US Laws, Codes, Statutes & Cases

OKLAHOMA STATUTES

TITLE 12A.

COMMERCIAL CODE

_________

§12A-1-9-101.  Short title.

SHORT TITLE

This article, Sections 1 through 144 of this act, may be cited as Uniform Commercial Code - Secured Transactions.

Added by Laws 2000, c. 371, § 1, eff. July 1, 2001.

§12A-1-9-102.  Definitions and index of definitions.

DEFINITIONS AND INDEX OF DEFINITIONS

(a)  In this article:

(1)  "Accession" means goods that are physically united with other goods in such a manner that the identity of the original goods is not lost.

(2) (A) "Account", except as used in "account for", means a right to payment of a monetary obligation, whether or not earned by performance:

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

(ii) for services rendered or to be rendered;

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

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

(v) for energy provided or to be provided;

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

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

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

(B) The term includes health-care-insurance receivables.

(C) The term does not include:

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

(ii) commercial tort claims;

(iii) deposit accounts;

(iv) investment property;

(v) letter-of-credit rights or letters of credit; or

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

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

(4)  "Accounting", except as used in "accounting for", means a record:

(A) authenticated by a secured party;

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

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

(5)  "Agricultural lien" means an interest in farm products:

(A) which secures payment or performance of an obligation for:

(i) goods or services furnished in connection with a debtor's farming operation; or

(ii) rent on real property leased by a debtor in connection with its farming operation;

(B) which is created by statute in favor of a person that:

(i) in the ordinary course of its business furnished goods or services to a debtor in connection with a debtor's farming operation; or

(ii) leased real property to a debtor in connection with the debtor's farming operation; and

(C) whose effectiveness does not depend on the person's possession of the personal property.

(6)  "As-extracted collateral" means:

(A) oil, gas, or other minerals that are subject to a security interest that:

(i) is created by a debtor having an interest in the minerals before extraction; and

(ii) attaches to the minerals as extracted; or

(B) accounts arising out of the sale at the wellhead or minehead of oil, gas, or other minerals in which the debtor had an interest before extraction.

(7)  "Authenticate" means:

(A) to sign; or

(B) to execute or otherwise adopt a symbol, or encrypt or similarly process a record in whole or in part, with the present intent of the authenticating person to identify the person and adopt or accept a record.

(8)  "Bank" means an organization that is engaged in the business of banking.  The term includes savings banks, savings and loan associations, credit unions, and trust companies.

(9)  "Cash proceeds" means proceeds that are money, checks, deposit accounts, or the like.

(10)  "Certificate of title" means a certificate of title with respect to which a statute provides for the security interest in question to be indicated on the certificate as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the collateral.

(11)  "Chattel paper" means a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods, or a lease of specific goods and license of software used in the goods.  In this paragraph, "monetary obligation" means a monetary obligation secured by the goods or owed under a lease of 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.  If a transaction is evidenced by records that include an instrument or series of instruments, the group of records taken together constitutes chattel paper.

(12)  "Collateral" means the property subject to a security interest or agricultural lien.  The term includes:

(A) proceeds to which a security interest attaches;

(B) accounts, chattel paper, payment intangibles, and promissory notes that have been sold; and

(C) goods that are the subject of a consignment.

(13)  "Commercial tort claim" means a claim arising in tort with respect to which:

(A) the claimant is an organization; or

(B) the claimant is an individual and the claim:

(i) arose in the course of the claimant's business or profession; and

(ii) does not include damages arising out of personal injury to or the death of an individual.

(14)  "Commodity account" means an account maintained by a commodity intermediary in which a commodity contract is carried for a commodity customer.

(15)  "Commodity contract" means a commodity futures contract, an option on a commodity futures contract, a commodity option, or another contract if the contract or option is:

(A) traded on or subject to the rules of a board of trade that has been designated as a contract market for such a contract pursuant to federal commodities laws; or

(B) traded on a foreign commodity board of trade, exchange, or market, and is carried on the books of a commodity intermediary for a commodity customer.

(16)  "Commodity customer" means a person for which a commodity intermediary carries a commodity contract on its books.

(17)  "Commodity intermediary" means a person that:

(A) is registered as a futures commission merchant under federal commodities law; or

(B) in the ordinary course of its business provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to federal commodities law.

(18)  "Communicate" means:

(A) to send a written or other tangible record;

(B) to transmit a record by any means agreed upon by the persons sending and receiving the record; or

(C) in the case of transmission of a record to or by a filing office, to transmit a record by any means prescribed by filing-office rule.

(19)  "Consignee" means a merchant to which goods are delivered in a consignment.

(20)  "Consignment" means a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale and:

(A) the merchant:

(i) deals in goods of that kind under a name other than the name of the person making delivery;

(ii) is not an auctioneer; and

(iii) is not generally known by its creditors to be substantially engaged in selling the goods of others;

(B) with respect to each delivery, the aggregate value of the goods is One Thousand Dollars ($1,000.00) or more at the time of delivery;

(C) the goods are not consumer goods immediately before delivery; and

(D) the transaction does not create a security interest that secures an obligation.

(21)  "Consignor" means a person that delivers goods to a consignee in a consignment.

(22)  "Consumer debtor" means a debtor in a consumer transaction.

(23)  "Consumer goods" means goods that are used or bought for use primarily for personal, family, or household purposes.

(24)  "Consumer-goods transaction" means a consumer transaction in which:

(A) an individual incurs an obligation primarily for personal, family, or household purposes; and

(B) a security interest in consumer goods secures the obligation.

(25)  "Consumer obligor" means an obligor who is an individual and who incurred the obligation as part of a transaction entered into primarily for personal, family, or household purposes.

(26)  "Consumer transaction" means a transaction in which (i) an individual incurs an obligation primarily for personal, family, or household purposes, (ii) a security interest secures the obligation, and (iii) the collateral is held or acquired primarily for personal, family, or household purposes.  The term includes consumer-goods transactions.

(27)  "Continuation statement" means an amendment of a financing statement which:

(A) identifies, by its file number, the initial financing statement to which it relates; and

(B) indicates that it is a continuation statement for, or that it is filed to continue the effectiveness of, the identified financing statement.

(28)  "Debtor" means:

(A) a person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor;

(B) a seller of accounts, chattel paper, payment intangibles, or promissory notes; or

(C) a consignee.

(29)  "Deposit account" means a demand, time, savings, passbook, or similar account maintained with a bank as defined in paragraph (8) of this subsection.  The term does not include investment property or a deposit account evidenced by an instrument.

(30)  "Document" means a document of title or a receipt of the type described in subsection (b) of Section 7201 of this title.

(31)  "Electronic chattel paper" means chattel paper evidenced by a record or records consisting of information stored in an electronic medium.

(32)  "Encumbrance" means a right, other than an ownership interest, in real property.  The term includes mortgages and other liens on real property.

(33)  "Equipment" means goods other than inventory, farm products, or consumer goods.

(34)  "Farm products" means goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and which are:

(A) crops grown, growing, or to be grown, including:

(i) crops produced on trees, vines, and bushes; and

(ii) aquatic goods produced in aquacultural operations;

(B) livestock, born or unborn, including aquatic goods produced in aquacultural operations;

(C) supplies used or produced in a farming operation; or

(D) products of crops or livestock in their unmanufactured states.

(35)  "Farming operation" means raising, cultivating, propagating, fattening, grazing, or any other farming, livestock, or aquacultural operation.

(36)  "File number" means the number assigned to an initial financing statement pursuant to subsection (a) of Section 19519 of this title.

(37)  "Filing office" means an office designated in Section 19501 as the place to file a financing statement.

(38)  "Filing-office rule" means a rule adopted pursuant to Section 19526 and 19526.1 of this title.

(39)  "Financing statement" means a record or records composed of an initial financing statement and any filed record relating to the initial financing statement.

(40)  "Fixture filing" means the filing of a financing statement covering goods that are or are to become fixtures and satisfying subsections (a) and (b) of Section 19502 of this title.  The term includes the filing of a financing statement covering goods of a transmitting utility which are or are to become fixtures.

(41)  "Fixtures" means goods that have become so related to particular real property that an interest in them arises under real property law.

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

(43)  "Good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing.

(44) (A) "Goods" means all things that are movable when a security interest attaches.

(B) The term includes:

(i) fixtures;

(ii) standing timber that is to be cut and removed under a conveyance or contract for sale;

(iii) the unborn young of animals;

(iv) crops grown, growing, or to be grown, even if the crops are produced on trees, vines, or bushes; and

(v) manufactured homes.

(C) The term also includes a computer program embedded in goods and any supporting information provided in connection with a transaction relating to the program if:

(i) the program is associated with the goods in such a manner that it customarily is considered part of the goods; or

(ii) by becoming the owner of the goods, a person acquires a right to use the program in connection with the goods.

(D) The term does not include a computer program which is embedded in goods and that consist solely of the medium in which the program is embedded.

(E) The term also does not include accounts, chattel paper, commercial tort claims, deposit accounts, documents, general intangibles, instruments, investment property, letter-of-credit rights, letters of credit, money, or oil, gas, or other minerals before extraction.

(45)  "Governmental unit" means a subdivision, agency, department, county, parish, municipality, or other unit of the government of the United States, a state, or a foreign country.  The term includes an organization having a separate corporate existence if the organization is eligible to issue debt on which interest is exempt from income taxation under the laws of the United States.

(46)  "Health-care-insurance receivable" means an interest in or claim under a policy of insurance which is a right to payment of a monetary obligation for health-care goods or services provided or to be provided.

(47) (A) "Instrument" means a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease, and is of a type that in ordinary course of business is transferred by delivery with any necessary endorsement or assignment.

(B) "Instrument" includes:

(i) an instrument as defined in subparagraph (A) of this paragraph, whether the instrument is subject to Section 3-104 of this title because it is not payable to order; and

(ii) a writing that contains both an acknowledgment by a bank as defined in paragraph (8) of this subsection that a sum of money has been received by the bank and its promise to repay the sum of money, which is considered a certificate of deposit by the bank issuing it, even if the writing provides that it is nontransferable or uses similar language.

(C) The term does not include:

(i) investment property;

(ii) letters of credit; or

(iii) writings that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card.

(48)  "Inventory" means goods, other than farm products, which:

(A) are leased by a person as lessor;

(B) are held by a person for sale or lease or to be furnished under a contract of service;

(C) are furnished by a person under a contract of service; or

(D) consist of raw materials, work in process, or materials used or consumed in a business.

(49)  "Investment property" means a security, whether certificated or uncertificated, security entitlement, securities account, commodity contract, or commodity account.

(50)  "Jurisdiction of organization", with respect to a registered organization, means the jurisdiction under whose law the organization is organized.

(51)  "Letter-of-credit right" means a right to payment or performance under a letter of credit, whether or not the beneficiary has demanded or is at the time entitled to demand payment or performance.  The term does not include the right of a beneficiary to demand payment or performance under a letter of credit.

(52)  "Lien creditor" means:

(A) a creditor that has acquired a lien on the property involved by attachment, levy, or the like;

(B) an assignee for benefit of creditors from the time of assignment;

(C) a trustee in bankruptcy from the date of the filing of the petition; or

(D) a receiver in equity from the time of appointment.

(53) (A) "Manufactured home" means a structure, transportable in one or more sections, which:

(i) in the traveling mode, is eight body feet or more in width or forty (40) body feet or more in length, or, when erected on site, is three hundred twenty (320) or more square feet,

(ii) is built on a permanent chassis,

(iii) is designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and

(iv) includes the plumbing, heating, air-conditioning, and electrical systems contained therein.

(B) The term includes any structure that meets all of the requirements of this paragraph except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the United States Secretary of Housing and Urban Development and complies with the standards established under Title 42 of the United States Code.

(54)  "Manufactured-home transaction" means a secured transaction:

(A) that creates a purchase-money security interest in a manufactured home, other than a manufactured home held as inventory; or

(B) in which a manufactured home, other than a manufactured home held as inventory, is the primary collateral.

(55)  "Mortgage" means a consensual interest in real property, including fixtures, which secures payment or performance of an obligation.

(56)  "New debtor" means a person that becomes bound as a debtor under subsection (d) of Section 19203 of this title by a security agreement previously entered into by another person.

(57) (A) "New value" means:

(i) money;

(ii) money's worth in property, services, or new credit; or

(iii) release by a transferee of an interest in property previously transferred to the transferee.

(B) The term does not include an obligation substituted for another obligation.

(58)  "Noncash proceeds" means proceeds other than cash proceeds.

(59) (A) "Obligor" means a person that, with respect to an obligation secured by a security interest in or an agricultural lien on the collateral:

(i) owes payment or other performance of the obligation;

(ii) has provided property other than the collateral to secure payment or other performance of the obligation; or

(iii) is otherwise accountable in whole or in part for payment or other performance of the obligation.

(B) The term does not include issuers or nominated persons under a letter of credit.

(60)  "Original debtor" means a person that, as debtor, entered into a security agreement to which a new debtor has become bound under subsection (d) of Section 19203 of this title.

(61)  "Payment intangible" means a general intangible under which the account debtor's principal obligation is a monetary obligation.

(62)  "Person related to", with respect to an individual, means:

(A) the spouse of the individual;

(B) a brother, brother-in-law, sister, or sister-in-law of the individual;

(C) an ancestor or lineal descendant of the individual or the individual's spouse; or

(D) any other relative, by blood or marriage, of the individual or the individual's spouse who shares the same home with the individual.

(63)  "Person related to", with respect to an organization, means:

(A) a person directly or indirectly controlling, controlled by, or under common control with the organization;

(B) an officer or director of, or a person performing similar functions with respect to, the organization;

(C) an officer or director of, or a person performing similar functions with respect to, a person described in subparagraph (A);

(D) the spouse of an individual described in subparagraph (A), (B), or (C) of this paragraph; or

(E) an individual who is related by blood or marriage to an individual described in subparagraph (A), (B), (C), or (D) of this paragraph and who shares the same home with the individual.

(64)  "Proceeds" means the following property:

(A) whatever is acquired upon the sale, lease, license, exchange, or other disposition of collateral;

(B) whatever is collected on, or distributed on account of, collateral;

(C) rights arising out of collateral;

(D) to the extent of the value of collateral, claims arising out of the loss, nonconformity, or interference with the use of, defects or infringement of rights in, or damage to, the collateral; or

(E) to the extent of the value of collateral and to the extent payable to the debtor or the secured party, insurance payable by reason of the loss or nonconformity of, defects or infringement of rights in, or damage to, the collateral.

(65)  "Promissory note" means an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay, and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds.

(66)  "Proposal" means a record authenticated by a secured party which includes the terms on which the secured party is willing to accept collateral in full or partial satisfaction of the obligation it secures pursuant to Sections 19620, 19621, and 19622 of this title.

(67)  "Public-finance transaction" means a secured transaction in connection with which:

(A) debt securities are issued;

(B) all or a portion of the securities issued have an initial stated maturity of at least twenty (20) years; and

(C) the debtor, obligor, secured party, account debtor or other person obligated on collateral, assignor or assignee of a secured obligation, or assignor or assignee of a security interest is a state or a governmental unit of a state.

(68)  "Pursuant to commitment", with respect to an advance made or other value given by a secured party, means pursuant to the secured party's obligation, whether or not a subsequent event of default or other event not within the secured party's control has relieved or may relieve the secured party from its obligation.

(69)  "Record", except as used in "for record", "of record", "record or legal title", and "record owner", means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.

(70)  "Registered organization" means an organization organized solely under the law of a single state or the United States and as to which the state or the United States must maintain a public record showing the organization to have been organized.

(71)  "Secondary obligor" means an obligor to the extent that:

(A) the obligor's obligation is secondary; or

(B) the obligor has a right of recourse with respect to an obligation secured by collateral against the debtor, another obligor, or property of either.

(72)  "Secured party" means:

(A) a person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;

(B) a person that holds an agricultural lien;

(C) a consignor;

(D) a person to which accounts, chattel paper, payment intangibles, or promissory notes have been sold;

(E) a trustee, indenture trustee, agent, collateral agent, or other representative in whose favor a security interest or agricultural lien is created or provided for; or

(F) a person that holds a security interest arising under Section 2401, 2505, paragraph (3) of Section 2711, paragraph (5) of Section 2A508, 4210, or 5118 of this title.

(73)  "Security agreement" means an agreement that creates or provides for a security interest.

(74)  "Send", in connection with a record or notification, means:

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

(B) to cause the record or notification to be received within the time that it would have been received if properly sent under subparagraph (A) of this paragraph.

(75)  "Software" means a computer program and any supporting information provided in connection with a transaction relating to the program.  The term does not include a computer program that is included in the definition of goods.

(76)  "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

(77)  "Supporting obligation" means a letter-of-credit right or secondary obligation that supports the payment or performance of an account, chattel paper, a document, a general intangible, an instrument, or investment property.

(78)  "Tangible chattel paper" means chattel paper evidenced by a record or records consisting of information that is inscribed on a tangible medium.

(79)  "Termination statement" means an amendment of a financing statement which:

(A) identifies, by its file number, the initial financing statement to which it relates; and

(B) indicates either that it is a termination statement or that the identified financing statement is no longer effective.

(80)  "Transmitting utility" means a person primarily engaged in the business of:

(A) operating a railroad, subway, street railway, or trolley bus;

(B) transmitting communications electrically, electromagnetically, or by light;

(C) transmitting goods by pipeline or sewer; or

(D) transmitting or producing and transmitting electricity, steam, gas, or water.

(b)  "Control" as provided in Section 7-106 of this title and the following definitions in other articles of this title apply to this article:

"Applicant" - Section 5102 of this title.

"Beneficiary" - Section 5102 of this title.

"Broker" - Section 8102 of this title.

"Certificated security" - Section 8102 of this title.

"Check" - Section 3104 of this title.

"Clearing corporation" - Section 8102 of this title.

"Contract for sale" - Section 2106 of this title.

"Customer" - Section 4104 of this title.

"Entitlement holder" - Section 8102 of this title.

"Financial asset" - Section 8102 of this title.

"Holder in due course" - Section 3302 of this title.

"Issuer" (with respect to a letter of credit or letter-of-credit right)- Section 5102 of this title.

"Issuer" - (with respect to a security) - Section 8-201 of this title.

"Issuer" - (with respect to documents of title) - Section 7-102 of this title.

"Lease" - Section 2A103 of this title.

"Lease agreement" - Section 2A103 of this title.

"Lease contract" - Section 2A103 of this title.

"Leasehold interest" - Section 2A103 of this title.

"Lessee" - Section 2A103 of this title.

"Lessee in ordinary course of business" - Section 2A103 of this title.

"Lessor" - Section 2A103 of this title.

"Lessor's residual interest" - Section 2A103 of this title.

"Letter of credit" - Section 5102 of this title.

"Merchant" - Section 2104 of this title.

"Negotiable instrument" - Section 3104 of this title.

"Nominated person" - Section 5102 of this title.

"Note" - Section 3104 of this title.

"Proceeds of a letter of credit" - Section 5114 of this title.

"Prove" - Section 3103 of this title.

"Sale" - Section 2106 of this title.

"Securities account" - Section 8501 of this title.

"Securities intermediary" - Section 8102 of this title.

"Security" - Section 8102 of this title.

"Security certificate" - Section 8102 of this title.

"Security entitlement" - Section 8102 of this title.

"Uncertificated security" - Section 8102 of this title.

(c)  Article 1 of this title contains general definitions and principles of construction and interpretation applicable throughout this article.

Added by Laws 2000, c. 371, § 2, eff. July 1, 2001.  Amended by Laws 2004, c. 153, § 1, eff. Nov. 1, 2004; Laws 2005, c. 140, § 59, eff. Jan. 1, 2006.

§12A-1-9-103.  Purchase-money security interest; application of payments; burden of establishing.

PURCHASE-MONEY SECURITY INTEREST; APPLICATION OF PAYMENTS;

BURDEN OF ESTABLISHING

(a)  In this section:

(1)  "purchase-money collateral" means goods or software that secures a purchase-money obligation incurred with respect to that collateral; and

(2)  "purchase-money obligation" means an obligation of an obligor incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used.

(b)  A security interest in goods is a purchase-money security interest:

(1)  to the extent that the goods are purchase-money collateral with respect to that security interest;

(2)  if the security interest is in inventory that is or was purchase-money collateral, to the extent that the security interest secures a purchase-money obligation incurred with respect to other inventory in which the secured party holds or held a purchase-money security interest; and

(3)  to the extent that the security interest secures a purchase-money obligation incurred with respect to software in which the secured party holds or held a purchase-money security interest.

(c)  A security interest in software is a purchase-money security interest to the extent that the security interest also secures a purchase-money obligation incurred with respect to goods in which the secured party holds or held a purchase-money security interest if:

(1)  the debtor acquired its interest in the software in an integrated transaction in which it acquired an interest in the goods; and

(2)  the debtor acquired its interest in the software for the principal purpose of using the software in the goods.

(d)  The security interest of a consignor in goods that are the subject of a consignment is a purchase-money security interest in inventory.

(e)  In a transaction other than a consumer-goods transaction, if the extent to which a security interest is a purchase-money security interest depends on the application of a payment to a particular obligation, the payment must be applied:

(1)  in accordance with any reasonable method of application to which the parties agree;

(2)  in the absence of the parties' agreement to a reasonable method, in accordance with any intention of the obligor manifested at or before the time of payment; or

(3)  in the absence of an agreement to a reasonable method and a timely manifestation of the obligor's intention, in the following order:

(A) to obligations that are not secured; and

(B) if more than one obligation is secured, to obligations secured by purchase-money security interests in the order in which those obligations were incurred.

(f)  In a transaction other than a consumer-goods transaction, a purchase-money security interest does not lose its status as such, even if:

(1)  the purchase-money collateral also secures an obligation that is not a purchase-money obligation;

(2)  collateral that is not purchase-money collateral also secures the purchase-money obligation; or

(3)  the purchase-money obligation has been renewed, refinanced, consolidated, or restructured.

(g)  In a transaction other than a consumer-goods transaction, a secured party claiming a purchase-money security interest has the burden of establishing the extent to which the security interest is a purchase-money security interest.

(h)  The limitation of the rules in subsections (e), (f), and (g) of this section to transactions other than consumer-goods transactions is intended to leave to the court the determination of the proper rules in consumer-goods transactions.  The court may not infer from that limitation the nature of the proper rule in consumer-goods transactions and may continue to apply established approaches.

Added by Laws 2000, c. 371, § 3, eff. July 1, 2001.

§12A-1-9-104.  Control of deposit account.

CONTROL OF DEPOSIT ACCOUNT

(a)  A secured party has control of a deposit account if:

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

(2)  the debtor, secured party, and bank have agreed in an authenticated 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.

(b)  A secured party that has satisfied subsection (a) of this section has control, even if the debtor retains the right to direct the disposition of funds from the deposit account.

Added by Laws 2000, c. 371, § 4, eff. July 1, 2001.

§12A-1-9-105.  Control of electronic chattel paper.

CONTROL OF ELECTRONIC CHATTEL PAPER

A secured party has control of electronic chattel paper if the record or records comprising the chattel paper are created, stored, and assigned in such a manner that:

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

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

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

(4)  copies or revisions that add or change an identified assignee of the authoritative copy can be made only with the participation of the secured party;

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

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

Added by Laws 2000, c. 371, § 5, eff. July 1, 2001.

§12A-1-9-106.  Control of investment property.

CONTROL OF INVESTMENT PROPERTY

(a)  A person has control of a certificated security, uncertificated security, or security entitlement as provided in Section 8106 of this title.

(b)  A secured party has control of a commodity contract if:

(1)  the secured party is the commodity intermediary with which the commodity contract is carried; or

(2)  the commodity customer, secured party, and commodity intermediary have agreed that the commodity intermediary will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer.

(c)  A secured party having control of all security entitlements or commodity contracts carried in a securities account or commodity account has control over the securities account or commodity account.

Added by Laws 2000, c. 371, § 6, eff. July 1, 2001.

§12A-1-9-107.  Control of letter-of-credit right.

CONTROL OF LETTER-OF-CREDIT RIGHT

A secured party has control of a letter-of-credit right to the extent of any right to payment or performance by the issuer or any nominated person if the issuer or nominated person has consented to an assignment of proceeds of the letter of credit under subsection (c) of Section 5114 of this title or otherwise applicable law or practice.

Added by Laws 2000, c. 371, § 7, eff. July 1, 2001.

§12A-1-9-108.  Sufficiency of description.

SUFFICIENCY OF DESCRIPTION

(a)  Except as otherwise provided in subsections (c), (d), and (e) of this section, a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described.

(b)  Except as otherwise provided in subsection (d) of this section, a description of collateral reasonably identifies the collateral if it identifies the collateral by:

(1)  specific listing;

(2)  category;

(3)  except as otherwise provided in subsection (e) of this section, a type of collateral defined in this title;

(4)  quantity;

(5)  computational or allocational formula or procedure; or

(6)  except as otherwise provided in subsection (c) of this section, any other method, if the identity of the collateral is objectively determinable.

(c)  A description of collateral as "all the debtor's assets" or "all the debtor's personal property" or using words of similar import does not reasonably identify the collateral.

(d)  Except as otherwise provided in subsection (e) of this section, a description of a security entitlement, securities account, or commodity account is sufficient if it describes:

(1)  the collateral by those terms or as investment property; or

(2)  the underlying financial asset or commodity contract.

(e)  A description only by type of collateral defined in this title is an insufficient description of:

(1)  a commercial tort claim; or

(2)  in a consumer transaction, consumer goods, a security entitlement, a securities account, or a commodity account.

Added by Laws 2000, c. 371, § 8, eff. July 1, 2001.

§12A-1-9-109.  Scope of article.

SCOPE OF ARTICLE

(a)  Except as otherwise provided in subsections (c) and (d) of this section, this article applies to:

(1)  a transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract;

(2)  an agricultural lien;

(3)  a sale of accounts, chattel paper, payment intangibles, or promissory notes;

(4)  a consignment;

(5)  a security interest arising under Section 2401, Section 2505, paragraph (3) of Section 2711, or paragraph (5) of Section 2A508 of this title, as provided in Section 19110 of this title; and

(6)  a security interest arising under Section 4210 or 5118 of this title.

(b)  The application of this article to a security interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this article does not apply.

(c)  This article does not apply to the extent that:

(1)  a statute, regulation, or treaty of the United States preempts this article;

(2)  another statute of this state expressly governs the creation, perfection, priority, or enforcement of a security interest created by this state or a governmental unit of this state;

(3)  a statute of another state, a foreign country, or a governmental unit of another state or a foreign country, other than a statute generally applicable to security interests, expressly governs creation, perfection, priority, or enforcement of a security interest created by the state, country, or governmental unit; or

(4)  the rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under Section 5-114 of this title.

(d)  This article does not apply to:

(1)  a landlord's lien, other than an agricultural lien;

(2)  a lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but Section 19333 of this title applies with respect to priority of the lien;

(3)  an assignment of a claim for wages, salary, or other compensation of an employee;

(4)  a sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of which they arose;

(5)  an assignment of accounts, chattel paper, payment intangibles, or promissory notes which is for the purpose of collection only;

(6)  an assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract;

(7)  an assignment of a single account, payment intangible, or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness;

(8)  a transfer of an interest in or an assignment of a claim under a policy of insurance, other than an assignment by or to a health-care provider of a health-care-insurance receivable and any subsequent assignment of the right to payment, but Sections 19315 and 19322 of this title apply with respect to proceeds and priorities in proceeds;

(9)  an assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral;

(10)  a right of recoupment or set-off, but:

(A) Section 19340 of this title applies with respect to the effectiveness of rights of recoupment or set-off against deposit accounts; and

(B) Section 19404 of this title applies with respect to defenses or claims of an account debtor;

(11)  the creation or transfer of an interest in or lien on real property, including a lease or rents thereunder, except to the extent that provision is made for:

(A) liens on real property in Sections 19203 and 19308 of this title;

(B) fixtures in Section 19334 of this title;

(C) fixture filings in Sections 19501, 19502, 19512, 19516, and 19519 of this title; and

(D) security agreements covering personal and real property in Section 19604 of this title; or

(12)  an assignment of a claim arising in tort, other than a commercial tort claim, but Sections 19315 and 19322 of this title apply with respect to proceeds and priorities in proceeds.

Added by Laws 2000, c. 371, § 9, eff. July 1, 2001.  Amended by Laws 2004, c. 153, § 2, eff. Nov. 1, 2004.

§12A-1-9-110.  Security interests arising under article 2 or 2a.

SECURITY INTERESTS ARISING UNDER ARTICLE 2 OR 2A

A security interest arising under Section 2401, 2505, paragraph (3) of Section 2711, or paragraph (5) of Section 2A508 of this title is subject to this article.  However, until the debtor obtains possession of the goods:

(1)  the security interest is enforceable, even if paragraph (3) of subsection (b) of Section 19203 of this title has not been satisfied;

(2)  filing is not required to perfect the security interest;

(3)  the rights of the secured party after default by the debtor are governed by Article 2 or 2A of this title; and

(4)  the security interest has priority over a conflicting security interest created by the debtor.

Added by Laws 2000, c. 371, § 10, eff. July 1, 2001.

§12A-1-9-201.  General effectiveness of security agreement.

GENERAL EFFECTIVENESS OF SECURITY AGREEMENT

(a)  Except as otherwise provided in this title, a security agreement is effective according to its terms between the parties, against purchasers of the collateral, and against creditors.

(b)  A transaction subject to this article is subject to any applicable rule of law which establishes a different rule for consumers, and any other statute or regulation that regulates the rates, charges, agreements and practices for loans, credit sales or other extensions of credit.

(c)  In case of conflict between this article and a rule of law, statute, or regulation described in subsection (b) of this section, the rule of law, statute, or regulation controls.  Failure to comply with a statute or regulation described in subsection (b) of this section has only the effect the statute or regulation specifies.

(d)  This article does not:

(1)  validate any rate, charge, agreement, or practice that violates a rule of law, statute, or regulation described in subsection (b) of this section; or

(2)  extend the application of the rule of law, statute, or regulation to a transaction not otherwise subject to it.

Added by Laws 2000, c. 371, § 11, eff. July 1, 2001.

§12A-1-9-202.  Title to collateral immaterial.

TITLE TO COLLATERAL IMMATERIAL

Except as otherwise provided with respect to consignments or sales of accounts, chattel paper, payment intangibles, or promissory notes, the provisions of this article with regard to rights and obligations apply whether title to collateral is in the secured party or the debtor.

Added by Laws 2000, c. 371, § 12, eff. July 1, 2001.

§12A-1-9-203.  Attachment and enforceability of security interest - Proceeds - Supporting obligations - Formal requisites.

ATTACHMENT AND ENFORCEABILITY OF SECURITY INTEREST;

PROCEEDS; SUPPORTING OBLIGATIONS; FORMAL REQUISITES

(a)  A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment.

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

(1)  value has been given;

(2)  the debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party; and

(3)  one of the following conditions is met:

(A) the debtor has authenticated a security agreement that provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned;

(B) the collateral is not a certificated security and is in the possession of the secured party under Section 19313 of this title pursuant to the debtor's security agreement;

(C) the collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under Section 8301 of this title pursuant to the debtor's security agreement; or

(D) the collateral is deposit accounts, electronic chattel paper, investment property, letter-of-credit rights, or electronic documents, and the secured party has control under Section 7-106, 19104, 19105, 19106, or 19107 of this title pursuant to the debtor's security agreement.

(c)  Subsection (b) of this section is subject to Section 4210 of this title on the security interest of a collecting bank, Section 5118 of this title on the security interest of a letter-of-credit issuer or nominated person, Section 19110 of this title on a security interest arising under Article 2 or 2A of this title, and Section 19206 of this title on security interests in investment property.

(d)  A person becomes bound as debtor by a security agreement entered into by another person if, by operation of law other than this article or by contract:

(1)  the security agreement becomes effective to create a security interest in the person's property; or

(2)  the person becomes generally obligated for the obligations of the other person, including the obligation secured under the security agreement, and acquires or succeeds to all or substantially all of the assets of the other person.

(e)  If a new debtor becomes bound as debtor by a security agreement entered into by another person:

(1)  the agreement satisfies paragraph (3) of subsection (b) of this section with respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement; and

(2)  another agreement is not necessary to make a security interest in the property enforceable.

(f)  The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by Section 19315 of this title and is also attachment of a security interest in a supporting obligation for the collateral.

(g)  The attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security interest, mortgage, or other lien.

(h)  The attachment of a security interest in a securities account is also attachment of a security interest in the security entitlements carried in the securities account.

(i)  The attachment of a security interest in a commodity account is also attachment of a security interest in the commodity contracts carried in the commodity account.

Added by Laws 2000, c. 371, § 13, eff. July 1, 2001.  Amended by Laws 2005, c. 140, § 60, eff. Jan. 1, 2006.

§12A-1-9-204.  After-acquired property; future advances.

AFTER-ACQUIRED PROPERTY; FUTURE ADVANCES

(a)  Except as otherwise provided in subsection (b) of this section, a security agreement may create or provide for a security interest in after-acquired collateral.

(b)  A security interest does not attach under a term constituting an afteracquired property clause to:

(1)  consumer goods, other than an accession when given as additional security, unless the debtor acquires rights in them within ten (10) days after the secured party gives value; or

(2)  a commercial tort claim.

(c)  A security agreement may provide that collateral secures, or that accounts, chattel paper, payment intangibles, or promissory notes are sold in connection with, future advances or other value, whether or not the advances or value are given pursuant to commitment.

Added by Laws 2000, c. 371, § 14, eff. July 1, 2001.

§12A-1-9-205.  Use or disposition of collateral permissible.

USE OR DISPOSITION OF COLLATERAL PERMISSIBLE

(a)  A security interest is not invalid or fraudulent against creditors solely because:

(1)  the debtor has the right or ability to:

(A) use, commingle, or dispose of all or part of the collateral, including returned or repossessed goods;

(B) collect, compromise, enforce, or otherwise deal with collateral;

(C) accept the return of collateral or make repossessions; or

(D) use, commingle, or dispose of proceeds; or

(2)  the secured party fails to require the debtor to account for proceeds or replace collateral.

(b)  This section does not relax the requirements of possession if attachment, perfection, or enforcement of a security interest depends upon possession of the collateral by the secured party.

Added by Laws 2000, c. 371, § 15, eff. July 1, 2001.

§12A-1-9-206.  Security interest arising in purchase or delivery of financial asset.

SECURITY INTEREST ARISING IN PURCHASE

OR DELIVERY OF FINANCIAL ASSET

(a)  A security interest in favor of a securities intermediary attaches to a person's security entitlement if:

(1)  the person buys a financial asset through the securities intermediary in a transaction in which the person is obligated to pay the purchase price to the securities intermediary at the time of the purchase; and

(2)  the securities intermediary credits the financial asset to the buyer's securities account before the buyer pays the securities intermediary.

(b)  The security interest described in subsection (a) of this section secures the person's obligation to pay for the financial asset.

(c)  A security interest in favor of a person that delivers a certificated security or other financial asset represented by a writing attaches to the security or other financial asset if:

(1)  the security or other financial asset:

(A) in the ordinary course of business is transferred by delivery with any necessary endorsement or assignment; and

(B) is delivered under an agreement between persons in the business of dealing with such securities or financial assets; and

(2)  the agreement calls for delivery against payment.

(d)  The security interest described in subsection (c) of this section secures the obligation to make payment for the delivery.

Added by Laws 2000, c. 371, § 16, eff. July 1, 2001.

§12A-1-9-207.  Rights and duties of secured party having possession or control of collateral.

RIGHTS AND DUTIES OF SECURED PARTY

HAVING POSSESSION OR CONTROL OF COLLATERAL

(a)  Except as otherwise provided in subsection (d) of this section, a secured party shall use reasonable care in the custody and preservation of collateral in the secured party's possession.  In the case of chattel paper or an instrument, reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed.

(b)  Except as otherwise provided in subsection (d) of this section, if a secured party has possession of collateral:

(1)  reasonable expenses, including the cost of insurance and payment of taxes or other charges, incurred in the custody, preservation, use, or operation of the collateral are chargeable to the debtor and are secured by the collateral;

(2)  the risk of accidental loss or damage is on the debtor to the extent of a deficiency in any effective insurance coverage;

(3)  the secured party shall keep the collateral identifiable, but fungible collateral may be commingled; and

(4)  the secured party may use or operate the collateral:

(A) for the purpose of preserving the collateral or its value;

(B) as permitted by an order of a court having competent jurisdiction; or

(C) except in the case of consumer goods, in the manner and to the extent agreed by the debtor.

(c)  Except as otherwise provided in subsection (d) of this section, a secured party having possession of collateral or control of collateral under Section 7-106, 19104, 19105, 19106, or 19107 of this title:

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

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

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

(d)  If the secured party is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor:

(1)  subsection (a) of this section does not apply unless the secured party is entitled under an agreement:

(A) to charge back uncollected collateral; or

(B) otherwise to full or limited recourse against the debtor or a secondary obligor based on the nonpayment or other default of an account debtor or other obligor on the collateral; and

(2)  subsections (b) and (c) of this section do not apply.

Added by Laws 2000, c. 371, § 17, eff. July 1, 2001.  Amended by Laws 2005, c. 140, § 61, eff. Jan. 1, 2006.

§12A-1-9-208.  Additional duties of secured party having control of collateral.

ADDITIONAL DUTIES OF SECURED PARTY

HAVING CONTROL OF COLLATERAL

(a)  This section applies to cases in which there is no outstanding secured obligation and the secured party is not committed to make advances, incur obligations, or otherwise give value.

(b)  Within ten (10) days after receiving an authenticated demand by the debtor:

(1)  a secured party having control of a deposit account under paragraph (2) of subsection (a) of Section 19104 of this title shall send to the bank with which the deposit account is maintained an authenticated statement that releases the bank from any further obligation to comply with instructions originated by the secured party;

(2)  a secured party having control of a deposit account under paragraph (3) of subsection (a) of Section 19104 of this title shall:

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

(B) transfer the balance on deposit into a deposit account in the debtor's name;

(3)  a secured party, other than a buyer, having control of electronic chattel paper under Section 19105 of this title shall:

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

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

(C) take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy which add or change an identified assignee of the authoritative copy without the consent of the secured party;

(4)  a secured party having control of investment property under paragraph (2) of subsection (d) of Section 8106 of this title or subsection (b) of Section 19106 of this title shall send to the securities intermediary or commodity intermediary with which the security entitlement or commodity contract is maintained an authenticated record that releases the securities intermediary or commodity intermediary from any further obligation to comply with entitlement orders or directions originated by the secured party;

(5)  a secured party having control of a letter-of-credit right under Section 19107 of this title 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 release from any further obligation to pay or deliver proceeds of the letter of credit to the secured party; and

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

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

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

(C) take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy which add or change an identified assignee of the authoritative copy without the consent of the secured party.

Added by Laws 2000, c. 371, § 18, eff. July 1, 2001.  Amended by Laws 2005, c. 140, § 62, eff. Jan 1, 2006.

§12A-1-9-209.  Duties of secured party if account debtor has been notified of assignment.

DUTIES OF SECURED PARTY IF ACCOUNT

DEBTOR HAS BEEN NOTIFIED OF ASSIGNMENT

(a)  Except as otherwise provided in subsection (c) of this section, this section applies if:

(1)  there is no outstanding secured obligation; and

(2)  the secured party is not committed to make advances, incur obligations, or otherwise give value.

(b)  Within ten (10) days after receiving an authenticated demand by the debtor, a secured party shall send to an account debtor that has received notification of an assignment to the secured party as assignee under subsection (a) of Section 19406 of this title an authenticated record that releases the account debtor from any further obligation to the secured party.

(c)  This section does not apply to an assignment constituting the sale of an account, chattel paper, or payment intangible.

Added by Laws 2000, c. 371, § 19, eff. July 1, 2001.

§12A-1-9-210.  Request for accounting; request regarding list of collateral or statement of account.

REQUEST FOR ACCOUNTING; REQUEST REGARDING

LIST OF COLLATERAL OR STATEMENT OF ACCOUNT

(a)  In this section:

(1)  "Request" means a record of a type described in paragraph (2), (3), or (4) of this subsection.

(2)  "Request for an accounting" means a record authenticated by a debtor requesting that the recipient provide an accounting of the unpaid obligations secured by collateral and reasonably identifying the transaction or relationship that is the subject of the request.

(3)  "Request regarding a list of collateral" means a record authenticated by a debtor requesting that the recipient approve or correct a list of what the debtor believes to be the collateral securing an obligation and reasonably identifying the transaction or relationship that is the subject of the request.

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

(b)  Subject to subsections (c), (d), (e), and (f) of this section, 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 fourteen (14) days after receipt:

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

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

(c)  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 record including a statement to that effect within fourteen (14) days after receipt.

(d)  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 fourteen (14) days after receipt by sending to the debtor an authenticated record:

(1)  disclaiming any interest in the collateral; and

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

(e)  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 fourteen (14) days after receipt by sending to the debtor an authenticated record:

(1)  disclaiming any interest in the obligations; and

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

(f)  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 Twenty-five Dollars ($25.00) for each additional response.

Added by Laws 2000, c. 371, § 20, eff. July 1, 2001.

§12A-1-9-301.  Law governing perfection and priority of security interests.

LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS

Except as otherwise provided in Sections 19303 through 19306 of this title, the following rules determine the law governing perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral:

(1)  Except as otherwise provided in this section, while a debtor is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral.

(2)  While collateral is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a possessory security interest in that collateral.

(3)  Except as otherwise provided in paragraph (4) of this section, while tangible negotiable documents, goods, instruments, money, or tangible chattel paper is located in a jurisdiction, the local law of that jurisdiction governs:

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

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

(C) the effect of perfection or nonperfection and the priority of a nonpossessory security interest in the collateral.

(4)  The local law of the jurisdiction in which the wellhead or minehead is located governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in as-extracted collateral.

Added by Laws 2000, c. 371, § 21, eff. July 1, 2001.  Amended by Laws 2005, c. 140, § 63, eff. Jan. 1, 2006.

§12A-1-9-302.  Law governing perfection and priority of agricultural liens.

LAW GOVERNING PERFECTION AND PRIORITY OF AGRICULTURAL LIENS

While farm products are located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of an agricultural lien on the farm products.

Added by Laws 2000, c. 371, § 22, eff. July 1, 2001.

§12A-1-9-303.  Law governing perfection and priority of security interests in goods covered by a certificate of title.

LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY

INTERESTS IN GOODS COVERED BY A CERTIFICATE OF TITLE

(a)  This section applies to goods covered by a certificate of title, even if there is no other relationship between the jurisdiction under whose certificate of title the goods are covered and the goods or the debtor.

(b)  Goods become covered by a certificate of title when a valid application for the certificate of title and the applicable fee are delivered to the appropriate authority.  Goods cease to be covered by a certificate of title at the earlier of the time the certificate of title ceases to be effective under the law of the issuing jurisdiction or the time the goods become covered subsequently by a certificate of title issued by another jurisdiction.

(c)  The local law of the jurisdiction under whose certificate of title the goods are covered governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in goods covered by a certificate of title from the time the goods become covered by the certificate of title until the goods cease to be covered by the certificate of title.

Added by Laws 2000, c. 371, § 23, eff. July 1, 2001.

§12A-1-9-304.  Law governing perfection and priority of security interests in deposit accounts.

LAW GOVERNING PERFECTION AND PRIORITY OF

SECURITY INTERESTS IN DEPOSIT ACCOUNTS

(a)  The local law of a bank's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a deposit account maintained with that bank.

(b)  The following rules determine a bank's jurisdiction for purposes of this part:

(1)  If an agreement between the bank and its customer governing the deposit account expressly provides that a particular jurisdiction is the bank's jurisdiction for purposes of this part, this article, or the Uniform Commercial Code, that jurisdiction is the bank's jurisdiction.

(2)  If paragraph (1) of this subsection does not apply and an agreement between the bank and its customer governing the deposit account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the bank's jurisdiction.

(3)  If neither paragraph (1) nor paragraph (2) of this subsection applies and an agreement between the bank and its customer governing the deposit account expressly provides that the deposit account is maintained at an office in a particular jurisdiction, that jurisdiction is the bank's jurisdiction.

(4)  If none of the preceding paragraphs of this subsection applies, the bank's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the customer's account is located.

(5)  If none of the preceding paragraphs applies, the bank's jurisdiction is the jurisdiction in which the chief executive office of the bank is located.

Added by Laws 2000, c. 371, § 24, eff. July 1, 2001.  Amended by Laws 2004, c. 153, § 3, eff. Nov. 1, 2004.

§12A-1-9-305.  Law governing perfection and priority of security interests in investment property.

LAW GOVERNING PERFECTION AND PRIORITY

OF SECURITY INTERESTS IN INVESTMENT PROPERTY

(a)  Except as otherwise provided in subsection (c) of this section, the following rules apply:

(1)  While a security certificate is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in the certificated security represented thereby.

(2)  The local law of the issuer's jurisdiction as specified in subsection (d) of Section 8110 of this title governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in an uncertificated security.

(3)  The local law of the securities intermediary's jurisdiction as specified in subsection (e) of Section 8110 of this title governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a security entitlement or securities account.

(4)  The local law of the commodity intermediary's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a commodity contract or commodity account.

(b)  The following rules determine a commodity intermediary's jurisdiction for purposes of this part:

(1)  If an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that a particular jurisdiction is the commodity intermediary's jurisdiction for purposes of this part, this article, or this title, that jurisdiction is the commodity intermediary's jurisdiction.

(2)  If paragraph (1) of this subsection does not apply and an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.

(3)  If neither paragraph (1) nor paragraph (2) of this subsection applies and an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that the commodity account is maintained at an office in a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.

(4)  If none of the preceding paragraphs of this section applies, the commodity intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the commodity customer's account is located.

(5)  If none of the preceding paragraphs of this section applies, the commodity intermediary's jurisdiction is the jurisdiction in which the chief executive office of the commodity intermediary is located.

(c)  The local law of the jurisdiction in which the debtor is located governs:

(1)  perfection of a security interest in investment property by filing;

(2)  automatic perfection of a security interest in investment property created by a broker or securities intermediary; and

(3)  automatic perfection of a security interest in a commodity contract or commodity account created by a commodity intermediary.

Added by Laws 2000, c. 371, § 25, eff. July 1, 2001.

§12A-1-9-306.  Law governing perfection and priority of security interests in letter-of-credit rights.

LAW GOVERNING PERFECTION AND PRIORITY

OF SECURITY INTERESTS IN LETTER-OF-CREDIT RIGHTS

(a)  Subject to subsection (c) of this section, the local law of the issuer's jurisdiction or a nominated person's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a letter-of-credit right if the issuer's jurisdiction or nominated person's jurisdiction is a state.

(b)  For purposes of this part, an issuer's jurisdiction or nominated person's jurisdiction is the jurisdiction whose law governs the liability of the issuer or nominated person with respect to the letter-of-credit right as provided in Section 5116 of this title.

(c)  This section does not apply to a security interest that is perfected only under subsection (d) of Section 19308 of this title.

Added by Laws 2000, c. 371, § 26, eff. July 1, 2001.

§12A-1-9-307.  Location of debtor.

LOCATION OF DEBTOR

(a)  In this section, "place of business" means a place where a debtor conducts its affairs.

(b)  Except as otherwise provided in this section, the following rules determine a debtor's location:

(1)  A debtor who is an individual is located at the individual's principal residence;

(2)  A debtor that is an organization and has only one place of business is located at its place of business; and

(3)  A debtor that is an organization and has more than one place of business is located at its chief executive office.

(c)  Subsection (b) of this section of this section applies only if a debtor's residence, place of business, or chief executive office, as applicable, is located in a jurisdiction whose law generally requires information concerning the existence of a nonpossessory security interest to be made generally available in a filing, recording, or registration system as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the collateral.  If subsection (b) of this section does not apply, the debtor is located in the District of Columbia.

(d)  A person that ceases to exist, have a residence, or have a place of business continues to be located in the jurisdiction specified by subsections (b) and (c) of this section.

(e)  A registered organization that is organized under the law of a state is located in that state.

(f)  Except as otherwise provided in subsection (i) of this section, a registered organization that is organized under the law of the United States and a branch or agency of a bank that is not organized under the law of the United States or a state are located:

(1)  in the state that the law of the United States designates, if the law designates a state of location;

(2)  in the state that the registered organization, branch, or agency designates, if the law of the United States authorizes the registered organization, branch, or agency to designate its state of location; or

(3)  in the District of Columbia, if neither paragraph (1) nor paragraph (2) of this subsection applies.

(g)  A registered organization continues to be located in the jurisdiction specified by subsection (e) or (f) of this section notwithstanding:

(1)  the suspension, revocation, forfeiture, or lapse of the registered organization's status as such in its jurisdiction of organization; or

(2)  the dissolution, winding up, or cancellation of the existence of the registered organization.

(h)  The United States is located in the District of Columbia.

(i)  A branch or agency of a bank that is not organized under the law of the United States or a state is located in the state in which the branch or agency is licensed, if all branches and agencies of the bank are licensed in only one state.

(j)  A foreign air carrier under the Federal Aviation Act of 1958, as amended, is located at the designated office of the agent upon which service of process may be made on behalf of the carrier.

(k)  This section applies only for purposes of this part.

Added by Laws 2000, c. 371, § 27, eff. July 1, 2001.

§12A-1-9-308.  When security interest or agricultural lien is perfected; continuity of perfection.

WHEN SECURITY INTEREST OR AGRICULTURAL

LIEN IS PERFECTED; CONTINUITY OF PERFECTION

(a)  Except as otherwise provided in this section and Section 19309 of this title, a security interest is perfected if it has attached and all of the applicable requirements for perfection in Sections 19310 through 19316 of this title have been satisfied.  A security interest is perfected when it attaches if the applicable requirements are satisfied before the security interest attaches.

(b)  An agricultural lien is perfected if it has become effective and all of the applicable requirements for perfection in Section 19310 of this title have been satisfied.  An agricultural lien is perfected when it becomes effective if the applicable requirements are satisfied before the agricultural lien becomes effective.

(c)  A security interest or agricultural lien is perfected continuously if it is originally perfected by one method under this article and is later perfected by another method under this article, without an intermediate period when it was unperfected.

(d)  Perfection of a security interest in collateral also perfects a security interest in a supporting obligation for the collateral.

(e)  Perfection of a security interest in a right to payment or performance also perfects a security interest in a security interest, mortgage, or other lien on personal or real property securing the right.

(f)  Perfection of a security interest in a securities account also perfects a security interest in the security entitlements carried in the securities account.

(g)  Perfection of a security interest in a commodity account also perfects a security interest in the commodity contracts carried in the commodity account.

Added by Laws 2000, c. 371, § 28, eff. July 1, 2001.

§12A-1-9-309.  Security interest perfected upon attachment.

SECURITY INTEREST PERFECTED UPON ATTACHMENT

The following security interests are perfected when they attach:

(1)  a purchase-money security interest in consumer goods, except as otherwise provided in subsection (b) of Section 19311 of this title with respect to consumer goods that are subject to a statute or treaty described in subsection (a) of Section 19311 of this title;

(2)  an assignment of accounts or payment intangibles which does not by itself or in conjunction with other assignments to the same assignee transfer a significant part of the assignor's outstanding accounts or payment intangibles;

(3)  a sale of a payment intangible;

(4)  a sale of a promissory note;

(5)  a security interest created by the assignment of a health-care-insurance receivable to the provider of the health-care goods or services;

(6)  a security interest arising under Section 2401, 2505, paragraph (3) of Section 2711, or paragraph (5) of Section 2A508 of this title, until the debtor obtains possession of the collateral;

(7)  a security interest of a collecting bank arising under Section 4210 of this title;

(8)  a security interest of an issuer or nominated person arising under Section 5118 of this title;

(9)  a security interest arising in the delivery of a financial asset under subsection (c) of Section 19206 of this title;

(10)  a security interest in investment property created by a broker or securities intermediary;

(11)  a security interest in a commodity contract or a commodity account created by a commodity intermediary;

(12)  an assignment for the benefit of all creditors of the transferor and subsequent transfers by the assignee thereunder;

(13)  a security interest created by an assignment of a beneficial interest in a decedent's estate; and

(14)  a sale by an individual of an account that is a right to payment of winnings in a lottery or other game of chance.

Added by Laws 2000, c. 371, § 29, eff. July 1, 2001.  Amended by Laws 2004, c. 153, § 4, eff. Nov. 1, 2004.

§12A-1-9-310.  When filing required to perfect security interest or agricultural lien - Security interests and agricultural liens to which filing provisions do not apply.

WHEN FILING REQUIRED TO PERFECT SECURITY INTEREST OR

AGRICULTURAL LIEN; SECURITY INTERESTS AND AGRICULTURAL

LIENS TO WHICH FILING PROVISIONS DO NOT APPLY

(a)  Except as otherwise provided in subsection (b) of this section and Section 19312 of this title, a financing statement must be filed to perfect all security interests and agricultural liens.

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

(1)  that is perfected under subsection (d), (e), (f), or (g) of Section 19308 of this title;

(2)  that is perfected under Section 19309 of this title when it attaches;

(3)  in property subject to a statute, regulation, or treaty described in subsection (a) of Section 19311 of this title;

(4)  in goods in possession of a bailee which is perfected under paragraph (1) or (2) of subsection (d) of Section 19312 of this title;

(5)  in certificated securities, documents, goods, or instruments which is perfected without filing, control, or possession under subsection (e), (f), or (g) of Section 19312 of this title;

(6)  in collateral in the secured party's possession under Section 19313 of this title;

(7)  in a certificated security which is perfected by delivery of the security certificate to the secured party under Section 19313 of this title;

(8)  in deposit accounts, electronic chattel paper, investment property, or letter-of-credit rights which is perfected by control under Section 19314 of this title;

(9)  in proceeds which is perfected under Section 19315 of this title; or

(10)  that is perfected under Section 19316 of this title.

(c)  If a secured party assigns a perfected security interest or agricultural lien, a filing under this article is not required to continue the perfected status of the security interest against creditors of and transferees from the original debtor.

Added by Laws 2000, c. 371, § 30, eff. July 1, 2001.  Amended by Laws 2005, c. 140, § 64, eff. Jan. 1, 2006.

§12A-1-9-311.  Perfection of security interests in property subject to certain statutes, regulations, and treaties.

PERFECTION OF SECURITY INTERESTS IN PROPERTY

SUBJECT TO CERTAIN STATUTES, REGULATIONS, AND TREATIES

(a)  Except as otherwise provided in subsection (d) of this section, the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to:

(1)  a statute, regulation, or treaty of the United States whose requirements for a security interest's obtaining priority over the rights of a lien creditor with respect to the property preempt subsection (a) of Section 19310 of this title;

(2)  another statute of this state that provides for central filing of, or that requires indication on or delivery for indication on a certificate of title of, any security interest in the property as a condition or result of perfection, including, but not limited to, Section 1110 of Title 47 and Section 4013 of Title 63 of the Oklahoma Statutes;

(3)  a certificate-of-title statute of another jurisdiction which provides for a security interest to be indicated on the certificate as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the property; or

(4)  the law or procedure of a federally recognized Indian tribe, if the security interest is in a vehicle registered or to be registered by the federally recognized Indian tribe and if within thirty (30) days after the security interest attaches, it is noted on the face of a certificate of title issued by the Indian tribe or, notwithstanding subsection G of Section 1110 of Title 47 of the Oklahoma Statutes, the security interest is otherwise perfected under an applicable law or procedure of that tribe.

(b)  Compliance with the requirements of a statute, regulation, or treaty described in subsection (a) of this section for obtaining priority over the rights of a lien creditor is equivalent to the filing of a financing statement under this article.  Except as otherwise provided in subsection (d) of this section and Section 19313 and subsections (d) and (e) of Section 19316 of this title for goods covered by a certificate of title, a security interest in property subject to a statute, regulation, or treaty described in subsection (a) of this section may be perfected only by compliance with those requirements, and a security interest so perfected remains perfected notwithstanding a change in the use or transfer of possession of the collateral.

(c)  Except as otherwise provided in subsection (d) of this section and subsections (d) and (e) of Section 19316 of this title, duration and renewal of perfection of a security interest perfected by compliance with the requirements prescribed by a statute, regulation, or treaty described in subsection (a) of this section are governed by the statute, regulation, or treaty.  In other respects, the security interest is subject to this article.

(d)  During any period in which collateral, described in Section 1110 of Title 47 and Section 4013 of Title 63 of the Oklahoma Statutes, is inventory held for sale or lease by a person or leased by that person as lessor and that person is in the business of selling goods of that kind, this section does not apply to a security interest in that collateral created by that person as debtor.

Added by Laws 2000, c. 371, § 31, eff. July 1, 2001.  Amended by Laws 2001, c. 354, § 1, eff. July 1, 2001; Laws 2005, c. 139, § 37, emerg. eff. May 5, 2005.

§12A-1-9-312.  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 - Temporary perfection without filing or transfer of possession.

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; TEMPORARY PERFECTION WITHOUT

FILING OR TRANSFER OF POSSESSION

(a)  A security interest in chattel paper, negotiable documents, instruments, or investment property may be perfected by filing.

(b)  Except as otherwise provided in subsections (c) and (d) of Section 19315 of this title for proceeds:

(1)  a security interest in a deposit account may be perfected only by control under Section 19314 of this title;

(2)  and except as otherwise provided in subsection (d) of Section 19308 of this title, a security interest in a letter-of-credit right may be perfected only by control under Section 19314 of this title; and

(3)  a security interest in money may be perfected only by the secured party's taking possession under Section 19313 of this title.

(c)  While goods are in the possession of a bailee that has issued a negotiable document covering the goods:

(1)  a security interest in the goods may be perfected by perfecting a security interest in the document; and

(2)  a security interest perfected in the document has priority over any security interest that becomes perfected in the goods by another method during that time.

(d)  While goods are in the possession of a bailee that has issued a nonnegotiable document covering the goods, a security interest in the goods may be perfected by:

(1)  issuance of a document in the name of the secured party;

(2)  the bailee's receipt of notification of the secured party's interest; or

(3)  filing as to the goods.

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

(f)  A perfected security interest in a negotiable document or goods in possession of a bailee, other than one that has issued a negotiable document for the goods, remains perfected for twenty (20) days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of:

(1)  ultimate sale or exchange; or

(2)  loading, unloading, storing, shipping, transshipping, manufacturing, processing, or otherwise dealing with them in a manner preliminary to their sale or exchange.

(g)  A perfected security interest in a certificated security or instrument remains perfected for twenty (20) days without filing if the secured party delivers the security certificate or instrument to the debtor for the purpose of:

(1)  ultimate sale or exchange; or

(2)  presentation, collection, enforcement, renewal, or registration of transfer.

(h)  After the twentyday period specified in subsection (e), (f), or (g) of this section expires, perfection depends upon compliance with this article.

Added by Laws 2000, c. 371, § 32, eff. July 1, 2001.  Amended by Laws 2005, c. 140, § 65, eff. Jan. 1, 2006.

§12A-1-9-313.  When possession by or delivery to secured party perfects security interest without filing.

WHEN POSSESSION BY OR DELIVERY TO SECURED PARTY

PERFECTS SECURITY INTEREST WITHOUT FILING

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

(b)  With respect to goods covered by a certificate of title issued by this state, a secured party may perfect a security interest in the goods by taking possession of the goods only in the circumstances described in subsection (d) of Section 19316 of this title.

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

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

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

(d)  If perfection of a security interest depends upon possession of the collateral by a secured party, perfection occurs no earlier than the time the secured party takes possession and continues only while the secured party retains possession.

(e)  A security interest in a certificated security in registered form is perfected by delivery when delivery of the certificated security occurs under Section 8301 of this title and remains perfected by delivery until the debtor obtains possession of the security certificate.

(f)  A person in possession of collateral is not required to acknowledge that it holds possession for a secured party's benefit.

(g)  If a person acknowledges that it holds possession for the secured party's benefit:

(1)  the acknowledgment is effective under subsection (c) of this section or subsection (a) of Section 8301 of this title, even if the acknowledgment violates the rights of a debtor; and

(2)  unless the person otherwise agrees or law other than this article otherwise provides, the person does not owe any duty to the secured party and is not required to confirm the acknowledgment to another person.

(h)  A secured party having possession of collateral does not relinquish possession by delivering the collateral to a person other than the debtor or a lessee of the collateral from the debtor in the ordinary course of the debtor's business if the person was instructed before the delivery or is instructed contemporaneously with the delivery:

(1)  to hold possession of the collateral for the secured party's benefit; or

(2)  to redeliver the collateral to the secured party.

(i)  A secured party does not relinquish possession, even if a delivery under subsection (h) of this section violates the rights of a debtor.  A person to which collateral is delivered under subsection (h) of this section does not owe any duty to the secured party and is not required to confirm the delivery to another person unless the person otherwise agrees or law other than this article otherwise provides.

Added by Laws 2000, c. 371, § 33, eff. July 1, 2001.  Amended by Laws 2005, c. 140, § 66, eff. Jan. 1, 2006.

§12A-1-9-314.  Perfection by control.

PERFECTION BY CONTROL

(a)  A security interest in investment property, deposit accounts, letter-of-credit rights, electronic chattel paper, or electronic documents may be perfected by control of the collateral under Section 7-106, 19104, 19105, 19106, or 19107 of this title.

(b)  A security interest in deposit accounts, electronic chattel paper, letter-of-credit rights, or electronic documents is perfected by control under Section 19104, 19105, or 19107 of this title when the secured party obtains control and remains perfected by control only while the secured party retains control.

(c)  A security interest in investment property is perfected by control under Section 19106 of this title from the time the secured party obtains control and remains perfected by control until:

(1)  the secured party does not have control; and

(2)  one of the following occurs:

(A) if the collateral is a certificated security, the debtor has or acquires possession of the security certificate;

(B) if the collateral is an uncertificated security, the issuer has registered or registers the debtor as the registered owner; or

(C) if the collateral is a security entitlement, the debtor is or becomes the entitlement holder.

Added by Laws 2000, c. 371, § 34, eff. July 1, 2001.  Amended by Laws 2005, c. 140, § 67, eff. Jan. 1, 2006.

§12A-1-9-315.  Secured party's rights on disposition of collateral and in proceeds.

SECURED PARTY'S RIGHTS ON DISPOSITION

OF COLLATERAL AND IN PROCEEDS

(a)  Except as otherwise provided in this article and in paragraph (2) of Section 2403 of this title:

(1)  a security interest or agricultural lien continues in collateral notwithstanding sale, lease, license, exchange, or other disposition thereof unless the secured party authorized the disposition free of the security interest or agricultural lien; and

(2)  a security interest attaches to any identifiable proceeds of collateral.

(b)  Proceeds that are commingled with other property are identifiable proceeds:

(1)  if the proceeds are goods, to the extent provided by Section 19336 of this title; and

(2)  if the proceeds are not goods, to the extent that the secured party identifies the proceeds by a method of tracing, including application of equitable principles, that is permitted under law other than this article with respect to commingled property of the type involved.

(c)  A security interest in proceeds is a perfected security interest if the security interest in the original collateral was perfected.

(d)  A perfected security interest in proceeds becomes unperfected on the twenty-first day after the security interest attaches to the proceeds unless:

(1)  the following conditions are satisfied:

(A) a filed financing statement covers the original collateral;

(B) the proceeds are collateral in which a security interest may be perfected by filing in the office in which the financing statement has been filed; and

(C) the proceeds are not acquired with cash proceeds;

(2)  the proceeds are identifiable cash proceeds; or

(3)  the security interest in the proceeds is perfected other than under subsection (c) of this section when the security interest attaches to the proceeds or within twenty (20) days thereafter.

(e)  If a filed financing statement covers the original collateral, a security interest in proceeds which remains perfected under paragraph (1) of subsection (d) of this section becomes unperfected at the later of:

(1)  when the effectiveness of the filed financing statement lapses under Section 19515 of this title or is terminated under Section 19513 of this title; or

(2)  the twenty-first day after the security interest attaches to the proceeds.

Added by Laws 2000, c. 371, § 35, eff. July 1, 2001.

§12A-1-9-316.  Continued perfection of security interest following change in governing law.

CONTINUED PERFECTION OF SECURITY INTEREST

FOLLOWING CHANGE IN GOVERNING LAW

(a)  A security interest perfected pursuant to the law of the jurisdiction designated in paragraph (1) of Section 19301 or subsection (c) of Section 19305 of this title remains perfected until the earliest of:

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

(2)  the expiration of four (4) months after a change of the debtor's location to another jurisdiction; or

(3)  the expiration of one (1) year after a transfer of collateral to a person that thereby becomes a debtor and is located in another jurisdiction.

(b)  If a security interest described in subsection (a) of this section becomes perfected under the law of the other jurisdiction before the earliest time or event described in that subsection, it remains perfected thereafter.  If the security interest does not become perfected under the law of the other jurisdiction before the earliest time or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

(c)  A possessory security interest in collateral, other than goods covered by a certificate of title and as-extracted collateral consisting of goods, remains continuously perfected if:

(1)  the collateral is located in one jurisdiction and subject to a security interest perfected under the law of that jurisdiction;

(2)  thereafter the collateral is brought into another jurisdiction; and

(3)  upon entry into the other jurisdiction, the security interest is perfected under the law of the other jurisdiction.

(d)  Except as otherwise provided in subsection (e) of this section, a security interest in goods covered by a certificate of title which is perfected by any method under the law of another jurisdiction when the goods become covered by a certificate of title from this state remains perfected until the security interest would have become unperfected under the law of the other jurisdiction had the goods not become so covered.

(e)  A security interest described in subsection (d) of this section becomes unperfected as against a purchaser of the goods for value and is deemed never to have been perfected as against a purchaser of the goods for value if the applicable requirements for perfection under subsection (b) of Section 19311 or Section 19313 of this title are not satisfied before the earlier of:

(1)  the time the security interest would have become unperfected under the law of the other jurisdiction had the goods not become covered by a certificate of title from this state; or

(2)  the expiration of four (4) months after the goods had become so covered.

(f)  A security interest in deposit accounts, letter-of-credit rights, or investment property which is perfected under the law of 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 (4) months after a change of the applicable jurisdiction to another jurisdiction.

(g)  If a security interest described in subsection (f) of this section becomes perfected under the law of the other jurisdiction before the earlier of the time or the end of the period described in that subsection, it remains perfected thereafter.  If the security interest does not become perfected under the law of the other jurisdiction before the earlier of that time or the end of that period, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.

Added by Laws 2000, c. 371, § 36, eff. July 1, 2001.

§12A-1-9-317.  Interests that take priority over or take free of security interest or agricultural lien.

INTERESTS THAT TAKE PRIORITY OVER OR TAKE FREE

OF SECURITY INTEREST OR AGRICULTURAL LIEN

(a)  A security interest or agricultural lien is subordinate to the rights of:

(1)  a person entitled to priority under Section 19322 of this title; and

(2)  except as otherwise provided in subsection (e) of this section, a person that becomes a lien creditor before the earlier of the time:

(A) the security interest or agricultural lien is perfected; or

(B) one of the conditions specified in paragraph (3) of subsection (b) of Section 1-9-203 of this title is met and a financing statement covering the collateral is filed.

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

(c)  Except as otherwise provided in subsection (e) of this section, a lessee of goods takes free of a security interest or agricultural lien if the lessee gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

(d)  A licensee of a general intangible or a buyer, other than a secured party, of accounts, electronic chattel paper, electronic documents, general intangibles, or investment property other than a certificated security takes free of a security interest if the licensee or buyer gives value without knowledge of the security interest and before it is perfected.

(e)  Except as otherwise provided in Sections 1-9-320 and 1-9-321 of this title, if a person files a financing statement with respect to a purchase-money security interest before or within twenty (20) days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee, or lien creditor which arise between the time the security interest attaches and the time of filing.

Added by Laws 2000, c. 371, § 37, eff. July 1, 2001.  Amended by Laws 2001, c. 354, § 2, eff. July 1, 2001; Laws 2005, c. 140, § 68, eff. Jan. 1, 2006.

§12A-1-9-318.  Rights and title of seller of account or chattel paper with respect to creditors and purchasers.

RIGHTS AND TITLE OF SELLER OF ACCOUNT OR CHATTEL

PAPER WITH RESPECT TO CREDITORS AND PURCHASERS

(a)  A debtor that has sold an account, chattel paper, payment intangible, or promissory note does not retain a legal or equitable interest in the collateral sold.

(b)  For purposes of determining the rights of creditors of, and purchasers for value of an account or chattel paper from, a debtor that has sold an account or chattel paper, while the buyer's security interest is unperfected, the debtor is deemed to have rights and title to the account or chattel paper identical to those the debtor sold.

Added by Laws 2000, c. 371, § 38, eff. July 1, 2001.

§12A-1-9-319.  Rights and title of consignee with respect to creditors and purchasers.

RIGHTS AND TITLE OF CONSIGNEE WITH

RESPECT TO CREDITORS AND PURCHASERS

(a)  Except as otherwise provided in subsection (b) of this section, for purposes of determining the rights of creditors of, and purchasers for value of goods from, a consignee, while the goods are in the possession of the consignee, the consignee is deemed to have rights and title to the goods identical to those the consignor had or had power to transfer.

(b)  For purposes of determining the rights of a creditor of a consignee, law other than this article determines the rights and title of a consignee while goods are in the consignee's possession if, under this part, a perfected security interest held by the consignor would have priority over the rights of the creditor.

Added by Laws 2000, c. 371, § 39, eff. July 1, 2001.

§12A-1-9-320.1.  Purpose.

PURPOSE

The purpose of Sections 19320.1 through 19320.7 of this title is to make the laws governing protection of buyers of farm products, commission merchants, and selling agents comply with the provisions of Section 1324 of the Food Security Act of 1985 as codified at Section 1631 of Title 7 of the United States Code.

Added by Laws 1987, c. 69, § 1.  Amended by Laws 2000, c. 371, § 41, eff. July 1, 2001.  Renumbered from § 9-307.1 of this title by Laws 2000, c. 371, § 183, eff. July 1, 2001.

§12A-1-9-320.2.  Definitions; requisites of an effective financing statement.

DEFINITIONS; REQUISITES OF AN

EFFECTIVE FINANCING STATEMENT

As used in this section and Sections 1-9-320.1 through 1-9-320.7 of this title:

(a) "Buyer in the ordinary course of business" means a person who, in the ordinary course of business, buys farm products from a person engaged in farming operations who is in the business of selling farm products.

(b) "Central filing system" means a system for filing effective financing statements on a statewide basis and which has been certified by the Secretary of the United States Department of Agriculture.

(c) "Commission merchant" means any person engaged in the business of receiving any farm product for sale, on commission, or for or on behalf of another person.

(d) "Effective financing statement" means a statement that:

(i) is an original or reproduced form consistent with the provisions of this act and approved by the Secretary of State;

(ii) is signed and filed with the Secretary of State by the secured party;

(iii) is signed by the debtor;

(iv) contains:

(A) the name and address of the secured party,

(B) the name and address of the person indebted to the secured party,

(C) the social security number of the debtor or, in the case of a debtor doing business other than as an individual, the Internal Revenue Service taxpayer identification number of such debtor,

(D) the farm product name,

(E) each county in this state where the farm product is produced or to be produced or a blanket code covering all 77 Oklahoma counties,

(F) a description of the farm products subject to the security interest only if needed to distinguish it from other such farm products owned by the same person or persons but not subject to the particular interest; and  

(G) the crop year, unless every crop of the farm product in question, for the duration of the effective financing statement, is to be subject to the particular security interest.

(v) must be amended in writing, within three (3) months, similarly signed and filed, to reflect material changes;

(vi) remains effective for a period of five (5) years from the date of filing, subject to extensions for additional periods of five (5) years each by refiling or filing a continuation statement within six (6) months before the expiration of the initial fiveyear period;

(vii) is removed from the active files when the statement lapses on the expiration of the effective period of the statement or when a termination statement from the secured party is accepted, whichever occurs first;

(viii) is accompanied by the requisite filing fee provided for in Section 111 of Title 28 of the Oklahoma Statutes; and

(ix) substantially complies with the requirements of this paragraph even though it contains minor errors that are not seriously misleading.

(x) may reflect multiple products or products in multiple counties.

(e) "Farm product" means an agricultural commodity such as wheat, corn, soybeans, or a species of livestock such as cattle, hogs, sheep, horses, or poultry used or produced in farming operations, or a product of such crop or livestock in its unmanufactured state (such as ginned cotton, woolclip, maple syrup, milk, and eggs), that is in the possession of a person engaged in farming operations.

(f) "Knows" or "knowledge" means actual knowledge.

(g) "Person" means any individual, partnership, corporation, limited liability company, trust, or any other business entity.

(h) "Security interest" means an interest in farm products that secures payment or performance of an obligation.

(i) "Selling agent" means any person, other than a commission merchant, who is engaged in the business of negotiating the sale and purchase of any farm product on behalf of a person engaged in farming operations.

(2)  Unless otherwise provided for in this act, for purposes of this section and Sections 4 and 6 of this act, receipt of notice shall be presumed if notice is sent by firstclass mail, postage prepaid.

Added by Laws 1987, c. 69, § 2.  Amended by Laws 2000, c. 371, § 42, eff. July 1, 2001.  Renumbered from § 9-307.2 of this title by Laws 2000, c. 371, § 183, eff. July 1, 2001.

§12A-1-9-320.3.  Forms - Duty of Secretary of State.

FORMS; DUTY OF SECRETARY OF STATE

The Secretary of State shall develop and maintain a standard form for an effective financing statement and for a statement of continuation, partial release, amendment, or assignment thereof, which shall be consistent with the provisions of Sections 19320.1 through 19320.7 of this title.

Added by Laws 1987, c. 69, § 3.  Amended by Laws 2000, c. 371, § 43, eff. July 1, 2001.  Renumbered from § 9-307.3 of this title by Laws 2000, c. 371, § 183, eff. July 1, 2001; Laws 2001, c. 406, § 1, emerg. eff. June 4, 2001.

§12A-1-9-320.4.  Protection of buyers of farm products, commission merchants and selling agents.

PROTECTION OF BUYERS OF FARM PRODUCTS,

COMMISSION MERCHANTS AND SELLING AGENTS

A buyer of farm products, commission merchant, or selling agent who purchases or sells farm products in the ordinary course of business from or for a person engaged in farming operations takes subject to a security interest in the farm products if:

(a) (i) the buyer of the farm products, commission merchant, or selling agent has failed to register with the Secretary of State prior to the purchase of the farm products and the secured party has filed an effective financing statement that covers the farm products being sold; or

(ii) the buyer of farm products, commission merchant or selling agent receives from the Secretary of State written notice as provided in paragraph (d) or (f) of subsection (4) of Section 1-9-320.6 of this title, and the buyer of farm products, commission merchant or selling agent does not secure a waiver or release of the security interest specified in an effective financing statement from the secured party by performing any payment obligation or otherwise; or

(b) the secured party or the seller provides written notice of the security interest pursuant to the provisions of Section 1-9-320.7 of this title.

Added by Laws 1987, c. 69, § 4.  Amended by Laws 2000, c. 371, § 44, eff. July 1, 2001.  Renumbered from § 9-307.4 of this title by Laws 2000, c. 371, § 183, eff. July 1, 2001.

§12A-1-9-320.5.  Immunity from liability.

IMMUNITY FROM LIABILITY

A buyer of farm products, commission merchant, or selling agent who purchases or sells farm products in the ordinary course of business from or for a person engaged in farming operations shall not be liable for errors or inaccuracies generated by the central filing system provided for in Section 19320.6 of this title if the buyer, commission merchant, or selling agent has otherwise complied with the provisions of Sections 19320.1 through 19320.7 of this title.

Added by Laws 1987, c. 69, § 5.  Amended by Laws 2000, c. 371, § 45, eff. July 1, 2001.  Renumbered from § 9-307.5 of this title by Laws 2000, c. 371, § 183, eff. July 1, 2001.

§12A-1-9-320.6.  Central filing system relating to farm products.

CENTRAL FILING SYSTEM RELATING TO FARM PRODUCTS

(1)  The Secretary of State shall be responsible for developing and implementing the central filing system.  This responsibility shall include obtaining the necessary certification for the system from the United States Department of Agriculture ("USDA").  The effective date for the implementation of the central filing system was October 24, 1988.

(2)  The Secretary of State may promulgate, in accordance with the applicable provisions of the Administrative Procedures Act, appropriate rules for the implementation and operation of the central filing system.

(3)  The Office of State Finance shall assist the Secretary of State in developing and implementing the central filing system.

(4)  The central filing system shall conform to the following requirements:

(a) The Secretary of State shall record the date and hour of the filing of each effective financing statement;

(b) The Secretary of State shall compile all effective financing statements into a master list:

(i) organized according to farm products;

(ii) arranged within each such product:

(A) in alphabetical order according to the last name of the individual debtors or, in the case of debtors doing business other than as individuals, the first word in the name of the debtors;

(B) in numerical order according to the social security number of the individual debtors or, in the case of debtors doing business other than as individuals, the Internal Revenue Service taxpayer identification number of the debtors;

(C) geographically by county produced; and

(D) by crop year; and

(iii) containing the information provided for in subparagraph (iv) of paragraph (d) of Section 1-9-320.2 of this title;

(iv) portions of the master list shall be available in hard copy or electronic formats, and may be organized by other sorting methods in addition to the methods listed above.

(c) The Secretary of State shall maintain records of all buyers of farm products, commission merchants, selling agents and others who register with the Secretary of State, on a form containing:

(i) the name and address of each registrant;  

(ii) the information on the farm product or products that the registrant is requesting;

(iii) the name of each county where the product is produced or to be produced, or a blanket code covering all seventy-seven (77) counties of this state; and

(iv) an authorized signature.

(d) (i) A copy of those portions of the master list covering the information requested by a registrant shall be distributed to such registrants by the Secretary of State on or before the last business day of each month and shall be presumed to have been received by the third business day of the following month.

(ii) Registrants shall be deemed to be registered only as to those portions of the master list for which they register, and shall be deemed to have failed to register and shall not be considered to be registrants as to those portions for which they do not register.

(iii) Registrants are subject only to security interests shown on the portions of the master list which they receive as a consequence of registration with the Secretary of State.

(iv) If a particular security interest is shown on the master list, but was included since the last regular distribution of portions of the master list to registrants, registrants shall not be subject to that security interest;

(e) The duration of the registration with the Secretary of State of a buyer of farm products, commission merchant, selling agent or other registrant shall be one (1) year from the effective date of the registration with the Secretary of State.

(f) (i) Upon request, within twentyfour (24) hours of any inquiry, for information, the Secretary of State shall provide verbal confirmation of the existence or nonexistence of any effective financing statement on file.  By the close of the business day following the day on which the request was received, written confirmation of the existence of an effective financing statement will be provided to buyers of farm products, commission merchants, and selling agents who have not registered, and others who request it.

(ii) The state or political subdivision shall not be liable if a loss or claim results from any confirmation of the existence or nonexistence of any effective financing statement on file in the Office of the Secretary of State made in good faith by an employee of the Office of the Secretary of State as required by the provisions of Section 1-9-320.6 of this title.

(5)  The filing in the office of the Secretary of State under this section shall be in addition to the filing requirements provided for in this article.

(6)  A financing or continuation statement covering farm products that has not lapsed and which was filed pursuant to Section 9401 of Title 12A of the Oklahoma Statutes between December 23, 1986, and October 24, 1988, inclusive, and for which no written notice was furnished as provided in Section 1-9-320.7 of this title, shall become ineffective as to a buyer of farm products, commission merchant or selling agent, unless the secured party files an effective financing statement in the office of the Secretary of State.

(7)  An effective financing statement shall not be deemed filed in accordance with the provisions of this section until all fees authorized by Section 111 of Title 28 of the Oklahoma Statutes relating to the filing of the statement are tendered to the Secretary of State.

(8)  The secured party shall file a termination statement within twenty (20) days after there is no outstanding secured obligation  or commitment to make advances, incur obligations or otherwise give value.  The secured party shall not be required to file a termination statement if the debtor, in writing, addressed to the secured party, requests that a termination not be filed.  The request shall be signed by the debtor or an authorized representative and the request may be made at any time prior to the expiration date of an effective financing statement set forth herein.  If the affected secured party fails to file a termination statement as required by this subsection, the party shall be liable to the Secretary of State for Five Hundred Dollars ($500.00).  In addition the affected secured party shall be liable to the debtor for any loss caused to the debtor by the failure to terminate the effective financing statement.

(9)  The Attorney General shall be responsible for enforcing the provisions of subsection (8) of this section on behalf of the Secretary of State and is authorized to take appropriate actions to collect any penalties owed to the Secretary of State pursuant to subsection (8) of this section.  When collected, the Attorney General shall cause the penalty to be deposited into the Central Filing System Revolving Fund created pursuant to Section 276.3 of Title 62 of the Oklahoma Statutes.

Added by Laws 1987, c. 69, § 6.  Amended by Laws 1991, c. 314, § 1, eff. Sept. 1, 1991; Laws 2000, c. 371, § 46, eff. July 1, 2001.  Renumbered from § 9-307.6 of this title by Laws 2000, c. 371, § 183, eff. July 1, 2001; Laws 2001, c. 406, § 2, emerg. eff. June 4, 2001.

§12A-1-9-320.7.  Written notification affecting farm products; disclosure requirements; penalty.

WRITTEN NOTIFICATION AFFECTING FARM PRODUCTS;

DISCLOSURE REQUIREMENTS; PENALTY

(1)  A secured party or a seller of farm products may furnish to the buyer of such farm products, commission merchant, or selling agent, within one (1) year before the sale of the farm products, a written notice of a security interest, organized according to farm products, that:

(a) is an original or reproduced copy thereof;

(b) contains:

(i) the name and address of the secured party;

(ii) the name and address of the person indebted to the secured party;

(iii) the social security number of the debtor or, in the case of a debtor doing business other than as an individual, the Internal Revenue Service taxpayer identification number of the debtor; and

(iv) a description of the farm products subject to the security interest created by the debtor, including the amount of the products where applicable, crop year, county, and a reasonable description of the property;

(c) must be amended in writing, within ten (10) days, similarly signed and transmitted, to reflect material changes;

(d) will lapse on the expiration period of the statement, or the transmission of a notice signed by the secured party that the statement has lapsed, whichever occurs first; and

(e) states any payment obligations imposed on the buyer of farm products, commission merchant, or selling agent by the secured party as conditions for waiver or release of the security interest.

(2)  For purposes of this section, receipt of notice shall be presumed if notice is sent by certified mail.

(3) (a) A secured party who intends to furnish written notification of the existence of a security interest in farm products as provided in this section, shall require the person engaged in farming operations to execute a security agreement containing a provision requiring the person to furnish to the secured party a list of the buyers, commission merchants, and selling agents to or through whom the person may sell the farm products.  If the person engaged in farming operations sells the farm product collateral to a buyer or through a commission merchant or selling agent not included on the list, the person engaged in farming operations shall be subject to the penalty provisions of paragraph (b) of this subsection, unless the person:

(i) has notified the secured party in writing of the identity of the buyer, commission merchant, or selling agent at least seven (7) days prior to the sale; or

(ii) has accounted to the secured party for the proceeds of the sale not later than twenty (20) days after the sale.

(b) A person violating the provisions of paragraph (a) of this subsection shall be fined Five Thousand Dollars ($5,000.00) or fifteen percent (15%) of the value or benefit received for the farm product described in the security agreement, whichever is greater.

Added by Laws 1987, c. 69, § 7.  Amended by Laws 1991, c. 314, § 2, eff. Sept. 1, 1991; Laws 2000, c. 371, § 47, eff. July 1, 2001.  Renumbered from § 9-307.7 of this title by Laws 2000, c. 371, § 183, eff. July 1, 2001.

§12A-1-9-320.  Buyer of goods.

BUYER OF GOODS

(a)  Except as otherwise provided in subsection (e) of this section, a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.

(b)  Except as otherwise provided in subsection (e) of this section, a buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if the buyer buys:

(1)  without knowledge of the security interest;

(2)  for value;

(3)  primarily for the buyer's personal, family, or household purposes; and

(4)  before the filing of a financing statement covering the goods.

(c)  To the extent that it affects the priority of a security interest over a buyer of goods under subsection (b) of this section, the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by subsections (a) and (b) of Section 19316 of this title.

(d)  A buyer in ordinary course of business buying oil, gas, or other minerals at the wellhead or minehead or after extraction takes free of an interest arising out of an encumbrance.

(e)  Subsections (a) and (b) of this section do not affect a security interest in goods in the possession of the secured party under Section 19313 of this title.

Added by Laws 2000, c. 371, § 40, eff. July 1, 2001.

§12A-1-9-321.  Licensee of general intangible and lessee of goods in ordinary course of business.

LICENSEE OF GENERAL INTANGIBLE AND LESSEE

OF GOODS IN ORDINARY COURSE OF BUSINESS

(a)  In this section, "licensee in ordinary course of business" means a person that becomes a licensee of a general intangible in good faith, without knowledge that the license violates the rights of another person in the general intangible, and in the ordinary course from a person in the business of licensing general intangibles of that kind.  A person becomes a licensee in the ordinary course if the license to the person comports with the usual or customary practices in the kind of business in which the licensor is engaged or with the licensor's own usual or customary practices.

(b)  A licensee in ordinary course of business takes its rights under a nonexclusive license free of a security interest in the general intangible created by the licensor, even if the security interest is perfected and the licensee knows of its existence.

(c)  A lessee in ordinary course of business takes its leasehold interest free of a security interest in the goods created by the lessor, even if the security interest is perfected and the lessee knows of its existence.

Added by Laws 2000, c. 371, § 48, eff. July 1, 2001.

§12A-1-9-322.  Priorities among conflicting security interests in and agricultural liens on same collateral.

PRIORITIES AMONG CONFLICTING SECURITY INTERESTS

IN AND AGRICULTURAL LIENS ON SAME COLLATERAL

(a)  Except as otherwise provided in this section, priority among conflicting security interests and agricultural liens in the same collateral is determined according to the following rules:

(1)  Conflicting perfected security interests and agricultural liens rank according to priority in time of filing or perfection.  Priority dates from the earlier of the time a filing covering the collateral is first made or the security interest or agricultural lien is first perfected, if there is no period thereafter when there is neither filing nor perfection;

(2)  A perfected security interest or agricultural lien has priority over a conflicting unperfected security interest or agricultural lien; and

(3)  The first security interest or agricultural lien to attach or become effective has priority if conflicting security interests and agricultural liens are unperfected.

(b)  For the purposes of paragraph (1) of subsection (a) of this section:

(1)  The time of filing or perfection as to a security interest in collateral is also the time of filing or perfection as to a security interest in proceeds; and

(2)  The time of filing or perfection as to a security interest in collateral supported by a supporting obligation is also the time of filing or perfection as to a security interest in the supporting obligation.

(c)  Except as otherwise provided in subsection (f) of this section, a security interest in collateral which qualifies for priority over a conflicting security interest under Sections 19327, 19328, 19329, 19330, or 19331 of this title also has priority over a conflicting security interest in:

(1)  Any supporting obligation for the collateral; and

(2)  Proceeds of the collateral if:

(A) the security interest in proceeds is perfected;

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

(C) in the case of proceeds that are proceeds of proceeds, all intervening proceeds are cash proceeds, proceeds of the same type as the collateral, or an account relating to the collateral.

(d)  Subject to subsection (e) of this section and except as otherwise provided in subsection (f) of this section, if a security interest in chattel paper, deposit accounts, negotiable documents, instruments, investment property, or letter-of-credit rights is perfected by a method other than filing, conflicting perfected security interests in proceeds of the collateral rank according to priority in time of filing.

(e)  Subsection (d) of this section applies only if the proceeds of the collateral are not cash proceeds, chattel paper, negotiable documents, instruments, investment property, or letter-of-credit rights.

(f)  Subsections (a) through (e) of this section are subject to:

(1)  subsection (g) of this section and the other provisions of this part;

(2)  Section 4210 of this title with respect to a security interest of a collecting bank;

(3)  Section 5118 of this title with respect to a security interest of an issuer or nominated person; and

(4)  Section 19110 of this title with respect to a security interest arising under Article 2 or 2A of this title.

(g)  A perfected agricultural lien on collateral has priority over a conflicting security interest in or agricultural lien on the same collateral if the statute creating the agricultural lien so provides.

Added by Laws 2000, c. 371, § 49, eff. July 1, 2001.

§12A-1-9-323.  Future advances.

FUTURE ADVANCES

(a)  Except as otherwise provided in subsection (c) of this section, for purposes of determining the priority of a perfected security interest under paragraph (1) of subsection (a) of Section 19322 of this title, perfection of the security interest dates from the time an advance is made to the extent that the security interest secures an advance that:

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

(A) under Section 19309 of this title when it attaches; or

(B) temporarily under subsection (e), (f), or (g) of Section 19312 of this title; and

(2)  is not made pursuant to a commitment entered into before or while the security interest is perfected by a method other than under Section 19309 or subsection (e), (f), or (g) of Section 19312 of this title.

(b)  Except as otherwise provided in subsection (c) of this section, a security interest is subordinate to the rights of a person that becomes a lien creditor to the extent that the security interest secures an advance made more than forty-five (45) days after the person becomes a lien creditor unless the advance is made:

(1)  without knowledge of the lien; or

(2)  pursuant to a commitment entered into without knowledge of the lien.

(c)  Subsections (a) and (b) of this section do not apply to a security interest held by a secured party that is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor.

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

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

(2)  forty-five (45) days after the purchase.

(e)  Subsection (d) of this section does not apply if the advance is made pursuant to a commitment entered into without knowledge of the buyer's purchase and before the expiration of the forty-fiveday period.

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

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

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

(g)  Subsection (f) of this section does not apply if the advance is made pursuant to a commitment entered into without knowledge of the lease and before the expiration of the forty-fiveday period.

Added by Laws 2000, c. 371, § 50, eff. July 1, 2001.

§12A-1-9-324.  Priority of purchase-money security interests.

PRIORITY OF PURCHASE-MONEY SECURITY INTERESTS

(a)  Except as otherwise provided in subsection (g) of this section, a perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, and, except as otherwise provided in Section 19327 of this title, a perfected security interest in its identifiable proceeds also has priority, if the purchase-money security interest is perfected when the debtor receives possession of the collateral or within twenty (20) days thereafter.

(b)  Subject to subsection (c) of this section and except as otherwise provided in subsection (g) of this section, 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 19330 of this title, and, except as otherwise provided in Section 19327 of this title, 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 notification to the holder of the conflicting security interest;

(3)  the holder of the conflicting security interest receives the notification within five (5) 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)  Paragraphs (2) through (4) of subsection (b) of this section apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory:

(1)  if the purchase-money security interest is perfected by filing, before the date of the filing; or

(2)  if the purchase-money security interest is temporarily perfected without filing or possession under subsection (f) of Section 19312 of this title, before the beginning of the twentyday period thereunder.

(d)  Subject to subsection (e) of this section and except as otherwise provided in subsection (g) of this section, a perfected purchase-money security interest in livestock that are farm products has priority over a conflicting security interest in the same livestock, and, except as otherwise provided in Section 19327 of this title, a perfected security interest in their identifiable proceeds and identifiable products in their unmanufactured states also has priority, if:

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

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

(3)  the holder of the conflicting security interest receives the notification within six (6) 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.

(e)  Paragraphs (2) through (4) of subsection (d) of this section applies only if the holder of the conflicting security interest had filed a financing statement covering the same types of livestock:

(1)  if the purchase-money security interest is perfected by filing, before the date of the filing; or

(2)  if the purchase-money security interest is temporarily perfected without filing or possession under subsection (f) of Section 19312 of this title, before the beginning of the twentyday period thereunder.

(f)  Except as otherwise provided in subsection (g) of this section, a perfected purchase-money security interest in software has priority over a conflicting security interest in the same collateral, and, except as otherwise provided in Section 19327 of this title, a perfected security interest in its identifiable proceeds also has priority, to the extent that the purchase-money security interest in the goods in which the software was acquired for use has priority in the goods and proceeds of the goods under this section.

(g)  If more than one security interest qualifies for priority in the same collateral under subsection (a), (b), (d), or (f) of this section:

(1)  a security interest securing an obligation incurred as all or part of the price of the collateral has priority over a security interest securing an obligation incurred for value given to enable the debtor to acquire rights in or the use of collateral; and

(2)  in all other cases, subsection (a) of Section 19322 of this title applies to the qualifying security interests.

Added by Laws 2000, c. 371, § 51, eff. July 1, 2001.

§12A-1-9-325.  Priority of security interests in transferred collateral.

PRIORITY OF SECURITY INTERESTS IN TRANSFERRED COLLATERAL

(a)  Except as otherwise provided in subsection (b) of this section, a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if:

(1)  the debtor acquired the collateral subject to the security interest created by the other person;

(2)  the security interest created by the other person was perfected when the debtor acquired the collateral; and

(3)  there is no period thereafter when the security interest is unperfected.

(b)  Subsection (a) of this section subordinates a security interest only if the security interest:

(1)  otherwise would have priority solely under subsection (a) of Section 19322 or Section 19324 of this title; or

(2)  arose solely under paragraph (3) of Section 2711 or paragraph (5) of Section 2A508 of this title.

Added by Laws 2000, c. 371, § 52, eff. July 1, 2001.

§12A-1-9-326.  Priority of security interests created by new debtor.

PRIORITY OF SECURITY INTERESTS CREATED BY NEW DEBTOR

(a)  Subject to subsection (b) of this section, a security interest created by a new debtor which is perfected by a filed financing statement that is effective solely under Section 19508 of this title in collateral in which a new debtor has or acquires rights is subordinate to a security interest in the same collateral which is perfected other than by a filed financing statement that is effective solely under Section 19508 of this title.

(b)  The other provisions of this part determine the priority among conflicting security interests in the same collateral perfected by filed financing statements that are effective solely under Section 19508 of this title.  However, if the security agreements to which a new debtor became bound as debtor were not entered into by the same original debtor, the conflicting security interests rank according to priority in time of the new debtor's having become bound.

Added by Laws 2000, c. 371, § 53, eff. July 1, 2001.

§12A-1-9-327.  Priority of security interests in deposit account.

PRIORITY OF SECURITY INTERESTS IN DEPOSIT ACCOUNT

The following rules govern priority among conflicting security interests in the same deposit account:

(1)  A security interest held by a secured party having control of the deposit account under Section 19104 of this title has priority over a conflicting security interest held by a secured party that does not have control.

(2)  Except as otherwise provided in paragraphs (3) and (4) of this section, security interests perfected by control under Section 19314 of this title rank according to priority in time of obtaining control.

(3)  Except as otherwise provided in paragraph (4) of this section, a security interest held by the bank with which the deposit account is maintained has priority over a conflicting security interest held by another secured party.

(4)  A security interest perfected by control under paragraph (3) of subsection (a) of Section 19104 of this title has priority over a security interest held by the bank with which the deposit account is maintained.

Added by Laws 2000, c. 371, § 54, eff. July 1, 2001.

§12A-1-9-328.  Priority of security interests in investment property.

PRIORITY OF SECURITY INTERESTS IN INVESTMENT PROPERTY

The following rules govern priority among conflicting security interests in the same investment property:

(1)  A security interest held by a secured party having control of investment property under Section 19106 of this title has priority over a security interest held by a secured party that does not have control of the investment property.

(2)  Except as otherwise provided in paragraphs (3) and (4) of this section, conflicting security interests held by secured parties each of which has control under Section 19106 of this title rank according to priority in time of:

(A) if the collateral is a security, obtaining control;

(B) if the collateral is a security entitlement carried in a securities account and:

(i) if the secured party obtained control under paragraph (1) of subsection (d) of Section 8-106 of this title, the secured party's becoming the person for which the securities account is maintained;

(ii) if the secured party obtained control under paragraph (2) of subsection (d) of Section 8106 of this title, the securities intermediary's agreement to comply with the secured party's entitlement orders with respect to security entitlements carried or to be carried in the securities account; or

(iii) if the secured party obtained control through another person under paragraph (3) of subsection (d) of Section 8106 of this title, the time on which priority would be based under this paragraph if the other person were the secured party; or

(C) if the collateral is a commodity contract carried with a commodity intermediary, the satisfaction of the requirement for control specified in paragraph (2) of subsection (b) of Section 19106 of this title with respect to commodity contracts carried or to be carried with the commodity intermediary.

(3)  A security interest held by a securities intermediary in a security entitlement or a securities account maintained with the securities intermediary has priority over a conflicting security interest held by another secured party.

(4)  A security interest held by a commodity intermediary in a commodity contract or a commodity account maintained with the commodity intermediary has priority over a conflicting security interest held by another secured party.

(5)  A security interest in a certificated security in registered form which is perfected by taking delivery under subsection (a) of Section 19313 of this title and not by control under Section 19314 of this title has priority over a conflicting security interest perfected by a method other than control.

(6)  Conflicting security interests created by a broker, securities intermediary, or commodity intermediary which are perfected without control under Section 19106 of this title rank equally.

(7)  In all other cases, priority among conflicting security interests in investment property is governed by Sections 19322 and 19323 of this title.

Added by Laws 2000, c. 371, § 55, eff. July 1, 2001.

§12A-1-9-329.  Priority of security interests in letter-of-credit right.

PRIORITY OF SECURITY INTERESTS IN LETTER-OF-CREDIT RIGHT

The following rules govern priority among conflicting security interests in the same letter-of-credit right:

(1)  A security interest held by a secured party having control of the letter-of-credit right under Section 19107 of this title has priority to the extent of its control over a conflicting security interest held by a secured party that does not have control.

(2)  Security interests perfected by control under Section 19 314 of this title rank according to priority in time of obtaining control.

Added by Laws 2000, c. 371, § 56, eff. July 1, 2001.

§12A-1-9-330.  Priority of purchaser of chattel paper or instrument.

PRIORITY OF PURCHASER OF CHATTEL PAPER OR INSTRUMENT

(a)  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 the chattel paper or obtains control of the chattel paper under Section 19105 of this title; and

(2)  the chattel paper does not indicate that it has been assigned to an identified assignee other than the purchaser.

(b)  A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed other than merely as proceeds of inventory subject to a security interest if the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under Section 19105 of this title in good faith, in the ordinary course of the purchaser's business, and without knowledge that the purchase violates the rights of the secured party.

(c)  Except as otherwise provided in Section 19327 of this title, a purchaser having priority in chattel paper under subsection (a) or (b) of this section also has priority in proceeds of the chattel paper to the extent that:

(1)  Section 19322 of this title provides for priority in the proceeds; or

(2)  the proceeds consist of the specific goods covered by the chattel paper or cash proceeds of the specific goods, even if the purchaser's security interest in the proceeds is unperfected.

(d)  Except as otherwise provided in subsection (a) of Section 19331 of this title, a purchaser of an instrument has priority over a security interest in the instrument perfected by a method other than possession if the purchaser gives value and takes possession of the instrument in good faith and without knowledge that the purchase violates the rights of the secured party.

(e)  For purposes of subsections (a) and (b) of this section, the holder of a purchase-money security interest in inventory gives new value for chattel paper constituting proceeds of the inventory.

(f)  For purposes of subsections (b) and (d) of this section, if chattel paper or an instrument indicates that it has been assigned to an identified secured party other than the purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase violates the rights of the secured party.

Added by Laws 2000, c. 371, § 57, eff. July 1, 2001.

§12A-1-9-331.  Priority of rights of purchasers of instruments, documents, and securities under other articles; priority of interests in financial assets and security entitlements under Article 8

PRIORITY OF RIGHTS OF PURCHASERS OF INSTRUMENTS, DOCUMENTS,

AND SECURITIES UNDER OTHER ARTICLES; PRIORITY OF INTERESTS

IN FINANCIAL ASSETS AND SECURITY ENTITLEMENTS UNDER ARTICLE 8

(a)  This article does not limit the rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document of title has been duly negotiated, or a protected purchaser of a security.  These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in Articles 3, 7, and 8 of this title.

(b)  This article does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under Article 8 of this title.

(c)  Filing under this article does not constitute notice of a claim or defense to the holders, or purchasers, or persons described in subsections (a) and (b) of this section.

Added by Laws 2000, c. 371, § 58, eff. July 1, 2001.

§12A-1-9-332.  Transfer of money; transfer of funds from deposit account.

TRANSFER OF MONEY; TRANSFER OF FUNDS FROM DEPOSIT ACCOUNT

(a)  A transferee of money takes the money free of a security interest unless the transferee acts in collusion with the debtor in violating the rights of the secured party.

(b)  A transferee of funds from a deposit account takes the funds free of a security interest in the deposit account unless the transferee acts in collusion with the debtor in violating the rights of the secured party.

Added by Laws 2000, c. 371, § 59, eff. July 1, 2001.

§12A-1-9-333.  Priority of certain liens arising by operation of law.

PRIORITY OF CERTAIN LIENS ARISING BY OPERATION OF LAW

(a)  In this section, "possessory lien" means an interest, other than a security interest or an agricultural lien:

(1)  which secures payment or performance of an obligation for services or materials furnished with respect to goods by a person in the ordinary course of the person's business;

(2)  which is created by statute or rule of law in favor of the person; and

(3)  whose effectiveness depends on the person's possession of the goods.

(b)  A possessory lien on goods has priority over a security interest in the goods unless the lien is created by a statute that expressly provides otherwise.

Added by Laws 2000, c. 371, § 60, eff. July 1, 2001.

§12A-1-9-334.  Priority of security interests in fixtures and crops.

PRIORITY OF SECURITY INTERESTS IN FIXTURES AND CROPS

(a)  A security interest under this article may be created in goods that are fixtures or may continue in goods that become fixtures.  A security interest does not exist under this article in ordinary building materials incorporated into an improvement on land.

(b)  This article does not prevent creation of an encumbrance upon fixtures under real property law.

(c)  In cases not governed by subsections (d) through (h) of this section, a security interest in fixtures is subordinate to a conflicting interest of an encumbrancer or owner of the related real property other than the debtor.

(d)  Except as otherwise provided in subsection (h) of this section, a perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest of record in or is in possession of the real property and:

(1)  the security interest is a purchase-money security interest;

(2)  the interest of the encumbrancer or owner arises before the goods become fixtures; and

(3)  the security interest is perfected by a fixture filing before the goods become fixtures or within twenty (20) days thereafter.

(e)  A perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if:

(1)  the debtor has an interest of record in the real property or is in possession of the real property and the security interest:

(A) is perfected by a fixture filing before the interest of the encumbrancer or owner is of record; and

(B) has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner;

(2)  before the goods become fixtures, the security interest is perfected by any method permitted by this article and the fixtures are readily removable:

(A) factory or office machines;

(B) equipment that is not primarily used or leased for use in the operation of the real property; or

(C) replacements of domestic appliances that are consumer goods;

(3)  the conflicting interest is a lien on the real property obtained by legal or equitable proceedings after the security interest was perfected by any method permitted by this article; or

(4)  the security interest is:

(A) created in a manufactured home in a manufactured-home transaction; and

(B) perfected pursuant to a statute described in paragraph (2) of subsection (a) of Section 19311 of this title.

(f)  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 record, consented to the security interest or disclaimed an interest in the goods as fixtures; or

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

(g)  The priority of the security interest under paragraph (2) of subsection (f) of this section continues for a reasonable time if the debtor's right to remove the goods as against the encumbrancer or owner terminates.

(h)  A mortgage is a construction mortgage to the extent that it secures an obligation incurred for the construction of an improvement on land, including the acquisition cost of the land, if a recorded record of the mortgage so indicates.  Except as otherwise provided in subsections (e) and (f) of this section, a security interest in fixtures is subordinate to a construction mortgage if a record of the mortgage is recorded before the goods become fixtures and the goods become fixtures before the completion of the construction.  A mortgage has this priority to the same extent as a construction mortgage to the extent that it is given to refinance a construction mortgage.

(i)  A perfected security interest in crops growing on real property has priority over a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest of record in or is in possession of the real property.

(j)  Subsection (i) of this section prevails over any inconsistent provisions of other statutes of this state.

Added by Laws 2000, c. 371, § 61, eff. July 1, 2001.

§12A-1-9-335.  Accessions.

ACCESSIONS

(a)  A security interest may be created in an accession and continues in collateral that becomes an accession.

(b)  If a security interest is perfected when the collateral becomes an accession, the security interest remains perfected in the collateral.

(c)  Except as otherwise provided in subsection (d) of this section, the other provisions of this part determine the priority of a security interest in an accession.

(d)  A security interest in an accession is subordinate to a security interest in the whole which is perfected by compliance with the requirements of a certificate-of-title statute under subsection (b) of Section 19311 of this title.

(e)  After default, subject to Part 6 of this article, a secured party may remove an accession from other goods if the security interest in the accession has priority over the claims of every person having an interest in the whole.

(f)  A secured party that removes an accession from other goods under subsection (e) of this section shall promptly reimburse any holder of a security interest or other lien on, or owner of, the whole or of the other goods, other than the debtor, for the cost of repair of any physical injury to the whole or the other goods.  The secured party need not reimburse the holder or owner for any diminution in value of the whole or the other goods caused by the absence of the accession removed or by any necessity for replacing it.  A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse.

Added by Laws 2000, c. 371, § 62, eff. July 1, 2001.

§12A-1-9-336.  Commingled goods.

COMMINGLED GOODS

(a)  In this section, "commingled goods" means goods that are physically united with other goods in such a manner that their identity is lost in a product or mass.

(b)  A security interest does not exist in commingled goods as such.  However, a security interest may attach to a product or mass that results when goods become commingled goods.

(c)  If collateral becomes commingled goods, a security interest attaches to the product or mass.

(d)  If a security interest in collateral is perfected before the collateral becomes commingled goods, the security interest that attaches to the product or mass under subsection (c) of this section is perfected.

(e)  Except as otherwise provided in subsection (f) of this section, the other provisions of this part determine the priority of a security interest that attaches to the product or mass under subsection (c) of this section.

(f)  If more than one security interest attaches to the product or mass under subsection (c) of this section, the following rules determine priority:

(1)  A security interest that is perfected under subsection (d) of this section has priority over a security interest that is unperfected at the time the collateral becomes commingled goods.

(2)  If more than one security interest is perfected under subsection (d) of this section, the security interests rank equally in proportion to value of the collateral at the time it became commingled goods.

Added by Laws 2000, c. 371, § 63, eff. July 1, 2001.

§12A-1-9-337.  Priority of security interests in goods covered by certificate of title.

PRIORITY OF SECURITY INTERESTS IN

GOODS COVERED BY CERTIFICATE OF TITLE

If, while a security interest in goods is perfected by any method under the law of another jurisdiction, this state issues a certificate of title that does not show that the goods are subject to the security interest or does not contain a statement that they may be subject to security interests not shown on the certificate:

(1)  a buyer of the goods, other than a person in the business of selling goods of that kind, takes free of the security interest if the buyer gives value and receives delivery of the goods after issuance of the certificate and without knowledge of the security interest; and

(2)  the security interest is subordinate to a conflicting security interest in the goods that attaches, and is perfected under subsection (b) of Section 19311 of this title, after issuance of the certificate and without the conflicting secured party's knowledge of the security interest.

Added by Laws 2000, c. 371, § 64, eff. July 1, 2001.

§12A-1-9-338.  Priority of security interest or agricultural lien perfected by filed financing statement providing certain incorrect information.

PRIORITY OF SECURITY INTEREST OR

AGRICULTURAL LIEN PERFECTED BY FILED FINANCING

STATEMENT PROVIDING CERTAIN INCORRECT INFORMATION

If a security interest or agricultural lien is perfected by a filed financing statement providing information described in paragraph (5) of subsection (b) of Section 19516 of this title which is incorrect at the time the financing statement is filed:

(1)  the security interest or agricultural lien is subordinate to a conflicting perfected security interest in the collateral to the extent that the holder of the conflicting security interest gives value in reasonable reliance upon the incorrect information; and

(2)  a purchaser, other than a secured party, of the collateral takes free of the security interest or agricultural lien to the extent that, in reasonable reliance upon the incorrect information, the purchaser gives value and, in the case of tangible chattel paper, tangible documents, goods, instruments, or a security certificate, receives delivery of the collateral.

Added by Laws 2000, c. 371, § 65, eff. July 1, 2001.  Amended by Laws 2005, c. 140, § 69, eff. Jan. 1, 2006.

§12A-1-9-339.  Priority subject to subordination.

PRIORITY SUBJECT TO SUBORDINATION

This article does not preclude subordination by agreement by a person entitled to priority.

Added by Laws 2000, c. 371, § 66, eff. July 1, 2001.

§12A-1-9-340.  Effectiveness of right of recoupment or set-off against deposit account.

EFFECTIVENESS OF RIGHT OF RECOUPMENT OR

SET-OFF AGAINST DEPOSIT ACCOUNT

(a)  Except as otherwise provided in subsection (c) of this section, a bank with which a deposit account is maintained may exercise any right of recoupment or set-off against a secured party that holds a security interest in the deposit account.

(b)  Except as otherwise provided in subsection (c) of this section, the application of this article to a security interest in a deposit account does not affect a right of recoupment or set-off of the secured party as to a deposit account maintained with the secured party.

(c)  The exercise by a bank of a set-off against a deposit account is ineffective against a secured party that holds a security interest in the deposit account which is perfected by control under paragraph (3) of subsection (a) of Section 19104 of this title, if the set-off is based on a claim against the debtor.

Added by Laws 2000, c. 371, § 67, eff. July 1, 2001.

§12A-1-9-341.  Bank's rights and duties with respect to deposit account.

BANK'S RIGHTS AND DUTIES WITH RESPECT TO DEPOSIT ACCOUNT

Except as otherwise provided in subsection (c) of Section 19340 of this title, and unless the bank otherwise agrees in an authenticated record, a bank's rights and duties with respect to a deposit account maintained with the bank are not terminated, suspended, or modified by:

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

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

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

Added by Laws 2000, c. 371, § 68, eff. July 1, 2001.

§12A-1-9-342.  Bank's right to refuse to enter into or disclose existence of control agreement.

BANK'S RIGHT TO REFUSE TO ENTER INTO

OR DISCLOSE EXISTENCE OF CONTROL AGREEMENT

This article does not require a bank to enter into an agreement of the kind described in paragraph (2) of subsection (a) of Section 19104 of this title, even if its customer so requests or directs.  A bank that has entered into such an agreement is not required to confirm the existence of the agreement to another person unless requested to do so by its customer.

Added by Laws 2000, c. 371, § 69, eff. July 1, 2001.

§12A-1-9-401.  Alienability of debtor's rights.

ALIENABILITY OF DEBTOR'S RIGHTS

(a)  Except as otherwise provided in subsection (b) of this section and Sections 19406, 19407, 19408, and 19409 of this title, whether a debtor's rights in collateral may be voluntarily or involuntarily transferred is governed by law other than this article.

(b)  An agreement between the debtor and secured party which prohibits a transfer of the debtor's rights in collateral or makes the transfer a default does not prevent the transfer from taking effect.

Added by Laws 2000, c. 371, § 70, eff. July 1, 2001.

§12A-1-9-402.  Secured party not obligated on contract of debtor or in tort.

SECURED PARTY NOT OBLIGATED ON

CONTRACT OF DEBTOR OR IN TORT

The existence of a security interest, agricultural lien, or authority given to a debtor to dispose of or use collateral, without more, does not subject a secured party to liability in contract or tort for the debtor's acts or omissions.

Added by Laws 2000, c. 371, § 71, eff. July 1, 2001.

§12A-1-9-403.  Agreement not to assert defenses against assignee.

AGREEMENT NOT TO ASSERT DEFENSES AGAINST ASSIGNEE

(a)  In this section, "value" has the meaning provided in subsection (a) of Section 3303 of this title.

(b)  Except as otherwise provided in this section, an agreement between an account debtor and an assignor not to assert against an assignee any claim or defense that the account debtor may have against the assignor is enforceable by an assignee that takes an assignment:

(1)  for value;

(2)  in good faith;

(3)  without notice of a claim of a property or possessory right to the property assigned; and

(4)  without notice of a defense or claim in recoupment of the type that may be asserted against a person entitled to enforce a negotiable instrument under subsection (a) Section 3305 of this title.

(c)  Subsection (b) of this section does not apply to defenses of a type that may be asserted against a holder in due course of a negotiable instrument under subsection (b) of Section 3305 of this title.

(d)  In a consumer transaction, if a record evidences the account debtor's obligation, law other than this article requires that the record include a statement to the effect that the rights of an assignee are subject to claims or defenses that the account debtor could assert against the original obligee, and the record does not include such a statement:

(1)  the record has the same effect as if the record included such a statement; and

(2)  the account debtor may assert against an assignee those claims and defenses that would have been available if the record included such a statement.

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

(f)  Except as otherwise provided in subsection (d) of this section, this section does not displace law other than this article which gives effect to an agreement by an account debtor not to assert a claim or defense against an assignee.

Added by Laws 2000, c. 371, § 72, eff. July 1, 2001.

§12A-1-9-404.  Rights acquired by assignee; claims and defenses against assignee.

RIGHTS ACQUIRED BY ASSIGNEE;

CLAIMS AND DEFENSES AGAINST ASSIGNEE

(a)  Unless an account debtor has made an enforceable agreement not to assert defenses or claims, and subject to subsections (b) through (e) of this section, the rights of an assignee are subject to:

(1)  all terms of the agreement between the account debtor and assignor and any defense or claim in recoupment arising from the transaction that gave rise to the contract; and

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

(b)  Subject to subsection (c) of this section and except as otherwise provided in subsection (d) of this section, the claim of an account debtor against an assignor may be asserted against an assignee under subsection (a) of this section only to reduce the amount the account debtor owes.

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

(d)  In a consumer transaction, if a record evidences the account debtor's obligation, law other than this article requires that the record include a statement to the effect that the account debtor's recovery against an assignee with respect to claims and defenses against the assignor may not exceed amounts paid by the account debtor under the record, and the record does not include such a statement, the extent to which a claim of an account debtor against the assignor may be asserted against an assignee is determined as if the record included such a statement.

(e)  This section does not apply to an assignment of a health-care-insurance receivable.

Added by Laws 2000, c. 371, § 73, eff. July 1, 2001.

§12A-1-9-405.  Modification of assigned contract.

MODIFICATION OF ASSIGNED CONTRACT

(a)  A modification of or substitution for an assigned contract is effective against an assignee if made in good faith.  The assignee acquires corresponding rights under the modified or substituted contract.  The assignment may provide that the modification or substitution is a breach of contract by the assignor.  This subsection is subject to subsections (b) through (d) of this section.

(b)  Subsection (a) of this section applies to the extent that:

(1)  the right to payment or a part thereof under an assigned contract has not been fully earned by performance; or

(2)  the right to payment or a part thereof has been fully earned by performance and the account debtor has not received notification of the assignment under subsection (a) of Section 19406 of this title.

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

(d)  This section does not apply to an assignment of a health-care-insurance receivable.

Added by Laws 2000, c. 371, § 74, eff. July 1, 2001.

§12A-1-9-406.  Discharge of account debtor; notification of assignment; identification and proof of assignment; restrictions on assignment of accounts, chattel paper, payment intangibles, and promissory notes ineffective.

DISCHARGE OF ACCOUNT DEBTOR; NOTIFICATION OF ASSIGNMENT;

IDENTIFICATION AND PROOF OF ASSIGNMENT; RESTRICTIONS ON

ASSIGNMENT OF ACCOUNTS, CHATTEL PAPER, PAYMENT

INTANGIBLES, AND PROMISSORY NOTES INEFFECTIVE

(a)  Subject to subsections (b) through (i) of this section, 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 by the assignor or the assignee, that the amount due or to become due has been assigned and that payment is to be made to the assignee.  After receipt of the notification, the account debtor may discharge its obligation by paying the assignee and may not discharge the obligation by paying the assignor.

(b)  Subject to subsection (h) of this section, notification is ineffective under subsection (a) of this section:

(1)  if it does not reasonably identify the rights assigned;

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

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

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

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

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

(c)  Subject to subsection (h) of this section, 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) of this section.

(d)  (1)  Except as otherwise provided in paragraph (2) of this subsection and subsection (e) of this section and Sections 2A303 and 19407 of this title, and subject to subsection (h) of this section, a term in an agreement between an account debtor and an assignor or in a promissory note is ineffective to the extent that it:

(A) 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

(B) 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.

(2)  This subsection does not apply to the assignment or transfer of or creation of a security interest in the following:

(i) a claim or right to receive compensation for injuries or sickness as described in 26 U.S.C., Section 104 (a)(1) or (2), as amended from time to time;

(ii) a claim or right to receive benefits under a special needs trust as described in 42 U.S.C., Section 1396p(d)(4), as amended from time to time; or

(iii) a structured settlement payment right as defined in paragraph 16 of Section 3239 of Title 12 of the Oklahoma Statutes to the extent of any conflict between the Uniform Commercial Code and the Structured Settlement Protection Act of 2001.

(e)  Subsection (d) of this section does not apply to the sale of a payment intangible or promissory note.

(f)  Except as otherwise provided in Sections 2A-303 and 19407 of this title and subject to subsections (h) and (i) of this section, a rule of law, statute, or regulation, that prohibits, restricts, or requires the consent of a government, governmental body or official, or account debtor to the assignment or transfer of, or creation of a security interest in, an account or chattel paper is ineffective to the extent that the rule of law, statute, or regulation:

(1)  prohibits, restricts, or requires the consent of the government, governmental body or official, or account debtor to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, the account or chattel paper; or

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

(g)  Subject to subsection (h) of this section, an account debtor may not waive or vary its option under paragraph (3) of subsection (b) of this section.

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

(i)  This section does not apply to an assignment of a health-care-insurance receivable.

Added by Laws 2000, c. 371, § 75, eff. July 1, 2001.  Amended by Laws 2004, c. 153, § 5, eff. Nov. 1, 2004.

§12A-1-9-407.  Restrictions on creation or enforcement of security interest in leasehold interest or in lessor's residual interest.

RESTRICTIONS ON CREATION OR ENFORCEMENT

OF SECURITY INTEREST IN LEASEHOLD INTEREST

OR IN LESSOR'S RESIDUAL INTEREST

(a)  Except as otherwise provided in subsection (b) of this section, a term in a lease agreement is ineffective to the extent that it:

(1)  prohibits, restricts, or requires the consent of a party to the lease to the assignment or transfer of or the creation, attachment, perfection, or enforcement of a security interest in, an interest of a party under the lease contract or in the lessor's residual interest in the goods; 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 lease.

(b)  Except as otherwise provided in paragraph (7) of Section 2A303 of this title, a term described in paragraph (2) of subsection (a) of this section is effective to the extent that there is:

(1)  a transfer by the lessee of the lessee's right of possession or use of the goods in violation of the term; or

(2)  a delegation of a material performance of either party to the lease contract in violation of the term.

(c)  The creation, attachment, perfection, or enforcement of a security interest in the lessor's interest under the lease contract or the lessor's residual interest in the goods is not a transfer that materially impairs the lessee's prospect of obtaining return performance or materially changes the duty of or materially increases the burden or risk imposed on the lessee within the purview of paragraph (4) of Section 2A303 of this title unless, and then only to the extent that, enforcement actually results in delegation of material performance of the lessor.

Added by Laws 2000, c. 371, § 76, eff. July 1, 2001.

§12A-1-9-408.  Restrictions on assignment of promissory notes, health-care-insurance receivables, and certain general intangibles ineffective.

RESTRICTIONS ON ASSIGNMENT OF PROMISSORY

NOTES, HEALTH-CARE-INSURANCE RECEIVABLES, AND

CERTAIN GENERAL INTANGIBLES INEFFECTIVE

(a)  Except as otherwise provided in subsection (b) of this section, a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or a general intangible, including a contract, permit, license, or franchise, and which term prohibits, restricts, or requires the consent of the person obligated on the promissory note or the account debtor to, the assignment or transfer of, or creation, attachment, or perfection of a security interest in, the promissory note, health-care-insurance receivable, or general intangible, is ineffective to the extent that the term:

(1)  would impair the creation, attachment, or perfection of a security interest; or

(2)  provides that the assignment or transfer or the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.

(b)  Subsection (a) of this section applies to a security interest in a payment intangible or promissory note only if the security interest arises out of a sale of the payment intangible or promissory note.

(c)  A rule of law, statute, or regulation, that prohibits, restricts, or requires the consent of a government, governmental body or official, person obligated on a promissory note, or account debtor to the assignment or transfer of, or creation of a security interest in, a promissory note, health-care-insurance receivable, or general intangible, including a contract, permit, license, or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law, statute, or regulation:

(1)  would impair the creation, attachment, or perfection of a security interest; or

(2)  provides that the assignment or transfer or the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.

(d)  To the extent that a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or general intangible or a rule of law, statute, or regulation described in subsection (c) of this section would be effective under law other than this article but is ineffective under subsection (a) or (c) of this section, the creation, attachment, or perfection of a security interest in the promissory note, health-care-insurance receivable, or general intangible:

(1)  is not enforceable against the person obligated on the promissory note or the account debtor;

(2)  does not impose a duty or obligation on the person obligated on the promissory note or the account debtor;

(3)  does not require the person obligated on the promissory note or the account debtor to recognize the security interest, pay or render performance to the secured party, or accept payment or performance from the secured party;

(4)  does not entitle the secured party to use or assign the debtor's rights under the promissory note, health-care-insurance receivable, or general intangible, including any related information or materials furnished to the debtor in the transaction giving rise to the promissory note, health-care-insurance receivable, or general intangible;

(5)  does not entitle the secured party to use, assign, possess, or have access to any trade secrets or confidential information of the person obligated on the promissory note or the account debtor; and

(6)  does not entitle the secured party to enforce the security interest in the promissory note, health-care-insurance receivable, or general intangible.

(e)  Subsections (a) and (c) of this section do not apply to the assignment or transfer of or creation of a security interest in:

(1)  a claim or right to receive compensation for injuries or sickness as described in 26 U.S.C., Section 104(a)(1) or (2), as amended from time to time;

(2)  a claim or right to receive benefits under a special needs trust as described in 42 U.S.C., Section 1396p(d)(4), as amended from time to time; or

(3)  a structured settlement payment right as defined in paragraph 16 of Section 3239 of Title 12 of the Oklahoma Statutes to the extent of any conflict between the Uniform Commercial Code and the Structured Settlement Protection Act of 2001.

Added by Laws 2000, c. 371, § 77, eff. July 1, 2001.  Amended by Laws 2004, c. 153, § 6, eff. Nov. 1, 2004.

§12A-1-9-409.  Repealed by Laws 2000, c. 371, § 185, eff. July 1, 2001.

§12A-1-9-501.  Filing office.

FILING OFFICE

(a)  Except as otherwise provided in subsection (b) of this section, if the local law of this state governs perfection of a security interest or agricultural lien, the office in which to file a financing statement to perfect the security interest or agricultural lien is:

(1)  the office designated for the filing or recording of a record of a mortgage on the related real property, if:

(A) the collateral is as-extracted collateral or timber to be cut; or

(B) the financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures; or

(2)  the office of the county clerk of Oklahoma County, in all other cases, including a case in which the collateral is goods that are or are to become fixtures and the financing statement is not filed as a fixture filing.

(b)  The office in which to file a financing statement to perfect a security interest in collateral, including fixtures, of a transmitting utility is the office of the Secretary of State pursuant to Sections 17 and 18 of Title 46 of the Oklahoma Statutes.  The financing statement also constitutes a fixture filing as to the collateral indicated in the financing statement which is or is to become fixtures.

Added by Laws 2000, c. 371, § 79, eff. July 1, 2001.

§12A-1-9-502.  Contents of financing statement; record of mortgage as financing statement; time of filing financing statement.

CONTENTS OF FINANCING STATEMENT; RECORD OF MORTGAGE AS

FINANCING STATEMENT; TIME OF FILING FINANCING STATEMENT

(a)  Subject to subsection (b) of this section, a financing statement is sufficient only if it:

(1)  provides the name of the debtor;

(2)  provides the name of the secured party or a representative of the secured party; and

(3)  indicates the collateral covered by the financing statement.

(b)  Except as otherwise provided in subsection (b) of Section 19501 of this title, to be sufficient, a financing statement that covers as-extracted collateral or timber to be cut, or which is filed as a fixture filing and covers goods that are or are to become fixtures, must satisfy subsection (a) of this section and also:

(1)  indicate that it covers this type of collateral;

(2)  indicate that it is to be filed against the tract index in the real property records;

(3)  provide a description of the real property to which the collateral is related; and

(4)  if the debtor does not have an interest of record in the real property, provide the name of a record owner.

(c)  A record of a mortgage is effective, from the date of recording as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut only if:

(1)  the record indicates the goods or accounts that it covers;

(2)  the goods are or are to become fixtures related to the real property described in the record or the collateral is related to the real property described in the record and is as-extracted collateral or timber to be cut;

(3)  the record satisfies the requirements for a financing statement in this section other than an indication that it is to be filed in the real property records; and

(4)  the record is duly recorded.

(d)  A financing statement may be filed before a security agreement is made or a security interest otherwise attaches.

(e)  (1)  No filing of a financing statement, continuation statement, termination statement, or assignment or release of a financing statement under the provisions of paragraph (1) of subsection (a) of Section 19501 of this title shall constitute record notice of the contents thereof against any subsequent purchaser or encumbrancer of real estate or any interest therein unless the same contains a legal description of the real estate adequate for the purposes of indexing in the tract indexes of the county wherein the real estate is situated.

(2)  It shall be the duty of the county clerk to cause all such financing statements, continuation statements, termination statements, or assignments or releases of financing statements containing an adequate legal description to be recorded and indexed in the records of said office in the same place and manner as a mortgage on real estate or assignment or release thereof.

(3)  To effectuate the provisions of Section 2A-309 of this title, a lessor of goods that are or are to become fixtures may file a fixture filing complying with that section, and filings related to that fixture filing, using the terms "lessor," "lessee," or the like instead of the terms specified in this part.  The provisions of this article relating to a fixture filing or a filing related to it shall apply as appropriate in conjunction with the provisions of Article 2A of this title with respect to such filings.

(f)  Except as otherwise provided in subsection (c) of this section, a financing statement, or any filing related to it, that complies with this section is sufficient and may be recorded and shall be effective as a financing statement even though it does not comply with the execution and acknowledgement requirements of Sections 15, 26, 93, 94, or 95 of Title 16 of the Oklahoma Statutes, as amended, or other statutes, if any, of like import that would impose requirements beyond those of the kind encompassed in this section.

Added by Laws 2000, c. 371, § 80, eff. July 1, 2001.

§12A-1-9-503.  Name of debtor and secured party.

NAME OF DEBTOR AND SECURED PARTY

(a)  A financing statement sufficiently provides the name of the debtor:

(1)  if the debtor is a registered organization, only if the financing statement provides the name of the debtor indicated on the public record of the debtor's jurisdiction of organization which shows the debtor to have been organized;

(2)  if the debtor is a decedent's estate, only if the financing statement provides the name of the decedent and indicates that the debtor is an estate;

(3)  if the debtor is a trust or a trustee acting with respect to property held in trust, only if the financing statement:

(A) provides the name specified for the trust in its organic documents or, if no name is specified, provides the name of the settlor and additional information sufficient to distinguish the debtor from other trusts having one or more of the same settlors; and

(B) indicates, in the debtor's name or otherwise, that the debtor is a trust or is a trustee acting with respect to property held in trust; and

(4)  in other cases:

(A) if the debtor has a name, only if it provides the individual or organizational name of the debtor; and

(B) if the debtor does not have a name, only if it provides the names of the partners, members, associates, or other persons comprising the debtor.

(b)  A financing statement that provides the name of the debtor in accordance with subsection (a) of this section is not rendered ineffective by the absence of:

(1)  a trade name or other name of the debtor; or

(2)  unless required under subparagraph (B) of paragraph (4) of subsection (a) of this section, names of partners, members, associates, or other persons comprising the debtor.

(c)  A financing statement that provides only the debtor's trade name does not sufficiently provide the name of the debtor.

(d)  Failure to indicate the representative capacity of a secured party or representative of a secured party does not affect the sufficiency of a financing statement.

(e)  A financing statement may provide the name of more than one debtor and the name of more than one secured party.

Added by Laws 2000, c. 371, § 81, eff. July 1, 2001.

§12A-1-9-504.  Indication of collateral.

INDICATION OF COLLATERAL

A financing statement sufficiently indicates the collateral that it covers if the financing statement provides:

(1)  a description of the collateral pursuant to Section 19108 of this title; or

(2)  an indication that the financing statement covers all assets or all personal property.

Added by Laws 2000, c. 371, § 82, eff. July 1, 2001.

§12A-1-9-505.  Filing and compliance with other statutes and treaties for consignments, leases, other bailments, and other transactions.

FILING AND COMPLIANCE WITH OTHER STATUTES AND TREATIES FOR

CONSIGNMENTS, LEASES, OTHER BAILMENTS, AND OTHER TRANSACTIONS

(a)  A consignor, lessor, or other bailor of goods, a licensor, or a buyer of a payment intangible or promissory note may file a financing statement, or may comply with a statute or treaty described in subsection (a) of Section 19311 of this title, using the terms "consignor", "consignee", "lessor", "lessee", "bailor", "bailee", "licensor", "licensee", "owner", "registered owner", "buyer", "seller", or words of similar import, instead of the terms "secured party" and "debtor".

(b)  This part applies to the filing of a financing statement under subsection (a) of this section and, as appropriate, to compliance that is equivalent to filing a financing statement under subsection (b) of Section 19311 of this title, but the filing or compliance is not of itself a factor in determining whether the collateral secures an obligation.  If it is determined for another reason that the collateral secures an obligation, a security interest held by the consignor, lessor, bailor, licensor, owner, or buyer which attaches to the collateral is perfected by the filing or compliance.

Added by Laws 2000, c. 371, § 83, eff. July 1, 2001.

§12A-1-9-506.  Effect of errors or omissions.

EFFECT OF ERRORS OR OMISSIONS

(a)  A financing statement substantially satisfying the requirements of this part is effective, even if it has minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading.

(b)  Except as otherwise provided in subsection (c) of this section, a financing statement that fails sufficiently to provide the name of the debtor in accordance with subsection (a) of Section 19503 of this title is seriously misleading.

(c)  If a search of the records of the filing office under the debtor's correct name, using the filing office's standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with subsection (a) of Section 19503 of this title, the name provided does not make the financing statement seriously misleading.

(d)  For purposes of subsection (b) of Section 19508 of this title, the "debtor's correct name" in subsection (c) of this section means the correct name of the new debtor.

Added by Laws 2000, c. 371, § 84, eff. July 1, 2001.

§12A-1-9-507.  Effect of certain events on effectiveness of financing statement.

EFFECT OF CERTAIN EVENTS ON

EFFECTIVENESS OF FINANCING STATEMENT

(a)  A filed financing statement remains effective with respect to collateral that is sold, exchanged, leased, licensed, or otherwise disposed of and in which a security interest or agricultural lien continues, even if the secured party knows of or consents to the disposition.

(b)  Except as otherwise provided in subsection (c) of this section and Section 19508 of this title, a financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under Section 19506 of this title.

(c)  If a debtor so changes its name that a filed financing statement becomes seriously misleading under Section 19506 of this title:

(1)  the financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or within four (4) months after, the change; and

(2)  the financing statement is not effective to perfect a security interest in collateral acquired by the debtor more than four (4) months after the change, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within four (4) months after the change.

Added by Laws 2000, c. 371, § 85, eff. July 1, 2001.

§12A-1-9-508.  Effectiveness of financing statement if new debtor becomes bound by security agreement.

EFFECTIVENESS OF FINANCING STATEMENT IF

NEW DEBTOR BECOMES BOUND BY SECURITY AGREEMENT

(a)  Except as otherwise provided in this section, a filed financing statement naming an original debtor is effective to perfect a security interest in collateral in which a new debtor has or acquires rights to the extent that the financing statement would have been effective had the original debtor acquired rights in the collateral.

(b)  If the difference between the name of the original debtor and that of the new debtor causes a filed financing statement that is effective under subsection (a) of this section to be seriously misleading under Section 19506 of this title:

(1)  the financing statement is effective to perfect a security interest in collateral acquired by the new debtor before, and within four (4) months after, the new debtor becomes bound under subsection (d) of Section 19203 of this title; and

(2)  the financing statement is not effective to perfect a security interest in collateral acquired by the new debtor more than four (4) months after the new debtor becomes bound under subsection (d) of Section 19203 of this title unless an initial financing statement providing the name of the new debtor if filed before the expiration of that time.

(c)  This section does not apply to collateral for which a filed financing statement remains effective against the new debtor under subsection (a) of Section 19507 of this title.

Added by Laws 2000, c. 371, § 86, eff. July 1, 2001.

§12A-1-9-509.  Persons entitled to file a record.

PERSONS ENTITLED TO FILE A RECORD

(a)  A person may file an initial financing statement, amendment that adds collateral covered by a financing statement, or amendment that adds a debtor to a financing statement only if:

(1)  the debtor authorizes the filing in an authenticated record; or

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

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

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

(2)  property that becomes collateral under paragraph (2) of subsection (a) of Section 19315 of this title, whether or not the security agreement expressly covers proceeds.

(c)  By acquiring collateral in which a security interest or agricultural lien continues under paragraph (1) of subsection (a) of Section 1-9-315 of this title, a debtor authorizes the filing of an initial financing statement, and an amendment, covering the collateral and property that becomes collateral under paragraph (2) of subsection (a) of Section 1-9-315 of this title.

(d)  A person may file an amendment other than an amendment that adds collateral covered by a financing statement or an amendment that adds a debtor to a financing statement only if:

(1)  the secured party of record authorizes the filing; or

(2)  the amendment is a termination statement for a financing statement for which the secured party of record has failed to file or send a termination statement as required by subsection (a) or (c) of Section 19513 of this title, the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed.

(e)  If there is more than one secured party of record for a financing statement, each secured party of record may authorize the filing of an amendment under subsection (d) of this section.

Added by Laws 2000, c. 371, § 87, eff. July 1, 2001.

§12A-1-9-510.  Effectiveness of filed record.

EFFECTIVENESS OF FILED RECORD

(a)  A filed record is effective only to the extent that it was filed by a person that may file it under Section 19509 of this title.

(b)  A record authorized by one secured party of record does not affect the financing statement with respect to another secured party of record.

(c)  A continuation statement that is not filed within the six-month period prescribed by subsection (d) of Section 19515 of this title is ineffective.

Added by Laws 2000, c. 371, § 88, eff. July 1, 2001.

§12A-1-9-511.  Secured party of record.

SECURED PARTY OF RECORD

(a)  A secured party of record with respect to a financing statement is a person whose name is provided as the name of the secured party or a representative of the secured party in an initial financing statement that has been filed.  If an initial financing statement is filed under subsection (a) of Section 19514 of this title, the assignee named in the initial financing statement is the secured party of record with respect to the financing statement.

(b)  If an amendment of a financing statement which provides the name of a person as a secured party or a representative of a secured party is filed, the person named in the amendment is a secured party of record.  If an amendment is filed under subsection (b) of Section 19514 of this title, the assignee named in the amendment is a secured party of record.

(c)  A person remains a secured party of record until the filing of an amendment of the financing statement which deletes the person.

Added by Laws 2000, c. 371, § 89, eff. July 1, 2001.

§12A-1-9-512.  Amendment of financing statement.

AMENDMENT OF FINANCING STATEMENT

(a)  Subject to Section 19509 of this title, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or, subject to subsection (e) of this section, otherwise amend the information provided in, a financing statement by filing an amendment that:

(1)  identifies, by its file number, the initial financing statement to which the amendment relates; and

(2)  if the amendment relates to an initial financing statement filed or recorded in a filing office described in paragraph (1) of subsection (a) of Section 19501 of this title, provides the file number and date that the initial financing statement was filed or recorded, and the information specified in subsection (b) of Section 19502 of this title.

(b)  Except as otherwise provided in Section 19515 of this title, the filing of an amendment does not extend the period of effectiveness of the financing statement.

(c)  A financing statement that is amended by an amendment that adds collateral is effective as to the added collateral only from the date of the filing of the amendment.

(d)  A financing statement that is amended by an amendment that adds a debtor is effective as to the added debtor only from the date of the filing of the amendment.

(e)  An amendment is ineffective to the extent it:

(1)  purports to delete all debtors and fails to provide the name of a debtor to be covered by the financing statement; or

(2)  purports to delete all secured parties of record and fails to provide the name of a new secured party of record.

Added by Laws 2000, c. 371, § 90, eff. July 1, 2001.

§12A-1-9-513.  Termination statement.

TERMINATION STATEMENT

(a)  A secured party shall cause the secured party of record for a financing statement to file a termination statement for the financing statement if the financing statement covers consumer goods and:

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

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

(b)  To comply with subsection (a) of this section, a secured party shall cause the secured party of record to file the termination statement:

(1)  within one (1) 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 twenty (20) days after the secured party receives an authenticated demand from a debtor.

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

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

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

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

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

(d)  Except as otherwise provided in Section 19510 of this title, upon the filing of a termination statement with the filing office, the financing statement to which the termination statement relates ceases to be effective.  Except as otherwise provided in Section 1-9-510 of this title, for purposes of subsection (g) of Section 1-9-519, subsection (a) of Section 1-9-522, and subsection (c) of Section 1-9-523 of this title, the filing with the filing office of a termination statement relating to a financing statement that indicates that the debtor is a transmitting utility also causes the effectiveness of the financing statement to lapse.

Added by Laws 2000, c. 371, § 91, eff. July 1, 2001.

§12A-1-9-514.  Assignment of powers of secured party of record.

ASSIGNMENT OF POWERS OF SECURED PARTY OF RECORD

(a)  Except as otherwise provided in subsection (c) of this section, an initial financing statement may reflect an assignment of all of the secured party's power to authorize an amendment to the financing statement by providing the name and mailing address of the assignee as the name and address of the secured party.

(b)  Except as otherwise provided in subsection (c) of this section, a secured party of record may assign of record all or part of its power to authorize an amendment to a financing statement by filing in the filing office an amendment of the financing statement which:

(1)  identifies, by its file number, the initial financing statement to which it relates;

(2)  provides the name of the assignor; and

(3)  provides the name and mailing address of the assignee.

(c)  An assignment of record of a security interest in a fixture covered by a record of a mortgage which is effective as a fixture filing under subsection (c) of Section 19502 of this title may be made only by an assignment of record of the mortgage in the manner provided by law of this state other than the Uniform Commercial Code.

Added by Laws 2000, c. 371, § 92, eff. July 1, 2001.

§12A-1-9-515.  Duration and effectiveness of financing statement; effect of lapsed financing statement.

DURATION AND EFFECTIVENESS OF FINANCING STATEMENT;

EFFECT OF LAPSED FINANCING STATEMENT

(a)  Except as otherwise provided in subsections (b), (e), (f), and (g) of this section, a filed financing statement is effective for a period of five (5) years after the date of filing.

(b)  Except as otherwise provided in subsections (e), (f), and (g) of this section, an initial financing statement filed in connection with a public-finance transaction or manufactured-home transaction is effective for a period of thirty (30) years after the date of filing if it indicates that it is filed in connection with a public-finance transaction or manufactured-home transaction.

(c)  The effectiveness of a filed financing statement lapses on the expiration of the period of its effectiveness unless before the lapse a continuation statement is filed pursuant to subsection (d) of this section.  Upon lapse, a financing statement ceases to be effective and any security interest or agricultural lien that was perfected by the financing statement becomes unperfected, unless the security interest is perfected otherwise.  If the security interest or agricultural lien becomes unperfected upon lapse, it is deemed never to have been perfected as against a purchaser of the collateral for value.

(d)  A continuation statement may be filed only within six (6) months before the expiration of the five-year period specified in subsection (a) of this section or the thirty-year period specified in subsection (b) of this section, whichever is applicable.

(e)  Except as otherwise provided in Section 19510 of this title, upon timely filing of a continuation statement, the effectiveness of the initial financing statement continues for a period of five (5) years commencing on the day on which the financing statement would have become ineffective in the absence of the filing.  Upon the expiration of the five-year period, the financing statement lapses in the same manner as provided in subsection (c) of this section, unless, before the lapse, another continuation statement is filed pursuant to subsection (d) of this section.  Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the initial financing statement.

(f)  If a debtor is a transmitting utility and a filed financing statement so indicates, the financing statement is effective until a termination statement is filed.

(g)  A record of a mortgage that is effective as a financing statement filed as a fixture filing under subsection (c) of Section 19502 of this title remains effective as a financing statement filed as a fixture filing until the mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the real property.

Added by Laws 2000, c. 371, § 93, eff. July 1, 2001.

§12A-1-9-516.  What constitutes filing; effectiveness of filing.

WHAT CONSTITUTES FILING; EFFECTIVENESS OF FILING

(a)  Except as otherwise provided in subsection (b) of this section, communication of a record to a filing office and tender of the filing fee or acceptance of the record by the filing office constitutes filing.

(b)  Filing does not occur with respect to a record that a filing office refuses to accept because:

(1)  the record is not communicated by a method or medium of communication authorized by the filing office;

(2)  an amount equal to or greater than the applicable filing fee is not tendered;

(3)  the filing office is unable to index the record because:

(A) in the case of an initial financing statement, the record does not provide a name for the debtor;

(B) in the case of an amendment or correction statement, the record:

(i) does not identify the initial financing statement as required by Section 19512 or 19518 of this title, as applicable; or

(ii) identifies an initial financing statement whose effectiveness has lapsed under Section 19515 of this title;

(C) in the case of an initial financing statement that provides the name of a debtor identified as an individual or an amendment that provides a name of a debtor identified as an individual which was not previously provided in the financing statement to which the record relates, the record does not identify the debtor's last name; or

(D) in the case of a record filed or recorded in the filing office described in paragraph (1) of subsection (a) of Section 19501 of this title, the record does not provide a sufficient description of the real property to which it relates;

(4)  in the case of an initial financing statement or an amendment that adds a secured party of record, the record does not provide a name and mailing address for the secured party of record;

(5)  in the case of an initial financing statement or an amendment that provides a name of a debtor which was not previously provided in the financing statement to which the amendment relates, the record does not:

(A) provide a mailing address for the debtor;

(B) indicate whether the debtor is an individual or an organization; or

(C) if the financing statement indicates that the debtor is an organization, provide:

(i) a type of organization for the debtor;

(ii) a jurisdiction of organization for the debtor; or

(iii) an organizational identification number for the debtor or indicate that the debtor has none;

(6)  in the case of an assignment reflected in an initial financing statement under paragraph (a) of Section 19514 of this title or an amendment filed under subsection (b) of Section 19514 of this title, the record does not provide a name and mailing address for the assignee; or

(7)  in the case of a continuation statement, the record is not filed within the six-month period prescribed by subsection (d) of Section 19515 of this title.

(c)  For  purposes of subsection (b) of this section:

(1)  a record does not provide information if the filing office is unable to read or decipher the information; and

(2)  a record that does not indicate that it is an amendment or identify an initial financing statement to which it relates, as required by Section 19512, 19514, or 19518 of this title, is an initial financing statement.

(d)  A record that is communicated to the filing office with tender of the filing fee, but which the filing office refuses to accept for a reason other than one set forth in subsection (b) of this section, is effective as a filed record except as against a purchaser of the collateral which gives value in reasonable reliance upon the absence of the record from the files.

Added by Laws 2000, c. 371, § 94, eff. July 1, 2001.

§12A-1-9-517.  Effect of indexing errors.

EFFECT OF INDEXING ERRORS

The failure of the filing office to index a record correctly does not affect the effectiveness of the filed record.

Added by Laws 2000, c. 371, § 95, eff. July 1, 2001.

§12A-1-9-518.  Claim concerning inaccurate or wrongfully filed record.

CLAIM CONCERNING INACCURATE OR WRONGFULLY FILED RECORD

(a)  A person may file in the filing office a correction statement with respect to a record indexed there under the person's name if the person believes that the record is inaccurate or was wrongfully filed.

(b)  A correction statement must:

(1)  identify the record to which it relates by:

(A) the file number of the initial financing statement to which the record relates; and

(B) if the correction statement relates to a record filed or recorded in a filing office described in paragraph (1) of subsection (a) of Section 19501 of this title, the file number, the date that the initial financing statement was filed or recorded, and the information specified in paragraph (1) of subsection (e) of Section 19502 of this title;

(2)  indicate that it is a correction statement; and

(3)  provide the basis for the person's belief that the record is inaccurate and indicate the manner in which the person believes the record should be amended to cure any inaccuracy or provide the basis for the person's belief that the record was wrongfully filed.

(c)  The filing of a correction statement does not affect the effectiveness of an initial financing statement or other filed record.

Added by Laws 2000, c. 371, § 96, eff. July 1, 2001.

§12A-1-9-519.  Numbering, maintaining, and indexing records; communicating information provided in records.

NUMBERING, MAINTAINING, AND INDEXING RECORDS;

COMMUNICATING INFORMATION PROVIDED IN RECORDS

(a)  For each record filed in a filing office, the filing office shall:

(1)  assign a unique number to the filed record;

(2)  create a record that bears the number assigned to the filed record and the date and time of filing;

(3)  maintain the filed record for public inspection; and

(4)  index the filed record in accordance with subsections (c), (d), and (e) of this section.

(b)  A file number assigned by the county clerk of Oklahoma County after July 1, 2001, must include a digit that:

(1)  is mathematically derived from or related to the other digits of the file number; and

(2)  aids the filing office in determining whether a number communicated as the file number includes a single-digit or transpositional error.

(c)  Except as otherwise provided in subsections (d) and (e) of this section, the filing office shall:

(1)  index an initial financing statement according to the name of the debtor and shall index all filed records relating to the initial financing statement in a manner that associates with one another an initial financing statement and all filed records relating to the initial financing statement; and

(2)  index a record that provides a name of a debtor which was not previously provided in the financing statement to which the record relates also according to the name that was not previously provided.

(d)  If a financing statement is filed as a fixture filing or covers as-extracted collateral or timber to be cut, it must be filed for record and the filing office shall index it:

(1)  under the names of the debtor and of each owner of record shown on the financing statement as if they were the mortgagors under a mortgage of the real property described; and

(2)  to the extent that the law of this state provides for indexing of records of mortgages under the name of the mortgagee, under the name of the secured party as if the secured party were the mortgagee thereunder, or, if indexing is by description, as if the financing statement were a record of a mortgage of the real property described.

(e)  If a financing statement is filed as a fixture filing or covers as-extracted collateral or timber to be cut, the filing office shall index an assignment filed under subsection (a) of Section 19514 of this title or an amendment filed under subsection (b) of Section 19514 of this title:

(1)  under the name of the assignor as grantor; and

(2)  to the extent that the law of this state provides for indexing a record of the assignment of a mortgage under the name of the assignee, under the name of the assignee.

(f)  The filing office shall maintain a capability:

(1)  to retrieve a record by the name of the debtor and:

(A) if the filing office is described in paragraph (1) of subsection (a) of Section 19501 of this title, by the file number assigned to the initial financing statement to which the record relates, the date that the record was filed or recorded, and the legal description of the real estate adequate for the purposes of indexing in the tract indexes of the county where the real estate is situated; or

(B) if the filing office is described in paragraph (2) of subsection (a) of Section 19501 of this title, by the file number and date of the initial financing statement to which the record relates; and

(2)  to associate and retrieve with one another an initial financing statement and each filed record relating to the initial financing statement.

(g)  The filing office may not remove a debtor's name from the index until one (1) year after the effectiveness of a financing statement naming the debtor lapses under Section 19515 of this title with respect to all secured parties of record.

(h)  The filing office shall perform the acts required by subsections (a) through (e) of this section at the time and in the manner prescribed by filing-office rule, but not later than two (2) business days after the filing office receives the record in question.

(i)  Subsection (b) of this section does not apply to a filing office described in paragraph (1) of subsection (a) of Section 19501 of this title.

Added by Laws 2000, c. 371, § 97, eff. July 1, 2001.

§12A-1-9-520.  Acceptance and refusal to accept record.

ACCEPTANCE AND REFUSAL TO ACCEPT RECORD

(a)  A filing office shall refuse to accept a record for filing for a reason set forth in subsection (b) of Section 19516 of this title and may refuse to accept a record for filing only for a reason set forth in subsection (b) of Section 19516 of this title.

(b)  If a filing office refuses to accept a record for filing, it shall communicate to the person that presented the record the fact of and reason for the refusal and the date and time the record would have been filed had the filing office accepted it.  The communication must be made at the time and in the manner prescribed by filing-office rule, but, in the case of a filing office described in paragraph (2) of subsection (a) of Section 19501 of this title, in no event more than two (2) business days after the filing office receives the record.

(c)  A filed financing statement satisfying subsections (a) and (b) of Section 19502 of this title is effective, even if the filing office is required to refuse to accept it for filing under subsection (a).  However, Section 19338 of this title applies to a filed financing statement providing information described in paragraph (5) of subsection (b) of Section 19516 of this title which is incorrect at the time the financing statement is filed.

(d)  If a record communicated to a filing office provides information that relates to more than one debtor, this part applies to each debtor separately.

Added by Laws 2000, c. 371, § 98, eff. July 1, 2001.

§12A-1-9-521.  Uniform form of written financing statement and amendment.

UNIFORM FORM OF WRITTEN FINANCING STATEMENT AND AMENDMENT

(a)  A filing office that accepts written records may not refuse to accept a written initial financing statement in the following form and format, except for a reason set forth in subsection (b) of Section 19516:

UCC FINANCING STATEMENT

FOLLOW INSTRUCTIONS (front and back) CAREFULLY

A. NAME AND PHONE OF CONTACT AT FILER [optional]

________________________________________

B. SEND ACKNOWLEDGMENT TO:  (Name and Address)

________________________________________

________________________________________ THE ABOVE SPACE IS FOR

________________________________________ FILING OFFICE USE ONLY

1. DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor name (1a or 1b) - Do not abbreviate or combine names

1a.  ORGANIZATION'S NAME

_______________________________________________________________

OR 1b.  INDIVIDUAL'S LAST NAME   FIRST NAME   MIDDLE NAME   SUFFIX

_______________________________________________________________

1c.  MAILING ADDRESS   CITY   STATE   POSTAL CODE   COUNTRY

_______________________________________________________________

1d. TAX ID. NO. ADD'L INFO. RE 1e. TYPE OF ORGANIZATION

SSN OR EIN ORGANIZATION DEBTOR

_______________________________________________________________

1f. JURISDICTION OF ORGANIZATION 1g.  ORGANIZATIONAL ID No.,

if any

_______________________________________________________[ ] NONE

2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor name (2a or 2b) - do not abbreviate or combine names

2a.  ORGANIZATION'S NAME

_______________________________________________________________

OR 2b.  INDIVIDUAL'S LAST NAME   FIRST NAME   MIDDLE NAME   SUFFIX

_______________________________________________________________

2c.  MAILING ADDRESS   CITY   STATE   POSTAL CODE   COUNTRY

_______________________________________________________________

2d. TAX ID. NO. ADD'L INFO. RE 2e. TYPE OF ORGANIZATION

SSN OR EIN ORGANIZATION DEBTOR

_______________________________________________________________

2f. JURISDICTION OF ORGANIZATION 2g.  ORGANIZATIONAL ID No.,

if any

_______________________________________________________[ ] NONE

3. SECURED PARTY'S NAME (or name of total assignee of assignor S/P) - insert only one secured party name (3a or 3b)

3a.  ORGANIZATION'S NAME

_______________________________________________________________

OR 3b.  INDIVIDUAL'S LAST NAME   FIRST NAME   MIDDLE NAME   SUFFIX

_______________________________________________________________

3c.  MAILING ADDRESS   CITY   STATE   POSTAL CODE   COUNTRY

_______________________________________________________________

4. This FINANCING STATEMENT covers the following collateral:

_______________________________________________________________

5. ALTERNATIVE DESIGNATION [if applicable]:  [ ] LESSEE/LESSOR

[ ] CONSIGNEE/CONSIGNOR [ ] BAILEE/BAILOR [ ] SELLER/BUYER

[ ] AG. LIEN [ ] NON-UCC FILING

6. [ ] This FINANCING STATEMENT is to be filed against the tract index in the REAL ESTATE RECORDS.

Attach Addendum [if applicable]

7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)

[ ] All Debtors  [ ] Debtor 1  [ ] Debtor 2

[ADDITIONAL FEE]  [optional]

_______________________________________________________________

8. OPTIONAL FILER REFERENCE DATA

_______________________________________________________________

FILING OFFICE COPY - NATIONAL UCC FILING STATEMENT (FORM UCC 1))

[BACK OF FORM]

UCC FINANCING STATEMENT ADDENDUM

FOLLOW INSTRUCTIONS (front and back) CAREFULLY.

9. NAME OF FIRST DEBTOR (1a or 1b) ON RELATED FINANCING STATEMENT

_______________________________________________________________

9a.  ORGANIZATION'S NAME

_______________________________________________________________

OR 9b.  INDIVIDUAL'S LAST NAME  FIRST NAME  MIDDLE NAME  SUFFIX

_______________________________________________________________

10. MISCELLANEOUS:

________________________________________

________________________________________ THE ABOVE SPACE IS FOR

________________________________________ FILING OFFICE USE ONLY

11. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - insert only one name (11a or 11b) - do not abbreviate or combine names

11a.  ORGANIZATION'S NAME

_______________________________________________________________

OR 11b.  INDIVIDUAL'S LAST NAME  FIRST NAME  MIDDLE NAME  SUFFIX

_______________________________________________________________

11c.  MAILING ADDRESS   CITY   STATE   POSTAL CODE   COUNTRY

_______________________________________________________________

11d. TAX ID. NO. ADD'L INFO. RE 11e. TYPE OF ORGANIZATION

SSN OR EIN ORGANIZATION DEBTOR

_______________________________________________________________

11f. JURISDICTION OF ORGANIZATION 11g.  ORGANIZATIONAL ID No.,

if any

_______________________________________________________[ ] NONE

12. [ ] ADDITIONAL SECURED PARTY'S or [ ] ASSIGNOR S/P'S NAME - insert only one name (12a or 12b).

12a.  ORGANIZATION'S NAME

_______________________________________________________________

OR 12b.  INDIVIDUAL'S LAST NAME   FIRST NAME   MIDDLE NAME  SUFFIX

_______________________________________________________________

12c.  MAILING ADDRESS   CITY   STATE   POSTAL CODE   COUNTRY

_______________________________________________________________

13. This FINANCING STATEMENT covers [ ] timber to be cut or [ ] as-extracted collateral, or is filed as a [ ] fixture filing.

14. Description of real estate:

_______________________________________________________________

_______________________________________________________________

15. Name and address of a RECORD OWNER of the above-described real estate (if Debtor does not have record interest):

_______________________________________________________________

_______________________________________________________________

16. Additional collateral description:

_______________________________________________________________

_______________________________________________________________

17. Check only if applicable and check only one box:

Debtor is a [ ] Trust or [ ] Trustee acting with respect to property held in trust or

[ ] Decedent's Estate

18. Check only if applicable and check only one box:

[ ] Debtor is a TRANSMITTING UTILITY

[ ] Filed in connection with a Manufactured-Home Transaction - effective 30 years

[ ] Filed in connection with a Public-Finance Transaction - effective 30 years

FILING OFFICE COPY - NATIONAL UCC FILING STATEMENT

(FORM UCC 1Ad)

(b)  A filing office that accepts written records for filing may not refuse to accept a written financing statement amendment in the following form, except for a reason set forth in subsection (b) of Section 19516:

UCC FINANCING STATEMENT AMENDMENT

FOLLOW INSTRUCTIONS (front and back) CAREFULLY

A. NAME AND PHONE OF CONTACT AT FILER [optional]

_______________________________________________________________

B. SEND ACKNOWLEDGMENT TO:  (Name and Address)

________________________________________

________________________________________ THE ABOVE SPACE IS FOR

________________________________________ FILING OFFICE USE ONLY

1a.  INITIAL FINANCING STATEMENT FILE NO. __________________

1b.  [ ] This FINANCING STATEMENT AMENDMENT is to be filed against the tract index in the REAL ESTATE RECORDS.

2. [ ] TERMINATION:  Effectiveness of the Financing Statement identified above is terminated with respect to security interest(s) of the Secured Party authorizing this Termination Statement.

3. [ ] CONTINUATION:  Effectiveness of the Financing Statement identified above with respect to security interest(s) of the Secured Party authorizing this Continuation Statement is continued for the additional period provided by applicable law.

4. [ ] ASSIGNMENT (full or partial):  Give name of assignee in item 7a or 7b and address of assignee in item 7c; and also give name of assignor in item 9.

_______________________________________________________________

5. AMENDMENT (PARTY INFORMATION):  This Amendment affects [ ] Debtor or [ ] Secured Party of record.  Check only one of these two boxes.  Also check one of the following three boxes and provide appropriate information in items 6 and/or 7.

[ ] CHANGE name and/or address:  Give current record name in item 6a or 6b; also give new name (if name change) in item 7a or 7b and/or new address (if address change) in item 7c.

[ ] DELETE name:  Give record name to be deleted in item 6a or 6b.

[ ] ADD name: Complete item 7a or 7b, and also item 7c; also complete items 7d-7g (if applicable).

6. CURRENT RECORD INFORMATION:

6a.  ORGANIZATION'S NAME

_______________________________________________________________

OR 6b.  INDIVIDUAL'S LAST NAME  FIRST NAME  MIDDLE NAME  SUFFIX

_______________________________________________________________

7. CHANGED (NEW) OR ADDED INFORMATION:

7a.  ORGANIZATION'S NAME

_______________________________________________________________

OR 7b.  INDIVIDUAL'S LAST NAME  FIRST NAME  MIDDLE NAME  SUFFIX

_______________________________________________________________

7c.  MAILING ADDRESS   CITY   STATE  POSTAL CODE  COUNTRY

_______________________________________________________________

7d. TAX ID. NO. ADD'L INFO. RE 7e. TYPE OF ORGANIZATION

SSN OR EIN ORGANIZATION DEBTOR

_______________________________________________________________

7f. JURISDICTION OF ORGANIZATION 7g.  ORGANIZATIONAL ID No.,

if any

_______________________________________________________[ ] NONE

8. AMENDMENT (COLLATERAL CHANGE):  check only one box

Describe collateral [ ] deleted or [ ] added, or give entire [ ] restated collateral description, or describe collateral [ ] assigned.

_______________________________________________________________

9. NAME OF SECURED PARTY OF RECORD AUTHORIZING THIS AMENDMENT (name of assignor, if this is an Assignment).  If this is an Amendment authorized by a Debtor which adds collateral or adds the authorizing Debtor, or if this is a Termination authorized by a Debtor, check here [ ] and enter name of DEBTOR authorizing this Amendment.

9a.  ORGANIZATION'S NAME

_______________________________________________________________

OR 9b.  INDIVIDUAL'S LAST NAME   FIRST NAME   MIDDLE NAME   SUFFIX

_______________________________________________________________

10. OPTIONAL FILE REFERENCE DATA

_______________________________________________________________

FILING OFFICE COPY - NATIONAL UCC FINANCING STATEMENT AMENDMENT (FORM UCC3)

[BACK OF FORM]

UCC FINANCING STATEMENT AMENDMENT ADDENDUM

FOLLOW INSTRUCTIONS (front and back) CAREFULLY

11. INITIAL FINANCING STATEMENT FILE NO. (same as item 1a on Amendment form)

_______________________________________________________________

12. NAME OF PARTY AUTHORIZING THIS AMENDMENT (same as item 9 on Amendment form)

12a.  ORGANIZATION'S NAME

_______________________________________________________________

OR 12b.  INDIVIDUAL'S LAST NAME  FIRST NAME  MIDDLE NAME  SUFFIX

_______________________________________________________________

13.  USE THIS SPACE FOR ADDITIONAL INFORMATION

_________________________________________

_________________________________________THE ABOVE SPACE IS FOR

_________________________________________FILING OFFICE USE ONLY

FILING OFFICE COPY - NATIONAL UCC FINANCING STATEMENT AMENDMENT ADDENDUM (FORM UCC3Ad)

(c)  A form that a filing office may not refuse to accept under subsection (a) or (b) of this section must conform to the format prescribed for the form by the National Conference of Commissioners on Uniform State Laws.

Added by Laws 2000, c. 371, § 99, eff. July 1, 2001.

§12A-1-9-522.  Maintenance and destruction of records.

MAINTENANCE AND DESTRUCTION OF RECORDS

(a)  The filing office shall maintain a record of the information provided in a filed financing statement for at least one year after the effectiveness of the financing statement has lapsed under Section 19515 of this title with respect to all secured parties of record.  The record must be retrievable by using the name of the debtor and:

(1)  if the record was filed or recorded in the filing office described in paragraph (1) of subsection (a) of Section 19501 of this title, by using the file number of the initial financing statement to which the record relates and the date and that the record was filed or recorded, and by the legal description of the real estate adequate for the purposes of indexing in the tract indexes of the county where the real estate is situated; or

(2)  if the record was filed in the filing office described in paragraph (2) of subsection (a) of Section 19501 of this title, by using the file number of the initial financing statement to which the record relates.

(b)  Except to the extent that a statute governing disposition of public records provides otherwise, the filing office immediately may destroy any written record evidencing a financing statement.  However, if the filing office destroys a written record, it shall maintain another record of the financing statement which complies with subsection (a) of this section.

Added by Laws 2000, c. 371, § 100, eff. July 1, 2001.

§12A-1-9-523.  Information from filing office; sale or license of records.

INFORMATION FROM FILING OFFICE; SALE OR LICENSE OF RECORDS

(a)  If a person that files a written record requests an acknowledgment of the filing, the filing office shall send to the person an image of the record showing the number assigned to the record pursuant to paragraph (1) of subsection (a) of Section 19519 of this title and the date and time of the filing of the record.  However, if the person furnishes a copy of the record to the filing office, the filing office may instead:

(1)  note upon the copy the number assigned to the record pursuant to paragraph (1) of subsection (a) of Section 19519 of this title and the date and time of the filing of the record; and

(2)  send the copy to the person.

(b)  If a person files a record other than a written record, the filing office shall communicate to the person an acknowledgment that provides:

(1)  the information in the record;

(2)  the number assigned to the record pursuant to paragraph (1) of subsection (a) of Section 19519 of this title; and

(3)  the date and time of the filing of the record.

(c)  The filing office shall communicate or otherwise make available in a record the following information to any person that requests it:

(1)  whether there is on file on a date and time specified by the filing office, but not a date earlier than three (3) business days before the filing office receives the request, any financing statement that:

(A) designates a particular debtor or, if the request so states, designates a particular debtor at the address specified in the request;

(B) has not lapsed under Section 19515 of this title with respect to all secured parties of record; and

(C) if the request so states, has lapsed under Section 19515 of this title and a record of which is maintained by the filing office under subsection (a) of Section 19522 of this title;

(2)  the date and time of filing of each financing statement; and

(3)  the information provided in each financing statement.

(d)  In complying with its duty under subsection (c) of this section, the filing office may communicate information in any medium.  However, if requested, the filing office shall communicate information by issuing a record that can be admitted into evidence in the courts of this state without extrinsic evidence of its authenticity.

(e)  The filing office shall perform the acts required by subsections (a) through (d) of this section at the time and in the manner prescribed by filing-office rule, but not later than two (2) business days after the filing office receives the request.

(f)  At least weekly, the filing office shall offer to sell or license to the public on a nonexclusive basis, in bulk, copies of all records filed in it under this part, in every medium from time to time available to the filing office.

Added by Laws 2000, c. 371, § 101, eff. July 1, 2001.

§12A-1-9-524.  Delay by filing office.

DELAY BY FILING OFFICE

Delay by the filing office beyond a time limit prescribed by this part is excused if:

(1)  the delay is caused by interruption of communication or computer facilities, war, emergency conditions, failure of equipment, or other circumstances beyond control of the filing office; and

(2)  the filing office exercises reasonable diligence under the circumstances.

Added by Laws 2000, c. 371, § 102, eff. July 1, 2001.

§12A-1-9-525.1.  Disposition of fees.

DISPOSITION OF FEES

(a)  There is hereby created a cash account to be known as the "Oklahoma County Clerk's Uniform Commercial Code Central Filing Fund".  The fund shall be a continuing fund, not subject to fiscal year limitations, and shall consist of all fees and penalties collected pursuant to Section 1-9-525 of this title by the county clerk of Oklahoma County, all monies otherwise credited to the account, and any interest accruing thereon.

(b)  Monies in this account shall be expended in the following amounts for the following purposes:

(1)  Of the fees collected pursuant to paragraphs (1) and (2) of subsection (a) of Section 19525 of this title, Five Dollars ($5.00) shall be paid monthly by the thirtieth day following the month in which collected to the general fund of Oklahoma County as a liquidated fee for capital and other expenses associated with operation of the filing office; and

(2)  All other fees or parts of fees and any interest accruing to this account shall be expended by the county clerk of Oklahoma County for the lawful operation of the filing office.

(c)  The county clerk of Oklahoma County may, by rule, establish prepaid fee accounts.  If adopted, the rule shall provide for at least the following:

(1)  An application for an account on a form prescribed in the rule;

(2)  A one-time application fee of not more than Twenty Dollars ($20.00);

(3)  Acceptable methods of making deposits to an account;

(4)  Any requirements for a minimum initial deposit, a minimum balance, and a minimum amount for subsequent deposits;

(5)  The fees and penalties which may be paid from the account;

(6)  Procedures for making deposits to and payments from an account; and

(7)  Procedures for closing an account.

Added by Laws 2000, c. 371, § 104, eff. July 1, 2001.

§12A-1-9-525.  Fees.

FEES

(a)  Except as otherwise provided in subsection (e) of this section, the fee for filing and indexing a record under this part, other than an initial financing statement of the kind described in subsection (c) of Section 19502 of this title, is:

(1)  Ten Dollars ($10.00) if the record is communicated in writing and consists of one to five pages, and an additional One Dollar ($1.00) per page for each page exceeding five; and

(2)  Ten Dollars ($10.00) if the record is communicated by an electronic medium authorized by filing-office rule.

(b)  The number of names required to be indexed does not affect the amount of the fee in subsection (a) of this section.

(c)  The fee for responding to a request for information from the filing office in any medium designated by the filing office, including issuing a certificate showing whether there is on file any financing statement naming a particular debtor, is Ten Dollars ($10.00) for each debtor.

(d)  The fee for a copy of a record is One Dollar ($1.00) per page regardless of the medium used.

(e)  This section does not require a fee with respect to a record of a mortgage which is effective as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut under subsection (c) of Section 19502 of this title.  However, the recording and satisfaction fees that otherwise would be applicable to the record of the mortgage apply pursuant to paragraphs 1, 2, 4, 7, 11, 15 and 16 of subsection A of Section 32 of Title 28 of the Oklahoma Statutes.

(f)  The fee for providing certified copies shall be One Dollar ($1.00) per page regardless of medium.

(g)  The fee for providing bulk data of indexed records as described in subsection (f) of Section 19523 of this title is as follows:

(1)  Five Hundred Dollars ($500.00) for the initial database history.

(2)  Fifty Dollars ($50.00) for weekly updates to the database.

(3)  Four cents ($0.04) per page for images of filed records.

(h)  The filing office may accept payment for fees by automated clearing house or by a nationally recognized debit or credit card.  If payment is made by a credit or debit card, the filing office may add an amount equal to the amount of the service charge incurred for the acceptance of the payment.  The filing office may enter into contracts for credit card processing services according to applicable county purchasing laws or may enter into agreements with the State Treasurer to participate in any credit card processing agreements entered into by the State Treasurer.

Added by Laws 2000, c. 371, § 103, eff. July 1, 2001.

§12A-1-9-526.1.  Procedures for adopting rules.

PROCEDURES FOR ADOPTING RULES

(a)  The county clerk of Oklahoma County shall adopt rules, pursuant to Section 19526 of this title, for the operation of the filing office designated in paragraph (2) of subsection (a) of Section 19501 of this title.  Initial rules for the filing office shall be adopted on or before January 1, 2001.  These rules may be amended or repealed and additional rules may be adopted at any time in the same manner as initial rules.

(b)  The county clerk of Oklahoma County, or a designee, shall conduct a meeting which complies with the Oklahoma Open Meeting Act at which public comment regarding the proposed rules may be given and received orally or in writing.

(c)  In addition to any notice required by the Oklahoma Open Meeting Act, notice shall be given of the proposed rulemaking which shall:

(1)  Be published in at least two newspapers in this state and in other periodicals and on Internet sites as the county clerk deems appropriate, at least thirty (30) and no more than sixty (60) days prior to the meeting at which public comment is invited on the proposed rules;

(2)  Be sent to any person who requests notice of proposed rulemaking under this section; and

(3)  Include the following:

(A) the date, time, and place of the meeting or meetings at which public comment is invited on the proposed rules,

(B) the address, telephone number, and Internet address, if any, for the office to which comments regarding the rules may be made or a request for a copy of the proposed rules may be directed,

(C) the deadline for making comments, and

(D) the reason for the proposed rule, repeal, or amendment, and a brief summary of the proposed rule, repeal, or amendment, including citations to the rules.

(d)  At the request of any person, the county clerk of Oklahoma County shall provide copies of proposed rules and rules adopted pursuant to this section.

(1)  One copy of each proposed rule, repeal, or amendment shall be provided free of charge.  Additional copies shall be made available upon payment of a fee which shall not exceed twenty-five cents ($0.25) per page plus the cost of mailing, if any.

(2)  Copies of rules adopted pursuant to this section shall be made available either:

(A) upon payment of a fee which shall not exceed twenty-five cents ($0.25) per page plus the cost of mailing, if any, or

(B) pursuant to subsection (f) of this section, or

(C) a combination of subparagraphs (A) and (B) of this paragraph.

(e)  Proposed rules and rules adopted pursuant to this section may also be published on one or more Internet sites designated by the county clerk.

(f)  The county clerk of Oklahoma County shall, no less than annually, compile and publish all rules adopted pursuant to this section which have been adopted and are effective or have been adopted and will become effective during the year after publication.  Copies of this compilation shall be made available upon payment of a fee which shall not exceed Five Dollars ($5.00) plus the cost of mailing, if any.

(g)  The county clerk of Oklahoma County may agree with the Office of Administrative Rules in the Office of the Secretary of State to publish the rules with the Oklahoma Administrative Code.  An agreement made pursuant to this subsection shall not require compliance with the Administrative Procedures Act.

Added by Laws 2000, c. 371, § 106, eff. Jan. 1, 2001.

§12A-1-9-526.  Filing-office rules.

FILING-OFFICE RULES

(a)  The county clerk of Oklahoma County shall adopt and publish rules to implement this article.  The filing-office rules must be:

(1)  consistent with this article; and

(2)  adopted and published in accordance with Section 19526.1 of this title.

(b)  To keep the filing-office rules and practices of the filing office in harmony with the rules and practices of filing offices in other jurisdictions that enact substantially this part, and to keep the technology used by the filing office compatible with the technology used by filing offices in other jurisdictions that enact substantially this part, the county clerk of Oklahoma County, so far as is consistent with the purposes, policies, and provisions of this article, in adopting, amending, and repealing filing-office rules, shall:

(1)  consult with filing offices in other jurisdictions that enact substantially this part;

(2)  consult the most recent version of the Model Rules promulgated by the International Association of Corporate Administrators or any successor organization; and

(3)  take into consideration the rules and practices of, and the technology used by, filing offices in other jurisdictions that enact substantially this part.

Added by Laws 2000, c. 371, § 105, eff. Jan. 1, 2001.

§12A-1-9-527.  Duty to report.

DUTY TO REPORT

The county clerk of Oklahoma County shall report annually on or before January 1 to the Governor and Legislature on the operation of the filing office.  The report must contain a statement of the extent to which:

(1)  the filing-office rules are not in harmony with the rules of filing offices in other jurisdictions that enact substantially this part and the reasons for these variations; and

(2)  the filing-office rules are not in harmony with the most recent version of the Model Rules promulgated by the International Association of Corporate Administrators, or any successor organization, and the reasons for these variations.

Added by Laws 2000, c. 371, § 107, eff. Jan. 1, 2001.

§12A-1-9-601.  Rights after default - Judicial enforcement - Consignor or buyer of accounts, chattel paper, payment intangibles, or promissory notes.

RIGHTS AFTER DEFAULT; JUDICIAL ENFORCEMENT;

CONSIGNOR OR BUYER OF ACCOUNTS, CHATTEL PAPER,

PAYMENT INTANGIBLES, OR PROMISSORY NOTES

(a)  After default, a secured party has the rights provided in this part and, except as otherwise provided in Section 19602 of this title, those provided by agreement of the parties.  A secured party:

(1)  may reduce a claim to judgment, foreclose, or otherwise enforce the claim, security interest, or agricultural lien by any available judicial procedure, but Section 686 of Title 12 of the Oklahoma Statutes, shall not apply to the enforcement of a claim, security interest, or agricultural lien under this article except as provided in Section 19604 of this title where the procedure is in accordance with the rights of the parties with respect to real property; and

(2)  if the collateral is documents, may proceed either as to the documents or as to the goods they cover.

(b)  A secured party in possession of collateral or control of collateral under Section 7-106, 19104, 19105, 19106, or 19107 of this title has the rights and duties provided in Section 19207 of this title.

(c)  The rights under subsections (a) and (b) of this section are cumulative and may be exercised simultaneously.

(d)  Except as otherwise provided in subsection (g) of this section and Section 19605 of this title, after default, a debtor and an obligor have the rights provided in this part and by agreement of the parties.

(e)  If a secured party has reduced its claim to judgment, the lien of any levy that may be made upon the collateral by virtue of an execution based upon the judgment relates back to the earliest of:

(1)  the date of perfection of the security interest or agricultural lien in the collateral;

(2)  the date of filing a financing statement covering the collateral; or

(3)  any date specified in a statute under which the agricultural lien was created.

(f)  A sale pursuant to an execution is a foreclosure of the security interest or agricultural lien by judicial procedure within the meaning of this section.  A secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of this article.

(g)  Except as otherwise provided in subsection (c) of Section 19607 of this title, this part imposes no duties upon a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles, or promissory notes.

Added by Laws 2000, c. 371, § 108, eff. July 1, 2001.  Amended by Laws 2005, c. 140, § 70, eff. Jan. 1, 2006.

§12A-1-9-602.  Waiver and variance of rights and duties.

WAIVER AND VARIANCE OF RIGHTS AND DUTIES

Except as otherwise provided in Section 19624 of this title, to the extent that they give rights to a debtor or obligor and impose duties on a secured party, the debtor or obligor may not waive or vary the rules stated in the following listed sections:

(1)  Subparagraph (C) of paragraph (4) of subsection (b) of Section 19207 of this title, which deals with use and operation of the collateral by the secured party;

(2)  Section 19210 of this title, which deals with requests for an accounting and requests concerning a list of collateral and statement of account;

(3)  Subsection (c) of Section 19607 of this title, which deals with collection and enforcement of collateral;

(4)  Subsection (a) of Section 19608 of this title and subsection (c) of Section 19615 of this title to the extent that they deal with application or payment of noncash proceeds of collection, enforcement, or disposition;

(5)  Subsection (a) of Section 19608 of this title and subsection (d) of Section 19615 of this title to the extent that they require accounting for or payment of surplus proceeds of collateral;

(6)  Section 19609 of this title to the extent that it imposes upon a secured party that takes possession of collateral without judicial process the duty to do so without breach of the peace;

(7)  Subsection (b) of Section 19610 of this title and Sections 19611, 19613, and 19614 of this title, which deal with disposition of collateral;

(8)  Subsection (f) of Section 19615 of this title, which deals with calculation of a deficiency or surplus when a disposition is made to the secured party, a person related to the secured party, or a secondary obligor;

(9)  Section 19616 of this title, which deals with explanation of the calculation of a surplus or deficiency;

(10)  Sections 19620, 19621, and 19622 of this title, which deal with acceptance of collateral in satisfaction of obligation;

(11)  Section 19623 of this title, which deals with redemption of collateral;

(12)  Section 19624 of this title, which deals with permissible waivers; and

(13)  Sections 19625 and 19626 of this title, which deal with the secured party's liability for failure to comply with this article.

Added by Laws 2000, c. 371, § 109, eff. July 1, 2001.

§12A-1-9-603.  Agreement on standards concerning rights and duties.

AGREEMENT ON STANDARDS CONCERNING RIGHTS AND DUTIES

(a)  The parties may determine by agreement the standards measuring the fulfillment of the rights of a debtor or obligor and the duties of a secured party under a rule stated in Section 19602  of this title if the standards are not manifestly unreasonable.

(b)  Subsection (a) of this section does not apply to the duty under Section 19609 of this title to refrain from breaching the peace.

Added by Laws 2000, c. 371, § 110, eff. July 1, 2001.

§12A-1-9-604.  Procedure if security agreement covers real property or fixtures.

PROCEDURE IF SECURITY AGREEMENT

COVERS REAL PROPERTY OR FIXTURES

(a)  If a security agreement covers both personal and real property, a secured party may proceed:

(1)  under this part as to the personal property without prejudicing any rights with respect to the real property; or

(2)  as to both the personal property and the real property in accordance with the rights with respect to the real property, in which case the other provisions of this part do not apply.

(b)  Subject to subsection (c) of this section, if a security agreement covers goods that are or become fixtures, a secured party may proceed:

(1)  under this part; or

(2)  in accordance with the rights with respect to real property, in which case the other provisions of this part do not apply.

(c)  Subject to the other provisions of this part, if a secured party holding a security interest in fixtures has priority over all owners and encumbrances of the real property, the secured party, after default, may remove the collateral from the real property.

(d)  A secured party that removes collateral shall promptly reimburse any encumbrancer or owner of the real property, other than the debtor, for the cost of repair of any physical injury caused by the removal.  The secured party need not reimburse the encumbrancer or owner for any diminution in value of the real property caused by the absence of the goods removed or by any necessity of replacing them.  A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse.

Added by Laws 2000, c. 371, § 111, eff. July 1, 2001.

§12A-1-9-605.  Unknown debtor or secondary obligor.

UNKNOWN DEBTOR OR SECONDARY OBLIGOR

A secured party does not owe a duty based on its status as secured party:

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

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

(B) the identity of the person; and

(C) how to communicate with the person; or

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

(A) that the person is a debtor; and

(B) the identity of the person.

Added by Laws 2000, c. 371, § 112, eff. July 1, 2001.

§12A-1-9-606.  Time of default for agricultural lien.

TIME OF DEFAULT FOR AGRICULTURAL LIEN

For purposes of this part, a default occurs in connection with an agricultural lien at the time the secured party becomes entitled to enforce the lien in accordance with the statute under which it was created.

Added by Laws 2000, c. 371, § 113, eff. July 1, 2001.

§12A-1-9-607.  Collection and enforcement by secured party.

COLLECTION AND ENFORCEMENT BY SECURED PARTY

(a)  If so agreed, and in any event after default, a secured party:

(1)  may notify an account debtor or other person obligated on collateral to make payment or otherwise render performance to or for the benefit of the secured party;

(2)  may take any proceeds to which the secured party is entitled under Section 19315 of this title;

(3)  may enforce the obligations of an account debtor or other person obligated on collateral and exercise the rights of the debtor with respect to the obligation of the account debtor or other person obligated on collateral to make payment or otherwise render performance to the debtor, and with respect to any property that secures the obligations of the account debtor or other person obligated on the collateral;

(4)  if it holds a security interest in a deposit account perfected by control under paragraph (1) of subsection (a) of Section 19104 of this title, may apply the balance of the deposit account to the obligation secured by the deposit account; and

(5)  if it holds a security interest in a deposit account perfected by control under paragraph (2) or (3) of subsection (a) Section 19104 of this title, may instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party.

(b)  If necessary to enable a secured party to exercise under paragraph (3) of subsection (a) of this section the right of a debtor to enforce a mortgage nonjudicially, the secured party may record in the office in which a record of the mortgage is recorded:

(1)  a copy of the security agreement that creates or provides for a security interest in the obligation secured by the mortgage; and

(2)  the secured party's sworn affidavit in recordable form stating that:

(A) a default has occurred; and

(B) the secured party is entitled to enforce the mortgage nonjudicially.

(c)  A secured party shall proceed in a commercially reasonable manner if the secured party:

(1)  undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral; and

(2)  is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor.

(d)  A secured party may deduct from the collections made pursuant to subsection (c) of this section reasonable expenses of collection and enforcement, including reasonable attorney's fees and legal expenses incurred by the secured party.

(e)  This section does not determine whether an account debtor, bank, or other person obligated on collateral owes a duty to a secured party.

Added by Laws 2000, c. 371, § 114, eff. July 1, 2001.

§12A-1-9-608.  Application of proceeds of collection or enforcement; liability for deficiency and right to surplus.

APPLICATION OF PROCEEDS OF COLLECTION OR ENFORCEMENT;

LIABILITY FOR DEFICIENCY AND RIGHT TO SURPLUS

(a)  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 this section in the following order to:

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

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

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

(2)  If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time.  Unless the holder complies, the secured party need not comply with the holder's demand under subparagraph (C) of paragraph (1) of this subsection.

(3)  A secured party need not apply or pay over for application noncash proceeds of collection and enforcement under this section unless the failure to do so would be commercially unreasonable.  A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.

(4)  A secured party shall account to and pay a debtor for any surplus, and the obligor is liable for any deficiency.

(b)  If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes, the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency.

Added by Laws 2000, c. 371, § 115, eff. July 1, 2001.

§12A-1-9-609.  Secured party's right to take possession after default.

SECURED PARTY'S RIGHT TO TAKE POSSESSION AFTER DEFAULT

(a)  After default, a secured party:

(1)  may take possession of the collateral; and

(2)  without removal, may render equipment unusable and dispose of collateral on a debtor's premises under Section 19610 of this title.

(b)  A secured party may proceed under subsection (a) of this section:

(1)  pursuant to judicial process; or

(2)  without judicial process, if it proceeds without breach of the peace.

(c)  If so agreed, and in any event after default, a secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties.

Added by Laws 2000, c. 371, § 116, eff. July 1, 2001.

§12A-1-9-610.  Disposition of collateral after default.

DISPOSITION OF COLLATERAL AFTER DEFAULT

(a)  After default, a secured party may sell, lease, license, or otherwise dispose of any or all of the collateral in its present condition or following any commercially reasonable preparation or processing.

(b)  Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable.  If commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms.

(c)  A secured party may purchase collateral:

(1)  at a public disposition; or

(2)  at a private disposition only if the collateral is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations.

(d)  A contract for sale, lease, license, or other disposition includes the warranties relating to title, possession, quiet enjoyment, and the like which by operation of law accompany a voluntary disposition of property of the kind subject to the contract.

(e)  A secured party may disclaim or modify warranties under subsection (d) of this section:

(1)  in a manner that would be effective to disclaim or modify the warranties in a voluntary disposition of property of the kind subject to the contract of disposition; or

(2)  by communicating to the purchaser a record evidencing the contract for disposition and including an express disclaimer or modification of the warranties.

(f)  A record is sufficient to disclaim warranties under subsection (e) of this section if it indicates "There is no warranty relating to title, possession, quiet enjoyment, or the like in this disposition" or uses words of similar import.

Added by Laws 2000, c. 371, § 117, eff. July 1, 2001.

§12A-1-9-611.  Notification before disposition of collateral.

NOTIFICATION BEFORE DISPOSITION OF COLLATERAL

(a)  In this section, "notification date" means the earlier of the date on which:

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

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

(b)  Except as otherwise provided in subsection (d) of this section, a secured party that disposes of collateral under Section 19610 of this title shall send to the persons specified in subsection (c) of this section a reasonable authenticated notification of disposition.

(c)  To comply with subsection (b) of this section, the secured party shall send an authenticated notification of disposition to:

(1)  the debtor;

(2)  any secondary obligor; and

(3)  if the collateral is other than consumer goods:

(A) any other person from which the secured party has received, before the notification date, an authenticated notification of a claim of an interest in the collateral;

(B) any other secured party or lienholder that, ten (10)  days before the notification date, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that:

(i) identified the collateral;

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

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

(C) any other secured party that, ten (10) days before the notification date, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in subsection (a) of Section 19311 of this title.

(d)  Subsection (b) of this section does not apply if the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market.

(e)  A secured party complies with the requirement for notification prescribed by subparagraph (B) of paragraph (3) of subsection (c) of this section if:

(1)  not later than twenty (20) days or earlier than thirty (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 subparagraph (B) of paragraph (3) of subsection (c) of this section; and

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

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

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

Added by Laws 2000, c. 371, § 118, eff. July 1, 2001.

§12A-1-9-612.  Timeliness of notification before disposition of collateral.

TIMELINESS OF NOTIFICATION BEFORE DISPOSITION OF COLLATERAL

(a)  Except as otherwise provided in subsection (b) of this section, whether a notification is sent within a reasonable time is a question of fact.

(b)  In a transaction other than a consumer transaction, a notification of disposition sent after default and ten (10) days or more before the earliest time of disposition set forth in the notification is sent within a reasonable time before the disposition.

Added by Laws 2000, c. 371, § 119, eff. July 1, 2001.

§12A-1-9-613.  Contents and form of notification before disposition of collateral:  general.

CONTENTS AND FORM OF NOTIFICATION

BEFORE DISPOSITION OF COLLATERAL:  GENERAL

Except in a consumer-goods transaction, the following rules apply:

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

(A) describes the debtor and the secured party;

(B) describes the collateral that is the subject of the intended disposition;

(C) states the method of intended disposition;

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

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

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

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

(A) information not specified by that paragraph; or

(B) minor errors that are not seriously misleading.

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

(5)  The following form of notification and the form appearing in paragraph (3) of Section 19614 of this title, when completed, 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]

Added by Laws 2000, c. 371, § 120, eff. July 1, 2001.

§12A-1-9-614.  Contents and form of notification before disposition of collateral:  consumer-goods transaction.

CONTENTS AND FORM OF NOTIFICATION BEFORE

DISPOSITION OF COLLATERAL:  CONSUMER-GOODS TRANSACTION

In a consumer-goods transaction, the following rules apply:

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

(A) the information specified in paragraph (1) of Section 19613 of this title;

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

(C) a telephone number from which the amount that must be paid to the secured party to redeem the collateral under Section 19623 of this title is available; and

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

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

(3)  The following form of notification, when completed, 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) of this section is sufficient, even if additional information appears at the end of the form.

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

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

Added by Laws 2000, c. 371, § 121, eff. July 1, 2001.

§12A-1-9-615.  Application of proceeds of disposition; liability for deficiency and right to surplus.

APPLICATION OF PROCEEDS OF DISPOSITION;

LIABILITY FOR DEFICIENCY AND RIGHT TO SURPLUS

(a)  A secured party shall apply or pay over for application the cash proceeds of disposition pursuant to Section 1-9-610 of this title 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's fees and legal expenses incurred by the secured party;

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

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

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

(B) 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; and

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

(b)  If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time.  Unless the holder does so, the secured party need not comply with the holder's demand under paragraph (3) of subsection (a) of this section.

(c)  A secured party need not apply or pay over for application noncash proceeds of disposition pursuant to Section 1-9-610 of this title unless the failure to do so would be commercially unreasonable.  A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.

(d)  If the security interest under which a disposition is made secures payment or performance of an obligation, after making the payments and applications required by subsection (a) of this section and permitted by subsection (c) of this section:

(1)  unless paragraph (4) of subsection (a) of this section  requires the secured party to apply or pay over cash proceeds to a consignor, the secured party shall account to and pay a debtor for any surplus; and

(2)  the obligor is liable for any deficiency.

(e)  If the underlying transaction is a sale of accounts, tangible chattel paper, payment intangibles, or promissory notes:

(1)  the debtor is not entitled to any surplus; and

(2)  the obligor is not liable for any deficiency.

(f)  The surplus or deficiency following a disposition is calculated based on the amount of proceeds that would have been realized in a disposition complying with this part to a transferee other than the secured party, a person related to the secured party, or a secondary obligor if:

(1)  the transferee in the disposition is the secured party, a person related to the secured party, or a secondary obligor; and

(2)  the amount of proceeds of the disposition is significantly below the range of proceeds that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.

(g)  A secured party that receives cash proceeds of a disposition in good faith and without knowledge that the receipt violates the rights of the holder of a security interest or other lien that is not subordinate to the security interest or agricultural lien under which the disposition is made:

(1)  takes the cash proceeds free of the security interest or other lien;

(2)  is not obligated to apply the proceeds of the disposition to the satisfaction of obligations secured by the security interest or other lien; and

(3)  is not obligated to account to or pay the holder of the security interest or other lien for any surplus.

Added by Laws 2000, c. 371, § 122, eff. July 1, 2001.  Amended by Laws 2001, c. 354, § 3, eff. July 1, 2001.

§12A-1-9-616.  Explanation of calculation of surplus or deficiency.

EXPLANATION OF CALCULATION OF SURPLUS OR DEFICIENCY

(a)  In this section:

(1)  "Explanation" means a writing that:

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

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

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

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

(2)  "Request" means a record:

(A) authenticated by a debtor or consumer obligor;

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

(C) sent after disposition of the collateral under Section 19610 of this title.

(b)  In a consumer-goods transaction in which the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under Section 19615 of this title, the secured party shall:

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

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

(B) within fourteen (14) days after receipt of a request; or

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

(c)  To comply with subparagraph (B) of paragraph (1) of subsection (a) of this section, a writing 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:

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

(B) if the secured party takes or receives possession of the collateral before default or does not take possession of the collateral, not more than thirty-five (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's 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) of this subsection; and

(6)  the amount of the surplus or deficiency.

(d)  A particular phrasing of the explanation is not required.  An explanation complying substantially with the requirements of subsection (a) of this section is sufficient, even if it includes minor errors that are not seriously misleading.

(e)  A debtor or consumer obligor is entitled without charge to one response to a request under this section during any six-month period in which the secured party did not send to the debtor or consumer obligor an explanation pursuant to paragraph (1) of subsection (b) of this section.  The secured party may require payment of a charge not exceeding Twenty-five Dollars ($25.00) for each additional response.

Added by Laws 2000, c. 371, § 123, eff. July 1, 2001.

§12A-1-9-617.  Rights of transferee of collateral.

RIGHTS OF TRANSFEREE OF COLLATERAL

(a)  A secured party's disposition of collateral after default:

(1)  transfers to a transferee for value all of the debtor's rights in the collateral;

(2)  discharges the security interest under which the disposition is made; and

(3)  discharges any subordinate security interest or other subordinate lien.

(b)  A transferee that acts in good faith takes free of the rights and interests described in subsection (a) of this section, even if the secured party fails to comply with this article or the requirements of any judicial proceeding.

(c)  If a transferee does not take free of the rights and interests described in subsection (a) of this section, the transferee takes the collateral subject to:

(1)  the debtor's rights in the collateral;

(2)  the security interest or agricultural lien under which the disposition is made; and

(3)  any other security interest or other lien.

Added by Laws 2000, c. 371, § 124, eff. July 1, 2001.

§12A-1-9-618.  Rights and duties of certain secondary obligors.

RIGHTS AND DUTIES OF CERTAIN SECONDARY OBLIGORS

(a)  A secondary obligor acquires the rights and becomes obligated to perform the duties of the secured party after the secondary obligor:

(1)  receives an assignment of a secured obligation from the secured party;

(2)  receives a transfer of collateral from the secured party and agrees to accept the rights and assume the duties of the secured party; or

(3)  is subrogated to the rights of a secured party with respect to collateral.

(b)  An assignment, transfer, or subrogation described in subsection (a) of this section:

(1)  is not a disposition of collateral under Section 19610 of this title; and

(2)  relieves the secured party of further duties under this article.

Added by Laws 2000, c. 371, § 125, eff. July 1, 2001.

§12A-1-9-619.  Transfer of record or legal title.

TRANSFER OF RECORD OR LEGAL TITLE

(a)  In this section, "transfer statement" means a record authenticated 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 post-default 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.

(b)  A transfer statement entitles the transferee to the transfer of record of all rights of the debtor in the collateral specified in the statement in any official filing, recording, registration, or certificate-of-title system covering the collateral.  If a transfer statement is presented with the applicable fee and request form to the official or office responsible for maintaining the system, the official or office shall:

(1)  accept the transfer statement;

(2)  promptly amend its records to reflect the transfer; and

(3)  if applicable, issue a new appropriate certificate of title in the name of the transferee.

(c)  A transfer of the record or legal title to collateral to a secured party under subsection (b) of this section or otherwise is not of itself a disposition of collateral under this article and does not of itself relieve the secured party of its duties under this article.

Added by Laws 2000, c. 371, § 126, eff. July 1, 2001.

§12A-1-9-620.  Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral.

ACCEPTANCE OF COLLATERAL IN FULL OR PARTIAL SATISFACTION

OF OBLIGATION; COMPULSORY DISPOSITION OF COLLATERAL

(a)  Except as otherwise provided in subsection (g) of this section, a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:

(1)  the debtor consents to the acceptance under subsection (c) of this section;

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

(A) a person to which the secured party was required to send a proposal under Section 19621 of this title; or

(B) any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest that 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; and

(4)  subsection (e) of this section does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to Section 19624 of this title.

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

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

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

(c)  For purposes of this section:

(1)  a debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default; and

(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 after default or the secured party:

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

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

(C) does not receive a notification of objection authenticated by the debtor within twenty (20) days after the proposal is sent.

(d)  To be effective under paragraph (2) of subsection (a) of this section, a notification of objection must be received by the secured party:

(1)  in the case of a person to which the proposal was sent pursuant to Section 19621 of this title, within twenty (20) days after notification was sent to that person; and

(2)  in other cases:

(A) within twenty (20) days after the last notification was sent pursuant to Section 19621 of this title; or

(B) if a notification was not sent, before the debtor consents to the acceptance under subsection (c) of this section.

(e)  A secured party that has taken possession of collateral shall dispose of the collateral pursuant to Section 19610 of this title within the time specified in subsection (f) of this section if:

(1)  Sixty percent (60%) of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or

(2)  Sixty percent (60%) of the principal amount of the obligation secured has been paid in the case of a non-purchase-money security interest in consumer goods.

(f)  To comply with subsection (e) of this section, the secured party shall dispose of the collateral:

(1)  within ninety (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 after default.

(g)  In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.

Added by Laws 2000, c. 371, § 127, eff. July 1, 2001.

§12A-1-9-621.  Notification of proposal to accept collateral.

NOTIFICATION OF PROPOSAL TO ACCEPT COLLATERAL

(a)  A secured party that desires to accept collateral in full or partial satisfaction of the obligation it secures shall send its proposal to:

(1)  any person from which the secured party has received, before the debtor consented to the acceptance, an authenticated notification of a claim of an interest in the collateral;

(2)  any other secured party or lienholder that, ten (10) 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 that:

(A) identified the collateral;

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

(C) was filed in the office or offices in which a financing statement against the debtor covering the collateral as of that date would have been filed; and

(3)  any other secured party that, ten (10) 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 subsection (a) of Section 19311 of this title.

(b)  A secured party that desires to accept collateral in partial satisfaction of the obligation it secures shall send its proposal to any secondary obligor in addition to the persons described in subsection (a) of this section.

Added by Laws 2000, c. 371, § 128, eff. July 1, 2001.

§12A-1-9-622.  Effect of acceptance of collateral.

EFFECT OF ACCEPTANCE OF COLLATERAL

(a)  A secured party's acceptance of collateral in full or partial satisfaction of the obligation it secures:

(1)  discharges the obligation to the extent consented to by the debtor;

(2)  transfers to the secured party all of a debtor's rights in the collateral;

(3)  discharges the security interest or agricultural lien that is the subject of the debtor's consent and any subordinate security interest or other subordinate lien; and

(4)  terminates any other subordinate interest.

(b)  A subordinate interest is discharged or terminated under subsection (a) of this section, even if the secured party fails to comply with this article.

Added by Laws 2000, c. 371, § 129, eff. July 1, 2001.

§12A-1-9-623.  Right to redeem collateral.

RIGHT TO REDEEM COLLATERAL

(a)  A debtor, any secondary obligor, or any other secured party or lienholder may redeem collateral.

(b)  To redeem collateral, a person shall tender:

(1)  fulfillment of all obligations secured by the collateral; and

(2)  the reasonable expenses and attorney's fees described in paragraph (1) of subsection (a) of Section 19615 of this title.

(c)  A redemption may occur at any time before a secured party:

(1)  has collected collateral under Section 19607 of this title;

(2)  has disposed of collateral or entered into a contract for its disposition under Section 19610 of this title; or

(3)  has accepted collateral in full or partial satisfaction of the obligation it secures under Section 19622 of this title.

Added by Laws 2000, c. 371, § 130, eff. July 1, 2001.

§12A-1-9-624.  Waiver.

WAIVER

(a)  A debtor or secondary obligor may waive the right to notification of disposition of collateral under Section 19611 of this title only by an agreement to that effect entered into and authenticated after default.

(b)  A debtor may waive the right to require disposition of collateral under subsection (e) of Section 19620 of this title only by agreement to that effect entered into and authenticated after default.

(c)  Except in a consumer-goods transaction, a debtor or secondary obligor may waive the right to redeem collateral under Section 19623 of this title only by an agreement to that effect entered into and authenticated after default.

Added by Laws 2000, c. 371, § 131, eff. July 1, 2000.

§12A-1-9-625.  Remedies for secured party's failure to comply with article.

REMEDIES FOR SECURED PARTY'S

FAILURE TO COMPLY WITH ARTICLE

(a)  If it is established that a secured party is not proceeding in accordance with this article, a court may order or restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions.

(b)  Subject to subsections (c), (d), and (f) of this section, a person is liable for damages in the amount of any loss caused by a failure to comply with this article.  Loss caused by a failure to comply may include loss resulting from the debtor's inability to obtain, or increased costs of, alternative financing.

(c)  Except as otherwise provided in Section 19628 of this title:

(1)  a person that, at the time of the failure, was a debtor, was an obligor, or held a security interest in or other lien on the collateral may recover damages under subsection (b) of this section for its loss; and

(2)  if the collateral is consumer goods, a person that was a debtor or a secondary obligor at the time a secured party failed to comply with this part may recover for that failure in any event an amount not less than the credit service charge plus ten percent (10%) of the principal amount of the obligation or the time-price differential plus ten percent (10%) of the cash price.

(d)  A debtor whose deficiency is eliminated under Section 19626 of this title may recover damages for the loss of any surplus.  However, a debtor or secondary obligor whose deficiency is eliminated or reduced under Section 19626 of this title may not otherwise recover under subsection (b) of this section for noncompliance with the provisions of this part relating to collection, enforcement, disposition, or acceptance.

(e)  In addition to any damages recoverable under subsection (b) of this section, the debtor, consumer obligor, or person named as a debtor in a filed record, as applicable, may recover Five Hundred Dollars ($500.00) in each case from a person that:

(1)  fails to comply with Section 19208 of this title;

(2)  fails to comply with Section 19209 of this title;

(3)  files a record that the person is not entitled to file under subsection (a) of Section 19509 of this title;

(4)  fails to cause the secured party of record to file or send a termination statement as required by subsection (a) or (c) Section 19513 of this title;

(5)  fails to comply with paragraph (1) of subsection (b) of Section 19616 of this title and whose failure is part of a pattern, or consistent with a practice, of noncompliance; or

(6)  fails to comply with paragraph (2) of subsection (b) of Section 19616 of this title.

(f)  A debtor or consumer obligor may recover damages under subsection (b) of this section and, in addition, Five Hundred Dollars ($500.00) in each case from a person that, without reasonable cause, fails to comply with a request under Section 19210 of this title.  A recipient of a request under Section 19210 of this title which never claimed an interest in the collateral or obligations that are the subject of a request under that section has a reasonable excuse for failure to comply with the request within the meaning of this subsection.

(g)  If a secured party fails to comply with a request regarding a list of collateral or a statement of account under Section 19210 of this title, the secured party may claim a security interest only as shown in the list or statement included in the request as against a person that is reasonably misled by the failure.

Added by Laws 2000, c. 371, § 132, eff. July 1, 2001.

§12A-1-9-626.  Action in which deficiency or surplus is in issue.

ACTION IN WHICH DEFICIENCY OR SURPLUS IS IN ISSUE

(a)  In an action arising from a transaction, other than a consumer transaction, in which the amount of a deficiency or surplus is in issue, the following rules apply:

(1)  A secured party need not prove compliance with the provisions of this part relating to collection, enforcement, disposition, or acceptance unless the debtor or a secondary obligor places the secured party's compliance in issue.

(2)  If the secured party's compliance is placed in issue, the secured party has the burden of establishing that the collection, enforcement, disposition, or acceptance was conducted in accordance with this part.

(3)  Except as otherwise provided in Section 19628 of this title, if a secured party fails to prove that the collection, enforcement, disposition, or acceptance was conducted in accordance with the provisions of this part relating to collection, enforcement, disposition, or acceptance, the liability of a debtor or a secondary obligor for a deficiency is limited to an amount by which the sum of the secured obligation, expenses, and attorney's fees exceeds the greater of:

(A) the proceeds of the collection, enforcement, disposition, or acceptance; or

(B) the amount of proceeds that would have been realized had the noncomplying secured party proceeded in accordance with the provisions of this part relating to collection, enforcement, disposition, or acceptance.

(4)  For purposes of subparagraph (B) of paragraph (3) of this subsection, the amount of proceeds that would have been realized is equal to the sum of the secured obligation, expenses, and attorney's fees unless the secured party proves that the amount is less than that sum.

(5)   If a deficiency or surplus is calculated under subsection (f) of Section 19615 of this title, the debtor or obligor has the burden of establishing that the amount of proceeds of the disposition is significantly below the range of prices that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.

(b)  The limitation of the rules in subsection (a) of this section to transactions other than consumer transactions is intended to leave to the court the determination of the proper rules in consumer transactions.  The court may not infer from that limitation the nature of the proper rule in consumer transactions and may continue to apply established approaches.

Added by Laws 2000, c. 371, § 133, eff. July 1, 2001.

§12A-1-9-627.  Determination of whether conduct was commercially reasonable.

DETERMINATION OF WHETHER CONDUCT

WAS COMMERCIALLY REASONABLE

(a)  The fact that a greater amount could have been obtained by a collection, enforcement, disposition, or acceptance at a different time or in a different method from that selected by the secured party is not of itself sufficient to preclude the secured party from establishing that the collection, enforcement, disposition, or acceptance was made in a commercially reasonable manner.

(b)  A disposition of collateral is made in a commercially reasonable manner if the disposition is made:

(1)  in the usual manner on any recognized market;

(2)  at the price current in any recognized market at the time of the disposition; or

(3)  otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition.

(c)  A collection, enforcement, disposition, or acceptance is commercially reasonable if it has been approved:

(1)  in a judicial proceeding;

(2)  by a bona fide creditors' committee;

(3)  by a representative of creditors; or

(4)  by an assignee for the benefit of creditors.

(d)  Approval under subsection (c) of this section need not be obtained, and lack of approval does not mean that the collection, enforcement, disposition, or acceptance is not commercially reasonable.

Added by Laws 2000, c. 371, § 134, eff. July 1, 2001.

§12A-1-9-628.  Nonliability and limitation on liability of secured party; liability of secondary obligor.

NONLIABILITY AND LIMITATION ON LIABILITY

OF SECURED PARTY; LIABILITY OF SECONDARY OBLIGOR

(a)  Unless a secured party knows that a person is a debtor or obligor, knows the identity of the person, and knows how to communicate with the person:

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

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

(b)  A secured party is not liable because of its status as secured party:

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

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

(B) the identity of the person; and

(C) how to communicate with the person; or

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

(A) that the person is a debtor; and

(B) the identity of the person.

(c)  A secured party is not liable to any person, and a person's liability for a deficiency is not affected, because of any act or omission arising out of the secured party's reasonable belief that a transaction is not a consumer-goods transaction or a consumer transaction or that goods are not consumer goods, if the secured party's belief is based on its reasonable reliance on:

(1)  a debtor's representation concerning the purpose for which collateral was to be used, acquired, or held; or

(2)  an obligor's representation concerning the purpose for which a secured obligation was incurred.

(d)  A secured party is not liable to any person under paragraph (2) of subsection (c) of Section 19 625 of this title for its failure to comply with Section 19616 of this title.

(e)  A secured party is not liable under paragraph (2) of subsection (c) of Section 19625 of this title more than once with respect to any one secured obligation.

Added by Laws 2000, c. 371, § 135, eff. July 1, 2001.

§12A-1-9-702.  Savings clause.

SAVINGS CLAUSE

(a)  Except as otherwise provided in this part, this act applies to a transaction or lien within its scope, even if the transaction or lien was entered into or created before this act takes effect.

(b)  Except as otherwise provided in subsection (c) of this section and Sections 19703 through 19709 of this title:

(1)  transactions and liens that were not governed by former Article 9 of this title, were validly entered into or created before this act takes effect, and would be subject to this act if they had been entered into or created after this act takes effect, and the rights, duties, and interests flowing from those transactions and liens remain valid after this act takes effect; and

(2)  the transactions and liens may be terminated, completed, consummated, and enforced as required or permitted by this act or by the law that otherwise would apply if this act had not taken effect.

(c)  This act does not affect an action, case, or proceeding commenced before this act takes effect.

Added by Laws 2000, c. 371, § 136, eff. July 1, 2001.

§12A-1-9-703.  Security interest perfected before effective date.

SECURITY INTEREST PERFECTED BEFORE EFFECTIVE DATE

(a)  A security interest that is enforceable immediately before this act takes effect and would have priority over the rights of a person that becomes a lien creditor at that time is a perfected security interest under this act if, when this act takes effect, the applicable requirements for enforceability and perfection under this act are satisfied without further action.

(b)  Except as otherwise provided in Section 19705 of this title, if, immediately before this act takes effect, a security interest is enforceable and would have priority over the rights of a person that becomes a lien creditor at that time, but the applicable requirements for enforceability or perfection under this act are not satisfied when this act takes effect, the security interest:

(1)  is a perfected security interest for one (1) year after this act takes effect;

(2)  remains enforceable thereafter only if the security interest becomes enforceable under Section 19203 of this title before the year expires; and

(3)  remains perfected thereafter only if the applicable requirements for perfection under this act are satisfied before the year expires.

Added by Laws 2000, c. 371, § 137, eff. July 1, 2001.

§12A-1-9-704.  Security interest unperfected before effective date.

SECURITY INTEREST UNPERFECTED BEFORE EFFECTIVE DATE

A security interest that is enforceable immediately before this act takes effect but which would be subordinate to the rights of a person that becomes a lien creditor at that time:

(1)  remains an enforceable security interest for one (1) year after this act takes effect;

(2)  remains enforceable thereafter if the security interest becomes enforceable under Section 19203 of this title when this act takes effect or within one (1) year thereafter; and

(3)  becomes perfected:

(A) without further action, when this act takes effect if the applicable requirements for perfection under this act are satisfied before or at that time; or

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

Added by Laws 2000, c. 371, § 138, eff. July 1, 2001.

§12A-1-9-705.  Effectiveness of action taken before effective date of act.

EFFECTIVENESS OF ACTION TAKEN

BEFORE EFFECTIVE DATE OF ACT

(a)  If action, other than the filing of a financing statement, is taken before this act takes effect and the action would have resulted in priority of a security interest over the rights of a person that becomes a lien creditor had the security interest become enforceable before this act takes effect, the action is effective to perfect a security interest that attaches under this act within one (1) year after this act takes effect.  An attached security interest becomes unperfected one (1) year after this act takes effect unless the security interest becomes a perfected security interest under this act before the expiration of that period.

(b)  The filing of a financing statement before this act takes effect is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under this act.

(c)  This act does not render ineffective an effective financing statement that, before this act takes effect, is filed and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in former Section 9-103.1 of this title.  However, except as otherwise provided in subsections (d) and (e) of this section and Section 19706 of this title, the financing statement ceases to be effective at the earlier of:

(1)  the time the financing statement would have ceased to be effective under the law of the jurisdiction in which it is filed; or

(2)  June 30, 2006.

(d)  The filing of a continuation statement after this act takes effect does not continue the effectiveness of the financing statement filed before this act takes effect.  However, upon the timely filing of a continuation statement after this act takes effect and in accordance with the law of the jurisdiction governing perfection as provided in Part 3 of this article, the effectiveness of a financing statement filed in the same office in that jurisdiction before this act takes effect continues for the period provided by the law of that jurisdiction.

(e)  Paragraph (2) of subsection (c) of this section applies to a financing statement that, before this act takes effect, is filed against a transmitting utility and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in former Section 9-103.1 only to the extent that Part 3 of this article provides that the law of a jurisdiction other than the jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement.

(f)  A financing statement that includes a financing statement filed before this act takes effect and a continuation statement filed after this act takes effect is effective only to the extent that it satisfies the requirements of Part 5 of this article for an initial financing statement.

(g)  If an effective financing statement was filed before July 1, 2001, and that financing statement would otherwise cease to be effective on June 30, 2006, by operation of paragraph (2) of subsection (c) of this section, a continuation statement permitted to be filed by the second sentence of subsection (d) of this section may be filed between December 30, 2005, and June 30, 2006, inclusive, and will be timely, notwithstanding subsection (d) of Section 1-9-515 of this title.  Without limitation, this provision applies to collateral, however described under former law, that meets the definition of "as-extracted collateral" in Section 1-9-102 of this title.

Added by Laws 2000, c. 371, § 139, eff. July 1, 2001.  Amended by Laws 2004, c. 153, § 7, eff. Nov. 1, 2004.

§12A-1-9-706.  When initial financing statement suffices to continue effectivness of financing statement.

WHEN INITIAL FINANCING STATEMENT SUFFICES

TO CONTINUE EFFECTIVNESS OF FINANCING STATEMENT

(a)  The filing of an initial financing statement in the office specified in Section 19501 of this title continues the effectiveness of a financing statement filed before this act takes effect if:

(1)  the filing of an initial financing statement in that office would be effective to perfect a security interest under this act;

(2)  the pre-effective-date financing statement was filed in an office in another state or another office in this state; and

(3)  the initial financing statement satisfies subsection (c) of this section.

(b)  The filing of an initial financing statement under subsection (a) of this section continues the effectiveness of the pre-effective-date financing statement:

(1)  if the initial financing statement is filed before this act takes effect, for the period provided in former Section 9-403 of this title with respect to a financing statement; and

(2)  if the initial financing statement is filed after this act takes effect, for the period provided in Section 19515 of this title with respect to an initial financing statement.

(c)  To be effective for purposes of subsection (a) of this section, an initial financing statement must:

(1)  satisfy the requirements of Part 5 of this article for an initial financing statement;

(2)  identify the pre-effective-date financing statement by indicating the office in which the financing statement was filed and providing the dates of filing and file numbers, if any, of the financing statement and of the most recent continuation statement filed with respect to the financing statement; and

(3)  indicate that the pre-effective-date financing statement remains effective.

Added by Laws 2000, c. 371, § 140, eff. July 1, 2001.

§12A-1-9-707.  Persons entitled to file initial financing statement.

PERSONS ENTITLED TO FILE INITIAL FINANCING STATEMENT

(a)  In this section, "pre-effective-date financing statement" means a financing statement filed before this act takes effect.

(b)  After this act takes effect, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or otherwise amend the information provided in, a pre-effective-date financing statement only in accordance with the law of the jurisdiction governing perfection as provided in Part 3 of this article of this title.  However, the effectiveness of a pre-effective-date financing statement also may be terminated in accordance with the law of the jurisdiction in which the financing statement is filed.

(c)  Except as otherwise provided in subsection (d) of this section, if the law of this state governs perfection of a security interest, the information in a pre-effective-date financing statement may be amended after this act takes effect only if:

(1)  the pre-effective-date financing statement and an amendment are filed in the office specified in Section 1-9-501 of this title;

(2)  an amendment is filed in the office specified in Section 1-9-501 of this title concurrently with, or after the filing in that office of, an initial financing statement that satisfies subsection (c) of Section 1-9-706 of this title; or

(3)  an initial financing statement that provides the information as amended and satisfies subsection (c) of Section 1-9-706 of this title is filed in the office specified in Section 1-9-501 of this title.

(d)  If the law of this state governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement may be continued only under subsections (d) and (f) of Section 1-9-705 or Section 1-9-706 of this title.

(e)  Whether or not the law of this state governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement filed in this state may be terminated after this act takes effect by filing a termination statement in the office in which the pre-effective-date financing statement is filed, unless an initial financing statement that satisfies subsection (c) of Section 1-9-706 of this title has been filed in the office specified by the law of the jurisdiction governing perfection as provided in Part 3 of this article of this title as the office in which to file a financing statement.

Added by Laws 2000, c. 371, § 141, eff. July 1, 2001.  Amended by Laws 2001, c. 354, § 4, eff. July 1, 2001.

§12A-1-9-708.  Persons entitled to file initial financing statement or continuation statement.

PERSONS ENTITLED TO FILE INITIAL

FINANCING STATEMENT OR CONTINUATION STATEMENT

A person may file an initial financing statement or a continuation statement under this part if:

(1)  the secured party of record authorizes the filing; and

(2)  the filing is necessary under this part:

(A) to continue the effectiveness of a financing statement filed before this act takes effect; or

(B) to perfect or continue the perfection of a security interest.

Added by Laws 2000, c. 371, § 142, eff. July 1, 2001.

§12A-1-9-709.  Priority.

PRIORITY

(a)  This act determines the priority of conflicting claims to collateral.  However, if the relative priorities of the claims were established before this act takes effect, former Article 9 determines priority.

(b)  For purposes of subsection (a) of Section 19322 of this title, the priority of a security interest that becomes enforceable under Section 19203 of this title dates from the time this act takes effect if the security interest is perfected under this act by the filing of a financing statement before this act takes effect which would not have been effective to perfect the security interest under former Article 9 of this title.  This subsection does not apply to conflicting security interests each of which is perfected by the filing of such a financing statement.

Added by Laws 2000, c. 371, § 143, eff. July 1, 2001.

§12A-1-9-710.  Duties of local-filing offices.

(a)  In this section:

(1)  "Local-filing office" means a filing office, other than the statewide filing office in the office of the County Clerk of Oklahoma County or the statewide filing office in the office of the Secretary of State, that is designated as the proper place to file a financing statement under former Article 9 of this title;

(2) (A) "Former-Article 9 records" means:

(i) financing statements and other records that have been filed in a local-filing office before July 1, 2001, and that are, or upon processing and indexing will be, reflected in the index maintained by the local-filing office for filing for financing statements and other records filed in the local-filing office before July 1, 2001, and

(ii) the index maintained by the local-filing office as of June 30, 2001, including entries for filings completed before July 1, 2001, even though processed on or after that date.

(B) "Former-Article 9 records" do not include records presented to a local-filing office for filing after June 30, 2001, whether or not the records relate to financing statements filed in the local-filing office before July 1, 2001; and

(3)  "Mortgage", "as-extracted collateral", "fixture filing", "goods" and "fixtures" have the meanings set forth in this article of this title.

(b)  A local-filing office shall not accept for filing a record presented after June 30, 2001, whether or not the record relates to a financing statement filed in the local-filing office before July 1, 2001.

(c)  Until July 1, 2008, each local-filing office shall maintain all former-Article 9 records in accordance with former-Article 9.  A former-Article 9 record which is filed before July 1, 2001, but which is not reflected on the index maintained as of June 30, 2001, by the local-filing office, shall be processed and indexed and reflected on the index maintained as of June 30, 2001, as soon as practicable, but in no event later than July 30, 2001.

(d)  Until July 1, 2008, each local-filing office shall respond to requests for information with respect to former-Article 9 records relating to a debtor and shall issue certificates in accordance with former-Article 9.  The fees for issuing a certificate or for furnishing a certified copy of a former-Article 9 record shall be the uniform fees provided by subsections (c) and (d) of Section 19525 of this title.

(e)  After June 30, 2008, each local-filing office may remove and destroy all former-Article 9 records pursuant to Section 155.2 of Title 19 of the Oklahoma Statutes.

(f)  This section shall not apply, with respect to financing statements and other records, to a filing office in which mortgages or records of mortgages on real property are required to be filed or recorded if:

(1)  the collateral is timber to be cut or as-extracted collateral, or

(2)  the record is or relates to a financing statement files as a fixture filing and the collateral is goods that are or are to become fixtures.

Added by Laws 2000, c. 371, § 144, eff. July 1, 2001.  Amended by Laws 2001, c. 354, § 5, eff. July 1, 2001.

§12A1101.  Short titles.

Short Titles.

(a)  Sections 1101 through 11107 of this title shall be known and may be cited as the "Uniform Commercial Code".

(b)  This article shall be known and may be cited as "Uniform Commercial Code - General Provisions".

Added by Laws 1961, p. 69, § 1-101.  Amended by Laws 1988, c. 86, § 79, eff. Nov. 1, 1988; Laws 2005, c. 139, § 1, eff. Jan. 1, 2006.

§12A1102.  Scope of article.

Scope of Article.

This article applies to a transaction to the extent that it is governed by another article of the Uniform Commercial Code.

Added by Laws 1961, p. 69, § 1102.  Amended by Laws 2005, c. 139, § 2, eff. Jan. 1, 2006.

§12A1103.  Construction of Uniform Commercial Code to promote its purposes and policies - Applicability of supplemental principles of law.

Construction of Uniform Commercial Code to Promote Its Purposes and Policies; Applicability of Supplemental Principles of Law.

(a)  The Uniform Commercial Code shall be liberally construed and applied to promote its underlying purposes and policies, which are:

(1) to simplify, clarify and modernize the law governing commercial transactions;

(2) to permit the continued expansion of commercial practices through custom, usage and agreement of the parties; and

(3) to make uniform the law among the various jurisdictions.

(b)  Unless displaced by the particular provisions of the Uniform Commercial Code, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause shall supplement its provisions.

Added by Laws 1961, p. 69, § 1103.  Amended by Laws 2005, c. 139, § 3, eff. Jan. 1, 2006.

§12A1104.  Construction against implicit repeal.

Construction Against Implicit Repeal.

The Uniform Commercial Code being a general act intended as a unified coverage of its subject matter, no part of it shall be deemed to be impliedly repealed by subsequent legislation if such construction can reasonably be avoided.

Added by Laws 1961, p. 69, § 1104.  Amended by Laws 2005, c. 139, § 4, eff. Jan. 1, 2006.

§12A-1-105.  Repealed by Laws 2005, c. 139, § 38, eff. Jan. 1, 2006.

§12A1106.  Use of singular and plural - Gender.

Use of Singular and Plural; Gender.

In the Uniform Commercial Code, unless the statutory context otherwise requires:

(1)  words in the singular number include the plural, and in the plural include the singular; and

(2)  words of any gender include any other gender.

Added by Laws 1961, p. 70, § 1106.  Amended by Laws 2005, c. 139, § 5, eff. Jan. 1, 2006.

§12A1107.  Section captions.

Section Captions.

Section captions are part of the Uniform Commercial Code.

Added by Laws 1961, p. 70, § 1107.  Amended by Laws 2005, c. 139, § 6, eff. Jan. 1, 2006.

§12A-1-108.  Repealed by Laws 1989, c. 154, § 2, operative July 1, 1989.

§12A-1-108.1.  Relationship to Electronic Signatures in Global and National Commerce Act.

Article 1 of the Uniform Commercial Code modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C., Section 7001 et seq., except that nothing in this article modifies, limits or supersedes Section 7001(c) of that Act or authorizes electronic delivery of any of the notices described in Section 7003(b) of that Act.

Added by Laws 2005, c. 139, § 7, eff. Jan. 1, 2006.

§12A-1-109.  Repealed by Laws 2005, c. 139, § 38, eff. Jan. 1, 2006.

§12A-1-201.  General definitions and principles of interpretation.

General Definitions and Principles of Interpretation.

(a)  Unless the context otherwise requires, words or phrases defined in this section, or in the additional definitions contained in other articles of the Uniform Commercial Code that apply to particular articles or parts thereof, have the meanings stated.

(b)  Subject to definitions contained in other articles of the Uniform Commercial Code that apply to particular articles or parts thereof:

(1)  "Action" in the sense of a judicial proceeding includes a recoupment, counterclaim, setoff, suit in equity, and any other proceedings in which rights are determined.

(2)  "Aggrieved party" means a party entitled to pursue a remedy.

(3)  "Agreement", as distinguished from "contract", means the bargain of the parties in fact as found in their language or inferred from other circumstances including course of performance, course of dealing, or usage of trade as provided in Section 1-303 of this title.

(4)  "Bank" means a person engaged in the business of banking and includes a savings bank, savings and loan association, credit union, and trust company.

(5)  "Bearer" means a person in control of a negotiable electronic document of title or a person in possession of an instrument, negotiable tangible document of title, or certificated security payable to bearer or endorsed in blank.

(6)  "Bill of lading" means a document of title evidencing the receipt of goods for shipment issued by a person engaged in the business of directly or indirectly transporting or forwarding goods.  The term does not include a warehouse receipt.

(7)  "Branch" includes a separately incorporated foreign branch of a bank.

(8)  "Burden of establishing" means the burden of persuading the trier of fact that the existence of the fact is more probable than its nonexistence.

(9)  "Buyer in ordinary course of business" means a person that buys goods in good faith, without knowledge that the sale violates the rights of another person in the goods, and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind.  A person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices.  A person that sells oil, gas, or other minerals at the wellhead or minehead is a person in the business of selling goods of that kind.  A buyer in ordinary course of business may buy for cash, by exchange of other property, or on secured or unsecured credit, and may acquire goods or documents of title under a preexisting contract for sale.  Only a buyer that takes possession of the goods or has a right to recover the goods from the seller under Article 2 may be a buyer in ordinary course of business.  "Buyer in ordinary course of business" does not include a person that acquires goods in a transfer in bulk or as security for or total or partial satisfaction of a money debt.

(10)  "Conspicuous", with reference to a term means so written, displayed, or presented that a reasonable person against whom it is to operate ought to have noticed it.  Whether a term is "conspicuous" or not is a decision for the court.  Conspicuous terms include the following:

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

(B) language in the body of a record or display in larger type than 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.

(11)  "Consumer" means an individual who enters into a transaction primarily for personal, family, or household purposes.

(12)  "Contract", as distinguished from "agreement", means the total legal obligation that results from the parties' agreement as determined by the provisions of the Uniform Commercial Code as supplemented by any other applicable laws.

(13)  "Creditor" includes a general creditor, a secured creditor, a lien creditor, and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity, and an executor or administrator of an insolvent debtor's or assignor's estate.

(14)  "Defendant" includes a person in the position of defendant in a counterclaim, cross-claim, or third-party claim.

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

(16)  "Document of title" means a record that in the regular course of business or financing is treated as adequately evidencing that the person in possession or control of the record is entitled to receive, control, hold, and dispose of the record and the goods the record covers and that purports to be issued by or addressed to a bailee and to cover goods in the bailee's possession which are either identified or are fungible portions of an identified mass.  The term includes a bill of lading, transport document, dock warrant, dock receipt, warehouse receipt, and order for delivery of goods.  An electronic document of title means a document of title evidenced by a record consisting of information stored in an electronic medium.  A tangible document of title means a document of title evidenced by a record consisting of information that is inscribed on a tangible medium.

(17)  "Fault" means a default, breach, or wrongful act or omission.

(18)  "Fungible goods" means:

(A) goods of which any unit, by nature or usage of trade, is the equivalent of any other like unit; or

(B) goods that by agreement are treated as equivalent.

(19)  "Genuine" means free of forgery or counterfeiting.

(20)  "Good faith", except as otherwise provided in Article 5 of this title, means honesty in fact and the observance of reasonable commercial standards of fair dealing.

(21)  "Holder" means:

(A) the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession;

(B) the person in possession of a document of title if the goods are deliverable either to bearer or to the order of the person in possession; or

(C) the person in control of a negotiable electronic document of title.

(22)  "Insolvency proceeding" includes any assignment for the benefit of creditors or other proceeding intended to liquidate or rehabilitate the estate of the person involved.

(23)  "Insolvent" means:

(A) having generally ceased to pay debts in the ordinary course of business other than as a result of bona fide dispute;

(B) being unable to pay debts as they become due; or

(C) being insolvent within the meaning of the federal bankruptcy law.

(24)  "Money" means a medium of exchange 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.

(25)  "Organization" means a person other than an individual.

(26)  "Party", as distinguished from "third party", means a person who has engaged in a transaction or made an agreement subject to the Uniform Commercial Code.

(27)  "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, public corporation, or any other legal or commercial entity.

(28)  "Present value" means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain by use of either an interest rate specified by the parties if that rate is not manifestly unreasonable at the time the transaction is entered into or, if an interest rate is not so specified, a commercially reasonable rate that takes into account the facts and circumstances at the time the transaction is entered into.

(29)  "Purchase" means taking by sale, discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift, or any other voluntary transaction creating an interest in property.

(30)  "Purchaser" means a person who takes by purchase.

(31)  "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(32)  "Remedy" means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal.

(33)  "Representative" means a person empowered to act for another, including an agent, an officer of a corporation or association, and a trustee, executor, or administrator of an estate.

(34)  "Right" includes remedy.

(35) "Security interest" means an interest in personal property or fixtures which secures payment or performance of an obligation.  "Security interest" includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction that is subject to Article 9 of this title.  "Security interest" does not include the special property interest of a buyer of goods on identification of those goods to a contract for sale under Section 2-401 of this title, but a buyer may also acquire a "security interest" by complying with the provisions of Article 9 of this title.  Except as otherwise provided in Section 2-505 of this title, the right of a seller or lessor of goods under Article 2 or 2A of this title to retain or acquire possession of the goods is not a "security interest", but a seller or lessor may also acquire a "security interest" by complying with Article 9 of this title.  The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer under Section 2-401 of this title is limited in effect to a reservation of a "security interest".  Whether a transaction in the form of a lease creates security interest is determined pursuant to Section 1-203 of this title.

(36)  "Send" in connection with any writing, record, or notice means:

(A) to deposit in the mail or deliver for transmission by any other usual means of communication with postage or cost of transmission provided for and properly addressed and, in the case of an instrument, to an address specified thereon or otherwise agreed, or if there be none, to any address reasonable under the circumstances; or

(B) in any other way to cause to be received any record or notice within the time at which it would have arrived if properly sent.

(37)  "Signed" includes any symbol executed or adopted with present intention to adopt or accept a writing.

(38) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

(39)  "Surety" includes guarantor or other secondary obligor.

(40)  "Term" means a portion of an agreement which relates to a particular matter.

(41)  "Unauthorized signature" means a signature made without actual, implied or apparent authority.  The term includes a forgery.

(42)  "Warehouse receipt" means a document of title issued by a person engaged in the business of storing goods for hire.

(43)  "Writing" includes printing, typewriting, or any other intentional reduction to tangible form.  "Written" has a corresponding meaning.

Added by Laws 1961, p. 70, § 1-201.  Amended by Laws 1981, c. 194, § 2, eff. Oct. 1, 1981; Laws 1984, c. 76, § 1, eff. Nov. 1, 1984; Laws 1988, c. 86, § 82, eff. Nov. 1, 1988; Laws 1991, c. 117, § 1, eff. Jan. 1, 1992; Laws 1994, c. 46, § 1, eff. Sept. 1, 1994; Laws 2000, c. 371, § 147, eff. July 1, 2001; Laws 2005, c. 139, § 8, eff. Jan. 1, 2006.

§12A1202.  Notice - Knowledge.

Notice; Knowledge.

(a)  Subject to subsection (f) of this section, a person has "notice" of a fact if the person:

(1) has actual knowledge of it;

(2) has received a notice or notification of it; or

(3) from all the facts and circumstances known to the person at the time in question, has reason to know that it exists.

(b) "Knowledge" means actual knowledge.  "Knows" has a corresponding meaning.

(c)  "Discover" or "learn" or a word or phrase of similar import refers to knowledge rather than to reason to know.

(d)  A person "notifies" or "gives" a notice or notification to another person by taking such steps as may be reasonably required to inform the other person in ordinary course whether or not the other person actually comes to know of it.

(e)  Subject to subsection (f) of this section, a person "receives" a notice or notification when:

(1) it comes to the attention of the person; or

(2) it is duly delivered in a form reasonable under the circumstances at the place of business through which the contract was made or at another location held out by that person as the place for receipt of such communications.

(f)  Notice, knowledge, or a notice or notification received by an organization is effective for a particular transaction from the time when it is brought to the attention of the individual conducting that transaction, and, in any event, from the time it would have been brought to the attention of the individual if the organization had exercised due diligence.  An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines.  Due diligence does not require an individual acting for the organization to communicate information unless such communication is part of the regular duties of the individual or unless the individual has reason to know of the transaction and that the transaction would be materially affected by the information.

Added by Laws 1961, p. 73, § 1202.  Amended by Laws 2005, c. 139, § 9, eff. Jan. 1, 2006.

§12A1203.  Lease distinguished from security interest.

Lease Distinguished from Security Interest.

(a)  Whether a transaction in the form of a lease creates a lease or security interest is determined by the facts of each case.

(b)  A transaction creates a security interest if the consideration that the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease not subject to termination by the lessee, and:

(1) the original term of the lease is equal to or greater than the remaining economic life of the goods;

(2) the lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods;

(3) the lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement; or

(4) the lessee has an option to become the owner of the goods for no additional consideration or for nominal additional consideration upon compliance with the lease agreement.

(c) A transaction in the form of a lease does not create a security interest merely because:

(1) the present value of the consideration the lessee is obligated to pay the lessor for the right to possession and use of the goods is substantially equal to or is greater than the fair market value of the goods at the time the lease is entered into;

(2) the lessee assumes risk of loss of the goods;

(3) the lessee agrees to pay, with respect to the goods, taxes, insurance, filing, recording, or registration fees, or service or maintenance costs;

(4) the lessee has an option to renew the lease or to become the owner of the goods;

(5) the lessee has an option to renew the lease for a fixed rent that is equal to or greater than the reasonably predictable fair market rent for the use of the goods for the term of the renewal at the time the option is to be performed; or

(6) the lessee has an option to become the owner of the goods for a fixed price that is equal to or greater than the reasonably predictable fair market value of the goods at the time the option is to be performed.

(d)  Additional consideration is nominal if it is less than the lessee's reasonably predictable cost of performing under the lease agreement if the option is not exercised.  Additional consideration is not nominal if:

(1) when the option to renew the lease is granted to the lessee, the rent is stated to be the fair market rent for the use of the goods for the term of the renewal determined at the time the option is to be performed, or

(2) when the option to become the owner of the goods is granted to the lessee, the price is stated to be the fair market value of the goods determined at the time the option is to be performed.

(e) The "remaining economic life of the goods" and "reasonably predictable" fair market rent, fair market value, or cost of performing under the lease agreement must be determined with reference to the facts and circumstances at the time the transaction is entered into.

Added by Laws 1961, p. 73, § 1203.  Amended by Laws 2005, c. 139, § 10, eff. Jan. 1, 2006.

§12A1204.  "Value".

"Value".

Except as otherwise provided in Articles 3, 4 and 5 of the Uniform Commercial Code, a person gives value for rights if the person acquires them:

(1)  in return for a binding commitment to extend credit or for the extension of immediately available credit, whether or not drawn upon and whether or not a charge-back is provided for in the event of difficulties in collection;

(2)  as security for, or in total or partial satisfaction of, a preexisting claim;

(3)  by accepting delivery under a preexisting contract for purchase; or

(4)  in return for any consideration sufficient to support a simple contract.

Added by Laws 1961, p. 73, § 1204.  Amended by Laws 2005, c. 139, § 11, eff. Jan. 1, 2006.

§12A1205.  Reasonable time - Seasonableness.

Reasonable Time; Seasonableness.

(a)  Whether a time for taking an action required by the Uniform Commercial Code is reasonable depends on the nature, purpose, and circumstances of the action.

(b)  An action is taken seasonably if it is taken at or within the time agreed or, if no time is agreed, at or within a reasonable time.

Added by Laws 1961, p. 73, § 1205.  Amended by Laws 2005, c. 139, § 12, eff. Jan. 1, 2006.

§12A1206.  Presumptions.

Presumptions.

Whenever the Uniform Commercial Code creates a "presumption" with respect to a fact, or provides that a fact is "presumed", the trier of fact must find the existence of the fact unless and until evidence is introduced that supports a finding of its nonexistence.

Added by Laws 1961, p. 74, § 1206.  Amended by Laws 1995, c. 242, § 53, eff. Feb. 1, 1996; Laws 2005, c. 139, § 13, eff. Jan. 1, 2006.

§12A-1-207.  Repealed by Laws 2005, c. 139, § 39, eff. Jan. 1, 2006.

§12A-1-208.  Repealed by Laws 2005, c. 139, § 39, eff. Jan. 1, 2006.

§12A-1-209.  Repealed by Laws 2005, c. 139, § 39, eff. Jan. 1, 2006.

§12A-1-301.  Territorial applicability - Parties' power to choose applicable law.

Territorial Applicability; Parties' Power to Choose Applicable Law.

(a)  Except as provided hereafter in this section, when a transaction bears a reasonable relation to this state and also to another state or nation, the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties.  Failing such agreement, this title applies to transactions bearing an appropriate relation to this state.

(b)  To the extent that the Uniform Commercial Code governs a transaction, if one of the following provisions of the Uniform Commercial Code specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law so specified:

(1)  Section 2-402 of this title;

(2)  Sections 2A-105 and 2A-106 of this title;

(3)  Section 4-102 of this title;

(4)  Section 4A-507 of this title;

(5)  Section 5-116 of this title;

(6)  Section 8-110 of this title; and

(7)  Sections 1-9-301 through 1-9-307 of this title.

Added by Laws 2005, c. 139, § 14, eff. Jan. 1, 2006.

§12A-1-302.  Variation by agreement.

Variation by Agreement.

(a)  Except as otherwise provided in subsection (b) of this section or elsewhere in the Uniform Commercial Code, the effect of the Uniform Commercial Code may be varied by agreement.

(b)  The obligations of good faith, diligence, reasonableness, and care prescribed by the Uniform Commercial Code may not be disclaimed by agreement.  The parties, by agreement, may determine the standards by which the performance of those obligations is to be measured if those standards are not manifestly unreasonable.  Whenever the Uniform Commercial Code requires an action to be taken within a reasonable time, a time that is not manifestly unreasonable may be fixed by agreement.

(c)  The presence in certain provisions of the Uniform Commercial Code of the phrase "unless otherwise agreed" or words of similar import does not imply that the effect of other provisions may not be varied by agreement under this section.

Added by Laws 2005, c. 139, § 15, eff. Jan. 1, 2006.

§12A-1-303.  Course of performance, course of dealing, and usage of trade.

Course of Performance, Course of Dealing, and Usage of Trade.

(a)  A "course of performance" is a sequence of conduct between the parties to a particular transaction that exists if:

(1)  the agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and

(2)  the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.

(b)  A "course of dealing" is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.

(c)  A "usage of trade" is any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question.  The existence and scope of such a usage must be proved as facts.  If it is established that such a usage is embodied in a trade code or similar record, the interpretation of the record is a question of law.

(d)  A course of performance or course of dealing between the parties or usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware is relevant in ascertaining the meaning of the agreement of the parties, may give particular meaning to specific terms of the agreement, and may supplement or qualify the terms of the agreement.  A usage of trade applicable in the place in which part of the performance under the agreement is to occur may be so utilized as to that part of the performance.

(e)  Except as otherwise provided in subsection (f) of this section, the express terms of an agreement and any applicable course of performance, course of dealing, or usage of trade must be construed whenever reasonable as consistent with each other.  If such a construction is unreasonable:

(1)  express terms prevail over course of performance, course of dealing, and usage of trade;

(2)  course of performance prevails over course of dealing and usage of trade; and

(3)  course of dealing prevails over usage of trade.

(f)  Subject to Section 2-209 of Title 12A of the Oklahoma Statutes, a course of performance is relevant to show a waiver or modification of any term inconsistent with the course of performance.

(g)  Evidence of a relevant usage of trade offered by one party is not admissible unless that party has given the other party notice that the court finds sufficient to prevent unfair surprise to the other party.

Added by Laws 2005, c. 139, § 16, eff. Jan. 1, 2006.

§12A-1-304.  Obligation of good faith.

Obligation of Good Faith.

Every contract of duty within the Uniform Commercial Code imposes an obligation of good faith in its performance and enforcement.

Added by Laws 2005, c. 139, § 17, eff. Jan. 1, 2006.

§12A-1-305.  Remedies to be liberally administered.

Remedies to Be Liberally Administered.

(a) The remedies provided by the Uniform Commercial Code must be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed but neither consequential or special nor penal damages may be had except as specifically provided in the Uniform Commercial Code or by other rule of law.

(b) Any right or obligation declared by the Uniform Commercial Code is enforceable by action unless the provision declaring it specifies a different and limited effect.

Added by Laws 2005, c. 139, § 18, eff. Jan. 1, 2006.

§12A-1-306.  Waiver or renunciation of claim or right after breach.

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 record.

Added by Laws 2005, c. 139, § 19, eff. Jan. 1, 2006.

§12A-1-307.  Prima facie evidence by third-party documents.

Prima Facie Evidence by Third-Party Documents.

A document in due form purporting to be a bill of lading, policy or certificate of insurance, official weigher's or inspector's certificate, consular invoice, or any other document authorized or required by the contract to be issued by a third party is prima facie evidence of its own authenticity and genuineness and of the facts stated in the document by the third party.

Added by Laws 2005, c. 139, § 20, eff. Jan. 1, 2006.

§12A-1-308.  Performance or acceptance under reservation of rights.

Performance or Acceptance Under Reservation of Rights.

(a)  A party that with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved.  Such words as "without prejudice", "under protest" or the like are sufficient.

(b)  Subsection (a) of this section does not apply to an accord and satisfaction.

Added by Laws 2005, c. 139, § 21, eff. Jan. 1, 2006.

§12A-1-309.  Option to accelerate at will.

Option to Accelerate at Will.

A term providing that one party or that party's successor in interest may accelerate payment or performance or require collateral or additional collateral "at will" or when the party "deems itself insecure", or in words of similar import, means that the party shall have power to do so only if that party in good faith believes that the prospect of payment or performance is impaired.  The burden of establishing lack of good faith is on the party against whom the power has been exercised.

Added by Laws 2005, c. 139, § 22, eff. Jan. 1, 2006.

§12A-1-310.  Subordination of obligations.

Subordination of obligations.

An obligation may be issued as subordinated to performance of another obligation of the person obligated, or a creditor may subordinate its right to performance of an obligation by agreement with either the person obligated or another creditor of the person obligated.  Such a subordination does not create a security interest as against either the common debtor or a subordinated creditor.

Added by Laws 2005, c. 139, § 23, eff. Jan. 1, 2006.

§12A2101.  Short Title.

This article shall be known and may be cited as Uniform Commercial CodeSales.

Laws 1961, p. 74, § 2101.  

§12A2102.  Scope; Certain Security and Other Transactions Excluded from this Article.

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

Laws 1961, p. 74, § 2102.  

§12A-2-103.  Definitions and Index of Definitions.

Definitions and Index of Definitions.

(1)  In this article unless the context otherwise requires:

(a) "Buyer" means a person who buys or contracts to buy goods.

(b) "Receipt" of goods means taking physical possession of them.

(c) "Seller" means a person who sells or contracts to sell goods.

(2)  Other definitions applying to this article or to specified parts thereof, and the sections in which they appear are:

"Acceptance".  Section 2-606 of this title.

"Banker's credit".  Section 2-325 of this title.

"Between merchants".  Section 2-104 of this title.

"Cancellation".  Section 2-106(4) of this title.

"Commercial unit".  Section 2-105 of this title.

"Confirmed credit".  Section 2-325 of this title.

"Conforming to contract".  Section 2-106 of this title.

"Contract for sale".  Section 2-106 of this title.

"Cover".  Section 2-712 of this title.

"Entrusting".  Section 2-403 of this title.

"Financing agency".  Section 2-104 of this title.

"Future goods".  Section 2-105 of this title.

"Goods".  Section 2-105 of this title.

"Identification".  Section 2-501 of this title.

"Installment contract".  Section 2-612 of this title.

"Letter of credit".  Section 2-325 of this title.

"Lot".  Section 2-105 of this title.

"Merchant".  Section 2-104 of this title.

"Overseas".  Section 2-323 of this title.

"Person in position of seller".  Section 2-707 of this title.

"Present sale".  Section 2-106 of this title.

"Sale".  Section 2-106 of this title.

"Sale on approval".  Section 2-326 of this title.

"Sale or return".  Section 2-326 of this title.

"Termination".  Section 2-106 of this title.

(3)  "Control" as provided in Section 7-106 of this title and the following definitions in other articles apply to this article:

"Check".  Section 3-104 of this title.

"Consignee".  Section 7-102 of this title.

"Consignor".  Section 7-102 of this title.

"Consumer goods".  Section 1-9-102 of this title.

"Dishonor".  Section 3-502 of this title.

"Draft".  Section 3-104 of this title.

(4)  In addition, Article 1 of this title contains general definitions and principles of construction and interpretation applicable throughout this article.

Added by Laws 1961, p. 74, § 2-103.  Amended by Laws 1994, c. 46, § 2, eff. Sept. 1, 1994; Laws 2000, c. 371, § 148, eff. July 1, 2001; Laws 2005, c. 140, § 42, eff. Jan. 1, 2006; Laws 2005, c. 473, § 1, emerg. eff. June 9, 2005.

NOTE:  Laws 2005, c. 139, § 24 repealed by Laws 2005, c. 473, § 3, emerg. eff. June 9, 2005.

§12A2104.  Definitions:  "Merchant";  "Between merchants"; "Financing agency".

Definitions:  "Merchant";  "Between Merchants"; "Financing Agency".

(1)  "Merchant" means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.

(2)  "Financing agency" means a bank, finance company or other person who in the ordinary course of business makes advances against goods or documents of title or who by arrangement with either the seller or the buyer intervenes in ordinary course to make or collect payment due or claimed under the contract for sale, as by purchasing or paying the seller's draft or making advances against it or by merely taking it for collection whether or not documents of title accompany or are associated with the draft.  "Financing agency" includes also a bank or other person who similarly intervenes between persons who are in the position of seller and buyer in respect to the goods (Section 2707).

(3)  "Between merchants" means in any transaction with respect to which both parties are chargeable with the knowledge or skill of merchants.

Added by Laws 1961, p. 75, § 2104.  Amended by Laws 2005, c. 140, § 43, eff. Jan. 1, 2006.

§12A2105.  Definitions:  Transferability; "Goods"; "Future" goods; "Lot"; "Commercial unit".

Definitions:  Transferability; "Goods";  "Future" Goods;  "Lot"; "Commercial Unit".

(1)  "Goods" means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Article 8) and things in action. "Goods" also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty (Section 2107) but does not include information.

(2)  Goods must be both existing and identified before any interest in them can pass.  Goods which are not both existing and identified are "future" goods.  A purported present sale of future goods or of any interest therein operates as a contract to sell.

(3)  There may be a sale of a part interest in existing identified goods.

(4)  An undivided share in an identified bulk of fungible goods is sufficiently identified to be sold although the quantity of the bulk is not determined.  Any agreed proportion of such a bulk or any quantity thereof agreed upon by number, weight or other measure may to the extent of the seller's interest in the bulk be sold to the buyer who then becomes an owner in common.

(5)  "Lot" means a parcel or a single article which is the subject matter of a separate sale or delivery, whether or not it is sufficient to perform the contract.

(6)  "Commercial unit" means such a unit of goods as by commercial usage is a single whole for purposes of sale and division of which materially impairs its character or value on the market or in use.  A commercial unit may be a single article (as a machine) or a set of articles (as a suite of furniture or an assortment of sizes) or a quantity (as a bale, gross, or carload) or any other unit treated in use or in the relevant market as a single whole.

Added by Laws 1961, p. 75, § 2105.  Amended by Laws 2005, c. 139, § 25, eff. Jan. 1, 2006.

§12A2106.  Definitions: "Contract"; "Agreement"; "Contract for sale"; "Sale"; "Present sale"; "Conforming" to contract; "Termination"; "Cancellation".

Definitions: "Contract"; "Agreement"; "Contract for Sale"; "Sale"; "Present Sale"; "Conforming" to Contract; "Termination"; "Cancellation".

(1)  In this article unless the context otherwise requires "contract" and "agreement" are limited to those relating to the present or future sale of goods.  "Contract for sale" includes both a present sale of goods and a contract to sell goods at a future time but does not include a license of information.  A "sale" consists in the passing of title from the seller to the buyer for a price (Section 2401).  A "present sale" means a sale which is accomplished by the making of the contract.

(2)  Goods or conduct including any part of a performance are "conforming" or conform to the contract when they are in accordance with the obligations under the contract.

(3)  "Termination" occurs when either party pursuant to a power created by agreement or law puts an end to the contract otherwise than for its breach.  On "termination" all obligations which are still executory on both sides are discharged but any right based on prior breach or performance survives.

(4)  "Cancellation" occurs when either party puts an end to the contract for breach by the other and its effect is the same as that of "termination" except that the canceling party also retains any remedy for breach of the whole contract or any unperformed balance.

Added by Laws 1961, p. 76, § 2106.  Amended by Laws 2005, c. 139, § 26, eff. Jan. 1, 2006.

§12A2107.  Goods to be Severed from Realty:  Recording.

Goods to be Severed from Realty: Recording.  (1) A contract for the sale of minerals or the like, including oil and gas, or a structure or its materials to be removed from realty is a contract for the sale of goods within this article if they are to be severed by the seller, but until severance, a purported present sale thereof which is not effective as a transfer of an interest in land is effective only as a contract to sell.

(2) A contract for the sale, apart from the land of growing crops or other things attached to realty and capable of severance without material harm thereto, but not described in subsection (1) of this section or of timber to be cut is a contract for the sale of goods within this article whether the subject matter is to be severed by the buyer or by the seller even though it forms part of the realty at the time of contracting, and the parties can by identification effect a present sale before severance.

(3) The provisions of this section are subject to any third party rights provided by the law relating to realty records, and the contract for sale may be executed and recorded as a document transferring an interest in land and shall then constitute notice to third parties of the buyer's rights under the contract for sale.

Laws 1961, p. 76, § 2107; Laws 1981, c. 194, § 3.

§12A2201.  Formal Requirements; Statute of Frauds.

(1) Except as otherwise provided in this section a contract for the sale of goods for the price of Five Hundred Dollars ($500.00) or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker.  A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.

(2) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within ten (10) days after it is received.

(3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable

(a)  if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or

(b)  if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or

(c)  with respect to goods for which payment has been made and accepted or which have been received and accepted (Section 2606).

Laws 1961, p. 77, § 2201.  

§12A2202.  Final written expression: parol or extrinsic evidence.

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 intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:

(a)  by course of performance, course of dealing or usage of trade (Section 16 of this act); and

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

Added by Laws 1961, p. 77, § 2202.  Amended by Laws 2005, c. 139, § 27, eff. Jan. 1, 2006.

§12A2203.  Seals Inoperative.

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

Laws 1961, p. 77, § 2203.  

§12A2204.  Formation in General.

(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.

(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.

(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

Laws 1961, p. 77, § 2204.  

§12A2205.  Firm Offers.

An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three (3) months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.

Laws 1961, p. 77, § 2205.  

§12A2206.  Offer and Acceptance in Formation of Contract.

(1) Unless otherwise unambiguously indicated by the language or circumstances

(a)  an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;

(b)  an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods, but such a shipment of nonconforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.

(2) Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

Laws 1961, p. 78, § 2206.  

§12A2207.  Additional Terms in Acceptance or Confirmation.

(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

(2) The additional terms are to be construed as proposals for addition to the contract.  Between merchants such terms become part of the contract unless:

(a)  the offer expressly limits acceptance to the terms of the offer;

(b)  they materially alter it; or

(c)  notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract.  In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this act.

Laws 1961, p. 78, § 2207.  

§12A2208.  Course of Performance or Practical Construction.

(1) Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement.

(2) The express terms of the agreement and any such course of performance, as well as any course of dealing and usage of trade, shall be construed whenever reasonable as consistent with each other; but when such construction is unreasonable, express terms shall control course of performance and course of performance shall control both course of dealing and usage of trade (Section 1205).

(3) Subject to the provisions of the next section on modification and waiver, such course of performance shall be relevant to show a waiver or modification of any term inconsistent with such course of performance.

Laws 1961, p. 78, § 2208.  

§12A2209.  Modification, Rescission and Waiver.

(1) An agreement modifying a contract within this article needs no consideration to be binding.

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

(3) The requirements of the statute of frauds section of this article (Section 2201) must be satisfied if the contract as modified is within its provisions.

(4) Although an attempt at modification or rescission does not satisfy the requirements  of subsection (2) or (3) it can operate as a waiver.

(5) A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.

Laws 1961, p. 78, § 2209.  

§12A-2-210.  Delegation of Performance; Assignment of Rights.

Delegation of Performance; Assignment of Rights.

(1)  A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract.  No delegation of performance relieves the party delegating of any duty to perform or any liability for breach.

(2)  Except as otherwise provided in Section 19406 of this title, unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract, or impair materially his chance of obtaining return performance.  A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of his entire obligation can be assigned despite agreement otherwise.

(3)  The creation, attachment, perfection, or enforcement of a security interest in the seller's interest under a contract is not a transfer that materially changes the duty of or increases materially the burden or risk imposed on the buyer or impairs materially the buyer's chance of obtaining return performance within the purview of paragraph (2) of this section unless, and then only to the extent that enforcement actually results in a delegation of material performance of the seller.  Even in that event, the creation, attachment, perfection, and enforcement of the security interest remain effective, but (i) the seller is liable to the buyer for damages caused by the delegation to the extent that the damages could not reasonably be prevented by the buyer, and (ii) a court having jurisdiction may grant other appropriate relief, including cancellation of the contract for sale or an injunction against enforcement of the security interest or consummation of the enforcement.

(4)  Unless the circumstances indicate the contrary a prohibition of assignment of "the contract" is to be construed as barring only the delegation to the assignee of the assignor's performance.

(5)  An assignment of "the contract" or of "all my rights under the contract" or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances (as in an assignment for security) indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by him to perform those duties.  This promise is enforceable by either the assignor or the other party to the original contract.

(6)  The other party may treat any assignment which delegates performance as creating reasonable grounds for insecurity and may without prejudice to his rights against the assignor demand assurances from the assignee (Section 2609).

Added by Laws 1961, p. 79, § 2-210.  Amended by Laws 2000, c. 371, § 149, eff. July 1, 2001.

§12A2301.  General Obligations of Parties.

The obligation of the seller is to transfer and deliver and that of the buyer is to accept and pay in accordance with the contract.

Laws 1961, p. 79, § 2301.  

§12A2302.  Unconscionable Contract or Clause.

(1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

(2) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.

Laws 1961, p. 79, § 2302.  

§12A2303.  Allocation or Division of Risks.

Where this article allocates a risk or a burden as between the parties "unless otherwise agreed", the agreement may not only shift the allocation but may also divide the risk or burden.

Laws 1961, p. 79, § 2303.  

§12A2304.  Price Payable in Money, Goods, Realty, or Otherwise.

(1) The price can be made payable in money or otherwise.  If it is payable in whole or in part in goods each party is a seller of the goods which he is to transfer.

(2) Even though all or part of the price is payable in an interest in realty the transfer of the goods and the seller's obligations with reference to them are subject to this article, but not the transfer of the interest in realty or the transferor's obligations in connection therewith.

Laws 1961, p. 79, § 2304.  

§12A2305.  Open Price Term.

(1) The parties if they so intend can conclude a contract for sale even though the price is not settled.  In such a case the price is a reasonable price at the time for delivery if

(a)  nothing is said as to price; or

(b)  the price is left to be agreed by the parties and they fail to agree; or

(c)  the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.

(2) A price to be fixed by the seller or by the buyer means a price for him to fix in good faith.

(3) When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other may at his option treat the contract as cancelled or himself fix a reasonable price.

(4) Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract.  In such case the buyer must return any goods already received or if unable so to do must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account.

§12A2306.  Output, Requirements and Exclusive Dealings.

(1) A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.

(2) A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.

Laws 1961, p. 80, § 2306.  

§12A2307.  Delivery in Single Lot or Several Lots.

Unless otherwise agreed all goods called for by a contract for sale must be tendered in a single delivery and payment is due only on such tender but where the circumstances give either party the right to make or demand delivery in lots the price if it can be apportioned may be demanded for each lot.

Laws 1961, p. 80, § 2307.  

§12A2308.  Absence of Specified Place for Delivery.

Unless otherwise agreed

(a)  the place for delivery of goods is the seller's place of business or if he has none his residence; but

(b)  in a contract for sale of identified goods which to the knowledge of the parties at the time of contracting are in some other place, that place is the place for their delivery; and

(c)  documents of title may be delivered through customary banking channels.

Laws 1961 P. 80, Sec. 2308.

§12A2309.  Absence of Specific Time Provisions; Notice of Termination.

(1) The time for shipment or delivery or any other action under a contract if not provided in this article or agreed upon shall be a reasonable time.

(2) Where the contract provides for successive performances but is indefinite in duration it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party.

(3) Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable.

Laws 1961, p. 80, § 2309.  

§12A2310.  Open time for payment or running of credit - Authority to ship under reservation.

Open Time for Payment or Running of Credit; Authority to Ship Under Reservation.

Unless otherwise agreed:

(a)  payment is due at the time and place at which the buyer is to receive the goods even though the place of shipment is the place of delivery; and

(b)  if the seller is authorized to send the goods he may ship them under reservation, and may tender the documents of title, but the buyer may inspect the goods after their arrival before payment is due unless such inspection is inconsistent with the terms of the contract (Section 2513); and

(c)  if delivery is authorized and made by way of documents of title otherwise than by subsection (b) then payment is due regardless of where the goods are to be received (i) at the time and place at which the buyer is to receive delivery of the tangible documents or (ii) at the time the buyer is to receive delivery of the electronic documents and at the seller's place of business or if none, the seller's residence; and

(d)  where the seller is required or authorized to ship the goods on credit the credit period runs from the time of shipment but postdating the invoice or delaying its dispatch will correspondingly delay the starting of the credit period.

Added by Laws 1961, p. 80, § 2310.  Amended by Laws 2005, c. 140, § 44, eff. Jan. 1, 2006.

§12A2311.  Options and Cooperation Respecting Performance.

(1) An agreement for sale which is otherwise sufficiently definite (subsection (3) of Section 2204) to be a contract is not made invalid by the fact that it leaves particulars of performance to be specified by one of the parties.  Any such specification must be made in good faith and within limits set by commercial reasonableness.

(2) Unless otherwise agreed specifications relating to assortment of the goods are at the buyer's option and except as otherwise provided in subsections (1) (c) and (3) of Section 2319 specifications or arrangements relating to shipment are at the seller's option.

(3) Where such specification would materially affect the other party's performance but is not seasonably made or where one party's cooperation is necessary to the agreed performance of the other but is not seasonably forthcoming, the other party in addition to all other remedies

(a)  is excused for any resulting delay in his own performance; and

(b)  may also either proceed to perform in any reasonable manner or after the time for a material part of his own performance treat the failure to specify or to cooperate as a breach by failure to deliver or accept the goods.

Laws 1961, p. 81, § 2311.  

§12A2312.  Warranty of Title and Against Infringement; Buyer's Obligation Against Infringement.

(1) Subject to subsection (2) there is in a contract for sale a warranty by the seller that

(a)  the title conveyed shall be good, and its transfer rightful; and

(b)  the goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.

(2) A warranty under subsection (1) will be excluded or modified only by specific language or by circumstances which give the buyer reason to know that the person selling does not claim title in himself or that he is purporting to sell only such right or title as he or a third person may have.

(3) Unless otherwise agreed a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim which arises out of compliance with the specifications.

Laws 1961, p. 81, § 2312.  

§12A2313.  Express Warranties by Affirmation, Promise, Description, Sample.

(1) Express warranties by the seller are created as follows:

(a)  Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.

(b)  Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.

(c)  Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.

(2) It is not necessary to the creation of an express warranty that the seller use formal words such as "warrant" or "guarantee" or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty.

Laws 1961, p. 81, § 2313.  

§12A2314.  Implied Warranty:  Merchantability; Usage of Trade.

(1) Unless excluded or modified (Section 2316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.

(2) Goods to be merchantable must be at least such as

(a)  pass without objection in the trade under the contract description; and

(b)  in the case of fungible goods, are of fair average quality within the description; and

(c)  are fit for the ordinary purposes for which such goods are used; and

(d)  run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and

(e)  are adequately contained, packaged, and labeled as the agreement may require; and

(f)  conform to the promises or affirmations of fact made on the container or label if any.

(3) Unless excluded or modified (Section 2316) other implied warranties may arise from course of dealing or usage of trade.

Laws 1961 P. 82, Sec. 2314.

§12A2315.  Implied Warranty: Fitness for Particular Purpose.

Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose. Laws 1961 P. 82, Sec. 2315.

§12A2316.  Exclusion or Modification of Warranties.

Exclusion or Modification of Warranties.  (1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but, subject to the provisions of this Article on parol or extrinsic evidence (Section 2202) negation or limitation is inoperative to the extent that such construction is unreasonable.

(2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that "There are no warranties which extend beyond the description on the face hereof."

(3) Notwithstanding subsection (2)

(a) unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like "as is", "with all faults" or other language which in common understanding calls the buyer's attention to the exclusion of warranties and makes plain that there is no implied warranty; and

(b) when the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him; and

(c) an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade; and

(d) the implied warranties of merchantability and fitness do not apply to the sale or barter of livestock or its unborn young, provided that seller offers sufficient evidence that all state and federal regulations pertaining to the health of such animals were complied with; provided, however, that the implied warranties of merchantability and fitness shall apply to the sale or barter of horses.

(4) Remedies for breach of warranty can be limited in accordance with the provisions of this Article on liquidation or limitation of damages and on contractual modification of remedy (Sections 2718 and 2719).

Laws 1961, p. 82, § 2316; Laws 1981, c. 181, § 1.  

§12A2317.  Cumulation and Conflict of Warranties Express or Implied.

Warranties whether express or implied shall be construed as consistent with each other and as cumulative, but if such construction is unreasonable the intention of the parties shall determine which warranty is dominant.  In ascertaining that intention the following rules apply:

(a)  Exact or technical specifications displace an inconsistent sample or model or general language of description.

(b)  A sample from an existing bulk displaces inconsistent general language of description.

(c)  Express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose.

Laws 1961, p. 82, § 2317.  

§12A2318.  Third Party Beneficiaries of Warranties Express or Implied.

Third Party Beneficiaries of Warranties Express or Implied.

(1)  A seller's warranty whether express or implied extends to any natural person who is in the family or household of his buyer or who is a guest in his home if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured in person by breach of the warranty.

(2)  This section does not displace principles of law and equity that extend a warranty to or for the benefit of a buyer to other persons.

(3)  The operation of this section may not be excluded, modified, or limited by a seller, but an exclusion, modification, or limitation of the warranty, including any with respect to rights and remedies, effective against the buyer is also effective against any beneficiary designated under this section.

Amended by Laws 1988, c. 86, § 83, eff. Nov. 1, 1988.  

§12A2319.  F.O.B. and F.A.S. Terms.

(1) Unless otherwise agreed the term F.O.B. (which means "free on board") at a named place, even though used only in connection with the stated price, is a delivery term under which

(a) when the term is F.O.B. the place of shipment, the seller must at that place ship the goods in the manner provided in this article (Section 2504) and bear the expense and risk of putting them into the possession of the carrier; or

(b) when the term is F.O.B. the place of destination, the seller must at his own expense and risk transport the goods to that place and there tender delivery of them in the manner provided in this article (Section 2503);

(c) when under either (a) or (b) the term is also F.O.B. vessel, car or other vehicle, the seller must in addition at his own expense and risk load the goods on board.  If the term if F.O.B. vessel the buyer must name the vessel and in an appropriate case the seller must comply with the provisions of this article on the form of bill of lading (Section 2323).

(2)  Unless otherwise agreed the term F.A.S. vessel (which means "free alongside") at a named port, even though used only in connection with the stated price, is a delivery term under which the seller must

(a)  at his own expense and risk deliver the goods alongside the vessel in the manner usual in that port or on a dock designated and provided by the buyer; and

(b)  obtain and tender a receipt for the goods in exchange for which the carrier is under a duty to issue a bill of lading.

(3)  Unless otherwise agreed in any case falling within subsection (1) (a) or (c) or subsection (2) the buyer must seasonably give any needed instructions for making delivery, including when the term is F.A.S. or F.O.B. the loading berth of the vessel and in an appropriate case its name and sailing date.  The seller may treat the failure of needed instructions as a failure of cooperation under this article (Section 2311).  He may also at his option move the goods in any reasonable manner preparatory to delivery or shipment.

(4)  Under the term F.O.B. vessel or F.A.S. unless otherwise agreed the buyer must make payment against tender of the required documents and the seller may not tender nor the buyer demand delivery of the goods in substitution for the documents.

Laws 1961, p. 83, § 2319. d

§12A2320.  C.I.F. and C. and F. Terms.

(1) The term C.I.F. means that the price includes in a lump sum the cost of the goods and the insurance and freight to the named destination.  The term C. and F. or C.F. means that the price so includes cost and freight to the named destination.

(2) Unless otherwise agreed and even though used only in connection with the stated price and destination, the term C.I.F. destination or its equivalent requires the seller at his own expense and risk to

(a)  put the goods into the possession of a carrier at the port for shipment and obtain a negotiable bill or bills of lading covering the entire transportation to the named destination; and

(b)  load the goods and obtain a receipt from the carrier (which may be contained in the bill of lading) showing that the freight has been paid or provided for; and

(c)  obtain a policy or certificate of insurance, including any war risk insurance, of a kind and on terms then current at the port of shipment in the usual amount, in the currency of the contract, shown to cover the same goods covered by the bill of lading and providing for payment of loss to the order of the buyer or for the account of whom it may concern; but the seller may add to the price the amount of the premium for any such war risk insurance; and

(d)  prepare an invoice of the goods and procure any other documents required to effect shipment or to comply with the contract; and

(e)  forward and tender with commercial promptness all the documents in due form and with any endorsement necessary to perfect the buyer's rights.

(3) Unless otherwise agreed the term C. and F. or its equivalent has the same effect and imposes upon the seller the same obligations and risks as a C.I.F. term except the obligation as to insurance.

(4) Under the term C.I.F. or C. and F. unless otherwise agreed the buyer must make payment against tender of the required documents and the seller may not tender nor the buyer demand delivery of the goods in substitution for the documents.

Laws 1961, p. 83, § 2320.  

§12A2321.  C.I.F. or C. and F.: "Net Landed Weights"; "Payment on Arrival"; Warranty of Condition on Arrival.

Under a contract containing a term C.I.F. or C. and F.

(1) Where the price is based on or is to be adjusted according to "net landed weights", "delivered weights", "out turn" quantity or quality or the like, unless otherwise agreed the seller must reasonably estimate the price.  The payment due on tender of the documents called for by the contract is the amount so estimated, but after final adjustment of the price a settlement must be made with commercial promptness.

(2) An agreement described in subsection (1) or any warranty of quality or condition of the goods on arrival places upon the seller the risk of ordinary deterioration, shrinkage and the like in transportation but has no effect on the place or time of indentification to the contract for sale or delivery or on the passing of the risk of loss.

(3) Unless otherwise agreed where the contract provides for payment on or after arrival of the goods the seller must before payment allow such preliminary inspection as is feasible; but if the goods are lost delivery of the documents and payment are due when the goods should have arrived.

Laws 1961, p. 84, § 2321.  

§12A2322.  Delivery "ExShip".

(1) Unless otherwise agreed a term for delivery of goods "exship" (which means from the carrying vessel) or in equivalent language is not restricted to a particular ship and requires delivery from a ship which has reached a place at the named port of destination where goods of the kind are usually discharged.

(2) Under such a term unless otherwise agreed

(a)  the seller must discharge all liens arising out of the carriage and furnish the buyer with a direction which puts the carrier under a duty to deliver the goods; and

(b)  the risk of loss does not pass to the buyer until the goods leave the ship's tackle or are otherwise properly unloaded.

Laws 1961, p. 84, § 2322.  

§12A2323.  Form of bill of lading required in overseas shipment - "Overseas".

Form of Bill of Lading Required in Overseas Shipment; "Overseas".

(1)  Where the contract contemplates overseas shipment and contains a term C.I.F. or C. and F. or F.O.B. vessel, the seller unless otherwise agreed must obtain a negotiable bill of lading stating that the goods have been loaded on board or, in the case of a term C.I.F. or C. and F., received for shipment.

(2)  Where in a case within subsection (1) a tangible bill of lading has been issued in a set of parts, unless otherwise agreed if the documents are not to be sent from abroad the buyer may demand tender of the full set; otherwise only one part of the bill of lading need be tendered.  Even if the agreement expressly requires a full set.

(a)  due tender of a single part is acceptable within the provisions of this article on cure of improper delivery (subsection (1) of Section 2508); and

(b)  even though the full set is demanded, if the documents are sent from abroad the person tendering an incomplete set may nevertheless require payment upon furnishing an indemnity which the buyer in good faith deems adequate.

(3)  A shipment by water or by air or a contract contemplating such shipment is "overseas" insofar as by usage of trade or agreement it is subject to the commercial, financing or shipping practices characteristic of international deep water commerce.

Added by Laws 1961, p. 84, § 2323.  Amended by Laws 2005, c. 140, § 45, eff. Jan. 1, 2006.

§12A2324.  "No Arrival, No Sale" Term.

Under a term "no arrival, no sale" or terms of like meaning, unless otherwise agreed.

(a)  the seller must properly ship conforming goods and if they arrive by any means he must tender them on arrival but he assumes no obligation that the goods will arrive unless he has caused the nonarrival; and

(b)  where without fault of the seller the goods are in part lost or have so deteriorated as no longer to conform to the contract or arrive after the contract time, the buyer may proceed as if there had been casualty to identified goods (Section 2613).

Laws 1961, p. 85, § 2324.  

§12A2325.  "Letter of Credit" Term; "Confirmed Credit".

(1) Failure of the buyer seasonably to furnish an agreed letter of credit is a breach of the contract for sale.

(2) The delivery to seller of a proper letter of credit suspends the buyer's obligation to pay.  If the letter of credit is dishonored, the seller may on seasonable notification to the buyer require payment directly from him.

(3) Unless otherwise agreed the term "letter of credit" or "banker's credit" in a contract for sale means an irrevocable credit issued by a financing agency of good repute and, where the shipment is overseas, of good international repute.  The term "confirmed credit" means that the credit must also carry the direct obligation of such an agency which does business in the seller's financial market.

Laws 1961, p. 85, § 2325.  

§12A-2-326.  Sale on Approval and Sale or Return; Consignment Sales and Rights of Creditors.

Sale on Approval and Sale or Return; Consignment Sales and Rights of Creditors.

(1)  Unless otherwise agreed, if delivered goods may be returned by the buyer even though they conform to the contract, the transaction is

(a)  a "sale on approval" if the goods are delivered primarily for use, and

(b)  a "sale or return" if the goods are delivered primarily for resale.

(2)  Goods held on approval are not subject to the claims of the buyer's creditors until acceptance; goods held on sale or return are subject to such claims while in the buyer's possession.

(3)  Any "or return" term of a contract for sale is to be treated as a separate contract for sale within the statute of frauds section of this article (Section 2201 of this title) and as contradicting the sale aspect of the contract within the provisions of this article on parole or extrinsic evidence (Section 2202 of this title).

Added by Laws 1961, p. 85, § 2-326.  Amended by Laws 2000, c. 371, § 150, eff. July 1, 2001.

§12A2327.  Special Incidents of Sale on Approval and Sale or Return.

(1) Under a sale on approval unless otherwise agreed

(a)  although the goods are identified to the contract the risk of loss and the title do not pass to the buyer until acceptance; and

(b)  use of the goods consistent with the purpose of trial is not acceptance but failure seasonably to notify the seller of election to return the goods is acceptance, and if the goods conform to the contract acceptance of any part is acceptance of the whole; and

(c)  after due notification of election to return, the return is at the seller's risk and expense but a merchant buyer must follow any reasonable instructions.

(2) Under a sale or return unless otherwise agreed

(a)  the option to return extends to the whole or any commercial unit of the goods while in substantially their original condition, but must be exercised seasonably, and

(b) the return is at the buyer's risk and expense.

Laws 1961, p. 86, § 2327.  

§12A2328.  Sale by Auction.

(1) In a sale by auction if goods are put up in lots each lot is the subject of a separate sale.

(2) A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner. Where a bid is made while the hammer is falling in acceptance of a prior bid the auctioneer may in his discretion reopen the bidding or declare the goods sold under the bid on which the hammer was falling.

(3) Such a sale is with reserve unless the goods are in explicit terms put up without reserve.  In an auction with reserve the auctioneer may withdraw the goods at any time until he announces completion of the sale.  In an auction without reserve, after the auctioneer calls for bids on an article or lot, that article or lot cannot be withdrawn unless no bid is made within a reasonable time. In either case a bidder may retract his bid until the auctioneer's announcement of completion of the sale, but a bidder's retraction does not revive any previous bid.

(4) If the auctioneer knowingly receives a bid on the seller's behalf or the seller makes or procures such a bid, and notice has not been given that liberty for such bidding is reserved, the buyer may at his option avoid the sale or take the goods at the price of the last good faith bid prior to the completion of the sale.  This subsection shall not apply to any bid at a forced sale.

Laws 1961, p. 86, § 2328.  

§12A2401.  Passing of title - Reservation for security - Limited application of this section.

Passing of Title; Reservation for Security; Limited Application of this Section.

Each provision of this article with regard to the rights, obligations and remedies of the seller, the buyer, purchasers or other third parties applies irrespective of title to the goods except where the provision refers to such title.  Insofar as situations are not covered by the other provisions of this article and matters concerning title become material the following rules apply:

(1)  Title to goods cannot pass under a contract for sale prior to their identification to the contract (Section 2501), and unless otherwise explicitly agreed the buyer acquires by their identification a special property as limited by this act.  Any retention or reservation by the seller of the title (property) in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest.  Subject to these provisions and to the provisions of the article on Secured Transactions (Article 9), title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties.

(2)  Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time or place; and in particular and despite any reservation of a security interest by the bill of lading:

(a)  if the contract requires or authorizes the seller to send the goods to the buyer but does not require him to deliver them at destination, title passes to the buyer at the time and place of shipment; but

(b)  if the contract requires delivery at destination, title passes on tender there.

(3)  Unless otherwise explicitly agreed where delivery is to be made without moving the goods,

(a)  if the seller is to deliver a tangible document of title, title passes at the time when and the place where he delivers such documents and if the seller is to deliver an electronic document of title, title passes when the seller delivers the document; or

(b)  if the goods are at the time of contracting already identified and no documents are to be delivered, title passes at the time and place of contracting.

(4)  A rejection or other refusal by the buyer to receive or retain the goods, whether or not justified, or a justified revocation of acceptance revests title to the goods in the seller. Such revesting occurs by operation of law and is not a "sale".

Added by Laws 1961, p. 86, § 2401.  Amended by Laws 2005, c. 140, § 46, eff. Jan. 1, 2006.

§12A2402.  Rights of Seller's Creditors Against Sold Goods.

(1) Except as provided in subsections (2) and (3), rights of unsecured creditors of the seller with respect to goods which have been identified to a contract for sale are subject to the buyer's rights to recover the goods under this article (Sections 2502 and 2716).

(2) A creditor of the seller may treat a sale or an identification of goods to a contract for sale as void if as against him a retention of possession by the seller is fraudulent under any rule of law of the state where the goods are situated, except that retention of possession in good faith and current course of trade by a merchantseller for a commercially reasonable time after a sale or identification is not fraudulent.

(3) Nothing this article shall be deemed to impair the rights of creditors of the seller.

(a)  under the provisions of the article on Secured Transactions (Article 9); or

(b)  where identification to the contract or delivery is made not in current course of trade but in satisfaction of or as security for a preexisting claim for money, security or the like and is made under circumstances which under any rule of law of the state where the goods are situated would apart from this article constitute the transaction a fraudulent transfer or voidable preference.

Laws 1961, p. 87, § 2402.  

§12A-2-403.  Power to Transfer; Good Faith Purchase of Goods; "Entrusting".

Power to Transfer; Good Faith Purchase of Goods; "Entrusting".

(1)  A purchaser of goods acquires all title which his transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased.  A person with voidable title has power to transfer a good title to a good faith purchaser for value.  When goods have been delivered under a transaction of purchase the purchaser has such power even though

(a) the transferor was deceived as to the identity of the purchaser, or

(b) the delivery was in exchange for a check which is later dishonored, or

(c) it was agreed that the transaction was to be a "cash sale", or

(d) the delivery was procured through fraud punishable as larcenous under the criminal law.

(2)  Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business.

(3)  "Entrusting" includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goods have been such as to be larcenous under the criminal law.

(4)  The rights of other purchasers of goods and of lien creditors are governed by the articles on Secured Transactions (Article 9) and Documents of Title (Article 7).

Added by Laws 1961, p. 87, § 2-403.  Amended by Laws 1990, c. 273, § 12, eff. Sept. 1, 1990; Laws 1997, c. 112, § 2, eff. Nov. 1, 1997.

§12A2501.  Insurable Interest in Goods; Manner of Identification of Goods.

(1) The buyer obtains a special property and an insurable interest in goods by identification of existing goods as goods to which the contract refers even though the goods so identified are nonconforming and he has an option to return or reject them.  Such identification can be made at any time and in any manner explicitly agreed to by the parties.  In the absence of explicit agreement identification occurs

(a)  when the contract is made if it is for the sale of goods already existing and identified;

(b)  if the contract is for the sale of future goods other than those described in paragraph (c), when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers;

(c)  when the crops are planted or otherwise become growing crops or the young are conceived if the contract is for the sale of unborn young to be born within twelve (12) months after contracting or for the Sale of crops to be harvested within twelve (12) months or the next normal harvest season after contracting whichever is longer.

(2) The seller retains an insurable interest in goods so long as title to or any security interest in the goods remains in him and where the identification is by the seller alone he may until default or insolvency or notification to the buyer that the identification is final substitute other goods for those identified.

(3) Nothing in this section impairs any insurable interest recognized under any other statute or rule of law.

Laws 1961, p. 88, § 2501.  

§12A-2-502.  Buyer's Right to Goods on Seller's Insolvency.

Buyer's Right to Goods on Seller's Insolvency.

(1)  Subject to paragraphs (2) and (3) of this section and even though the goods have not been shipped a buyer who has paid a part or all of the price of goods in which the buyer has a special property under the provisions of Section 2-501 of this title may on making and keeping good a tender of any unpaid portion of their price recover them from the seller if:

(a)  in the case of goods bought for personal, family, or household purposes, the seller repudiates or fails to deliver as required by the contract; or

(b)  in all cases, the seller becomes insolvent within ten (10) days after receipt of the first installment on their price.

(2)  The buyer's right to recover the goods under subparagraph (a) of paragraph (1) vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.

(3)  If the identification creating his special property has been made by the buyer he acquires the right to recover the goods only if they conform to the contract for sale.

Added by Laws 1961, p. 88, § 2-502.  Amended by Laws 2000, c. 371, § 151, eff. July 1, 2001.

§12A2503.  Manner of seller's tender of delivery.

Manner of Seller's Tender of Delivery.

(1)  Tender of delivery requires that the seller put and hold conforming goods at the buyer's disposition and give the buyer any notification reasonably necessary to enable him to take delivery. The manner, time and place for tender are determined by the agreement and this article, and in particular:

(a)  tender must be at a reasonable hour, and if it is of goods they must be kept available for the period reasonably necessary to enable the buyer to take possession; but

(b)  unless otherwise agreed the buyer must furnish facilities reasonably suited to the receipt of the goods.

(2)  Where the case is within the next section respecting shipment tender requires that the seller comply with its provisions.

(3)  Where the seller is required to deliver at a particular destination tender requires that he comply with subsection (1) and also in any appropriate case tender documents as described in subsections (4) and (5) of this section.

(4)  Where goods are in the possession of a bailee and are to be delivered without being moved.

(a)  tender requires that the seller either tender a negotiable document of title covering such goods or procure acknowledgment by the bailee of the buyer's right to possession of the goods; but

(b)  tender to the buyer of a nonnegotiable document of title or of a written direction to the bailee to deliver is sufficient tender unless the buyer seasonably objects, and receipt by the bailee of notification of the buyer's rights fixes those rights as against the bailee and all third persons; but risk of loss of the goods and of any failure by the bailee to honor the nonnegotiable document of title or to obey the direction remains on the seller until the buyer has had a reasonable time to present the document or direction, and a refusal by the bailee to honor the document or to obey the direction defeats the tender.

(5)  Where the contract requires the seller to deliver documents

(a)  he must tender all such documents in correct form, except as provided in this article with respect to bills of lading in a set (subsection (2) of Section 2323); and

(b)  tender through customary banking channels is sufficient and dishonor of a draft accompanying or associated with the documents constitutes nonacceptance or rejection.

Added by Laws 1961, p. 88, § 2503.  Amended by Laws 2005, c. 140, § 47, eff. Jan. 1, 2006.

§12A2504.  Shipment by Seller.

Where the seller is required or authorized to send the goods to the buyer and the contract does not require him to deliver them at a particular destination, then unless otherwise agreed he must

(a)  put the goods in the possession of such a carrier and make such a contract for their transportation as may be reasonable having regard to the nature of the goods and other circumstances of the case; and

(b)  obtain and promptly deliver or tender in due form any document necessary to enable the buyer to obtain possession of the goods or otherwise required by the agreement or by usage of trade; and

(c)  promptly notify the buyer of the shipment.  Failure to notify the buyer under paragraph (c) or to make a proper contract under paragraph (a) is a ground for rejection only if material delay or loss ensues.

Laws 1961, p. 89, § 2504.  

§12A2505.  Seller's shipment under reservation.

Seller's Shipment Under Reservation.

(1)  Where the seller has identified goods to the contract by or before shipment:

(a)  his procurement of a negotiable bill of lading to his own order or otherwise reserves in him a security interest in the goods.  His procurement of the bill to the order of a financing agency or of the buyer indicates in addition only the seller's expectation of transferring that interest to the person named.

(b)  a nonnegotiable bill of lading to himself or his nominee reserves possession of the goods as security but except in a case of conditional delivery (subsection (2) of Section 2507) a nonnegotiable bill of lading naming the buyer as consignee reserves no security interest even though the seller retains possession or control of the bill of lading.

(2)  When shipment by the seller with reservation of a security interest is in violation of the contract for sale it constitutes an improper contract for transportation within the preceding section but impairs neither the rights given to the buyer by shipment and identification of the goods to the contract nor the seller's powers as a holder of a negotiable document of title.

Added by Laws 1961, p. 89, § 2505.  Amended by Laws 2005, c. 140, § 48, eff. Jan. 1, 2006.

§12A2506.  Rights of financing agency.

Rights of Financing Agency.

(1)  A financing agency by paying or purchasing for value a draft which relates to a shipment of goods acquires to the extent of the payment or purchase and in addition to its own rights under the draft and any document of title securing it any rights of the shipper in the goods including the right to stop delivery and the shipper's right to have the draft honored by the buyer.

(2)  The right to reimbursement of a financing agency which has in good faith honored or purchased the draft under commitment to or authority from the buyer is not impaired by subsequent discovery of defects with reference to any relevant document which was apparently regular.

Added by Laws 1961, p. 90, § 2506.  Amended by Laws 2005, c. 140, § 49, eff. Jan. 1, 2006.

§12A2507.  Effect of Seller's Tender; Delivery on Condition.

1) Tender of delivery is a condition to the buyer's duty to accept the goods and, unless otherwise agreed, to his duty to pay for them. Tender entitles the seller to acceptance of the goods and to payment according to the contract.

(2) Where payment is due and demanded on the delivery to the buyer of goods or documents of title, his right as against the seller to retain or dispose of them is conditional upon his making the payment due.

Laws 1961, p. 90, § 2507.  

§12A2508.  Cure by Seller of Improper Tender or Delivery; Replacement.

(1) Where any tender or delivery by the seller is rejected because nonconforming and the time for performance has not yet expired, the seller may seasonably notify the buyer of his intention to cure and may then within the contract time make a conforming delivery.

(2) Where the buyer rejects a nonconforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may if he seasonably notifies the buyer have a further reasonable time to substitute a conforming tender.

Laws 1961, p. 90, § 2508.  

§12A2509.  Risk of loss in the absence of breach.

Risk of Loss in the Absence of Breach.

(1)  Where the contract requires or authorizes the seller to ship the goods by carrier:

(a)  if it does not require him to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier even though the shipment is under reservation (Section 2505); but

(b)  if it does require him to deliver them at a particular destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the buyer when the goods are there duly so tendered as to enable the buyer to take delivery.

(2)  Where the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the buyer:

(a)  on his receipt of a negotiable document of title covering the goods; or

(b)  on acknowledgment by the bailee of the buyer's right to possession of the goods; or

(c)  after his receipt of possession or control of a nonnegotiable document of title or other direction to deliver in a record, as provided in subsection (4) (b) of Section 2503.

(3)  In any case not within subsection (1) or (2), the risk of loss passes to the buyer on his receipt of the goods if the seller is a merchant; otherwise the risk passes to the buyer on tender of delivery.

(4)  The provisions of this section are subject to contrary agreement of the parties and to the provisions of this article on sale on approval (Section 2327) and on effect of breach on risk of loss (Section 2510).

Added by Laws 1961, p. 90, § 2509.  Amended by Laws 2005, c. 140, § 50, eff. Jan. 1, 2006.

§12A2510.  Effect of Breach on Risk of Loss.

(1) Where a tender or delivery of goods so fails