2005 Nevada Chapter 104 — Uniform Commercial CodeOriginal Articles

CHAPTER 104 - UNIFORM COMMERCIALCODEORIGINAL ARTICLES

ARTICLE 1

GENERAL PROVISIONS

Part 1

Short Titles, Scope, Construction, Severability and ElectronicSignatures and Delivery

NRS 104.1101 Shorttitles.

NRS 104.1102 Scopeof Article 1.

NRS 104.1103 Constructionof Uniform Commercial Code to promote underlying purposes and policies;applicability of supplemental principles of law.

NRS 104.1104 Constructionagainst implied repeal.

NRS 104.1105 Severability.

NRS 104.1106 Useof singular and plural; gender.

NRS 104.1107 Waiveror renunciation of claim or right after breach. [Repealed.]

NRS 104.1108 Relationto Electronic Signatures in Global and National Commerce Act.

NRS 104.1110 Provisionsfor transition. [Repealed.]

Part 2

General Definitions and Principles of Interpretation

NRS 104.1201 Generaldefinitions.

NRS 104.1202 Notice;knowledge.

NRS 104.1203 Leasedistinguished from security interest.

NRS 104.1204 Value.

NRS 104.1205 Reasonabletime; seasonableness.

NRS 104.1206 Presumptions.

NRS 104.1207 Performanceor acceptance under reservation of rights. [Repealed.]

NRS 104.1208 Optionto accelerate at will. [Repealed.]

Part 3

Territorial Applicability and General Rules

NRS 104.1301 Territorialapplicability; parties power to choose applicable law.

NRS 104.1302 Variationby agreement.

NRS 104.1303 Courseof performance, course of dealing and usage of trade.

NRS 104.1304 Obligationof good faith.

NRS 104.1305 Remediesto be liberally administered.

NRS 104.1306 Waiveror renunciation of claim or right after breach.

NRS 104.1307 Primafacie evidence by third-party documents.

NRS 104.1308 Performanceor acceptance under reservation of rights.

NRS 104.1309 Optionto accelerate at will.

NRS 104.1310 Subordinatedobligations.

ARTICLE 2

SALES

Part 1

Short Title, General Construction and Subject Matter

NRS 104.2101 Shorttitle.

NRS 104.2102 Scope;certain security and other transactions excluded from this article.

NRS 104.2103 Definitionsand index of definitions.

NRS 104.2104 Definitions:Merchant; between merchants; financing agency.

NRS 104.2105 Definitions:Transferability; goods; future goods; lot; commercial unit.

NRS 104.2106 Definitions:Contract; agreement; contract for sale; sale; present sale;conforming to contract; termination; cancellation.

NRS 104.2107 Goodsto be severed from realty: Recording.

Part 2

Form, Formation and Readjustment of Contract

NRS 104.2201 Formalrequirements; statute of frauds.

NRS 104.2202 Finalwritten expression: Parol or extrinsic evidence.

NRS 104.2203 Sealsinoperative.

NRS 104.2204 Formationin general.

NRS 104.2205 Firmoffers.

NRS 104.2206 Offerand acceptance in formation of contract.

NRS 104.2207 Additionalterms in acceptance or confirmation.

NRS 104.2208 Courseof performance or practical construction. [Repealed.]

NRS 104.2209 Modification,rescission and waiver.

NRS 104.2210 Delegationof performance; assignment of rights.

Part 3

General Obligation and Construction of Contract

NRS 104.2301 Generalobligations of parties.

NRS 104.2302 Unconscionablecontract or clause.

NRS 104.2303 Allocationor division of risks.

NRS 104.2304 Pricepayable in money, goods, realty or otherwise.

NRS 104.2305 Openprice term.

NRS 104.2306 Output,requirements and exclusive dealings.

NRS 104.2307 Deliveryin single lot or several lots.

NRS 104.2308 Absenceof specified place for delivery.

NRS 104.2309 Absenceof specific time for action or duration of contract; notice of termination.

NRS 104.2310 Opentime for payment or running of credit; authority to ship under reservation.

NRS 104.2311 Optionsand cooperation respecting performance.

NRS 104.2312 Warrantyof title and against infringement; buyers obligation against infringement.

NRS 104.2313 Expresswarranties by affirmation, promise, description or sample.

NRS 104.2314 Impliedwarranty: Merchantability; usage of trade.

NRS 104.2315 Impliedwarranty: Fitness for particular purpose.

NRS 104.2316 Exclusionor modification of warranties.

NRS 104.2317 Cumulationand conflict of warranties express or implied.

NRS 104.2318 Third-partybeneficiaries of warranties express or implied.

NRS 104.2319 F.O.B.and F.A.S. terms.

NRS 104.2320 C.I.F.and C. & F. terms.

NRS 104.2321 C.I.F.or C. & F.: Net landed weights; payment on arrival; warranty ofcondition on arrival.

NRS 104.2322 Deliveryex-ship.

NRS 104.2323 Formof bill of lading required in overseas shipment; overseas.

NRS 104.2324 Noarrival, no sale term.

NRS 104.2325 Letterof credit term; confirmed credit.

NRS 104.2326 Saleon approval and sale or return; rights of creditors.

NRS 104.2327 Specialincidents of sale on approval and sale or return.

NRS 104.2328 Saleby auction.

Part 4

Title, Creditors and Good Faith Purchasers

NRS 104.2401 Passingof title; reservation for security; limited application of this section.

NRS 104.2402 Rightsof sellers creditors against sold goods.

NRS 104.2403 Powerto transfer; good faith purchase of goods; entrusting.

Part 5

Performance

NRS 104.2501 Insurableinterest in goods; manner of identification of goods.

NRS 104.2502 Buyersright to goods on sellers repudiation, failure to deliver or insolvency.

NRS 104.2503 Mannerof sellers tender of delivery.

NRS 104.2504 Shipmentby seller.

NRS 104.2505 Sellersshipment under reservation.

NRS 104.2506 Rightsof financing agency.

NRS 104.2507 Effectof sellers tender; delivery on condition.

NRS 104.2508 Cureby seller of improper tender or delivery; replacement.

NRS 104.2509 Riskof loss in the absence of breach.

NRS 104.2510 Effectof breach on risk of loss.

NRS 104.2511 Tenderof payment by buyer; payment by check.

NRS 104.2512 Paymentby buyer before inspection.

NRS 104.2513 Buyersright to inspection of goods.

NRS 104.2514 Whendocuments deliverable on acceptance; when on payment.

NRS 104.2515 Preservingevidence of goods in dispute.

Part 6

Breach, Repudiation and Excuse

NRS 104.2601 Buyersrights on improper delivery.

NRS 104.2602 Mannerand effect of rightful rejection.

NRS 104.2603 Merchantbuyers duties as to rightfully rejected goods.

NRS 104.2604 Buyersoptions as to salvage of rightfully rejected goods.

NRS 104.2605 Waiverof buyers objections by failure to particularize.

NRS 104.2606 Whatconstitutes acceptance of goods.

NRS 104.2607 Effectof acceptance; notice of breach; burden of establishing breach afteracceptance; notice of claim or litigation to person answerable over.

NRS 104.2608 Revocationof acceptance in whole or in part.

NRS 104.2609 Rightto adequate assurance of performance.

NRS 104.2610 Anticipatoryrepudiation.

NRS 104.2611 Retractionof anticipatory repudiation.

NRS 104.2612 Installmentcontract; breach.

NRS 104.2613 Casualtyto identified goods.

NRS 104.2614 Substitutedperformance.

NRS 104.2615 Excuseby failure of presupposed conditions.

NRS 104.2616 Procedureon notice claiming excuse.

Part 7

Remedies

NRS 104.2701 Remediesfor breach of collateral contracts not impaired.

NRS 104.2702 Sellersremedies on discovery of buyers insolvency.

NRS 104.2703 Sellersremedies in general.

NRS 104.2704 Sellersright to identify goods to contract notwithstanding breach or to salvageunfinished goods.

NRS 104.2705 Sellersstoppage of delivery in transit or otherwise.

NRS 104.2706 Sellersresale including contract for resale.

NRS 104.2707 Personin the position of a seller.

NRS 104.2708 Sellersdamages for nonacceptance or repudiation.

NRS 104.2709 Actionfor price.

NRS 104.2710 Sellersincidental damages.

NRS 104.2711 Buyersremedies in general; buyers security interest in rejected goods.

NRS 104.2712 Cover;buyers procurement of substitute goods.

NRS 104.2713 Buyersdamages for nondelivery or repudiation.

NRS 104.2714 Buyersdamages for breach in regard to accepted goods.

NRS 104.2715 Buyersincidental and consequential damages.

NRS 104.2716 Buyersright to specific performance or replevin.

NRS 104.2717 Deductionof damages from the price.

NRS 104.2718 Liquidationor limitation of damages; deposits.

NRS 104.2719 Contractualmodification or limitation of remedy.

NRS 104.2720 Effectof cancellation or rescission on claims for antecedent breach.

NRS 104.2721 Remediesfor fraud.

NRS 104.2722 Whocan sue third parties for injury to goods.

NRS 104.2723 Proofof market price: Time and place.

NRS 104.2724 Admissibilityof market quotations.

NRS 104.2725 Statuteof limitations in contracts for sale.

ARTICLE 3

NEGOTIABLE INSTRUMENTS

Part 1

General Provisions and Definitions

NRS 104.3101 Shorttitle.

NRS 104.3102 Subjectmatter.

NRS 104.3103 Definitions.

NRS 104.3104 Negotiableinstrument.

NRS 104.3105 Issueof instrument.

NRS 104.3106 Unconditionalpromise or order.

NRS 104.3107 Instrumentpayable in foreign money.

NRS 104.3108 Payableon demand or at definite time.

NRS 104.3109 Payableto bearer or to order.

NRS 104.3110 Identificationof person to whom instrument is payable.

NRS 104.3111 Placeof payment.

NRS 104.3112 Interest.

NRS 104.3113 Dateof instrument.

NRS 104.3114 Contradictoryterms of instrument.

NRS 104.3115 Incompleteinstruments.

NRS 104.3116 Jointand several liability; contribution.

NRS 104.3117 Otheragreements affecting instrument.

NRS 104.3118 Statuteof limitations.

NRS 104.3119 Noticeof right to defend action.

Part 2

Negotiation, Transfer and Endorsement

NRS 104.3201 Negotiation.

NRS 104.3202 Negotiationsubject to rescission.

NRS 104.3203 Transferof instrument; rights acquired by transfer.

NRS 104.3204 Endorsement.

NRS 104.3205 Specialendorsement; blank endorsement; anomalous endorsement.

NRS 104.3206 Restrictiveendorsement.

NRS 104.3207 Reacquisition.

Part 3

Enforcement of Instruments

NRS 104.3301 Personentitled to enforce instrument.

NRS 104.3302 Holderin due course.

NRS 104.3303 Valueand consideration.

NRS 104.3304 Overdueinstrument.

NRS 104.3305 Defensesand claims in recoupment.

NRS 104.3306 Claimsto an instrument.

NRS 104.3307 Noticeof breach of fiduciary duty.

NRS 104.3308 Proofof signatures and status as holder in due course.

NRS 104.3309 Enforcementof lost, destroyed or stolen instrument.

NRS 104.3310 Effectof instrument on obligation for which taken.

NRS 104.3311 Accordand satisfaction by use of instrument.

NRS 104.3312 Lost,destroyed or stolen cashiers check, tellers check or certified check.

Part 4

Liability of Parties

NRS 104.3401 Signature.

NRS 104.3402 Signatureby representative.

NRS 104.3403 Unauthorizedsignature.

NRS 104.3404 Impostors;fictitious payees.

NRS 104.3405 Employersresponsibility for fraudulent endorsement by employee.

NRS 104.3406 Negligencecontributing to forged signature or alteration of instrument.

NRS 104.3407 Alteration.

NRS 104.3408 Draweenot liable on unaccepted draft.

NRS 104.3409 Acceptanceof draft; certified check.

NRS 104.3410 Acceptancevarying draft.

NRS 104.3411 Refusalto pay cashiers checks, tellers checks and certified checks.

NRS 104.3412 Obligationof issuer of note or cashiers check.

NRS 104.3413 Obligationof acceptor.

NRS 104.3414 Obligationof drawer.

NRS 104.3415 Obligationof endorser.

NRS 104.3416 Transferwarranties.

NRS 104.3417 Presentmentwarranties.

NRS 104.3418 Paymentor acceptance by mistake.

NRS 104.3419 Instrumentssigned for accommodation.

NRS 104.3420 Conversionof instrument.

Part 5

Dishonor

NRS 104.3501 Presentment.

NRS 104.3502 Dishonor.

NRS 104.3503 Noticeof dishonor.

NRS 104.3504 Excusedpresentment and notice of dishonor.

NRS 104.3505 Evidenceof dishonor.

Part 6

Discharge and Payment

NRS 104.3601 Dischargeand effect of discharge.

NRS 104.3602 Payment.

NRS 104.3603 Tenderof payment.

NRS 104.3604 Dischargeby cancellation or renunciation.

NRS 104.3605 Dischargeof endorsers and accommodation parties.

ARTICLE 4

BANK DEPOSITS AND COLLECTIONS

Part 1

General Provisions and Definitions

NRS 104.4101 Shorttitle.

NRS 104.4102 Applicability.

NRS 104.4103 Variationby agreement; measure of damages; action constituting ordinary care.

NRS 104.4104 Definitionsand index of definitions.

NRS 104.4105 Depositarybank; payor bank; intermediary bank; collecting bank; presenting bank.

NRS 104.4106 Payablethrough or payable at bank.

NRS 104.4107 Separateoffice of bank.

NRS 104.4108 Timeof receipt of items.

NRS 104.4109 Delays.

NRS 104.4110 Electronicpresentment.

NRS 104.4111 Statuteof limitations.

Part 2

Collection of Items: Depositary and Collecting Banks

NRS 104.4201 Statusof collecting bank as agent and provisional status of credits; item endorsedpay any bank.

NRS 104.4202 Responsibilityfor collection or return; when action timely.

NRS 104.4203 Effectof instructions.

NRS 104.4204 Methodsof sending and presenting; sending directly to payor bank.

NRS 104.4205 Depositorybank holder of unendorsed item.

NRS 104.4206 Transferbetween banks.

NRS 104.4207 Transferwarranties.

NRS 104.4208 Presentmentwarranties.

NRS 104.4209 Encodingand retention warranties.

NRS 104.4210 Securityinterest of collecting bank in items, accompanying documents and proceeds.

NRS 104.4211 Whenbank gives value for purposes of holder in due course.

NRS 104.4212 Presentmentby notice of item not payable by, through or at bank; liability of drawer orendorser.

NRS 104.4213 Mediumand time of settlement by bank.

NRS 104.4214 Rightof charge-back or refund; liability of collecting bank; return of item.

NRS 104.4215 Finalpayment of item by payor bank; when provisional debits and credits becomefinal; when certain credits become available for withdrawal.

NRS 104.4216 Insolvencyand preference.

Part 3

Collection of Items: Payor Banks

NRS 104.4301 Deferredposting; recovery of payment by return of items; time of dishonor; return ofitems by payor bank.

NRS 104.4302 Payorbanks responsibility for late return of item.

NRS 104.4303 Whenitems subject to notice, stop-payment order, legal process or setoff; order inwhich items may be charged or certified.

Part 4

Relationship Between Payor Bank and its Customer

NRS 104.4401 Whenbank may charge customers account.

NRS 104.4402 Banksliability to customer for wrongful dishonor; time of determining insufficiencyof account.

NRS 104.4403 Customersright to stop payment; burden of proof of loss.

NRS 104.4404 Banknot obligated to pay check more than 6 months old.

NRS 104.4405 Deathor incompetence of customer.

NRS 104.4406 Customersduty to discover or report unauthorized signature or alteration.

NRS 104.4407 Payorbanks right to subrogation on improper payment.

Part 5

Collection of Documentary Drafts

NRS 104.4501 Handlingof documentary drafts; duty to send for presentment and to notify customer ofdishonor.

NRS 104.4502 Presentmentof on arrival drafts.

NRS 104.4503 Responsibilityof presenting bank for documents and goods; report of reasons for dishonor;referee in case of need.

NRS 104.4504 Privilegeof presenting bank to deal with goods; security interest for expenses.

ARTICLE 5

LETTERS OF CREDIT

NRS 104.5101 Shorttitle.

NRS 104.5102 Definitions.

NRS 104.5103 Scope.

NRS 104.5104 Formalrequirements.

NRS 104.5105 Consideration.

NRS 104.5106 Issuance,amendment, cancellation and duration.

NRS 104.5107 Confirmer,nominated person and adviser.

NRS 104.5108 Issuersrights and obligations.

NRS 104.5109 Fraudand forgery.

NRS 104.5110 Warranties.

NRS 104.5111 Remedies.

NRS 104.5112 Transferof letter of credit.

NRS 104.5113 Transferby operation of law.

NRS 104.5114 Assignmentof proceeds.

NRS 104.5115 Statuteof limitations.

NRS 104.5116 Choiceof law and forum.

NRS 104.5117 Subrogationof issuer, applicant and nominated person.

NRS 104.5118 Securityinterest of issuer or nominated person.

ARTICLE 7

WAREHOUSE RECEIPTS,BILLS OF LADING AND OTHER DOCUMENTS OF TITLE

Part 1

General

NRS 104.7101 Shorttitle.

NRS 104.7102 Definitionsand index of definitions.

NRS 104.7103 Relationof Article to treaty or statute.

NRS 104.7104 Negotiableand nonnegotiable document of title.

NRS 104.7105 Reissuancein alternative medium.

NRS 104.7106 Controlof electronic document of title.

Part 2

Warehouse Receipts: Special Provisions

NRS 104.7201 Personthat may issue warehouse receipt; storage under bond.

NRS 104.7202 Formof warehouse receipt; effect of omission.

NRS 104.7203 Liabilityfor nonreceipt or misdescription.

NRS 104.7204 Dutyof care; contractual limitation of warehouses liability.

NRS 104.7205 Titleunder warehouse receipt defeated in certain cases.

NRS 104.7206 Terminationof storage at warehouses option.

NRS 104.7207 Goodsmust be kept separate; fungible goods.

NRS 104.7208 Alteredwarehouse receipts.

NRS 104.7209 Lienof warehouse.

NRS 104.7210 Enforcementof warehouses lien.

Part 3

Bills of Lading: Special Provisions

NRS 104.7301 Liabilityfor nonreceipt or misdescription; said to contain; shippers weight, loadand count; improper handling.

NRS 104.7302 Throughbills of lading and similar documents of title.

NRS 104.7303 Diversion;reconsignment; change of instructions.

NRS 104.7304 Tangiblebills of lading in set.

NRS 104.7305 Destinationbills.

NRS 104.7306 Alteredbills of lading.

NRS 104.7307 Lienof carrier.

NRS 104.7308 Enforcementof carriers lien.

NRS 104.7309 Dutyof care; contractual limitation of carriers liability.

Part 4

Warehouse Receipts and Bills of Lading: General Obligations

NRS 104.7401 Irregularitiesin issue of receipt or bill or conduct of issuer.

NRS 104.7402 Duplicatedocument of title; overissue.

NRS 104.7403 Obligationof bailee to deliver; excuse.

NRS 104.7404 Noliability for good-faith delivery pursuant to document of title.

Part 5

Warehouse Receipts and Bills of Lading: Negotiation and Transfers

NRS 104.7501 Formof negotiation and requirements of due negotiation.

NRS 104.7502 Rightsacquired by due negotiation.

NRS 104.7503 Documentof title to goods defeated in certain cases.

NRS 104.7504 Rightsacquired in absence of due negotiation; effect of diversion; stoppage of delivery.

NRS 104.7505 Endorsernot guarantor for other parties.

NRS 104.7506 Deliverywithout endorsement; right to compel endorsement.

NRS 104.7507 Warrantieson negotiation or delivery of document of title.

NRS 104.7508 Warrantiesof collecting bank as to documents of title.

NRS 104.7509 Adequatecompliance with commercial contract.

Part 6

Warehouse Receipts and Bills of Lading: Miscellaneous Provisions

NRS 104.7601 Lost,stolen or destroyed documents of title.

NRS 104.7602 Judicialprocess against goods covered by negotiable document of title.

NRS 104.7603 Conflictingclaims; interpleader.

ARTICLE 8

INVESTMENT SECURITIES

Part 1

Short Title and General Matters

NRS 104.8101 Shorttitle.

NRS 104.8102 Definitions.

NRS 104.8103 Rulesfor determining whether certain obligations and interests are securities orfinancial assets.

NRS 104.8104 Acquisitionof security or financial asset or interest therein.

NRS 104.8105 Noticeof adverse claim.

NRS 104.8106 Control.

NRS 104.8107 Whetherendorsement, instruction or entitlement order is effective.

NRS 104.8108 Warrantiesin direct holding.

NRS 104.8109 Warrantiesin indirect holding.

NRS 104.8110 Applicability;choice of law.

NRS 104.8111 Rulesof clearing corporation.

NRS 104.8112 Creditorslegal process.

NRS 104.8113 Statuteof frauds inapplicable.

NRS 104.8114 Evidentiaryrules concerning certificated securities.

NRS 104.8115 Securitiesintermediary and others not liable to adverse claimant.

NRS 104.8116 Securitiesintermediary as purchaser for value.

Part 2

Issue and Issuer

NRS 104.8201 Issuer.

NRS 104.8202 Issuersresponsibility and defenses; notice of defect or defense.

NRS 104.8203 Stalenessas notice of defect or defense.

NRS 104.8204 Effectof issuers restriction on transfer.

NRS 104.8205 Effectof unauthorized signature on security certificate.

NRS 104.8206 Completionor alteration of security certificate.

NRS 104.8207 Rightsand duties of issuer with respect to registered owners.

NRS 104.8208 Effectof signature of authenticating trustee, registrar or transfer agent.

NRS 104.8209 Issuerslien.

NRS 104.8210 Overissue.

Part 3

Transfer of Certificated and Uncertificated Securities

NRS 104.8301 Delivery.

NRS 104.8302 Rightsof purchaser.

NRS 104.8303 Protectedpurchaser.

NRS 104.8304 Endorsement.

NRS 104.8305 Instruction.

NRS 104.8306 Effectof guaranteeing signature, endorsement or instruction.

NRS 104.8307 Purchasersright to requisites for registration of transfer.

Part 4

Registration

NRS 104.8401 Dutyof issuer to register transfer.

NRS 104.8402 Assurancethat endorsement or instruction is effective.

NRS 104.8403 Demandthat issuer not register transfer.

NRS 104.8404 Wrongfulregistration.

NRS 104.8405 Replacementof lost, destroyed or wrongfully taken security certificate.

NRS 104.8406 Obligationto notify issuer of lost, destroyed or wrongfully taken security certificate.

NRS 104.8407 Authenticatingtrustee, transfer agent and registrar.

Part 5

Security Entitlements

NRS 104.8501 Securitiesaccount; acquisition of security entitlement from securities intermediary.

NRS 104.8502 Assertionof adverse claim against entitlement holder.

NRS 104.8503 Propertyinterest of entitlement holder in financial asset held by securities intermediary.

NRS 104.8504 Dutyof securities intermediary to maintain financial asset.

NRS 104.8505 Dutyof securities intermediary with respect to payments and distributions.

NRS 104.8506 Dutyof securities intermediary to exercise rights as directed by entitlementholder.

NRS 104.8507 Dutyof securities intermediary to comply with entitlement order.

NRS 104.8508 Dutyof securities intermediary to change entitlement holders position to otherform of security holding.

NRS 104.8509 Specificationof duties of securities intermediary by other statute or regulation; manner ofperformance of duties of securities intermediary and exercise of rights ofentitlement holder.

NRS 104.8510 Rightsof purchaser of security entitlement from entitlement holder.

NRS 104.8511 Priorityamong security interests and entitlement holders.

ARTICLE 9

SECURED TRANSACTIONS

Part 1

General Provisions

NRS 104.9101 Shorttitle.

NRS 104.9102 Definitionsand index of definitions.

NRS 104.9103 Purchase-moneysecurity interest: Circumstances of existence; applicability of payments;burden of establishing.

NRS 104.9104 Controlof deposit account.

NRS 104.9105 Controlof electronic chattel paper.

NRS 104.9106 Controlof investment property.

NRS 104.9107 Controlof letter-of-credit right.

NRS 104.9108 Sufficiencyof descriptions.

NRS 104.9109 Scopeof applicability.

NRS 104.9110 Applicabilityto security interests arising under Article 2 or 2A.

Part 2

Effectiveness of Security Agreement; Attachment of SecurityInterest; Rights of Parties to Security Agreement

NRS 104.9201 Generaleffectiveness of security agreement.

NRS 104.9202 Titleto collateral immaterial.

NRS 104.9203 Attachmentand enforceability of security interest; proceeds; formal requisites;supporting obligations.

NRS 104.9204 After-acquiredproperty; future advances.

NRS 104.9205 Useor disposition of collateral permissible.

NRS 104.9206 Securityinterest arising in purchase or delivery of financial asset.

NRS 104.9207 Rightsand duties of secured party having possession or control of collateral.

NRS 104.9208 Additionalduties of secured party having control of collateral.

NRS 104.9209 Dutiesof secured party if account debtor has been notified of assignment.

NRS 104.9210 Requestfor accounting; request regarding list of collateral or statement of account.

Part 3

Perfection and Priority

NRS 104.9301 Determinationof law governing perfection and priority of security interests.

NRS 104.9302 Determinationof law governing perfection and priority of agricultural liens.

NRS 104.9303 Determinationof law governing perfection and priority of security interests in goods coveredby certificate of title.

NRS 104.9304 Determinationof law governing perfection and priority of security interests in depositaccounts.

NRS 104.9305 Determinationof law governing perfection and priority of security interests in investmentproperty.

NRS 104.9306 Determinationof law governing perfection and priority of security interests inletter-of-credit rights.

NRS 104.9307 Locationof debtor.

NRS 104.9308 Whensecurity interest or agricultural lien is perfected; continuity of perfection.

NRS 104.9309 Securityinterest perfected upon attachment.

NRS 104.9310 Whenfiling required to perfect security interest or agricultural lien; securityinterests and agricultural liens to which filing provisions do not apply.

NRS 104.9311 Perfectionof security interests in property subject to certain statutes, regulations andtreaties.

NRS 104.9312 Perfectionof security interests in chattel paper, deposit accounts, documents, goodscovered by documents, instruments, investment property, letter-of-credit rightsand money; perfection by permissive filing; temporary perfection without filingor transfer of possession.

NRS 104.9313 Whenpossession by or delivery to secured party perfects security interest withoutfiling.

NRS 104.9314 Perfectionby control.

NRS 104.9315 Securedpartys rights on disposition of collateral and in proceeds.

NRS 104.9316 Continuedperfection of security interest following change in governing law.

NRS 104.9317 Intereststhat take priority over or take free of unperfected security interest oragricultural lien.

NRS 104.9318 Nointerest retained in right to payment that is sold; rights and title of sellerof account or chattel paper with respect to creditors and purchasers.

NRS 104.9319 Rightsand title of consignee with respect to creditors and purchasers.

NRS 104.9320 Protectionof certain buyers of goods.

NRS 104.9321 Protectionof licensee of general intangible and lessee of goods in ordinary course ofbusiness.

NRS 104.9322 Prioritiesamong conflicting security interests in and agricultural liens on samecollateral.

NRS 104.9323 Futureadvances.

NRS 104.9324 Priorityof purchase-money security interests.

NRS 104.9325 Priorityof security interests in transferred collateral.

NRS 104.9326 Priorityof security interests created by new debtor.

NRS 104.9327 Priorityamong conflicting security interests in same deposit account.

NRS 104.9328 Priorityamong conflicting security interests in same investment property.

NRS 104.9329 Priorityamong conflicting security interests in same letter-of-credit right.

NRS 104.9330 Priorityof purchaser of chattel paper or instrument.

NRS 104.9331 Priorityof rights of purchasers of instruments, documents and securities under otherarticles; priority of interests in financial assets and security entitlementsunder article 8.

NRS 104.9332 Effectof transfer of money; effect of transfer of funds from deposit account.

NRS 104.9333 Priorityof certain possessory liens arising by operation of law.

NRS 104.9334 Priorityof security interests in fixtures and crops.

NRS 104.9335 Accessions.

NRS 104.9336 Commingledgoods.

NRS 104.9337 Priorityof security interests in goods covered by certificate of title.

NRS 104.9338 Priorityof security interest or agricultural lien perfected by filed financingstatement providing certain incorrect information.

NRS 104.9339 Prioritysubject to subordination by agreement.

NRS 104.9340 Effectivenessof right of recoupment or setoff against deposit account.

NRS 104.9341 Banksrights and duties with respect to deposit account.

NRS 104.9342 Banksright to refuse to enter into or disclose existence of control agreement.

Part 4

Rights of Third Parties

NRS 104.9401 Alienabilityof debtors rights.

NRS 104.9402 Securedparty not obligated in contract of debtor or in tort.

NRS 104.9403 Agreementnot to assert defenses against assignee.

NRS 104.9404 Rightsacquired by assignee; claims and defenses against assignee.

NRS 104.9405 Modificationof or substitution for assigned contract.

NRS 104.9406 Dischargeof account debtor; notification of assignment; identification and proof ofassignment; restrictions on assignment of accounts, chattel paper, paymentintangibles and promissory notes ineffective.

NRS 104.9407 Restrictionson assignment, transfer, creation or enforcement of security interest inleasehold interest or in lessors residual interest.

NRS 104.9408 Restrictionson assignment or transfer of promissory notes, health-care insurancereceivables and certain general intangibles ineffective.

NRS 104.9409 Restrictionson assignment of letter-of-credit rights ineffective.

Part 5

Filing

NRS 104.9501 Filingoffice.

NRS 104.9502 Contentsof financing statement; record of mortgage as financing statement; time offiling financing statement.

NRS 104.9503 Nameof debtor and secured party provided in financing statement.

NRS 104.9504 Indicationof collateral in financing statement.

NRS 104.9505 Filingof financing statement in compliance with other statutes and treaties forconsignments, leases, other bailments and other transactions.

NRS 104.9506 Effectof errors or omissions in financing statement.

NRS 104.9507 Effectof certain events on effectiveness of financing statement.

NRS 104.9508 Effectivenessof financing statement if new debtor becomes bound by security agreement.

NRS 104.9509 Personsentitled to file record.

NRS 104.9510 Effectivenessof filed record.

NRS 104.9511 Securedparty of record.

NRS 104.9512 Amendmentof financing statement.

NRS 104.9513 Terminationstatement.

NRS 104.9514 Assignmentof certain powers of secured party of record.

NRS 104.9515 Durationand effectiveness of financing statement; effect of lapsed financing statement.

NRS 104.9516 Whatconstitutes filing; effectiveness of filing.

NRS 104.9517 Effectof indexing errors.

NRS 104.9518 Claimconcerning inaccurate or wrongfully filed record: Filing of correctionstatement.

NRS 104.9519 Numbering,maintaining and indexing records; communicating information provided inrecords.

NRS 104.9520 Acceptanceand refusal to accept record.

NRS 104.9521 Acceptanceof certain written records including initial financing statements by filingoffice; format of written records.

NRS 104.9522 Maintenanceand destruction of records.

NRS 104.9523 Informationfrom filing office; sale or license of records.

NRS 104.9524 Excuseddelay by filing office.

NRS 104.9525 Fees.

NRS 104.9526 Filing-officerules.

NRS 104.9527 Dutyof Secretary of State to report.

Part 6

Default

NRS 104.9601 Rightsafter default; judicial enforcement; effect on consignor or buyer of accounts,chattel paper, payment intangibles or promissory notes.

NRS 104.9602 Waiverand variance of rights and duties of debtor and obligor.

NRS 104.9603 Agreementon standards concerning rights and duties of parties.

NRS 104.9604 Procedureif security agreement covers real property or fixtures.

NRS 104.9605 Dutyto unknown debtor or secondary obligor.

NRS 104.9606 Timeof default for agricultural lien.

NRS 104.9607 Collectionand enforcement by secured party.

NRS 104.9608 Applicationof proceeds of collection or enforcement; liability for deficiency and right tosurplus.

NRS 104.9609 Securedpartys right to take possession or dispose of collateral after default.

NRS 104.9610 Dispositionof collateral after default.

NRS 104.9611 Notificationbefore disposition of collateral.

NRS 104.9612 Timelinessof notification before disposition of collateral.

NRS 104.9613 Contentsand form of notification before disposition of collateral: General.

NRS 104.9614 Contentsand form of notification before disposition of collateral: Consumer-goodstransaction.

NRS 104.9615 Applicationof proceeds of disposition; liability for deficiency and right to surplus.

NRS 104.9616 Explanationof calculation of surplus or deficiency.

NRS 104.9617 Effectof disposition of collateral by secured party after default; rights oftransferee regarding collateral.

NRS 104.9618 Rightsand duties of certain secondary obligors.

NRS 104.9619 Transferof record or legal title.

NRS 104.9620 Acceptanceof collateral in full or partial satisfaction of obligation; compulsorydisposition of collateral.

NRS 104.9621 Notificationof proposal to accept collateral in satisfaction of obligation.

NRS 104.9622 Effectof acceptance of collateral in satisfaction of obligation.

NRS 104.9623 Redemptionof collateral.

NRS 104.9624 Waiverof right to notification of disposition of collateral; waiver of right toredeem collateral.

NRS 104.9625 Remediesfor secured partys failure to comply with article.

NRS 104.9626 Actionin which deficiency or surplus is in issue.

NRS 104.9627 Determinationof whether conduct was commercially reasonable.

NRS 104.9628 Nonliabilityand limitation on liability of secured party; liability of secondary obligor.

Part 7

Transitional Provisions Regarding 2001 Amendments

NRS 104.9702 Applicabilityof amendatory provisions to preexisting transactions, liens, actions, cases andproceedings.

NRS 104.9703 Securityinterest perfected before July 1, 2001.

NRS 104.9704 Securityinterest unperfected before July 1, 2001.

NRS 104.9705 Effectivenessof action taken before July 1, 2001.

NRS 104.9706 Wheninitial financing statement suffices to continue effectiveness of financingstatement filed before July 1, 2001.

NRS 104.9707 Personsentitled to file initial financing statement or continuation statement.

NRS 104.9708 Determinationof priority of conflicting claims to collateral.

NRS 104.9709 Effectiveness,amendment and termination of financing statement filed before July 1, 2001.

_________

ARTICLE 1

GENERAL PROVISIONS

Part 1

Short Titles, Scope, Construction, Severability andElectronic Signatures and Delivery

NRS 104.1101 Shorttitles.

1. This chapter, together with chapter 104A of NRS, may be cited as the UniformCommercial Code.

2. This Article may be cited as the Uniform CommercialCodeGeneral Provisions.

(Added to NRS by 2005, 824)

NRS 104.1102 Scopeof Article 1. This Article applies to a transaction to the extent thatit is governed by another Article of the Uniform Commercial Code.

(Added to NRS by 2005, 824)

NRS 104.1103 Constructionof Uniform Commercial Code to promote underlying purposes and policies;applicability of supplemental principles of law.

1. The Uniform Commercial Code must be liberallyconstrued and applied to promote its underlying purposes and policies, whichare:

(a) To simplify, clarify and modernize the lawgoverning commercial transactions;

(b) To permit the continued expansion of commercialpractices through custom, usage and agreement of the parties; and

(c) To make uniform the law among the variousjurisdictions.

2. Unless displaced by the particular provisions ofthe Uniform Commercial Code, the principles of law and equity, including thelaw merchant and the law relative to capacity to contract, principal and agent,estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, andother validating or invalidating cause supplement its provisions.

(Added to NRS by 2005, 824)

NRS 104.1104 Constructionagainst implied repeal. The Uniform CommercialCode 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 subsequentlegislation if such construction can reasonably be avoided.

(Added to NRS by 2005, 825)

NRS 104.1105 Severability.If any provision or clause of the Uniform Commercial Code or its applicationto any person or circumstance is held invalid, the invalidity does not affectother provisions or applications of the Uniform Commercial Code which can begiven effect without the invalid provision or application, and to this end theprovisions of the Uniform Commercial Code are severable.

(Added to NRS by 2005, 825)

NRS 104.1106 Useof singular and plural; gender. In the UniformCommercial Code, unless the statutory context otherwise requires:

1. Words in the singular number include the plural,and those in the plural include the singular; and

2. Words of any gender also refer to any other gender.

(Added to NRS by 2005, 825)

NRS 104.1107 Waiveror renunciation of claim or right after breach. Repealed.(See chapter 233, Statutesof Nevada 2005, at page 887.)

 

NRS 104.1108 Relationto Electronic Signatures in Global and National Commerce Act. This Article modifies, limits and supersedes the federalElectronic Signatures in Global and National Commerce Act, 15 U.S.C. 7001et. seq., but does not modify, limit or supersede Section 101(c) of that act,15 U.S.C. 7001(c), or authorize electronic delivery of any of the noticesdescribed in Section 103(b) of that act, 15 U.S.C. 7003(b).

(Added to NRS by 2005, 825)

NRS 104.1110 Provisionsfor transition. Repealed. (See chapter 233, Statutes of Nevada 2005,at page 887.)

 

Part 2

General Definitions andPrinciples of Interpretation

NRS 104.1201 General definitions.

1. Unless the context otherwise requires, words orphrases defined in this section, or in the additional definitions contained inother Articles of the Uniform Commercial Code that apply to particular Articlesor parts thereof, have the meanings stated.

2. Subject to definitions contained in other Articlesof the Uniform Commercial Code that apply to particular Articles or partsthereof:

(a) Action, in the sense of a judicial proceeding,includes recoupment, counterclaim, set off, suit in equity and any otherproceeding in which rights are determined.

(b) Aggrieved party means a party entitled to pursuea remedy.

(c) Agreement, as distinguished from contract,means the bargain of the parties in fact, as found in their language orinferred from other circumstances, including course of performance, course ofdealing, or usage of trade as provided in NRS104.1303.

(d) Bank means a person engaged in the business ofbanking and includes a savings bank, savings and loan association, credit unionand trust company.

(e) Bearer means a person in control of a negotiableelectronic document of title or a person in possession of a negotiableinstrument, negotiable tangible document of title or certificated security thatis payable to bearer or endorsed in blank.

(f) Bill of lading means a document of titleevidencing the receipt of goods for shipment issued by a person engaged in thebusiness of directly or indirectly transporting or forwarding goods. The termdoes not include a warehouse receipt.

(g) Branch includes a separately incorporated foreignbranch of a bank.

(h) Burden of establishing a fact means the burden ofpersuading the trier of fact that the existence of the fact is more probablethan its nonexistence.

(i) Buyer in ordinary course of business means aperson that buys goods in good faith, without knowledge that the sale violatesthe rights of another person in the goods, and in the ordinary course from aperson, 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 comportswith the usual or customary practices in the kind of business in which the selleris engaged or with the sellers own usual or customary practices. A person thatsells oil, gas or other minerals at the wellhead or minehead is a person in thebusiness of selling goods of that kind. A buyer in ordinary course of businessmay buy for cash, by exchange of other property, or on secured or unsecuredcredit, and may acquire goods or documents of title under a preexisting contractfor sale. Only a buyer that takes possession of the goods or has a right torecover the goods from the seller under Article 2 may be a buyer in ordinarycourse of business. Buyer in ordinary course of business does not include aperson that acquires goods in a transfer in bulk or as security for or in totalor partial satisfaction of a money debt.

(j) Conspicuous, with reference to a term, means sowritten, displayed or presented that a reasonable person against which it is tooperate ought to have noticed it. Whether a term is conspicuous or not is adecision for the court. Conspicuous terms include the following:

(1) A heading in capitals equal to or greater insize than the surrounding text, or in contrasting type, font or color to thesurrounding text of the same or lesser size; and

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

(k) Consumer means a natural person who enters into atransaction primarily for personal, family or household purposes.

(l) Contract, as distinguished from agreement,means the total legal obligation that results from the parties agreement asdetermined by the Uniform Commercial Code as supplemented by any otherapplicable laws.

(m) Creditor includes a general creditor, a securedcreditor, a lien creditor and any representative of creditors, including anassignee for the benefit of creditors, a trustee in bankruptcy, a receiver inequity, and an executor or administrator of an insolvent debtors or assignorsestate.

(n) Defendant includes a person in the position ofdefendant in a counterclaim, cross-claim or third-party claim.

(o) Delivery, with respect to an electronic documentof title means voluntary transfer of control and with respect to an instrument,a tangible document of title or chattel paper, means voluntary transfer ofpossession.

(p) Document of title means a record:

(1) That in the regular course of business orfinancing is treated as adequately evidencing that the person in possession orcontrol of the record is entitled to receive, control, hold and dispose of therecord and the goods the record covers; and

(2) That purports to be issued by or addressedto a bailee and to cover goods in the bailees possession which are eitheridentified or are fungible portions of an identified mass.

The termincludes a bill of lading, transport document, dock warrant, dock receipt,warehouse receipt and order for delivery of goods. An electronic document oftitle means a document of title evidenced by a record consisting of informationstored in an electronic medium. A tangible document of title means a documentof title evidenced by a record consisting of information that is inscribed on atangible medium.

(q) Fault means a default, breach or wrongful act oromission.

(r) Fungible goods means:

(1) Goods of which any unit, by nature or usageof trade, is the equivalent of any other like unit; or

(2) Goods that by agreement are treated asequivalent.

(s) Genuine means free of forgery or counterfeiting.

(t) Good faith, except as otherwise provided inArticle 5, means honesty in fact and the observance of reasonable commercialstandards of fair dealing.

(u) Holder means:

(1) The person in possession of a negotiableinstrument that is payable either to bearer or to an identified person that isthe person in possession;

(2) The person in possession of a negotiabletangible document of title if the goods are deliverable either to bearer or tothe order of the person in possession; or

(3) The person in control of a negotiableelectronic document of title.

(v) Insolvency proceeding includes an assignment forthe benefit of creditors or other proceeding intended to liquidate orrehabilitate the estate of the person involved.

(w) Insolvent means:

(1) Having generally ceased to pay debts in theordinary course of business other than as a result of bona fide dispute;

(2) Being unable to pay debts as they becomedue; or

(3) Being insolvent within the meaning offederal bankruptcy law.

(x) Money means a medium of exchange currentlyauthorized or adopted by a domestic or foreign government. The term includes amonetary unit of account established by an intergovernmental organization or byagreement between two or more countries.

(y) Organization means a person other than a naturalperson.

(z) Party, as distinguished from third party, meansa person that has engaged in a transaction or made an agreement subject to theUniform Commercial Code.

(aa) Person means a natural person, 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.

(bb) Present value means the amount as of a datecertain of one or more sums payable in the future, discounted to the datecertain by use of either an interest rate specified by the parties if that rateis not manifestly unreasonable at the time the transaction is entered into or,if an interest rate is not so specified, a commercially reasonable rate thattakes into account the facts and circumstances at the time the transaction isentered into.

(cc) Purchase means taking by sale, lease, discount,negotiation, mortgage, pledge, lien, security interest, issue or reissue, giftor any other voluntary transaction creating an interest in property.

(dd) Purchaser means a person that takes by purchase.

(ee) Record means information that is inscribed on atangible medium or that is stored in an electronic or other medium and isretrievable in perceivable form.

(ff) Remedy means any remedial right to which anaggrieved party is entitled with or without resort to a tribunal.

(gg) Representative means a person empowered to actfor another, including an agent, an officer of a corporation or association,and a trustee, executor or administrator of an estate.

(hh) Right includes remedy.

(ii) Security interest means an interest in personalproperty or fixtures which secures payment or performance of an obligation.Security interest includes any interest of a consignor and a buyer ofaccounts, chattel paper, a payment intangible or a promissory note in atransaction that is subject to Article 9. Security interest does not includethe special property interest of a buyer of goods on identification of thosegoods to a contract for sale under NRS104.2401, but a buyer may also acquire a security interest by complyingwith Article 9. Except as otherwise provided in NRS 104.2505, the right of a seller orlessor of goods under Article 2 or 2A to retain or acquire possession of thegoods is not a security interest, but a seller or lessor may also acquire asecurity interest by complying with Article 9. The retention or reservationof title by a seller of goods notwithstanding shipment or delivery to the buyerunder NRS 104.2401 is limited in effectto a reservation of a security interest. Whether a transaction in the form ofa lease creates a security interest is determined pursuant to NRS 104.1203.

(jj) Send in connection with a writing, record ornotice means:

(1) To deposit in the mail or deliver fortransmission by any other usual means of communication with postage or cost oftransmission provided for and properly addressed and, in the case of aninstrument, to an address specified thereon or otherwise agreed, or if there benone to any address reasonable under the circumstances; or

(2) In any other way to cause to be received anyrecord or notice within the time it would have arrived if properly sent.

(kk) Signed includes using any symbol executed oradopted with present intention to adopt or accept a writing.

(ll) State means a state of the United States, theDistrict of Columbia, Puerto Rico, the United States Virgin Islands, or anyterritory or insular possession subject to the jurisdiction of the UnitedStates.

(mm) Surety includes a guarantor or other secondaryobligor.

(nn) Term means a portion of an agreement thatrelates to a particular matter.

(oo) Unauthorized signature means a signature madewithout actual, implied or apparent authority. The term includes a forgery.

(pp) Warehouse receipt means a document of titleissued by a person engaged in the business of storing goods for hire.

(qq) Writing includes printing, typewriting or anyother intentional reduction to tangible form. Written has a correspondingmeaning.

(Added to NRS by 2005, 825)

NRS 104.1202 Notice;knowledge.

1. Subject to subsection 6, a person has notice of afact if the person:

(a) Has actual knowledge of it;

(b) Has received a notice or notification of it; or

(c) From all the facts and circumstances known to theperson at the time in question, has reason to know that it exists.

2. Knowledge means actual knowledge. Knows has acorresponding meaning.

3. Discover, learn or words of similar importrefer to knowledge rather than to reason to know.

4. A person notifies or gives a notice or notificationto another person by taking such steps as may be reasonably required to informthe other person in ordinary course, whether or not the other person actuallycomes to know of it.

5. Subject to subsection 6, a person receives anotice or notification when:

(a) It comes to that persons attention; or

(b) It is duly delivered in a form reasonable under thecircumstances at the place of business through which the contract was made orat another location held out by that person as the place for receipt of suchcommunications.

6. Notice, knowledge, or a notice or notificationreceived by an organization is effective for a particular transaction from thetime it is brought to the attention of the natural person conducting thattransaction and, in any event, from the time it would have been brought to thenatural persons attention if the organization had exercised due diligence. Anorganization exercises due diligence if it maintains reasonable routines forcommunicating significant information to the person conducting the transactionand there is reasonable compliance with the routines. Due diligence does notrequire a natural person acting for the organization to communicate informationunless the communication is part of the natural persons regular duties or thenatural person has reason to know of the transaction and that the transactionwould be materially affected by the information.

(Added to NRS by 2005, 829)

NRS 104.1203 Leasedistinguished from security interest.

1. Whether a transaction in the form of a leasecreates a lease or security interest is determined by the facts of each case.

2. A transaction in the form of a lease creates asecurity interest if the consideration that the lessee is to pay the lessor forthe right to possession and use of the goods is an obligation for the term ofthe lease and is not subject to termination by the lessee, and:

(a) The original term of the lease is equal to orgreater than the remaining economic life of the goods;

(b) The lessee is bound to renew the lease for theremaining economic life of the goods or is bound to become the owner of thegoods;

(c) The lessee has an option to renew the lease for theremaining economic life of the goods for no additional consideration or fornominal additional consideration upon compliance with the lease agreement; or

(d) The lessee has an option to become the owner of thegoods for no additional consideration or for nominal additional considerationupon compliance with the lease agreement.

3. A transaction in the form of a lease does notcreate a security interest merely because:

(a) The present value of the consideration the lesseeis obligated to pay the lessor for the right to possession and use of the goodsis substantially equal to or is greater than the fair market value of the goodsat the time the lease is entered into;

(b) The lessee assumes risk of loss of the goods;

(c) The lessee agrees to pay, with respect to the goods,taxes, insurance, filing, recording or registration fees, or service ormaintenance costs;

(d) The lessee has an option to renew the lease or tobecome the owner of the goods;

(e) The lessee has an option to renew the lease for afixed rent that is equal to or greater than the reasonably predictable fairmarket rent for the use of the goods for the term of the renewal at the timethe option is to be performed; or

(f) The lessee has an option to become the owner of thegoods for a fixed price that is equal to or greater than the reasonablypredictable fair market value of the goods at the time the option is to beperformed.

4. Additional consideration is nominal if it is lessthan the lessees reasonably predictable cost of performing under the leaseagreement if the option is not exercised. Additional consideration is notnominal if:

(a) When the option to renew the lease is granted tothe lessee, the rent is stated to be the fair market rent for the use of thegoods for the term of the renewal determined at the time the option is to beperformed; or

(b) When the option to become the owner of the goods isgranted to the lessee, the price is stated to be the fair market value of thegoods determined at the time the option is to be performed.

5. The remaining economic life of the goods andreasonably predictable fair market rent, fair market value or cost ofperforming under the lease agreement must be determined with reference to thefacts and circumstances at the time the transaction is entered into.

(Added to NRS by 2005, 829)

NRS 104.1204 Value.Except as otherwise provided in Articles 3, 4, and 5, a person gives value forrights if the person acquires them:

1. In return for a binding commitment to extend creditor for the extension of immediately available credit, whether or not drawn uponand whether or not a charge-back is provided for in the event of difficultiesin collection;

2. As security for, or in total or partialsatisfaction of, a preexisting claim;

3. By accepting delivery under a preexisting contractfor purchase; or

4. In return for any consideration sufficient tosupport a simple contract.

(Added to NRS by 2005, 830)

NRS 104.1205 Reasonabletime; seasonableness.

1. Whether a time for taking an action required by theUniform Commercial Code is reasonable depends on the nature, purpose andcircumstances of the action.

2. An action is taken seasonably if it is taken at orwithin the time agreed or, if no time is agreed, at or within a reasonabletime.

(Added to NRS by 2005, 830)

NRS 104.1206 Presumptions.Whenever the Uniform Commercial Code creates a presumption with respect to afact, or provides that a fact is presumed, the trier of fact must find theexistence of the fact unless and until evidence is introduced that supports afinding of its nonexistence.

(Added to NRS by 2005, 830)

NRS 104.1207 Performanceor acceptance under reservation of rights. Repealed. (See chapter 233, Statutes of Nevada 2005,at page 887.)

 

NRS 104.1208 Optionto accelerate at will. Repealed. (See chapter233, Statutes ofNevada 2005, at page 887.)

 

Part 3

TerritorialApplicability and General Rules

NRS 104.1301 Territorialapplicability; parties power to choose applicable law.

1. Except as otherwise provided in this section, whena transaction bears a reasonable relation to this State and also to anotherstate or nation the parties may agree that the law either of this State or ofsuch other state or nation shall govern their rights and duties.

2. In the absence of an agreement effective undersubsection 1, and except as otherwise provided in subsection 3, the UniformCommercial Code applies to transactions bearing an appropriate relation to thisState.

3. If one of the following provisions of the UniformCommercial Code specifies the applicable law, that provision governs and acontrary agreement is effective only to the extent permitted by the law sospecified:

(a) NRS 104.2402;

(b) NRS 104.4102;

(c) NRS 104.5116;

(d) NRS 104.8110;

(e) NRS 104.9301to 104.9307, inclusive;

(f) NRS 104A.2105and 104A.2106; and

(g) NRS 104A.4507.

(Added to NRS by 2005, 831)

NRS 104.1302 Variationby agreement.

1. Except as otherwise provided in subsection 2 orelsewhere in the Uniform Commercial Code, the effect of provisions of theUniform Commercial Code may be varied by agreement.

2. The obligations of good faith, diligence,reasonableness and care prescribed by the Uniform Commercial Code may not bedisclaimed by agreement. The parties, by agreement, may determine the standardsby which the performance of those obligations is to be measured if thosestandards are not manifestly unreasonable. Whenever the Uniform Commercial Coderequires an action to be taken within a reasonable time, a time that is notmanifestly unreasonable may be fixed by agreement.

3. The presence in certain provisions of the UniformCommercial Code of the phrase unless otherwise agreed, or words of similarimport, does not imply that the effect of other provisions may not be varied byagreement under this section.

(Added to NRS by 2005, 831)

NRS 104.1303 Courseof performance, course of dealing and usage of trade.

1. A course of performance is a sequence of conductbetween the parties to a particular transaction that exists if:

(a) The agreement of the parties with respect to thetransaction involves repeated occasions for performance by a party; and

(b) The other party, with knowledge of the nature ofthe performance and opportunity for objection to it, accepts the performance oracquiesces in it without objection.

2. A course of dealing is a sequence of conductconcerning previous transactions between the parties to a particulartransaction that is fairly to be regarded as establishing a common basis ofunderstanding for interpreting their expressions and other conduct.

3. A usage of trade is any practice or method ofdealing having such regularity of observance in a place, vocation or trade asto justify an expectation that it will be observed with respect to thetransaction in question. The existence and scope of such a usage must be provedas facts. If it is established that such a usage is embodied in a trade code orsimilar record, the interpretation of the record is a question of law.

4. A course of performance or course of dealingbetween the parties or usage of trade in the vocation or trade in which theyare engaged or of which they are or should be aware is relevant in ascertainingthe meaning of the parties agreement, may give particular meaning to specificterms of the agreement, and may supplement or qualify the terms of theagreement. A usage of trade applicable in the place in which part of theperformance under the agreement is to occur may be so utilized as to that partof the performance.

5. Except as otherwise provided in subsection 6, theexpress terms of an agreement and any applicable course of performance, courseof dealing or usage of trade must be construed whenever reasonable asconsistent with each other. If such a construction is unreasonable:

(a) Express terms prevail over course of performance,course of dealing and usage of trade;

(b) Course of performance prevails over course ofdealing and usage of trade; and

(c) Course of dealing prevails over usage of trade.

6. Subject to NRS104.2209, a course of performance is relevant to show a waiver ormodification of any term inconsistent with the course of performance.

7. Evidence of a relevant usage of trade offered byone party is not admissible unless that party has given the other party noticethat the court finds sufficient to prevent unfair surprise to the other party.

(Added to NRS by 2005, 831)

NRS 104.1304 Obligationof good faith. Every contract or duty withinthe Uniform Commercial Code imposes an obligation of good faith in itsperformance and enforcement.

(Added to NRS by 2005, 832)

NRS 104.1305 Remediesto be liberally administered.

1. The remedies provided by the Uniform CommercialCode must be liberally administered to the end that the aggrieved party may beput in as good a position as if the other party had fully performed but neitherconsequential or special damages nor penal damages may be had except asspecifically provided in the Uniform Commercial Code or by other rule of law.

2. Any right or obligation declared by the UniformCommercial Code is enforceable by action unless the provision declaring itspecifies a different and limited effect.

(Added to NRS by 2005, 832)

NRS 104.1306 Waiveror renunciation of claim or right after breach. Aclaim or right arising out of an alleged breach may be discharged in whole orin part without consideration by agreement of the aggrieved party in anauthenticated record.

(Added to NRS by 2005, 832)

NRS 104.1307 Primafacie evidence by third-party documents. A documentin due form purporting to be a bill of lading, policy or certificate ofinsurance, official weighers or inspectors certificate, consular invoice, orany other document authorized or required by the contract to be issued by athird party is prima facie evidence of its own authenticity and genuineness andof the facts stated in the document by the third party.

(Added to NRS by 2005, 832)

NRS 104.1308 Performanceor acceptance under reservation of rights.

1. A party that with explicit reservation of rightsperforms or promises performance or assents to performance in a manner demandedor offered by the other party does not thereby prejudice the rights reserved.Such words as without prejudice, under protest, or the like are sufficient.

2. Subsection 1 does not apply to an accord andsatisfaction.

(Added to NRS by 2005, 832)

NRS 104.1309 Optionto accelerate at will. A term providing thatone party or that partys successor in interest may accelerate payment orperformance or require collateral or additional collateral at will or whenthe party deems itself insecure, or words of similar import, means that theparty has power to do so only if that party in good faith believes that theprospect of payment or performance is impaired. The burden of establishing lackof good faith is on the party against which the power has been exercised.

(Added to NRS by 2005, 832)

NRS 104.1310 Subordinatedobligations. An obligation may be issued assubordinated to performance of another obligation of the person obligated, or acreditor may subordinate its right to performance of an obligation by agreementwith either the person obligated or another creditor of the person obligated.Subordination does not create a security interest as against either the commondebtor or a subordinated creditor.

(Added to NRS by 2005, 833)

ARTICLE 2

SALES

Part 1

Short Title, General Construction and Subject Matter

NRS 104.2101 Shorttitle. This article shall be known and may becited as Uniform Commercial CodeSales.

(Added to NRS by 1965, 784)

NRS 104.2102 Scope;certain security and other transactions excluded from this article. Unless the context otherwise requires, this articleapplies to transactions in goods; it does not apply to any transaction whichalthough in the form of an unconditional contract to sell or present sales isintended to operate only as a security transaction nor does this article impairor repeal any statute regulating sales to consumers, farmers or other specifiedclasses of buyers.

(Added to NRS by 1965, 784)

NRS 104.2103 Definitionsand index of definitions.

1. In this Article unless the context otherwiserequires:

(a) Buyer means a person who buys or contracts to buygoods.

(b) Receipt of goods means taking physical possessionof them.

(c) Seller means a person who sells or contracts tosell goods.

2. Other definitions applying to this Article or tospecified parts thereof, and the sections in which they appear are:

 

Acceptance. NRS 104.2606.

Bankers credit. NRS 104.2325.

Between merchants. NRS 104.2104.

Cancellation. Subsection 4 of NRS 104.2106.

Commercial unit. NRS 104.2105.

Confirmed credit. NRS 104.2325.

Conforming to contract. NRS 104.2106.

Contract for sale. NRS 104.2106.

Cover. NRS 104.2712.

Entrusting. NRS 104.2403.

Financing agency. NRS 104.2104.

Future goods. NRS 104.2105.

Goods. NRS 104.2105.

Identification. NRS 104.2501.

Installment contract. NRS 104.2612.

Letter of credit. NRS 104.2325.

Lot. NRS 104.2105.

Merchant. NRS 104.2104.

Overseas. NRS 104.2323.

Person in position of seller. NRS 104.2707.

Present sale. NRS 104.2106.

Sale. NRS 104.2106.

Sale on approval. NRS 104.2326.

Sale or return. NRS 104.2326.

Termination. NRS 104.2106.

 

3. Control as provided in NRS 104.7106 and the following definitionsin other Articles apply to this Article:

 

Check. NRS 104.3104.

Consignee. NRS 104.7102.

Consignor. NRS 104.7102.

Consumer goods. NRS 104.9102.

Draft. NRS 104.3104.

 

4. In addition Article 1 contains general definitionsand principles of construction and interpretation applicable throughout thisArticle.

(Added to NRS by 1965, 784; A 1999, 372; 2005, 847)

NRS 104.2104 Definitions:Merchant; between merchants; financing agency.

1. Merchant means a person who deals in goods of thekind or otherwise by his occupation holds himself out as having knowledge orskill peculiar to the practices or goods involved in the transaction or to whomsuch knowledge or skill may be attributed by his employment of an agent orbroker or other intermediary who by his occupation holds himself out as havingsuch knowledge or skill.

2. Financing agency means a bank, finance company orother person who in the ordinary course of business makes advances againstgoods or documents of title or who by arrangement with either the seller or thebuyer intervenes in ordinary course to make or collect payment due or claimedunder the contract for sale, as by purchasing or paying the sellers draft ormaking advances against it or by merely taking it for collection whether or notdocuments of title accompany or are associated with the draft. Financingagency includes also a bank or other person who similarly intervenes betweenpersons who are in the position of seller and buyer in respect to the goods (NRS 104.2707).

3. Between merchants means in any transaction withrespect to which both parties are chargeable with the knowledge or skill ofmerchants.

(Added to NRS by 1965, 785; A 2005, 848)

NRS 104.2105 Definitions:Transferability; goods; future goods; lot; commercial unit.

1. Goods means all things (including speciallymanufactured goods) which are movable at the time of identification to thecontract for sale other than the money in which the price is to be paid,investment securities (Article 8) and things in action. Goods also includesthe unborn young of animals and growing crops and other identified thingsattached to realty as described in the section on goods to be severed fromrealty (NRS 104.2107).

2. Goods must be both existing and identified beforeany interest in them can pass. Goods which are not both existing and identifiedare future goods. A purported present sale of future goods or of any interesttherein operates as a contract to sell.

3. There may be a sale of a part interest in existingidentified goods.

4. An undivided share in an identified bulk offungible goods is sufficiently identified to be sold although the quantity ofthe bulk is not determined. Any agreed proportion of such a bulk or anyquantity thereof agreed upon by number, weight or other measure may to theextent of the sellers interest in the bulk be sold to the buyer who thenbecomes an owner in common.

5. Lot means a parcel or a single Article which isthe subject matter of a separate sale or delivery, whether or not it issufficient to perform the contract.

6. Commercial unit means such a unit of goods as bycommercial usage is a single whole for purposes of sale and division of whichmaterially impairs its character or value on the market or in use. A commercialunit may be a single Article (as a machine) or a set of Articles (as a suite offurniture or an assortment of sizes) or a quantity (as a bale, gross orcarload) or any other unit treated in use or in the relevant market as a singlewhole.

(Added to NRS by 1965, 785)

NRS 104.2106 Definitions:Contract; agreement; contract for sale; sale; present sale;conforming to contract; termination; cancellation.

1. In this article unless the context otherwiserequires contract and agreement are limited to those relating to thepresent or future sale of goods. Contract for sale includes both a presentsale of goods and a contract to sell goods at a future time. A sale consistsin the passing of title from the seller to the buyer for a price (NRS 104.2401). A present sale means asale which is accomplished by the making of the contract.

2. Goods or conduct including any part of aperformance are conforming or conform to the contract when they are inaccordance with the obligations under the contract.

3. Termination occurs when either party pursuant toa power created by agreement or law puts an end to the contract otherwise thanfor its breach. On termination all obligations which are still executory onboth sides are discharged but any right based on prior breach or performancesurvives.

4. Cancellation occurs when either party puts an endto the contract for breach by the other and its effect is the same as that oftermination except that the cancelling party also retains any remedy forbreach of the whole contract or any unperformed balance.

(Added to NRS by 1965, 786)

NRS 104.2107 Goodsto 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 fromrealty is a contract for the sale of goods within this article if they are tobe severed by the seller but until severance a purported present sale thereofwhich is not effective as a transfer of an interest in land is effective onlyas a contract to sell.

2. A contract for the sale apart from the land ofgrowing crops or other things attached to realty and capable of severancewithout material harm thereto but not described in subsection 1 or of timber tobe cut is a contract for the sale of goods within this article whether thesubject matter is to be severed by the buyer or by the seller even though itforms part of the realty at the time of contracting, and the parties can byidentification effect a present sale before severance.

3. The provisions of this section are subject to anythird party rights provided by the law relating to realty records, and thecontract for sale may be executed and recorded as a document transferring aninterest in land and shall then constitute notice to third parties of thebuyers rights under the contract for sale.

(Added to NRS by 1965, 786; A 1973, 933)

Part 2

Form, Formation and Readjustment of Contract

NRS 104.2201 Formalrequirements; statute of frauds.

1. Except as otherwise provided in this section acontract for the sale of goods for the price of $500 or more is not enforceableby way of action or defense unless there is some writing sufficient to indicatethat a contract for sale has been made between the parties and signed by theparty against whom enforcement is sought or by his authorized agent or broker.A writing is not insufficient because it omits or incorrectly states a termagreed upon but the contract is not enforceable under this subsection beyondthe quantity of goods shown in such writing.

2. Between merchants if within a reasonable time awriting in confirmation of the contract and sufficient against the sender isreceived and the party receiving it has reason to know its contents, itsatisfies the requirements of subsection 1 against such party unless writtennotice of objection to its contents is given within 10 days after it isreceived.

3. A contract which does not satisfy the requirementsof subsection 1 but which is valid in other respects is enforceable:

(a) If the goods are to be specially manufactured forthe buyer and are not suitable for sale to others in the ordinary course of thesellers business and the seller, before notice of repudiation is received andunder circumstances which reasonably indicate that the goods are for the buyer,has made either a substantial beginning of their manufacture or commitments fortheir procurement; or

(b) If the party against whom enforcement is soughtadmits in his pleading, testimony or otherwise in court that a contract forsale was made, but the contract is not enforceable under this provision beyondthe quantity of goods admitted; or

(c) With respect to goods for which payment has beenmade and accepted or which have been received and accepted (NRS 104.2606).

(Added to NRS by 1965, 787)

NRS 104.2202 Finalwritten expression: Parol or extrinsic evidence. Termswith respect to which the confirmatory memoranda of the parties agree or whichare otherwise set forth in writing intended by the parties as a finalexpression of their agreement with respect to such terms as are included thereinmay not be contradicted by evidence of any prior agreement or of acontemporaneous oral agreement but may be explained or supplemented:

1. By course of performance, course of dealing orusage of trade (NRS 104.1303); and

2. By evidence of consistent additional terms unlessthe court finds the writing to have been intended also as a complete andexclusive statement of the terms of the agreement.

(Added to NRS by 1965, 787; A 2005, 849)

NRS 104.2203 Sealsinoperative. The affixing of a seal to awriting evidencing a contract for sale or an offer to buy or sell goods doesnot constitute the writing a sealed instrument and the law with respect tosealed instruments does not apply to such contract or offer.

(Added to NRS by 1965, 787)

NRS 104.2204 Formationin general.

1. A contract for sale of goods may be made in anymanner sufficient to show agreement, including conduct by both parties whichrecognizes the existence of such a contract.

2. An agreement sufficient to constitute a contractfor sale may be found even though the moment of its making is undetermined.

3. Even though one or more terms are left open acontract for sale does not fail for indefiniteness if the parties have intendedto make a contract and there is a reasonably certain basis for giving anappropriate remedy.

(Added to NRS by 1965, 788)

NRS 104.2205 Firmoffers. An offer by a merchant to buy or sellgoods in a signed writing which by its terms gives assurance that it will beheld open is not revocable, for lack of consideration, during the time statedor if no time is stated for a reasonable time, but in no event may such periodof irrevocability exceed 3 months; but any such term of assurance on a formsupplied by the offeree must be separately signed by the offeror.

(Added to NRS by 1965, 788)

NRS 104.2206 Offerand acceptance in formation of contract.

1. Unless otherwise unambiguously indicated by thelanguage or circumstances:

(a) An offer to make a contract shall be construed asinviting acceptance in any manner and by any medium reasonable in thecircumstances.

(b) An order or other offer to buy goods for prompt orcurrent shipment shall be construed as inviting acceptance either by a promptpromise to ship or by the prompt or current shipment of conforming ornonconforming goods, but such a shipment of nonconforming goods does notconstitute an acceptance if the seller seasonably notifies the buyer that theshipment is offered only as an accommodation to the buyer.

2. Where the beginning of a requested performance is areasonable mode of acceptance an offeror who is not notified of acceptancewithin a reasonable time may treat the offer as having lapsed beforeacceptance.

(Added to NRS by 1965, 788)

NRS 104.2207 Additionalterms in acceptance or confirmation.

1. A definite and seasonable expression of acceptanceor a written confirmation which is sent within a reasonable time operates as anacceptance even though it states terms additional to or different from thoseoffered or agreed upon, unless acceptance is expressly made conditional onassent to the additional or different terms.

2. The additional terms are to be construed asproposals for addition to the contract. Between merchants such terms becomepart of the contract unless:

(a) The offer expressly limits acceptance to the termsof the offer;

(b) They materially alter it; or

(c) Notification of objection to them has already beengiven or is given within a reasonable time after notice of them is received.

3. Conduct by both parties which recognizes theexistence of a contract is sufficient to establish a contract for sale althoughthe writings of the parties do not otherwise establish a contract. In such casethe terms of the particular contract consist of those terms on which thewritings of the parties agree, together with any supplementary termsincorporated under any other provisions of this chapter.

(Added to NRS by 1965, 788)

NRS 104.2208 Courseof performance or practical construction. Repealed. (See chapter 233, Statutes of Nevada 2005,at page 887.)

 

NRS 104.2209 Modification,rescission and waiver.

1. An agreement modifying a contract within thisArticle needs no consideration to be binding.

2. A signed agreement which excludes modification orrescission except by a signed writing cannot be otherwise modified orrescinded, but except as between merchants such a requirement on a formsupplied by the merchant must be separately signed by the other party.

3. The requirements of the statute of frauds sectionof this Article (NRS 104.2201) must besatisfied if the contract as modified is within its provisions.

4. Although an attempt at modification or rescissiondoes not satisfy the requirements of subsection 2 or 3 it can operate as awaiver.

5. A party who has made a waiver affecting anexecutory portion of the contract may retract the waiver by reasonablenotification received by the other party that strict performance will berequired of any term waived, unless the retraction would be unjust in view of amaterial change of position in reliance on the waiver.

(Added to NRS by 1965, 789)

NRS 104.2210 Delegationof performance; assignment of rights.

1. A party may perform his duty through a delegateunless otherwise agreed or unless the other party has a substantial interest inhaving his original promisor perform or control the acts required by thecontract. No delegation of performance relieves the party delegating of anyduty to perform or any liability for breach.

2. Except as otherwise provided in NRS 104.9406, unless otherwise agreed, allrights of either seller or buyer can be assigned except where the assignmentwould materially change the duty of the other party, or increase materially theburden or risk imposed on him by his contract, or impair materially his chanceof obtaining return performance. A right to damages for breach of the wholecontract or a right arising out of the assignors due performance of his entireobligation can be assigned despite agreement otherwise.

3. Unless the circumstances indicate the contrary aprohibition of assignment of the contract is to be construed as barring onlythe delegation to the assignee of the assignors performance.

4. An assignment of the contract or of all myrights under the contract or an assignment in similar general terms is anassignment of rights and unless the language or the circumstances (as in anassignment for security) indicate the contrary, it is a delegation ofperformance of the duties of the assignor and its acceptance by the assigneeconstitutes a promise by him to perform those duties. This promise is enforceableby either the assignor or the other party to the original contract.

5. The other party may treat any assignment whichdelegates performance as creating reasonable grounds for insecurity and maywithout prejudice to his rights against the assignor demand assurances from theassignee (NRS 104.2609).

(Added to NRS by 1965, 789; A 1999, 373)

Part 3

General Obligation and Construction of Contract

NRS 104.2301 Generalobligations of parties. The obligation of theseller is to transfer and deliver and that of the buyer is to accept and pay inaccordance with the contract.

(Added to NRS by 1965, 790)

NRS 104.2302 Unconscionablecontract or clause.

1. If the court as a matter of law finds the contractor any clause of the contract to have been unconscionable at the time it wasmade the court may refuse to enforce the contract, or it may enforce theremainder of the contract without the unconscionable clause, or it may so limitthe application of any unconscionable clause as to avoid any unconscionableresult.

2. When it is claimed or appears to the court that thecontract or any clause thereof may be unconscionable the parties shall beafforded a reasonable opportunity to present evidence as to its commercialsetting, purpose and effect to aid the court in making the determination.

(Added to NRS by 1965, 790)

NRS 104.2303 Allocationor division of risks. Where this articleallocates 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 orburden.

(Added to NRS by 1965, 790)

NRS 104.2304 Pricepayable in money, goods, realty or otherwise.

1. The price can be made payable in money orotherwise. If it is payable in whole or in part in goods each party is a sellerof the goods which he is to transfer.

2. Even though all or part of the price is payable inan interest in realty the transfer of the goods and the sellers obligationswith reference to them are subject to this Article, but not the transfer of theinterest in realty or the transferors obligations in connection therewith.

(Added to NRS by 1965, 790)

NRS 104.2305 Openprice term.

1. The parties if they so intend can conclude acontract for sale even though the price is not settled. In such a case the priceis 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 andthey fail to agree; or

(c) The price is to be fixed in terms of some agreedmarket or other standard as set or recorded by a third person or agency and itis not so set or recorded.

2. A price to be fixed by the seller or by the buyermeans a price for him to fix in good faith.

3. When a price left to be fixed otherwise than byagreement of the parties fails to be fixed through fault of one party the othermay at his option treat the contract as cancelled or himself fix a reasonableprice.

4. Where, however, the parties intend not to be boundunless the price be fixed or agreed and it is not fixed or agreed there is nocontract. In such a case the buyer must return any goods already received or ifunable so to do must pay their reasonable value at the time of delivery and theseller must return any portion of the price paid on account.

(Added to NRS by 1965, 790)

NRS 104.2306 Output,requirements and exclusive dealings.

1. A term which measures the quantity by the output ofthe seller or the requirements of the buyer means such actual output orrequirements as may occur in good faith, except that no quantity unreasonablydisproportionate to any stated estimate or in the absence of a stated estimateto any normal or otherwise comparable prior output or requirements may betendered or demanded.

2. A lawful agreement by either the seller or thebuyer for exclusive dealing in the kind of goods concerned imposes unlessotherwise agreed an obligation by the seller to use best efforts to supply thegoods and by the buyer to use best efforts to promote their sale.

(Added to NRS by 1965, 791)

NRS 104.2307 Deliveryin single lot or several lots. Unlessotherwise agreed all goods called for by a contract for sale must be tenderedin a single delivery and payment is due only on such tender but where thecircumstances give either party the right to make or demand delivery in lotsthe price if it can be apportioned may be demanded for each lot.

(Added to NRS by 1965, 791)

NRS 104.2308 Absenceof specified place for delivery. Unlessotherwise agreed:

1. The place for delivery of goods is the sellersplace of business or if he has none his residence;

2. In a contract for sale of identified goods which tothe knowledge of the parties at the time of contracting are in some otherplace, that place is the place for their delivery; and

3. Documents of title may be delivered throughcustomary banking channels.

(Added to NRS by 1965, 791)

NRS 104.2309 Absenceof specific time for action or duration of contract; notice of termination.

1. The time for shipment or delivery or any otheraction under a contract if not provided in this Article or agreed upon shall bea reasonable time.

2. Where the contract provides for successiveperformances but is indefinite in duration it is valid for a reasonable timebut unless otherwise agreed may be terminated at any time by either party.

3. Termination of a contract by one party except onthe happening of an agreed event requires that reasonable notification bereceived by the other party and an agreement dispensing with notification isinvalid if its operation would be unconscionable.

(Added to NRS by 1965, 791)

NRS 104.2310 Opentime for payment or running of credit; authority to ship under reservation. Unless otherwise agreed:

1. Payment is due at the time and place at which thebuyer is to receive the goods even though the place of shipment is the place ofdelivery; and

2. If the seller is authorized to send the goods hemay ship them under reservation, and may tender the documents of title, but thebuyer may inspect the goods after their arrival before payment is due unlesssuch inspection is inconsistent with the terms of the contract (NRS 104.2513); and

3. If delivery is authorized and made by way ofdocuments of title otherwise than by subsection 2 then payment is dueregardless of where the goods are to be received:

(a) At the time and place at which the buyer is toreceive delivery of the tangible documents; or

(b) At the time the buyer is to receive delivery of theelectronic documents and at the sellers place of business or if none, thesellers residence; and

4. Where the seller is required or authorized to shipthe goods on credit the credit period runs from the time of shipment butpostdating the invoice or delaying its dispatch will correspondingly delay thestarting of the credit period.

(Added to NRS by 1965, 791; A 2005, 849)

NRS 104.2311 Optionsand cooperation respecting performance.

1. An agreement for sale which is otherwisesufficiently definite (subsection 3 of NRS104.2204) to be a contract is not made invalid by the fact that it leavesparticulars of performance to be specified by one of the parties. Any suchspecification must be made in good faith and within limits set by commercialreasonableness.

2. Unless otherwise agreed specifications relating toassortment of the goods are at the buyers option and except as otherwiseprovided in paragraph (c) of subsection 1 and subsection 3 of NRS 104.2319 specifications orarrangements relating to shipment are at the sellers option.

3. Where such specification would materially affectthe other partys performance but is not seasonably made or where one partyscooperation is necessary to the agreed performance of the other but is notseasonably forthcoming, the other party in addition to all other remedies:

(a) Is excused for any resulting delay in his ownperformance; and

(b) May also either proceed to perform in anyreasonable manner or after the time for a material part of his own performancetreat the failure to specify or to cooperate as a breach by failure to deliveror accept the goods.

(Added to NRS by 1965, 792)

NRS 104.2312 Warrantyof title and against infringement; buyers obligation against infringement.

1. Subject to subsection 2 there is in a contract forsale a warranty by the seller that:

(a) The title conveyed shall be good, and its transferrightful; and

(b) The goods shall be delivered free from any securityinterest or other lien or encumbrance of which the buyer at the time ofcontracting has no knowledge.

2. A warranty under subsection 1 will be excluded ormodified only by specific language or by circumstances which give the buyerreason to know that the person selling does not claim title in himself or thathe is purporting to sell only such right or title as he or a third person mayhave.

3. Unless otherwise agreed a seller who is a merchantregularly dealing in goods of the kind warrants that the goods shall bedelivered free of the rightful claim of any third person by way of infringementor the like but a buyer who furnishes specifications to the seller must holdthe seller harmless against any such claim which arises out of compliance withthe specifications.

(Added to NRS by 1965, 792)

NRS 104.2313 Expresswarranties by affirmation, promise, description or sample.

1. Express warranties by the seller are created asfollows:

(a) Any affirmation of fact or promise made by theseller to the buyer which relates to the goods and becomes part of the basis ofthe bargain creates an express warranty that the goods shall conform to theaffirmation or promise.

(b) Any description of the goods which is made part ofthe basis of the bargain creates an express warranty that the goods shallconform to the description.

(c) Any sample or model which is made part of the basisof the bargain creates an express warranty that the whole of the goods shallconform to the sample or model.

2. It is not necessary to the creation of an expresswarranty that the seller use formal words such as warrant or guarantee orthat he have a specific intention to make a warranty, but an affirmation merelyof the value of the goods or a statement purporting to be merely the sellersopinion or commendation of the goods does not create a warranty.

(Added to NRS by 1965, 792)

NRS 104.2314 Impliedwarranty: Merchantability; usage of trade.

1. Unless excluded or modified (NRS 104.2316), a warranty that the goodsshall be merchantable is implied in a contract for their sale if the seller isa merchant with respect to goods of that kind. Under this section the servingfor value of food or drink to be consumed either on the premises or elsewhereis a sale.

2. Goods to be merchantable must be at least such as:

(a) Pass without objection in the trade under thecontract description; and

(b) In the case of fungible goods, are of fair averagequality within the description; and

(c) Are fit for the ordinary purposes for which suchgoods are used; and

(d) Run, within the variations permitted by theagreement, of even kind, quality and quantity within each unit and among allunits involved; and

(e) Are adequately contained, packaged and labeled asthe agreement may require; and

(f) Conform to the promises or affirmations of factmade on the container or label if any.

3. Unless excluded or modified (NRS 104.2316) other implied warranties mayarise from course of dealing or usage of trade.

(Added to NRS by 1965, 793)

NRS 104.2315 Impliedwarranty: Fitness for particular purpose. Wherethe seller at the time of contracting has reason to know any particular purposefor which the goods are required and that the buyer is relying on the sellersskill or judgment to select or furnish suitable goods, there is unless excludedor modified under the next section an implied warranty that the goods shall befit for such purpose.

(Added to NRS by 1965, 793)

NRS 104.2316 Exclusionor modification of warranties.

1. Words or conduct relevant to the creation of anexpress warranty and words or conduct tending to negate or limit warranty shallbe construed wherever reasonable as consistent with each other; but subject tothe provisions of this Article on parol or extrinsic evidence (NRS 104.2202) negation or limitation isinoperative to the extent that such construction is unreasonable.

2. Subject to subsection 3, to exclude or modify theimplied warranty of merchantability or any part of it the language must mentionmerchantability and in case of a writing must be conspicuous, and to exclude ormodify any implied warranty of fitness the exclusion must be by a writing andconspicuous. Language to exclude all implied warranties of fitness issufficient if it states, for example, that There are no warranties whichextend beyond the description on the face hereof.

3. Notwithstanding subsection 2:

(a) Unless the circumstances indicate otherwise, allimplied warranties are excluded by expressions like as is, with all faultsor other language which in common understanding calls the buyers attention tothe exclusion of warranties and makes plain that there is no implied warranty;and

(b) When the buyer before entering into the contracthas examined the goods or the sample or model as fully as he desired or hasrefused to examine the goods there is no implied warranty with regard todefects which an examination ought in the circumstances to have revealed tohim; and

(c) An implied warranty can also be excluded ormodified by course of dealing or course of performance or usage of trade.

4. Remedies for breach of warranty can be limited inaccordance with the provisions of this Article on liquidation or limitation ofdamages and on contractual modification of remedy (NRS 104.2718 and 104.2719).

(Added to NRS by 1965, 793)

NRS 104.2317 Cumulationand conflict of warranties express or implied. Warrantieswhether express or implied shall be construed as consistent with each other andas cumulative, but if such construction is unreasonable the intention of theparties shall determine which warranty is dominant. In ascertaining thatintention the following rules apply:

1. Exact or technical specifications displace aninconsistent sample or model or general language of description.

2. A sample from an existing bulk displaces inconsistentgeneral language of description.

3. Express warranties displace inconsistent impliedwarranties other than an implied warranty of fitness for a particular purpose.

(Added to NRS by 1965, 794)

NRS 104.2318 Third-partybeneficiaries of warranties express or implied. Asellers warranty whether express or implied extends to any natural person whois in the family or household of his buyer or who is a guest in his home if itis reasonable to expect that such person may use, consume or be affected by thegoods and who is injured in person by breach of the warranty. A seller may notexclude or limit the operation of this section.

(Added to NRS by 1965, 794)

NRS 104.2319 F.O.B.and F.A.S. terms.

1. Unless otherwise agreed the term F.O.B. (whichmeans free on board) at a named place, even though used only in connectionwith the stated price, is a delivery term under which:

(a) When the term is F.O.B. the place of shipment, theseller must at that place ship the goods in the manner provided in this article(NRS 104.2504) and bear the expense andrisk 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 placeand there tender delivery of them in the manner provided in this article (NRS 104.2503);

(c) When under either paragraph (a) or (b) the term isalso F.O.B. vessel, car or other vehicle, the seller must in addition at hisown expense and risk load the goods on board. If the term is F.O.B. vessel thebuyer must name the vessel and in an appropriate case the seller must complywith the provisions of this article on the form of bill of lading (NRS 104.2323).

2. Unless otherwise agreed the term F.A.S. vessel(which means free alongside) at a named port, even though used only inconnection with the stated price, is a delivery term under which the sellermust:

(a) At his own expense and risk deliver the goods alongsidethe vessel in the manner usual in that port or on a dock designated andprovided by the buyer; and

(b) Obtain and tender a receipt for the goods inexchange for which the carrier is under a duty to issue a bill of lading.

3. Unless otherwise agreed in any case falling withinparagraph (a) or (c) of subsection 1 or subsection 2 the buyer must seasonablygive any needed instructions for making delivery, including when the term isF.A.S. or F.O.B. the loading berth of the vessel and in an appropriate case itsname and sailing date. The seller may treat the failure of needed instructionsas a failure of cooperation under this article (NRS 104.2311). He may also at his optionmove the goods in any reasonable manner preparatory to delivery or shipment.

4. Under the term F.O.B. vessel or F.A.S. unlessotherwise agreed the buyer must make payment against tender of the requireddocuments and the seller may not tender nor the buyer demand delivery of thegoods in substitution for the documents.

(Added to NRS by 1965, 794)

NRS 104.2320 C.I.F.and C. & F. terms.

1. The term C.I.F. means that the price includes in alump sum the cost of the goods and the insurance and freight to the nameddestination. The term C. & F. or C.F. means that the price so includes costand freight to the named destination.

2. Unless otherwise agreed and even though used onlyin connection with the stated price and destination, the term C.I.F.destination or its equivalent requires the seller at his own expense and riskto:

(a) Put the goods into the possession of a carrier atthe port for shipment and obtain a negotiable bill or bills of lading coveringthe entire transportation to the named destination; and

(b) Load the goods and obtain a receipt from thecarrier (which may be contained in the bill of lading) showing that the freighthas 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 theport of shipment in the usual amount, in the currency of the contract, shown tocover the same goods covered by the bill of lading and providing for payment ofloss to the order of the buyer or for the account of whom it may concern; butthe seller may add to the price the amount of the premium for any such war riskinsurance; and

(d) Prepare an invoice of the goods and procure anyother documents required to effect shipment or to comply with the contract; and

(e) Forward and tender with commercial promptness allthe documents in due form and with any endorsement necessary to perfect thebuyers rights.

3. Unless otherwise agreed the term C. & F. or itsequivalent has the same effect and imposes upon the seller the same obligationsand risks as a C.I.F. term except the obligation as to insurance.

4. Under the term C.I.F. or C. & F. unlessotherwise agreed the buyer must make payment against tender of the requireddocuments and the seller may not tender nor the buyer demand delivery of thegoods in substitution for the documents.

(Added to NRS by 1965, 795)

NRS 104.2321 C.I.F.or C. & F.: Net landed weights; payment on arrival; warranty ofcondition on arrival. Under a contractcontaining a term C.I.F. or C. & F.:

1. Where the price is based on or is to be adjustedaccording to net landed weights, delivered weights, out turn quantity orquality or the like, unless otherwise agreed the seller must reasonablyestimate the price. The payment due on tender of the documents called for bythe contract is the amount so estimated, but after final adjustment of theprice a settlement must be made with commercial promptness.

2. An agreement described in subsection 1 or anywarranty of quality or condition of the goods on arrival places upon the sellerthe risk of ordinary deterioration, shrinkage and the like in transportationbut has no effect on the place or time of identification to the contract forsale or delivery or on the passing of the risk of loss.

3. Unless otherwise agreed where the contract providesfor payment on or after arrival of the goods the seller must before paymentallow such preliminary inspection as is feasible; but if the goods are lostdelivery of the documents and payment are due when the goods should havearrived.

(Added to NRS by 1965, 796)

NRS 104.2322 Deliveryex-ship.

1. Unless otherwise agreed a term for delivery ofgoods ex-ship (which means from the carrying vessel) or in equivalentlanguage is not restricted to a particular ship and requires delivery from aship which has reached a place at the named port of destination where goods ofthe kind are usually discharged.

2. Under such a term unless otherwise agreed:

(a) The seller must discharge all liens arising out ofthe carriage and furnish the buyer with a direction which puts the carrierunder a duty to deliver the goods; and

(b) The risk of loss does not pass to the buyer until thegoods leave the ships tackle or are otherwise properly unloaded.

(Added to NRS by 1965, 796)

NRS 104.2323 Form of bill of lading required inoverseas shipment; overseas.

1. Where the contract contemplates overseas shipmentand contains a term C.I.F. or C. & F. or F.O.B. vessel, the seller unlessotherwise agreed must obtain a negotiable bill of lading stating that the goodshave been loaded on board or, in the case of a term C.I.F. or C. & F.,received for shipment.

2. Where in a case within subsection 1 a tangible billof lading has been issued in a set of parts, unless otherwise agreed if thedocuments are not to be sent from abroad the buyer may demand tender of thefull set; otherwise only one part of the bill of lading need be tendered. Evenif the agreement expressly requires a full set:

(a) Due tender of a single part is acceptable withinthe provisions of this Article on cure of improper delivery (subsection 1 of NRS 104.2508); and

(b) Even though the full set is demanded, if thedocuments are sent from abroad the person tendering an incomplete set maynevertheless require payment upon furnishing an indemnity which the buyer ingood faith deems adequate.

3. A shipment by water or by air or a contractcontemplating such shipment is overseas insofar as by usage of trade oragreement it is subject to the commercial, financing or shipping practicescharacteristic of international deep water commerce.

(Added to NRS by 1965, 796; A 2005, 849)

NRS 104.2324 Noarrival, no sale term. Under a term noarrival, no sale or terms of like meaning, unless otherwise agreed:

1. The seller must properly ship conforming goods andif they arrive by any means he must tender them on arrival but he assumes noobligation that the goods will arrive unless he has caused the nonarrival; and

2. Where without fault of the seller the goods are inpart lost or have so deteriorated as no longer to conform to the contract orarrive after the contract time, the buyer may proceed as if there had beencasualty to identified goods (NRS 104.2613).

(Added to NRS by 1965, 797)

NRS 104.2325 Letterof credit term; confirmed credit.

1. Failure of the buyer seasonably to furnish anagreed letter of credit is a breach of the contract for sale.

2. The delivery to seller of a proper letter of creditsuspends the buyers obligation to pay. If the letter of credit is dishonored,the seller may on seasonable notification to the buyer require payment directlyfrom him.

3. Unless otherwise agreed the term letter of creditor bankers credit in a contract for sale means an irrevocable credit issuedby a financing agency of good repute and, where the shipment is overseas, ofgood international repute. The term confirmed credit means that the creditmust also carry the direct obligation of such an agency which does business inthe sellers financial market.

(Added to NRS by 1965, 797)

NRS 104.2326 Saleon approval and sale or return; rights of creditors.

1. Unless otherwise agreed, if delivered goods may bereturned by the buyer even though they conform to the contract, the transactionis:

(a) A sale on approval if the goods are deliveredprimarily for use; and

(b) A sale or return if the goods are deliveredprimarily for resale.

2. Goods held on approval are not subject to theclaims of the buyers creditors until acceptance; goods held on sale or returnare subject to such claims while in the buyers possession.

3. Any or return term of a contract for sale is tobe treated as a separate contract for sale within the statute of frauds sectionof this Article (NRS 104.2201) and ascontradicting the sale aspect of the contract within the provisions of thisArticle on parol or extrinsic evidence (NRS104.2202).

(Added to NRS by 1965, 797; A 1999, 373)

NRS 104.2327 Specialincidents 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 contractthe risk of loss and the title do not pass to the buyer until acceptance; and

(b) Use of the goods consistent with the purpose oftrial is not acceptance but failure seasonably to notify the seller of electionto return the goods is acceptance, and if the goods conform to the contractacceptance of any part is acceptance of the whole; and

(c) After due notification of election to return, thereturn is at the sellers risk and expense but a merchant buyer must follow anyreasonable instructions.

2. Under a sale or return unless otherwise agreed:

(a) The option to return extends to the whole or anycommercial unit of the goods while in substantially their original condition,but must be exercised seasonably; and

(b) The return is at the buyers risk and expense.

(Added to NRS by 1965, 798)

NRS 104.2328 Saleby auction.

1. In a sale by auction if goods are put up in lotseach lot is the subject of a separate sale.

2. A sale by auction is complete when the auctioneerso announces by the fall of the hammer or in other customary manner. Where abid is made while the hammer is falling in acceptance of a prior bid theauctioneer may in his discretion reopen the bidding or declare the goods soldunder the bid on which the hammer was falling.

3. Such a sale is with reserve unless the goods are inexplicit terms put up without reserve. In an auction with reserve theauctioneer may withdraw the goods at any time until he announces completion ofthe sale. In an auction without reserve, after the auctioneer calls for bids onan Article or lot, that Article or lot cannot be withdrawn unless no bid ismade within a reasonable time. In either case a bidder may retract his biduntil the auctioneers announcement of completion of the sale, but a biddersretraction does not revive any previous bid.

4. If the auctioneer knowingly receives a bid on thesellers behalf or the seller makes or procures such a bid, and notice has notbeen given that liberty for such bidding is reserved, the buyer may at hisoption avoid the sale or take the goods at the price of the last good faith bidprior to the completion of the sale. This subsection shall not apply to any bidat a forced sale.

(Added to NRS by 1965, 798)

Part 4

Title, Creditors and Good Faith Purchasers

NRS 104.2401 Passingof 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 thirdparties applies irrespective of title to the goods except where the provisionrefers to such title. Insofar as situations are not covered by the otherprovisions of this Article and matters concerning title become material thefollowing rules apply:

1. Title to goods cannot pass under a contract forsale prior to their identification to the contract (NRS 104.2501), and unless otherwiseexplicitly agreed the buyer acquires by their identification a special propertyas limited by this chapter. Any retention or reservation by the seller of thetitle (property) in goods shipped or delivered to the buyer is limited ineffect to a reservation of a security interest. Subject to these provisions andto the provisions of the Article on secured transactions (Article 9), title togoods passes from the seller to the buyer in any manner and on any conditionsexplicitly agreed on by the parties.

2. Unless otherwise explicitly agreed title passes tothe buyer at the time and place at which the seller completes his performancewith reference to the physical delivery of the goods, despite any reservationof a security interest and even though a document of title is to be deliveredat a different time or place; and in particular and despite any reservation ofa security interest by the bill of lading:

(a) If the contract requires or authorizes the sellerto send the goods to the buyer but does not require him to deliver them atdestination, 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 deliveryis to be made without moving the goods:

(a) If the seller is to deliver a tangible document oftitle, title passes at the time when and the place where he delivers suchdocuments 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 alreadyidentified and no documents of title are to be delivered, title passes at thetime and place of contracting.

4. A rejection or other refusal by the buyer toreceive or retain the goods, whether or not justified, or a justifiedrevocation of acceptance revests title to the goods in the seller. Suchrevesting occurs by operation of law and is not a sale.

(Added to NRS by 1965, 798; A 2005, 850)

NRS 104.2402 Rightsof sellers creditors against sold goods.

1. Except as provided in subsections 2 and 3, rightsof unsecured creditors of the seller with respect to goods which have beenidentified to a contract for sale are subject to the buyers rights to recoverthe goods under this Article (NRS 104.2502and 104.2716).

2. A creditor of the seller may treat a sale or anidentification of goods to a contract for sale as void if as against him aretention of possession by the seller is fraudulent under any rule of law ofthe state where the goods are situated, except that retention of possession ingood faith and current course of trade by a merchant-seller for a commerciallyreasonable time after a sale or identification is not fraudulent.

3. Nothing in this Article shall be deemed to impairthe rights of creditors of the seller:

(a) Under the provisions of the Article on securedtransactions (Article 9); or

(b) Where identification to the contract or delivery ismade not in current course of trade but in satisfaction of or as security for apreexisting claim for money, security or the like and is made undercircumstances which under any rule of law of the state where the goods aresituated would apart from this Article constitute the transaction a fraudulenttransfer or voidable preference.

(Added to NRS by 1965, 799)

NRS 104.2403 Powerto transfer; good faith purchase of goods; entrusting.

1. A purchaser of goods acquires all title which histransferor had or had power to transfer except that a purchaser of a limitedinterest acquires rights only to the extent of the interest purchased. A personwith voidable title has power to transfer a good title to a good faithpurchaser for value. When goods have been delivered under a transaction ofpurchase the purchaser has such power even though:

(a) The transferor was deceived as to the identity ofthe purchaser;

(b) The delivery was in exchange for a check which islater dishonored;

(c) It was agreed that the transaction was to be acash sale; or

(d) The delivery was procured through fraud punishableas larcenous under the criminal law.

2. Any entrusting of possession of goods to a merchantwho deals in goods of that kind gives him power to transfer all rights of theentruster to a buyer in ordinary course of business.

3. Entrusting includes any delivery and any acquiescencein retention of possession regardless of any condition expressed between theparties to the delivery or acquiescence and regardless of whether theprocurement of the entrusting or the possessors disposition of the goods havebeen such as to be larcenous under the criminal law.

4. The rights of other purchasers of goods and of liencreditors are governed by the articles on secured transactions (article 9) anddocuments of title (article 7).

(Added to NRS by 1965, 800; A 1991, 412)

Part 5

Performance

NRS 104.2501 Insurableinterest in goods; manner of identification of goods.

1. The buyer obtains a special property and aninsurable interest in goods by identification of existing goods as goods towhich the contract refers even though the goods so identified are nonconformingand he has an option to return or reject them. Such identification can be madeat any time and in any manner explicitly agreed to by the parties. In theabsence of explicit agreement identification occurs:

(a) When the contract is made if it is for the sale ofgoods already existing and identified.

(b) If the contract is for the sale of future goodsother than those described in paragraph (c), when goods are shipped, marked orotherwise designated by the seller as goods to which the contract refers.

(c) When the crops are planted or otherwise becomegrowing crops or the young are conceived if the contract is for the sale ofunborn young to be born within 12 months after contracting or for the sale ofcrops to be harvested within 12 months or the next normal harvest season aftercontracting, whichever is longer.

2. The seller retains an insurable interest in goodsso long as title to or any security interest in the goods remains in him andwhere the identification is by the seller alone he may until default orinsolvency or notification to the buyer that the identification is finalsubstitute other goods for those identified.

3. Nothing in this section impairs any insurableinterest recognized under any other statute or rule of law.

(Added to NRS by 1965, 800)

NRS 104.2502 Buyersright to goods on sellers repudiation, failure to deliver or insolvency.

1. Subject to subsections 2 and 3, and even though thegoods have not been shipped, a buyer who has paid a part or all of the price ofgoods in which he has a special property under the provisions of the immediatelypreceding section may on making and keeping good a tender of any unpaid portionof their price recover them from the seller if:

(a) In the case of goods bought for personal, family orhousehold purposes, the seller repudiates or fails to deliver as required bythe contract; or

(b) In all cases, the seller becomes insolvent within10 days after receipt of the first installment on their price.

2. The right of the buyer to recover the goods undersubsection 1 vests upon acquisition of a special property even if the sellerhas not then repudiated or failed to deliver.

3. If the identification creating his special propertyhas been made by the buyer he acquires the right to recover the goods only ifthey conform to the contract for sale.

(Added to NRS by 1965, 801; A 1999, 374; 2001, 709)

NRS 104.2503 Mannerof sellers tender of delivery.

1. Tender of delivery requires that the seller put andhold conforming goods at the buyers disposition and give the buyer anynotification reasonably necessary to enable him to take delivery. The manner,time and place for tender are determined by the agreement and this Article, andin particular:

(a) Tender must be at a reasonable hour, and if it isof goods they must be kept available for the period reasonably necessary toenable the buyer to take possession; but

(b) Unless otherwise agreed the buyer must furnishfacilities reasonably suited to the receipt of the goods.

2. Where the case is within the next sectionrespecting shipment tender requires that the seller comply with its provisions.

3. Where the seller is required to deliver at aparticular destination tender requires that he comply with subsection 1 andalso in any appropriate case tender documents as described in subsections 4 and5 of this section.

4. Where goods are in the possession of a bailee andare to be delivered without being moved:

(a) Tender requires that the seller either tender anegotiable document of title covering such goods or procure acknowledgment bythe bailee of the buyers right to possession of the goods; but

(b) Tender to the buyer of a nonnegotiable document oftitle or of a record directing the bailee to deliver is sufficient tenderunless the buyer seasonably objects, and except as otherwise provided inArticle 9, receipt by the bailee of notification of the buyers rights fixesthose rights as against the bailee and all third persons; but risk of loss ofthe goods and of any failure by the bailee to honor the nonnegotiable documentof title or to obey the direction remains on the seller until the buyer has hada reasonable time to present the document or direction, and a refusal by thebailee to honor the document or to obey the direction defeats the tender.

5. Where the contract requires the seller to deliverdocuments:

(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 NRS 104.2323); and

(b) Tender through customary banking channels issufficient and dishonor of a draft accompanying or associated with thedocuments constitutes nonacceptance or rejection.

(Added to NRS by 1965, 801; A 2005, 850)

NRS 104.2504 Shipmentby seller. Where the seller is required or authorizedto send the goods to the buyer and the contract does not require him to deliverthem at a particular destination, then unless otherwise agreed he must:

1. Put the goods in the possession of such a carrierand make such a contract for their transportation as may be reasonable havingregard to the nature of the goods and other circumstances of the case; and

2. Obtain and promptly deliver or tender in due formany document necessary to enable the buyer to obtain possession of the goods orotherwise required by the agreement or by usage of trade; and

3. Promptly notify the buyer of the shipment.

Failure tonotify the buyer under subsection 3 or to make a proper contract undersubsection 1 is a ground for rejection only if material delay or loss ensues.

(Added to NRS by 1965, 802)

NRS 104.2505 Sellersshipment under reservation.

1. Where the seller has identified goods to thecontract by or before shipment:

(a) His procurement of a negotiable bill of lading tohis 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 buyerindicates in addition only the sellers expectation of transferring thatinterest to the person named.

(b) A nonnegotiable bill of lading to himself or hisnominee reserves possession of the goods as security but except in a case ofconditional delivery (subsection 2 of NRS104.2507) a nonnegotiable bill of lading naming the buyer as consignee reservesno security interest even though the seller retains possession or control ofthe bill of lading.

2. When shipment by the seller with reservation of asecurity interest is in violation of the contract for sale it constitutes animproper contract for transportation within the preceding section but impairsneither the rights given to the buyer by shipment and identification of thegoods to the contract nor the sellers powers as a holder of a negotiabledocument of title.

(Added to NRS by 1965, 802; A 2005, 851)

NRS 104.2506 Rightsof financing agency.

1. A financing agency by paying or purchasing forvalue a draft which relates to a shipment of goods acquires to the extent ofthe payment or purchase and in addition to its own rights under the draft andany document of title securing it any rights of the shipper in the goodsincluding the right to stop delivery and the shippers right to have the drafthonored by the buyer.

2. The right to reimbursement of a financing agencywhich has in good faith honored or purchased the draft under commitment to orauthority from the buyer is not impaired by subsequent discovery of defectswith reference to any relevant document which was apparently regular.

(Added to NRS by 1965, 802; A 2005, 851)

NRS 104.2507 Effectof sellers tender; delivery on condition.

1. Tender of delivery is a condition to the buyersduty to accept the goods and, unless otherwise agreed, to his duty to pay forthem. Tender entitles the seller to acceptance of the goods and to paymentaccording to the contract.

2. Where payment is due and demanded on the deliveryto the buyer of goods or documents of title, his right as against the seller toretain or dispose of them is conditional upon his making the payment due.

(Added to NRS by 1965, 802)

NRS 104.2508 Cureby seller of improper tender or delivery; replacement.

1. Where any tender or delivery by the seller isrejected because nonconforming and the time for performance has not yetexpired, the seller may seasonably notify the buyer of his intention to cureand may then within the contract time make a conforming delivery.

2. Where the buyer rejects a nonconforming tenderwhich the seller had reasonable grounds to believe would be acceptable with orwithout money allowance the seller may if he seasonably notifies the buyer havea further reasonable time to substitute a conforming tender.

(Added to NRS by 1965, 803)

NRS 104.2509 Riskof loss in the absence of breach.

1. Where the contract requires or authorizes the sellerto ship the goods by carrier:

(a) If it does not require him to deliver them at aparticular destination, the risk of loss passes to the buyer when the goods areduly delivered to the carrier even though the shipment is under reservation (NRS 104.2505); but

(b) If it does require him to deliver them at aparticular destination and the goods are there duly tendered while in thepossession of the carrier, the risk of loss passes to the buyer when the goodsare there duly so tendered as to enable the buyer to take delivery.

2. Where the goods are held by a bailee to bedelivered without being moved, the risk of loss passes to the buyer:

(a) On his receipt of possession or control of anegotiable document of title covering the goods; or

(b) On acknowledgment by the bailee of the buyersright to possession of the goods; or

(c) After his receipt of possession or control of anonnegotiable document of title or other direction to deliver in a record, asprovided in paragraph (b) of subsection 4 of NRS104.2503.

3. In any case not within subsection 1 or 2, the riskof loss passes to the buyer on his receipt of the goods if the seller is amerchant; otherwise the risk passes to the buyer on tender of delivery.

4. The provisions of this section are subject tocontrary agreement of the parties and to the provisions of this Article on saleon approval (NRS 104.2327) and on effectof breach on risk of loss (NRS 104.2510).

(Added to NRS by 1965, 803; A 2005, 852)

NRS 104.2510 Effectof breach on risk of loss.

1. Where a tender or delivery of goods so fails toconform to the contract as to give a right of rejection the risk of their lossremains on the seller until cure or acceptance.

2. Where the buyer rightfully revokes acceptance hemay to the extent of any deficiency in his effective insurance coverage treatthe risk of loss as having rested on the seller from the beginning.

3. Where the buyer as to conforming goods alreadyidentified to the contract for sale repudiates or is otherwise in breach beforerisk of their loss has passed to him, the seller may to the extent of anydeficiency in his effective insurance coverage treat the risk of loss asresting on the buyer for a commercially reasonable time.

(Added to NRS by 1965, 803)

NRS 104.2511 Tenderof payment by buyer; payment by check.

1. Unless otherwise agreed tender of payment is acondition to the sellers duty to tender and complete any delivery.

2. Tender of payment is sufficient when made by anymeans or in any manner current in the ordinary course of business unless theseller demands payment in legal tender and gives any extension of timereasonably necessary to procure it.

3. Payment by check is conditional and is defeated asbetween the parties by dishonor of the check on due presentment.

(Added to NRS by 1965, 804; A 1993, 1255)

NRS 104.2512 Paymentby buyer before inspection.

1. Where the contract requires payment beforeinspection nonconformity of the goods does not excuse the buyer from so makingpayment unless:

(a) The nonconformity appears without inspection; or

(b) Despite tender of the required documents thecircumstances would justify injunction against honor under the provisions ofthis chapter.

2. Payment pursuant to subsection 1 does not constitutean acceptance of goods or impair the buyers right to inspect or any of hisremedies.

(Added to NRS by 1965, 804; A 1997, 374)

NRS 104.2513 Buyersright to inspection of goods.

1. Unless otherwise agreed and subject to subsection3, where goods are tendered or delivered or identified to the contract forsale, the buyer has a right before payment or acceptance to inspect them at anyreasonable place and time and in any reasonable manner. When the seller isrequired or authorized to send the goods to the buyer, the inspection may beafter their arrival.

2. Expenses of inspection must be borne by the buyerbut may be recovered from the seller if the goods do not conform and arerejected.

3. Unless otherwise agreed and subject to theprovisions of this article on C.I.F. contracts (subsection 3 of NRS 104.2321), the buyer is not entitledto inspect the goods before payment of the price when the contract provides:

(a) For delivery C.O.D. or on other like terms; or

(b) For payment against documents of title, exceptwhere such payment is due only after the goods are to become available forinspection.

4. A place or method of inspection fixed by theparties is presumed to be exclusive but unless otherwise expressly agreed itdoes not postpone identification or shift the place for delivery or for passingthe risk of loss. If compliance becomes impossible, inspection shall be asprovided in this section unless the place or method fixed was clearly intendedas an indispensable condition failure of which avoids the contract.

(Added to NRS by 1965, 804)

NRS 104.2514 Whendocuments deliverable on acceptance; when on payment. Unlessotherwise agreed documents against which a draft is drawn are to be deliveredto the drawee on acceptance of the draft if it is payable more than 3 daysafter presentment; otherwise, only on payment.

(Added to NRS by 1965, 804)

NRS 104.2515 Preservingevidence of goods in dispute. In furtheranceof the adjustment of any claim or dispute:

1. Either party on reasonable notification to theother and for the purpose of ascertaining the facts and preserving evidence hasthe right to inspect, test and sample the goods, including such of them as maybe in the possession or control of the other; and

2. The parties may agree to a third party inspectionor survey to determine the conformity or condition of the goods and may agreethat the findings shall be binding upon them in any subsequent litigation oradjustment.

(Added to NRS by 1965, 804)

Part 6

Breach, Repudiation and Excuse

NRS 104.2601 Buyersrights on improper delivery. Subject to theprovisions of this article on breach in installment contracts (NRS 104.2612) and unless otherwise agreedunder the sections on contractual limitations of remedy (NRS 104.2718 and 104.2719), if the goods or the tender ofdelivery fail in any respect to conform to the contract, the buyer may:

1. Reject the whole; or

2. Accept the whole; or

3. Accept any commercial unit or units and reject therest.

(Added to NRS by 1965, 805)

NRS 104.2602 Mannerand effect of rightful rejection.

1. Rejection of goods must be within a reasonable timeafter their delivery or tender. It is ineffective unless the buyer seasonablynotifies the seller.

2. Subject to the provisions of the two followingsections on rejected goods (NRS 104.2603and 104.2604):

(a) After rejection any exercise of ownership by thebuyer with respect to any commercial unit is wrongful as against the seller;and

(b) If the buyer has before rejection taken physicalpossession of goods in which he does not have a security interest under theprovisions of this Article (subsection 3 of NRS104.2711), he is under a duty after rejection to hold them with reasonablecare at the sellers disposition for a time sufficient to permit the seller toremove them; but

(c) The buyer has no further obligations with regard togoods rightfully rejected.

3. The sellers rights with respect to goodswrongfully rejected are governed by the provisions of this Article on sellersremedies in general (NRS 104.2703).

(Added to NRS by 1965, 805)

NRS 104.2603 Merchantbuyers duties as to rightfully rejected goods.

1. Subject to any security interest in the buyer(subsection 3 of NRS 104.2711), whenthe seller has no agent or place of business at the market of rejection a merchantbuyer is under a duty after rejection of goods in his possession or control tofollow any reasonable instructions received from the seller with respect to thegoods and in the absence of such instructions to make reasonable efforts tosell them for the sellers account if they are perishable or threaten todecline in value speedily. Instructions are not reasonable if on demandindemnity for expenses is not forthcoming.

2. When the buyer sells goods under subsection 1, heis entitled to reimbursement from the seller or out of the proceeds forreasonable expenses of caring for and selling them, and if the expenses includeno selling commission then to such commission as is usual in the trade or ifthere is none to a reasonable sum not exceeding 10 percent on the grossproceeds.

3. In complying with this section the buyer is heldonly to good faith and good faith conduct hereunder is neither acceptance norconversion nor the basis of an action for damages.

(Added to NRS by 1965, 805)

NRS 104.2604 Buyersoptions as to salvage of rightfully rejected goods. Subjectto the provisions of the immediately preceding section on perishables if theseller gives no instructions within a reasonable time after notification ofrejection the buyer may store the rejected goods for the sellers account orreship them to him or resell them for the sellers account with reimbursementas provided in the preceding section. Such action is not acceptance orconversion.

(Added to NRS by 1965, 806)

NRS 104.2605 Waiverof buyers objections by failure to particularize.

1. The buyers failure to state in connection withrejection a particular defect which is ascertainable by reasonable inspectionprecludes him from relying on the unstated defect to justify rejection or toestablish breach:

(a) Where the seller could have cured it if statedseasonably; or

(b) Between merchants when the seller has afterrejection made a request in writing for a full and final written statement ofall defects on which the buyer proposes to rely.

2. Payment against documents made without reservationof rights precludes recovery of the payment for defects apparent in thedocuments.

(Added to NRS by 1965, 806; A 2005, 852)

NRS 104.2606 Whatconstitutes acceptance of goods.

1. Acceptance of goods occurs when the buyer:

(a) After a reasonable opportunity to inspect the goodssignifies to the seller that the goods are conforming or that he will take orretain them in spite of their nonconformity; or

(b) Fails to make an effective rejection (subsection 1of NRS 104.2602), but such acceptancedoes not occur until the buyer has had a reasonable opportunity to inspectthem; or

(c) Does any act inconsistent with the sellersownership; but if such act is wrongful as against the seller it is anacceptance only if ratified by him.

2. Acceptance of a part of any commercial unit is acceptanceof that entire unit.

(Added to NRS by 1965, 806)

NRS 104.2607 Effectof acceptance; notice of breach; burden of establishing breach afteracceptance; notice of claim or litigation to person answerable over.

1. The buyer must pay at the contract rate for anygoods accepted.

2. Acceptance of goods by the buyer precludesrejection of the goods accepted and if made with knowledge of a nonconformitycannot be revoked because of it unless the acceptance was on the reasonableassumption that the nonconformity would be seasonably cured but acceptance doesnot of itself impair any other remedy provided by this Article fornonconformity.

3. Where a tender has been accepted:

(a) The buyer must within a reasonable time after hediscovers or should have discovered any breach notify the seller of breach orbe barred from any remedy; and

(b) If the claim is one for infringement or the like(subsection 3 of NRS 104.2312) and thebuyer is sued as a result of such a breach he must so notify the seller withina reasonable time after he receives notice of the litigation or be barred fromany remedy over for liability established by the litigation.

4. The burden is on the buyer to establish any breachwith respect to the goods accepted.

5. Where the buyer is sued for breach of a warranty orother obligation for which his seller is answerable over:

(a) He may give his seller written notice of thelitigation. If the notice states that the seller may come in and defend andthat if the seller does not do so he will be bound in any action against him byhis buyer by any determination of fact common to the two litigations, thenunless the seller after seasonable receipt of the notice does come in anddefend he is so bound.

(b) If the claim is one for infringement or the like(subsection 3 of NRS 104.2312) theoriginal seller may demand in writing that his buyer turn over to him controlof the litigation including settlement or else be barred from any remedy overand if he also agrees to bear all expense and to satisfy any adverse judgment,then unless the buyer after seasonable receipt of the demand does turn overcontrol the buyer is so barred.

6. The provisions of subsections 3, 4 and 5 apply toany obligation of a buyer to hold the seller harmless against infringement orthe like (subsection 3 of NRS 104.2312).

(Added to NRS by 1965, 806)

NRS 104.2608 Revocationof acceptance in whole or in part.

1. The buyer may revoke his acceptance of a lot orcommercial unit whose nonconformity substantially impairs its value to him ifhe has accepted it:

(a) On the reasonable assumption that its nonconformitywould be cured and it has not been seasonably cured; or

(b) Without discovery of such nonconformity if hisacceptance was reasonably induced either by the difficulty of discovery beforeacceptance or by the sellers assurances.

2. Revocation of acceptance must occur within areasonable time after the buyer discovers or should have discovered the groundfor it and before any substantial change in condition of the goods which is notcaused by their own defects. It is not effective until the buyer notifies theseller of it.

3. A buyer who so revokes has the same rights andduties with regard to the goods involved as if he had rejected them.

(Added to NRS by 1965, 807)

NRS 104.2609 Rightto adequate assurance of performance.

1. A contract for sale imposes an obligation on eachparty that the others expectation of receiving due performance will not beimpaired. When reasonable grounds for insecurity arise with respect to theperformance of either party the other may in writing demand adequate assuranceof due performance and until he receives such assurance may if commerciallyreasonable suspend any performance for which he has not already received theagreed return.

2. Between merchants the reasonableness of grounds forinsecurity and the adequacy of any assurance offered shall be determinedaccording to commercial standards.

3. Acceptance of any improper delivery or payment doesnot prejudice the aggrieved partys right to demand adequate assurance offuture performance.

4. After receipt of a justified demand failure toprovide within a reasonable time not exceeding 30 days such assurance of dueperformance as is adequate under the circumstances of the particular case is arepudiation of the contract.

(Added to NRS by 1965, 807)

NRS 104.2610 Anticipatoryrepudiation. When either party repudiates thecontract with respect to a performance not yet due the loss of which willsubstantially impair the value of the contract to the other, the aggrievedparty may:

1. For a commercially reasonable time awaitperformance by the repudiating party; or

2. Resort to any remedy for breach (NRS 104.2703 or 104.2711), even though he has notified therepudiating party that he would await the latters performance and has urgedretraction; and

3. In either case suspend his own performance or proceedingin accordance with the provisions of this Article on the sellers right toidentify goods to the contract notwithstanding breach or to salvage unfinishedgoods (NRS 104.2704).

(Added to NRS by 1965, 808)

NRS 104.2611 Retractionof anticipatory repudiation.

1. Until the repudiating partys next performance isdue he can retract his repudiation unless the aggrieved party has since therepudiation cancelled or materially changed his position or otherwise indicatedthat he considers the repudiation final.

2. Retraction may be by any method which clearlyindicates to the aggrieved party that the repudiating party intends to perform,but must include any assurance justifiably demanded under the provisions of thisArticle (NRS 104.2609).

3. Retraction reinstates the repudiating partysrights under the contract with due excuse and allowance to the aggrieved partyfor any delay occasioned by the repudiation.

(Added to NRS by 1965, 808)

NRS 104.2612 Installmentcontract; breach.

1. An installment contract is one which requires orauthorizes the delivery of goods in separate lots to be separately accepted,even though the contract contains a clause each delivery is a separatecontract or its equivalent.

2. The buyer may reject any installment which isnonconforming if the nonconformity substantially impairs the value of thatinstallment and cannot be cured or if the nonconformity is a defect in therequired documents; but if the nonconformity does not fall within subsection 3and the seller gives adequate assurance of its cure the buyer must accept thatinstallment.

3. Whenever nonconformity or default with respect toone or more installments substantially impairs the value of the whole contractthere is a breach of the whole. But the aggrieved party reinstates the contractif he accepts a nonconforming installment without seasonably notifying ofcancellation or if he brings an action with respect only to past installmentsor demands performance as to future installments.

(Added to NRS by 1965, 808)

NRS 104.2613 Casualtyto identified goods. Where the contractrequires for its performance goods identified when the contract is made, andthe goods suffer casualty without fault of either party before the risk of losspasses to the buyer, or in a proper case under a no arrival, no sale term (NRS 104.2324) then:

1. If the loss is total the contract is avoided; and

2. If the loss is partial or the goods have sodeteriorated as no longer to conform to the contract the buyer may neverthelessdemand inspection and at his option either treat the contract as avoided oraccept the goods with due allowance from the contract price for thedeterioration or the deficiency in quantity but without further right againstthe seller.

(Added to NRS by 1965, 808)

NRS 104.2614 Substitutedperformance.

1. Where without fault of either party the agreedberthing, loading or unloading facilities fail or an agreed type of carrierbecomes unavailable or the agreed manner of delivery otherwise becomescommercially impracticable but a commercially reasonable substitute isavailable, such substitute performance must be tendered and accepted.

2. If the agreed means or manner of payment failsbecause of domestic or foreign governmental regulation, the seller may withholdor stop delivery unless the buyer provides a means or manner of payment whichis commercially a substantial equivalent. If delivery has already been taken,payment by the means or in the manner provided by the regulation discharges thebuyers obligation unless the regulation is discriminatory, oppressive orpredatory.

(Added to NRS by 1965, 809)

NRS 104.2615 Excuseby failure of presupposed conditions. Exceptso far as a seller may have assumed a greater obligation and subject to thepreceding section on substituted performance:

1. Delay in delivery or nondelivery in whole or inpart by a seller who complies with subsections 2 and 3 is not a breach of hisduty under a contract for sale if performance as agreed has been madeimpracticable by the occurrence of a contingency the nonoccurrence of which wasa basic assumption on which the contract was made or by compliance in goodfaith with any applicable foreign or domestic governmental regulation or orderwhether or not it later proves to be invalid.

2. Where the causes mentioned in subsection 1 affectonly a part of the sellers capacity to perform, he must allocate productionand deliveries among his customers but may at his option include regularcustomers not then under contract as well as his own requirements for furthermanufacture. He may so allocate in any manner which is fair and reasonable.

3. The seller must notify the buyer seasonably thatthere will be delay or nondelivery and, when allocation is required undersubsection 2, of the estimated quota thus made available for the buyer.

(Added to NRS by 1965, 809)

NRS 104.2616 Procedureon notice claiming excuse.

1. Where the buyer receives notification of a materialor indefinite delay or an allocation justified under the preceding section hemay by written notification to the seller as to any delivery concerned, andwhere the prospective deficiency substantially impairs the value of the wholecontract under the provisions of this Article relating to breach of installmentcontracts (NRS 104.2612), then also asto the whole:

(a) Terminate and thereby discharge any unexecutedportion of the contract; or

(b) Modify the contract by agreeing to take hisavailable quota in substitution.

2. If after receipt of such notification from theseller the buyer fails so to modify the contract within a reasonable time notexceeding 30 days the contract lapses with respect to any deliveries affected.

3. The provisions of this section may not be negatedby agreement except insofar as the seller has assumed a greater obligationunder the preceding section.

(Added to NRS by 1965, 809)

Part 7

Remedies

NRS 104.2701 Remediesfor breach of collateral contracts not impaired. Remediesfor breach of any obligation or promise collateral or ancillary to a contractfor sale are not impaired by the provisions of this article.

(Added to NRS by 1965, 810)

NRS 104.2702 Sellersremedies on discovery of buyers insolvency.

1. Where the seller discovers the buyer to beinsolvent he may refuse delivery except for cash including payment for allgoods theretofore delivered under the contract, and stop delivery under thisArticle (NRS 104.2705).

2. Where the seller discovers that the buyer hasreceived goods on credit while insolvent he may reclaim the goods upon demandmade within 10 days after the receipt, but if misrepresentation of solvency hasbeen made to the particular seller in writing within 3 months before deliverythe 10-day limitation does not apply. Except as provided in this subsection theseller may not base a right to reclaim goods on the buyers fraudulent orinnocent misrepresentation of solvency or of intent to pay.

3. The sellers right to reclaim under subsection 2 issubject to the rights of a buyer in ordinary course or other good faithpurchaser or lien creditor under this Article (NRS 104.2403). Successful reclamation ofgoods excludes all other remedies with respect to them.

(Added to NRS by 1965, 810)

NRS 104.2703 Sellersremedies in general. Where the buyerwrongfully rejects or revokes acceptance of goods or fails to make a paymentdue on or before delivery or repudiates with respect to a part or the whole,then with respect to any goods directly affected and, if the breach is of thewhole contract (NRS 104.2612), thenalso with respect to the whole undelivered balance, the aggrieved seller may:

1. Withhold delivery of such goods.

2. Stop delivery by any bailee as hereafter provided (NRS 104.2705).

3. Proceed under the next section respecting goodsstill unidentified to the contract.

4. Resell and recover damages as hereafter provided (NRS 104.2706).

5. Recover damages for nonacceptance (NRS 104.2708) or in a proper case theprice (NRS 104.2709).

6. Cancel.

(Added to NRS by 1965, 810)

NRS 104.2704 Sellersright to identify goods to contract notwithstanding breach or to salvageunfinished goods.

1. An aggrieved seller under the preceding sectionmay:

(a) Identify to the contract conforming goods notalready identified if at the time he learned of the breach they are in hispossession or control.

(b) Treat as the subject of resale goods which havedemonstrably been intended for the particular contract even though those goodsare unfinished.

2. Where the goods are unfinished an aggrieved sellermay in the exercise of reasonable commercial judgment for the purposes of avoidingloss and of effective realization either complete the manufacture and whollyidentify the goods to the contract or cease manufacture and resell for scrap orsalvage value or proceed in any other reasonable manner.

(Added to NRS by 1965, 810)

NRS 104.2705 Sellersstoppage of delivery in transit or otherwise.

1. The seller may stop delivery of goods in thepossession of a carrier or other bailee when he discovers the buyer to beinsolvent (NRS 104.2702) and may stopdelivery of carload, truckload, planeload or larger shipments of express orfreight when the buyer repudiates or fails to make a payment due beforedelivery or if for any other reason the seller has a right to withhold or reclaimthe goods.

2. As against such buyer the seller may stop deliveryuntil:

(a) Receipt of the goods by the buyer; or

(b) Acknowledgment to the buyer by any bailee of thegoods except a carrier that the bailee holds the goods for the buyer; or

(c) Such acknowledgment to the buyer by a carrier byreshipment or as a warehouse; or

(d) Negotiation to the buyer of any negotiable documentof title covering the goods.

3. To stop delivery the seller must so notify as toenable the bailee by reasonable diligence to prevent delivery of the goods.After such notification the bailee must hold and deliver the goods according tothe directions of the seller but the seller is liable to the bailee for anyensuing charges or damages. If a negotiable document of title has been issued forgoods the bailee is not obligated to obey a notification to stop untilsurrender of possession or control of the document. A carrier who has issued anonnegotiable bill of lading is not obliged to obey a notification to stop receivedfrom a person other than the consignor.

(Added to NRS by 1965, 811; A 2005, 852)

NRS 104.2706 Sellersresale including contract for resale.

1. Under the conditions stated in NRS 104.2703 on sellers remedies, theseller may resell the goods concerned or the undelivered balance thereof. Wherethe resale is made in good faith and in a commercially reasonable manner theseller may recover the difference between the resale price and the contractprice together with any incidental damages allowed under the provisions of thisArticle (NRS 104.2710), but lessexpenses saved in consequence of the buyers breach.

2. Except as otherwise provided in subsection 3 orunless otherwise agreed resale may be at public or private sale including saleby way of one or more contracts to sell or of identification to an existing contractof the seller. Sale may be as a unit or in parcels and at any time and placeand on any terms but every aspect of the sale including the method, manner,time, place and terms must be commercially reasonable. The resale must bereasonably identified as referring to the broken contract, but it is notnecessary that the goods be in existence or that any or all of them have beenidentified to the contract before the breach.

3. Where the resale is at private sale the seller mustgive the buyer reasonable notification of his intention to resell.

4. Where the resale is at public sale:

(a) Only identified goods can be sold except wherethere is a recognized market for a public sale of futures in goods of the kind;and

(b) It must be made at a usual place or market forpublic sale if one is reasonably available and except in the case of goodswhich are perishable or threaten to decline in value speedily the seller mustgive the buyer reasonable notice of the time and place of the resale; and

(c) If the goods are not to be within the view of thoseattending the sale the notification of sale must state the place where thegoods are located and provide for their reasonable inspection by prospectivebidders; and

(d) The seller may buy.

5. A purchaser who buys in good faith at a resaletakes the goods free of any rights of the original buyer even though the sellerfails to comply with one or more of the requirements of this section.

6. The seller is not accountable to the buyer for anyprofit made on any resale. A person in the position of a seller (NRS 104.2707) or a buyer who hasrightfully rejected or justifiably revoked acceptance must account for anyexcess over the amount of his security interest, as hereinafter defined(subsection 3 of NRS 104.2711).

(Added to NRS by 1965, 811)

NRS 104.2707 Personin the position of a seller.

1. A person in the position of a seller includes asagainst a principal an agent who has paid or become responsible for the priceof goods on behalf of his principal or anyone who otherwise holds a securityinterest or other right in goods similar to that of a seller.

2. A person in the position of a seller may asprovided in this Article withhold or stop delivery (NRS 104.2705) and resell (NRS 104.2706) and recover incidentaldamages (NRS 104.2710).

(Added to NRS by 1965, 812)

NRS 104.2708 Sellersdamages for nonacceptance or repudiation.

1. Subject to subsection 2 and to the provisions ofthis Article with respect to proof of market price (NRS 104.2723), the measure of damages fornonacceptance or repudiation by the buyer is the difference between the marketprice at the time and place for tender and the unpaid contract price togetherwith any incidental damages provided in this Article (NRS 104.2710), but less expenses saved inconsequence of the buyers breach.

2. If the measure of damages provided in subsection 1is inadequate to put the seller in as good a position as performance would havedone then the measure of damages is the profit (including reasonable overhead)which the seller would have made from full performance by the buyer, togetherwith any incidental damages provided in this Article (NRS 104.2710), due allowance for costsreasonably incurred and due credit for payments or proceeds of resale.

(Added to NRS by 1965, 812)

NRS 104.2709 Actionfor price.

1. When the buyer fails to pay the price as it becomesdue the seller may recover, together with any incidental damages under the nextsection, the price:

(a) Of goods accepted or of conforming goods lost ordamaged within a commercially reasonable time after risk of their loss haspassed to the buyer; and

(b) Of goods identified to the contract if the selleris unable after reasonable effort to resell them at a reasonable price or thecircumstances reasonably indicate that such effort will be unavailing.

2. Where the seller sues for the price he must holdfor the buyer any goods which have been identified to the contract and arestill in his control except that if resale becomes possible he may resell themat any time prior to the collection of the judgment. The net proceeds of anysuch resale must be credited to the buyer and payment of the judgment entitleshim to any goods not resold.

3. After the buyer has wrongfully rejected or revokedacceptance of the goods or has failed to make a payment due or has repudiated (NRS 104.2610), a seller who is held notentitled to the price under this section shall nevertheless be awarded damagesfor nonacceptance under the preceding section.

(Added to NRS by 1965, 812)

NRS 104.2710 Sellersincidental damages. Incidental damages to an aggrievedseller include any commercially reasonable charges, expenses or commissionsincurred in stopping delivery, in the transportation, care and custody of goodsafter the buyers breach, in connection with return or resale of the goods orotherwise resulting from the breach.

(Added to NRS by 1965, 813)

NRS 104.2711 Buyersremedies in general; buyers security interest in rejected goods.

1. Where the seller fails to make delivery orrepudiates or the buyer rightfully rejects or justifiably revokes acceptancethen with respect to any goods involved, and with respect to the whole if thebreach goes to the whole contract (NRS104.2612), the buyer may cancel and whether or not he has done so may inaddition to recovering so much of the price as has been paid:

(a) Cover and have damages under the next section asto all the goods affected whether or not they have been identified to thecontract; or

(b) Recover damages for nondelivery as provided in thisArticle (NRS 104.2713).

2. Where the seller fails to deliver or repudiates thebuyer may also:

(a) If the goods have been identified recover them asprovided in this Article (NRS 104.2502);or

(b) In a proper case obtain specific performance orreplevy the goods as provided in this Article (NRS 104.2716).

3. On rightful rejection or justifiable revocation ofacceptance a buyer has a security interest in goods in his possession orcontrol for any payments made on their price and any expenses reasonablyincurred in their inspection, receipt, transportation, care and custody and mayhold such goods and resell them in like manner as an aggrieved seller (NRS 104.2706).

(Added to NRS by 1965, 813)

NRS 104.2712 Cover;buyers procurement of substitute goods.

1. After a breach within the preceding section thebuyer may cover by making in good faith and without unreasonable delay anyreasonable purchase of or contract to purchase goods in substitution for thosedue from the seller.

2. The buyer may recover from the seller as damagesthe difference between the cost of cover and the contract price together withany incidental or consequential damages as hereinafter defined (NRS 104.2715), but less expenses saved inconsequence of the sellers breach.

3. Failure of the buyer to effect cover within thissection does not bar him from any other remedy.

(Added to NRS by 1965, 813)

NRS 104.2713 Buyersdamages for nondelivery or repudiation.

1. Subject to the provisions of this Article withrespect to proof of market price (NRS104.2723), the measure of damages for nondelivery or repudiation by theseller is the difference between the market price at the time when the buyerlearned of the breach and the contract price together with any incidental andconsequential damages provided in this Article (NRS 104.2715), but less expenses saved inconsequence of the sellers breach.

2. Market price is to be determined as of the placefor tender or, in cases of rejection after arrival or revocation of acceptance,as of the place of arrival.

(Added to NRS by 1965, 813)

NRS 104.2714 Buyersdamages for breach in regard to accepted goods.

1. Where the buyer has accepted goods and givennotification (subsection 3 of NRS 104.2607)he may recover as damages for any nonconformity of tender the loss resulting inthe ordinary course of events from the sellers breach as determined in anymanner which is reasonable.

2. The measure of damages for breach of warranty isthe difference at the time and place of acceptance between the value of thegoods accepted and the value they would have had if they had been as warranted,unless special circumstances show proximate damages of a different amount.

3. In a proper case any incidental and consequentialdamages under the next section may also be recovered.

(Added to NRS by 1965, 814)

NRS 104.2715 Buyersincidental and consequential damages.

1. Incidental damages resulting from the sellersbreach include expenses reasonably incurred in inspection, receipt,transportation and care and custody of goods rightfully rejected, any commerciallyreasonable charges, expenses or commissions in connection with effecting coverand any other reasonable expense incident to the delay or other breach.

2. Consequential damages resulting from the sellersbreach include:

(a) Any loss resulting from general or particularrequirements and needs of which the seller at the time of contracting hadreason to know and which could not reasonably be prevented by cover orotherwise; and

(b) Injury to person or property proximately resultingfrom any breach of warranty.

(Added to NRS by 1965, 814)

NRS 104.2716 Buyersright to specific performance or replevin.

1. Specific performance may be decreed where the goodsare unique or in other proper circumstances.

2. The decree for specific performance may includesuch terms and conditions as to payment of the price, damages or other reliefas the court may deem just.

3. The buyer has a right of replevin for goodsidentified to the contract if after reasonable effort he is unable to effectcover for such goods or the circumstances reasonably indicate that such effortwill be unavailing or if the goods have been shipped under reservation andsatisfaction of the security interest in them has been made or tendered. In thecase of goods bought for personal, family or household purposes, the buyersright of replevin vests upon acquisition of a special property, even if theseller had not then repudiated or failed to deliver.

(Added to NRS by 1965, 814; A 1999, 374)

NRS 104.2717 Deductionof damages from the price. The buyer on notifyingthe seller of his intention to do so may deduct all or any part of the damagesresulting from any breach of the contract from any part of the price still dueunder the same contract.

(Added to NRS by 1965, 814)

NRS 104.2718 Liquidationor limitation of damages; deposits.

1. Damages for breach by either party may beliquidated in the agreement but only at an amount which is reasonable in thelight of the anticipated or actual harm caused by the breach, the difficultiesof proof of loss, and the inconvenience or nonfeasibility of otherwiseobtaining an adequate remedy. A term fixing unreasonably large liquidateddamages is void as a penalty.

2. Where the seller justifiably withholds delivery ofgoods because of the buyers breach, the buyer is entitled to restitution ofany amount by which the sum of his payments exceeds:

(a) The amount to which the seller is entitled byvirtue of terms liquidating the sellers damages in accordance with subsection1; or

(b) In the absence of such terms, 20 percent of thevalue of the total performance for which the buyer is obligated under thecontract or $500, whichever is smaller.

3. The buyers right to restitution under subsection 2is subject to offset to the extent that the seller establishes:

(a) A right to recover damages under the provisions ofthis Article other than subsection 1; and

(b) The amount or value of any benefits received by thebuyer directly or indirectly by reason of the contract.

4. Where a seller has received payment in goods theirreasonable value or the proceeds of their resale shall be treated as paymentsfor the purposes of subsection 2; but if the seller has notice of the buyersbreach before reselling goods received in part performance, his resale issubject to the conditions laid down in this Article on resale by an aggrievedseller (NRS 104.2706).

(Added to NRS by 1965, 814)

NRS 104.2719 Contractualmodification or limitation of remedy.

1. Subject to the provisions of subsections 2 and 3 ofthis section and of the preceding section on liquidation and limitation ofdamages:

(a) The agreement may provide for remedies in additionto or in substitution for those provided in this article and may limit or alterthe measure of damages recoverable under this article, as by limiting thebuyers remedies to return of the goods and repayment of the price or to repairand replacement of nonconforming goods or parts; and

(b) Resort to a remedy as provided is optional unlessthe remedy is expressly agreed to be exclusive, in which case it is the soleremedy.

2. Where circumstances cause an exclusive or limitedremedy to fail of its essential purpose, remedy may be had as provided in thischapter.

3. Consequential damages may be limited or excludedunless the limitation or exclusion is unconscionable. Limitation ofconsequential damages for injury to the person in the case of consumer goods isprima facie unconscionable but limitation of damages where the loss iscommercial is not.

(Added to NRS by 1965, 815)

NRS 104.2720 Effectof cancellation or rescission on claims for antecedent breach. Unless the contrary intention clearly appears, expressionsof cancellation or rescission of the contract or the like shall not beconstrued as a renunciation or discharge of any claim in damages for anantecedent breach.

(Added to NRS by 1965, 815)

NRS 104.2721 Remediesfor fraud. Remedies for material misrepresentationor fraud include all remedies available under this article for nonfraudulentbreach. Neither rescission or a claim for rescission of the contract for salenor rejection or return of the goods shall bar or be deemed inconsistent with aclaim for damages or other remedy.

(Added to NRS by 1965, 815)

NRS 104.2722 Whocan sue third parties for injury to goods. Wherea third party so deals with goods which have been identified to a contract forsale as to cause actionable injury to a party to that contract:

1. A right of action against the third party is ineither party to the contract for sale who has title to or a security interestor a special property or an insurable interest in the goods; and if the goodshave been destroyed or converted a right of action is also in the party whoeither bore the risk of loss under the contract for sale or has since theinjury assumed that risk as against the other.

2. If at the time of the injury the party plaintiffdid not bear the risk of loss as against the other party to the contract forsale and there is no arrangement between them for disposition of the recovery,his suit or settlement is, subject to his own interest, as a fiduciary for theother party to the contract.

3. Either party may with the consent of the other suefor the benefit of whom it may concern.

(Added to NRS by 1965, 816)

NRS 104.2723 Proofof market price: Time and place.

1. If an action based on anticipatory repudiationcomes to trial before the time for performance with respect to some or all ofthe goods, any damages based on market price (NRS 104.2708 or 104.2713) shall be determined according tothe price of such goods prevailing at the time when the aggrieved party learnedof the repudiation.

2. If evidence of a price prevailing at the times orplaces described in this Article is not readily available the price prevailingwithin any reasonable time before or after the time described or at any otherplace which in commercial judgment or under usage of trade would serve as areasonable substitute for the one described may be used, making any properallowance for the cost of transporting the goods to or from such other place.

3. Evidence of a relevant price prevailing at a timeor place other than the one described in this Article offered by one party isnot admissible unless and until he has given the other party such notice as thecourt finds sufficient to prevent unfair surprise.

(Added to NRS by 1965, 816)

NRS 104.2724 Admissibilityof market quotations. Whenever the prevailingprice or value of any goods regularly bought and sold in any established commoditymarket is in issue, reports in official publications or trade journals or innewspapers or periodicals of general circulation published as the reports ofsuch market shall be admissible in evidence. The circumstances of thepreparation of such a report may be shown to affect its weight but not itsadmissibility.

(Added to NRS by 1965, 816)

NRS 104.2725 Statuteof limitations in contracts for sale.

1. An action for breach of any contract for sale mustbe commenced within 4 years after the cause of action has accrued. By theoriginal agreement the parties may reduce the period of limitation to not lessthan 1 year but may not extend it.

2. A cause of action accrues when the breach occurs,regardless of the aggrieved partys lack of knowledge of the breach. A breachof warranty occurs when tender of delivery is made, except that where awarranty explicitly extends to future performance of the goods and discovery ofthe breach must await the time of such performance the cause of action accrueswhen the breach is or should have been discovered.

3. Where an action commenced within the time limitedby subsection 1 is so terminated as to leave available a remedy by anotheraction for the same breach such other action may be commenced after theexpiration of the time limited and within 6 months after the termination of thefirst action unless the termination resulted from voluntary discontinuance orfrom dismissal for failure or neglect to prosecute.

4. This section does not alter the law on tolling ofthe statute of limitations nor does it apply to causes of action which haveaccrued before this chapter becomes effective.

(Added to NRS by 1965, 816)

ARTICLE 3

NEGOTIABLE INSTRUMENTS

Part 1

General Provisions and Definitions

NRS 104.3101 Shorttitle. This article may be cited as UniformCommercial CodeNegotiable Instruments.

(Added to NRS by 1965, 817; A 1993, 1255; 1995, 1074)

NRS 104.3102 Subjectmatter.

1. This article applies to negotiable instruments. Itdoes not apply to money, to payment orders governed by article 4A, or tosecurities governed by article 8.

2. If there is conflict between this article andarticle 4 or 9, articles 4 and 9 govern.

3. Regulations of the Board of Governors of theFederal Reserve System and operating circulars of the Federal Reserve bankssupersede any inconsistent provision of this article to the extent of theinconsistency.

(Added to NRS by 1965, 818; A 1993,1257)(Substituted in revision for NRS 104.3103)

NRS 104.3103 Definitions.

1. In this Article:

(a) Acceptor means a drawee who has accepted a draft.

(b) Drawee means a person ordered in a draft to makepayment.

(c) Drawer means a person who signs or is identifiedin a draft as a person ordering payment.

(d) Maker means a person who signs or is identifiedin a note as a person undertaking to pay.

(e) Order means a written instruction to pay moneysigned by the person giving the instruction. The instruction may be addressedto any person, including the person giving the instruction, or to one or morepersons jointly or in the alternative but not in succession. An authorizationto pay is not an order unless the person authorized to pay is also instructedto pay.

(f) Ordinary care in the case of a person engaged inbusiness means observance of reasonable commercial standards, prevailing in thearea in which he is located, with respect to the business in which he isengaged. In the case of a bank that takes an instrument for processing for collectionor payment by automated means, reasonable commercial standards do not requirethe bank to examine the instrument if the failure to examine does not violateits prescribed procedures and its procedures do not vary unreasonably fromgeneral banking usage not disapproved by this Article or Article 4.

(g) Party means a party to an instrument.

(h) Promise means a written undertaking to pay moneysigned by the person undertaking to pay. An acknowledgment of an obligation bythe obligor is not a promise unless the obligor also undertakes to pay theobligation.

(i) Prove with respect to a fact means to meet theburden of establishing the fact (paragraph (h) of subsection 2 of NRS 104.1201).

(j) Record means information that is inscribed on atangible medium or that is stored in an electronic or other medium and isretrievable in perceivable form.

(k) Remitter means a person who purchases aninstrument from its issuer if the instrument is payable to an identified personother than the purchaser.

(l) Remotely-created item means an item drawn on anaccount, which is not created by the payor bank and does not bear a signaturepurporting to be the signature of the drawer.

2. Other definitions applying to this Article and thesections in which they appear are:

 

Acceptance. NRS 104.3409.

Accommodated party. NRS 104.3419.

Accommodation party. NRS 104.3419.

Account. NRS 104.4104.

Alteration. NRS 104.3407.

Anomalous endorsement. NRS 104.3205.

Blank endorsement. NRS 104.3205.

Cashiers check. NRS 104.3104.

Certificate of deposit. NRS 104.3104.

Certified check. NRS 104.3409.

Check. NRS 104.3104.

Consideration. NRS 104.3303.

Draft. NRS 104.3104.

Endorsement. NRS 104.3204.

Endorser. NRS 104.3204.

Holder in due course. NRS 104.3302.

Incomplete instrument. NRS 104.3115.

Instrument. NRS 104.3104.

Issue. NRS 104.3105.

Issuer. NRS 104.3105.

Negotiable instrument. NRS 104.3104.

Negotiation. NRS 104.3201.

Note. NRS 104.3104.

Payable at a definite time. NRS 104.3108.

Payable on demand. NRS 104.3108.

Payable to bearer. NRS 104.3109.

Payable to order. NRS 104.3109.

Payment. NRS 104.3602.

Person entitled to enforce. NRS 104.3301.

Presentment. NRS 104.3501.

Reacquisition. NRS 104.3207.

Special endorsement. NRS 104.3205.

Tellers check. NRS 104.3104.

Transfer of instrument. NRS 104.3203.

Travelers check. NRS 104.3104.

Value. NRS 104.3303.

 

3. The following definitions in other Articles applyto this Article:

 

Bank. NRS 104.4105.

Banking day. NRS 104.4104.

Clearinghouse. NRS 104.4104.

Collecting bank. NRS 104.4105.

Customer. NRS 104.4104.

Depositary bank. NRS 104.4105.

Documentary draft. NRS 104.4104.

Intermediary bank. NRS 104.4105.

Item. NRS 104.4104.

Payor bank. NRS 104.4105.

Suspends payments. NRS 104.4104.

 

4. In addition Article 1 contains general definitionsand principles of construction and interpretation applicable throughout thisArticle.

(Added to NRS by 1965, 817; A 1993, 1255; 2005, 853, 1995)

NRS 104.3104 Negotiableinstrument.

1. Except as otherwise provided in subsections 3 and4, negotiable instrument means an unconditional promise or order to pay afixed amount of money, with or without interest or other charges described inthe promise or order, if it:

(a) Is payable to bearer or to order at the time it isissued or first comes into possession of a holder;

(b) Is payable on demand or at a definite time; and

(c) Does not state any other undertaking or instructionby the person promising or ordering payment to do any act in addition to thepayment of money, but the promise or order may contain:

(1) An undertaking or power to give, maintain orprotect collateral to secure payment;

(2) An authorization or power to the holder toconfess judgment or realize on or dispose of collateral; or

(3) A waiver of the benefit of any law intendedfor the advantage or protection of an obligor.

2. Instrument means a negotiable instrument.

3. An order that meets all of the requirements ofsubsection 1, except paragraph (a), and otherwise falls within the definitionof check in subsection 6 is a negotiable instrument and a check.

4. A promise or order other than a check is not aninstrument if, at the time it is issued or first comes into possession of aholder, it contains a conspicuous statement, however expressed, to the effectthat the promise or order is not negotiable or is not an instrument governed bythis article.

5. An instrument is a note if it is a promise and isa draft if it is an order. If an instrument falls within the definition ofboth note and draft, a person entitled to enforce the instrument may treatit as either.

6. Check means:

(a) A draft, other than a documentary draft, payable ondemand and drawn on a bank; or

(b) A cashiers check or tellers check.

Aninstrument may be a check even though it is described on its face by anotherterm, such as money order.

7. Cashiers check means a draft with respect towhich the drawer and drawee are the same bank or branches of the same bank.

8. Tellers check means a draft drawn by a bank:

(a) On another bank; or

(b) Payable at or through a bank.

9. Travelers check means an instrument that:

(a) Is payable on demand;

(b) Is drawn on or payable at or through a bank;

(c) Is designated by the term travelers check or bya substantially similar term; and

(d) Requires, as a condition to payment, acountersignature by a person whose specimen signature appears on theinstrument.

10. Certificate of deposit means an instrumentcontaining an acknowledgment by a bank that a sum of money has been received bythe bank and a promise by the bank to repay the sum of money. A certificate ofdeposit is a note of the bank.

(Added to NRS by 1965, 818; A 1993, 1257)

NRS 104.3105 Issueof instrument.

1. Issue means the first delivery of an instrumentby the maker or drawer, whether to a holder or nonholder, for the purpose ofgiving rights on the instrument to any person.

2. An unissued instrument, or an unissued incompleteinstrument that is completed, is binding on the maker or drawer, butnonissuance is a defense. An instrument that is conditionally issued or isissued for a special purpose is binding on the maker or drawer, but failure ofthe condition or special purpose to be fulfilled is a defense.

3. Issuer applies to issued and unissued instrumentsand means a maker or drawer of an instrument.

(Added to NRS by 1965, 819; A 1989, 610; 1993,1260)(Substituted in revision for NRS 104.3106)

NRS 104.3106 Unconditionalpromise or order.

1. Except as otherwise provided in this section, forthe purposes of subsection 1 of NRS104.3104, a promise or order is unconditional unless it states:

(a) An express condition to payment;

(b) That the promise or order is subject to or governedby another record; or

(c) That rights or obligations with respect to thepromise or order are stated in another record.

A referenceto another record does not of itself make the promise or order conditional.

2. A promise or order is not made conditional by areference to another record for a statement of rights with respect to collateral,prepayment or acceleration, or because payment is limited to resort to aparticular fund or source.

3. If a promise or order requires, as a condition topayment, a countersignature by a person whose specimen signature appears on thepromise or order, the condition does not make the promise or order conditionalfor the purposes of subsection 1 of NRS104.3104. If the person whose specimen signature appears on an instrumentfails to countersign the instrument, the failure to countersign is a defense tothe obligation of the issuer, but the failure does not prevent a transferee ofthe instrument from becoming a holder of the instrument.

4. If a promise or order at the time it is issued orfirst comes into possession of a holder contains a statement, required byapplicable statutory or administrative law, to the effect that the rights of aholder or transferee are subject to claims or defenses that the issuer couldassert against the original payee, the promise or order is not thereby madeconditional for the purposes of subsection 1 of NRS 104.3104; but if the promise or orderis an instrument, there cannot be a holder in due course of the instrument.

(Added to NRS by 1965, 818; A 1993, 1259; 2005, 1997)

NRS 104.3107 Instrumentpayable in foreign money. Unless the instrumentotherwise provides, an instrument that states the amount payable in foreignmoney may be paid in the foreign money or in an equivalent amount in dollarscalculated by using the current bank-offered spot rate at the place of paymentfor the purchase of dollars on the day on which the instrument is paid.

(Added to NRS by 1965, 819; A 1993, 1261)

NRS 104.3108 Payableon demand or at definite time.

1. A promise or order is payable on demand if it:

(a) States that it is payable on demand or at sight;

(b) Otherwise indicates that it is payable at the willof the holder; or

(c) Does not state any time of payment.

2. A promise or order is payable at a definite timeif it is payable on elapse of a definite period of time after sight oracceptance or at a fixed date or dates or at a time or times readilyascertainable at the time the promise or order is issued, subject to rights ofprepayment, acceleration, extension at the option of the holder or extension toa further definite time at the option of the maker or acceptor or automaticallyupon or after a specified act or event.

3. If an instrument, payable at a fixed date, is alsopayable upon demand made before the fixed date, the instrument is payable ondemand until the fixed date and, if demand for payment is not made before thatdate, becomes payable at a definite time on the fixed date.

(Added to NRS by 1965, 819; A 1993, 1261)

NRS 104.3109 Payableto bearer or to order.

1. A promise or order is payable to bearer if it:

(a) States that it is payable to bearer or to the orderof bearer or otherwise indicates that the person in possession of the promiseor order is entitled to payment;

(b) Does not state a payee; or

(c) States that it is payable to or to the order ofcash or otherwise indicates that it is not payable to an identified person.

2. A promise or order that is not payable to bearer ispayable to order if it is payable to the order of an identified person or to anidentified person or order. A promise or order that is payable to order ispayable to the identified person.

3. An instrument payable to bearer may become payableto an identified person if it is specially endorsed pursuant to subsection 1 ofNRS 104.3205. An instrument payable toan identified person may become payable to bearer if it is endorsed in blankpursuant to subsection 2 of NRS 104.3205.

(Added to NRS by 1965, 820; A 1993,1262)(Substituted in revision for NRS 104.3110)

NRS 104.3110 Identificationof person to whom instrument is payable.

1. The person to whom an instrument is initiallypayable is determined by the intent of the person, whether or not authorized,signing as, or in the name or behalf of, the issuer of the instrument. Theinstrument is payable to the person intended by the signer even if that personis identified in the instrument by a name or other identification that is notthat of the intended person. If more than one person signs in the name orbehalf of the issuer of an instrument and all the signers do not intend thesame person as payee, the instrument is payable to any person intended by oneor more of the signers.

2. If the signature of the issuer of an instrument ismade by automated means, such as a check-writing machine, the payee of theinstrument is determined by the intent of the person who supplied the name oridentification of the payee, whether or not authorized to do so.

3. A person to whom an instrument is payable may beidentified in any way, including by name, identifying number, office or accountnumber. For the purpose of determining the holder of an instrument, thefollowing rules apply:

(a) If an instrument is payable to an account and theaccount is identified only by number, the instrument is payable to the personto whom the account is payable. If an instrument is payable to an accountidentified by number and by the name of a person, the instrument is payable tothe named person, whether or not that person is the owner of the accountidentified by number.

(b) If an instrument is payable to:

(1) A trust, an estate, or a person described astrustee or representative of a trust or estate, the instrument is payable tothe trustee, the representative, or a successor of either, whether or not thebeneficiary or estate is also named;

(2) A person described as agent or similarrepresentative of a named or identified person, the instrument is payable tothe represented person, the representative or a successor of therepresentative;

(3) A fund or organization that is not a legalentity, the instrument is payable to a representative of the members of thefund or organization; or

(4) An office or to a person described asholding an office, the instrument is payable to the named person, the incumbentof the office or a successor to the incumbent.

4. If an instrument is payable to two or more personsalternatively, it is payable to any of them and may be negotiated, dischargedor enforced by any or all of them in possession of the instrument. If aninstrument is payable to two or more persons not alternatively, it is payableto all of them and may be negotiated, discharged or enforced only by all ofthem. If an instrument payable to two or more persons is ambiguous as towhether it is payable to the persons alternatively, the instrument is payableto the persons alternatively.

(Added to NRS by 1965, 819; A 1993,1261)(Substituted in revision for NRS 104.3109)

NRS 104.3111 Placeof payment. Except as otherwise provided foritems in article 4, an instrument is payable at the place of payment stated inthe instrument. If no place of payment is stated, an instrument is payable atthe address of the drawee or maker stated in the instrument. If no address isstated, the place of payment is the place of business of the drawee or maker.If a drawee or maker has more than one place of business, the place of paymentis any place of business of the drawee or maker chosen by the person entitledto enforce the instrument. If the drawee or maker has no place of business, theplace of payment is the residence of the drawee or maker.

(Added to NRS by 1965, 820; A 1993, 1263)

NRS 104.3112 Interest.

1. Unless otherwise provided in the instrument:

(a) An instrument is not payable with interest; and

(b) Interest on an interest-bearing instrument ispayable from the date of the instrument.

2. Interest may be stated in an instrument as a fixedor variable amount of money or it may be expressed as a fixed or variable rateor rates. The amount or rate of interest may be stated or described in theinstrument in any manner and may require reference to information not containedin the instrument. If an instrument provides for interest, but the amount ofinterest payable cannot be ascertained from the description, interest ispayable at the judgment rate in effect at the place of payment of theinstrument and at the time interest first accrues.

(Added to NRS by 1965, 820; A 1993, 1263)

NRS 104.3113 Dateof instrument.

1. An instrument may be antedated or postdated. Thedate stated determines the time of payment if the instrument is payable at afixed period after date. Except as otherwise provided in subsection 3 of NRS 104.4401, an instrument payable on demandis not payable before the date of the instrument.

2. If an instrument is undated, its date is the dateof its issue or, in the case of an unissued instrument, the date it first comesinto possession of a holder.

(Added to NRS by 1965, 821; A 1993,1264)(Substituted in revision for NRS 104.3114)

NRS 104.3114 Contradictoryterms of instrument. If an instrument containscontradictory terms, typewritten terms prevail over printed terms, handwrittenterms prevail over both, and words prevail over numbers.

(Added to NRS by 1965, 821; A 1993,1264)(Substituted in revision for NRS 104.3113)

NRS 104.3115 Incompleteinstruments.

1. Incomplete instrument means a signed writing,whether or not issued by the signer, the contents of which show at the time ofsigning that it is incomplete but that the signer intended it to be completedby the addition of words or numbers.

2. Except as otherwise provided in subsection 3, if anincomplete instrument is an instrument under NRS104.3104, it may be enforced according to its terms if it is not completed,or according to its terms as augmented by completion. If an incompleteinstrument is not an instrument under NRS104.3104, but, after completion, the requirements of NRS 104.3104 are met, the instrument maybe enforced according to its terms as augmented by completion.

3. If words or numbers are added to an incompleteinstrument without authority of the signer, there is an alteration of theincomplete instrument under NRS 104.3407.

4. The burden of establishing that words or numberswere added to an incomplete instrument without authority of the signer is onthe person asserting the lack of authority.

(Added to NRS by 1965, 821; A 1993, 1264)

NRS 104.3116 Jointand several liability; contribution.

1. Except as otherwise provided in the instrument, twoor more persons who have the same liability on an instrument as makers,drawers, acceptors, endorsers who endorse as joint payees, or anomalousendorsers are jointly and severally liable in the capacity in which they sign.

2. Except as otherwise provided in subsection 6 of NRS 104.3419 or by agreement of theaffected parties, a party having joint and several liability who pays theinstrument is entitled to receive from any party having the same joint andseveral liability contribution in accordance with applicable law.

3. Discharge of one party having joint and severalliability by a person entitled to enforce the instrument does not affect theright under subsection 2 of a party having the same joint and several liabilityto receive contribution from the party discharged.

(Added to NRS by 1965, 821; A 1993, 1265; 2005, 1997)

NRS 104.3117 Otheragreements affecting instrument. Subject toapplicable law regarding exclusion of proof of contemporaneous or previousagreements, the obligation of a party to an instrument to pay the instrumentmay be modified, supplemented or nullified by a separate agreement of theobligor and a person entitled to enforce the instrument, if the instrument isissued or the obligation is incurred in reliance on the agreement or as part ofthe same transaction giving rise to the agreement. To the extent an obligationis modified, supplemented or nullified by an agreement under this section, theagreement is a defense to the obligation.

(Added to NRS by 1965, 822; A 1993,1267)(Substituted in revision for NRS 104.3119)

NRS 104.3118 Statuteof limitations.

1. Except as otherwise provided in subsection 5, anaction to enforce the obligation of a party to pay a note payable at a definitetime must be commenced within 6 years after the due date or dates stated in thenote or, if a due date is accelerated, within 6 years after the accelerated duedate.

2. Except as otherwise provided in subsection 4 or 5,if demand for payment is made to the maker of a note payable on demand, anaction to enforce the obligation of a party to pay the note must be commencedwithin 6 years after the demand. If no demand for payment is made to the maker,an action to enforce the note is barred if neither principal nor interest onthe note has been paid for a continuous period of 10 years.

3. Except as otherwise provided in subsection 4, anaction to enforce the obligation of a party to an unaccepted draft to pay thedraft must be commenced within 3 years after dishonor of the draft or 10 yearsafter the date of the draft, whichever period expires first.

4. An action to enforce the obligation of the acceptorof a certified check or the issuer of a tellers check, cashiers check ortravelers check must be commenced within 3 years after demand for payment ismade to the acceptor or issuer, as the case may be.

5. An action to enforce the obligation of a party to acertificate of deposit to pay the instrument must be commenced within 6 yearsafter demand for payment is made to the maker, but if the instrument states adue date and the maker is not required to pay before that date, the 6-yearperiod begins when a demand for payment is in effect and the due date haspassed.

6. An action to enforce the obligation of a party topay an accepted draft, other than a certified check, must be commenced:

(a) Within 6 years after the due date or dates statedin the draft or acceptance if the obligation of the acceptor is payable at adefinite time; or

(b) Within 6 years after the date of the acceptance ifthe obligation of the acceptor is payable on demand.

7. Unless governed by other law regarding claims forindemnity or contribution, an action for conversion of an instrument, for moneyhad and received, or like action based on conversion, for breach of warranty,or to enforce an obligation, duty or right arising under this article and notgoverned by this section must be commenced within 3 years after the cause ofaction accrues.

(Added to NRS by 1965, 821; A 1993,1265)(Substituted in revision for NRS 104.3117)

NRS 104.3119 Noticeof right to defend action. In an action forbreach of an obligation for which a third person is answerable over pursuant tothis Article or Article 4, the defendant may give the third person notice ofthe litigation in a record, and the person notified may then give similarnotice to any other person who is answerable over. If the notice states thatthe person notified may come in and defend and that failure to do so will bindthe person notified in an action later brought by the person giving the noticeas to any determination of fact common to the two litigations, the personnotified is so bound unless after seasonable receipt of the notice the personnotified does come in and defend.

(Added to NRS by 1965, 821; A 1993, 1266; 2005, 1998)

Part 2

Negotiation, Transfer and Endorsement

NRS 104.3201 Negotiation.

1. Negotiation means a transfer of possession,whether voluntary or involuntary, of an instrument by a person other than theissuer to a person who thereby becomes its holder.

2. Except for negotiation by a remitter, if aninstrument is payable to an identified person, negotiation requires transfer ofpossession of the instrument and its endorsement by the holder. If aninstrument is payable to bearer, it may be negotiated by transfer of possessionalone.

(Added to NRS by 1965, 823; A 1993,1268)(Substituted in revision for NRS 104.3202)

NRS 104.3202 Negotiationsubject to rescission.

1. Negotiation is effective even if obtained:

(a) From an infant, a corporation exceeding its powersor a person without capacity;

(b) By fraud, duress or mistake; or

(c) In breach of duty or as part of an illegaltransaction.

2. To the extent permitted by other law, negotiationmay be rescinded or may be subject to other remedies, but those remedies maynot be asserted against a subsequent holder in due course or a person payingthe instrument in good faith and without knowledge of facts that are a basisfor rescission or other remedy.

(Added to NRS by 1965, 824; A 1993,1271)(Substituted in revision for NRS 104.3207)

NRS 104.3203 Transferof instrument; rights acquired by transfer.

1. An instrument is transferred when it is deliveredby a person other than its issuer for the purpose of giving to the personreceiving delivery the right to enforce the instrument.

2. Transfer of an instrument, whether or not thetransfer is a negotiation, vests in the transferee any right of the transferorto enforce the instrument, including any right as a holder in due course, butthe transferee cannot acquire rights of a holder in due course by a transfer,directly or indirectly, from a holder in due course if the transferee engagedin fraud or illegality affecting the instrument.

3. Unless otherwise agreed, if an instrument istransferred for value and the transferee does not become a holder because oflack of endorsement by the transferor, the transferee has a specificallyenforceable right to the unqualified endorsement of the transferor, butnegotiation of the instrument does not occur until the endorsement is made.

4. If a transferor purports to transfer less than theentire instrument, negotiation of the instrument does not occur. The transfereeobtains no rights under this article and has only the rights of a partialassignee.

(Added to NRS by 1965, 823; A 1993,1267)(Substituted in revision for NRS 104.3201)

NRS 104.3204 Endorsement.

1. Endorsement means a signature, other than that ofa signer as maker, drawer or acceptor, that alone or accompanied by other wordsis made on an instrument for the purpose of negotiating the instrument,restricting payment of the instrument, or incurring endorsers liability on theinstrument, but regardless of the intent of the signer, a signature and itsaccompanying words are an endorsement unless the accompanying words, terms ofthe instrument, place of the signature, or other circumstances unambiguouslyindicate that the signature was made for a purpose other than endorsement. Forthe purpose of determining whether a signature is made on an instrument, apaper affixed to the instrument is a part of the instrument.

2. Endorser means a person who makes an endorsement.

3. For the purpose of determining whether thetransferee of an instrument is a holder, an endorsement that transfers asecurity interest in the instrument is effective as an unqualified endorsementof the instrument.

4. If an instrument is payable to a holder under aname that is not his own, endorsement may be made by the holder in the namestated in the instrument or in his own name, or both, but signature in bothnames may be required by a person paying or taking the instrument for value orcollection.

(Added to NRS by 1965, 823; A 1993,1268)(Substituted in revision for NRS 104.3203)

NRS 104.3205 Specialendorsement; blank endorsement; anomalous endorsement.

1. If an endorsement is made by the holder of aninstrument, whether payable to an identified person or payable to bearer, andthe endorsement identifies a person to whom it makes the instrument payable, itis a special endorsement. When specially endorsed, an instrument becomespayable to the identified person and may be negotiated only by the endorsementof that person. The principles stated in NRS104.3110 apply to special endorsements.

2. If an endorsement is made by the holder of aninstrument and it is not a special endorsement, it is a blank endorsement.When endorsed in blank, an instrument becomes payable to bearer and may benegotiated by transfer of possession alone until specially endorsed.

3. The holder may convert a blank endorsement thatconsists only of a signature into a special endorsement by writing, above thesignature of the endorser, words identifying the person to whom the instrumentis made payable.

4. Anomalous endorsement means an endorsement madeby a person who is not the holder of the instrument. An anomalous endorsementdoes not affect the manner in which the instrument may be negotiated.

(Added to NRS by 1965, 823; A 1993,1269)(Substituted in revision for NRS 104.3204)

NRS 104.3206 Restrictiveendorsement.

1. An endorsement limiting payment to a particularperson or otherwise prohibiting further transfer or negotiation of theinstrument is not effective to prevent further transfer or negotiation of theinstrument.

2. An endorsement stating a condition to the right ofthe endorsee to receive payment does not affect the right of the endorsee toenforce the instrument. A person paying the instrument or taking it for valueor collection may disregard the condition, and the rights and liabilities ofthat person are not affected by whether the condition has been fulfilled.

3. If an instrument bears an endorsement described insubsection 2 of NRS 104.4201 or inblank or to a particular bank using the words for deposit, for collection,or other words indicating a purpose of having the instrument collected by abank for the endorser or for a particular account, the following rules apply:

(a) A person, other than a bank, who purchases theinstrument when so endorsed converts the instrument unless the amount paid forthe instrument is received by the endorser or applied consistently with theendorsement.

(b) A depositary bank that purchases the instrument ortakes it for collection when so endorsed converts the instrument unless theamount paid by the bank with respect to the instrument is received by theendorser or applied consistently with the endorsement.

(c) A payor bank that is also the depositary bank orthat takes the instrument for immediate payment over the counter from a personother than a collecting bank converts the instrument unless the proceeds of theinstrument are received by the endorser or applied consistently with theendorsement.

(d) Except as otherwise provided in paragraph (c), apayor bank or intermediary bank may disregard the endorsement and is not liableif the proceeds of the instrument are not received by the endorser or appliedconsistently with the endorsement.

4. Except for an endorsement covered by subsection 3,if an instrument bears an endorsement using words to the effect that payment isto be made to the endorsee as agent, trustee or other fiduciary for the benefitof the endorser or another person, the following rules apply:

(a) Unless there is notice of breach of fiduciary dutyas provided in NRS 104.3307, a personwho purchases the instrument from the endorsee or takes the instrument from theendorsee for collection or payment may pay the proceeds of payment or the valuegiven for the instrument to the endorsee without regard to whether the endorseeviolates a fiduciary duty to the endorser.

(b) A subsequent transferee of the instrument or personwho pays the instrument is neither given notice nor otherwise affected by therestriction in the endorsement unless the transferee or payor knows that thefiduciary dealt with the instrument or its proceeds in breach of fiduciaryduty.

5. The presence of an instrument of an endorsement towhich this section applies does not prevent a purchaser of the instrument frombecoming a holder in due course of the instrument unless the purchaser is aconverter under subsection 3 or has notice or knowledge of breach of fiduciaryduty as stated in subsection 4.

6. In an action to enforce the obligation of a partyto pay the instrument, the obligor has a defense if payment would violate anendorsement to which this section applies and the payment is not permitted bythis section.

(Added to NRS by 1965, 823; A 1993,1269)(Substituted in revision for NRS 104.3205)

NRS 104.3207 Reacquisition. Reacquisition of an instrument occurs if it is transferredto a former holder, by negotiation or otherwise. A former holder who reacquiresthe instrument may cancel endorsements made after the reacquirer first became aholder of the instrument. If the cancellation causes the instrument to bepayable to the reacquirer or to bearer, the reacquirer may negotiate theinstrument. An endorser whose endorsement is cancelled is discharged, and thedischarge is effective against any subsequent holder.

(Added to NRS by 1965, 824; A 1993,1270)(Substituted in revision for NRS 104.3206)

Part 3

Enforcement of Instruments

NRS 104.3301 Personentitled to enforce instrument.

1. Person entitled to enforce an instrument means:

(a) The holder of the instrument;

(b) A nonholder in possession of the instrument who hasthe rights of a holder; or

(c) A person not in possession of the instrument who isentitled to enforce the instrument pursuant to NRS 104.3309 or subsection 4 of NRS 104.3418.

2. A person may be a person entitled to enforce theinstrument even though the person is not the owner of the instrument or is inwrongful possession of the instrument.

(Added to NRS by 1965, 825; A 1993, 1272)

NRS 104.3302 Holderin due course.

1. Except as otherwise provided in subsection 3 ofthis section and subsection 4 of NRS104.3106, holder in due course means the holder of an instrument if:

(a) The instrument when issued or negotiated to theholder does not bear such apparent evidence of forgery or alteration or is nototherwise so irregular or incomplete as to call into question its authenticity;and

(b) The holder took the instrument:

(1) For value;

(2) In good faith;

(3) Without notice that the instrument isoverdue or has been dishonored or that there is an uncured default with respectto payment of another instrument issued as part of the same series;

(4) Without notice that the instrument containsan unauthorized signature or has been altered;

(5) Without notice of any claim to theinstrument described in NRS 104.3306;and

(6) Without notice that any party has a defenseor claim in recoupment described in subsection 1 of NRS 104.3305.

2. Notice of discharge of a party, other thandischarge in an insolvency proceeding, is not notice of a defense undersubsection 1, but discharge is effective against a person who became a holderin due course with notice of the discharge. Public filing or recording of adocument does not of itself constitute notice of a defense, claim in recoupmentor claim to the instrument.

3. Except to the extent a transferor or predecessor ininterest has rights as a holder in due course, a person does not acquire rightsof a holder in due course of an instrument taken:

(a) By legal process or by purchase in an execution,bankruptcy, or creditors sale or similar proceeding;

(b) By purchase as part of a bulk transaction not inordinary course of business of the transferor; or

(c) As the successor in interest to an estate or otherorganization.

4. If, under paragraph (a) of subsection 1 of NRS 104.3303, the promise of performancethat is the consideration for an instrument has been partially performed, theholder may assert rights as a holder in due course of the instrument only tothe fraction of the amount payable under the instrument equal to the value ofthe partial performance divided by the value of the promised performance.

5. If the person entitled to enforce an instrument hasonly a security interest in the instrument and the person obliged to pay theinstrument has a defense, claim in recoupment or claim to the instrument thatmay be asserted against the person who granted the security interest, theperson entitled to enforce the instrument may assert rights as a holder in duecourse only to an amount payable under the instrument which, at the time ofenforcement of the instrument, does not exceed the amount of the unpaidobligation secured.

6. To be effective, notice must be received at a timeand in a manner that gives a reasonable opportunity to act on it.

7. This section is subject to any law limiting statusas a holder in due course in particular classes of transactions.

(Added to NRS by 1965, 825; A 1993, 1272)

NRS 104.3303 Valueand consideration.

1. An instrument is issued or transferred for valueif:

(a) The instrument is issued or transferred for apromise of performance, to the extent the promise has been performed;

(b) The transferee acquires a security interest orother lien in the instrument other than a lien obtained by judicial proceeding;

(c) The instrument is issued or transferred as paymentof, or as security for, an antecedent claim against any person, whether or notthe claim is due;

(d) The instrument is issued or transferred in exchangefor a negotiable instrument; or

(e) The instrument is issued or transferred in exchangefor the incurring of an irrevocable obligation to a third party by the persontaking the instrument.

2. Consideration means any consideration sufficientto support a simple contract. The drawer or maker of an instrument has adefense if the instrument is issued without consideration. If an instrument isissued for a promise of performance, the issuer has a defense to the extentperformance of the promise is due and the promise has not been performed. If aninstrument is issued for value as stated in subsection 1, the instrument isalso issued for consideration.

(Added to NRS by 1965, 825; A 1993, 1273)

NRS 104.3304 Overdueinstrument.

1. An instrument payable on demand becomes overdue atthe earliest of the following times:

(a) On the day after the day demand for payment is dulymade;

(b) If the instrument is a check, 90 days after itsdate; or

(c) If the instrument is not a check, when theinstrument has been outstanding for a period of time after its date which isunreasonably long under the circumstances of the particular case in light ofthe nature of the instrument and usage of the trade.

2. With respect to an instrument payable at a definitetime the following rules apply:

(a) If the principal is payable in installments and adue date has not been accelerated, the instrument becomes overdue upon defaultunder the instrument for nonpayment of an installment, and the instrumentremains overdue until the default is cured.

(b) If the principal is not payable in installments andthe due date has not been accelerated, the instrument becomes overdue on theday after the due date.

(c) If a due date with respect to principal has beenaccelerated, the instrument becomes overdue on the day after the accelerateddue date.

3. Unless the due date of principal has beenaccelerated, an instrument does not become overdue if there is default inpayment of interest but no default in payment of principal.

(Added to NRS by 1965, 825; A 1993, 1274)

NRS 104.3305 Defensesand claims in recoupment.

1. Except as otherwise provided in this section, theright to enforce the obligation of a party to pay an instrument is subject tothe following:

(a) A defense of the obligor based on:

(1) Infancy of the obligor to the extent it is adefense to a simple contract;

(2) Duress, lack of legal capacity or illegalityof the transaction which, under other law, nullifies the obligation of theobligor;

(3) Fraud that induced the obligor to sign theinstrument with neither knowledge nor reasonable opportunity to learn of itscharacter or its essential terms; or

(4) Discharge of the obligor in insolvencyproceedings;

(b) A defense of the obligor stated in another sectionof this Article or a defense of the obligor that would be available if theperson entitled to enforce the instrument were enforcing a right to paymentunder a simple contract; and

(c) A claim in recoupment of the obligor against theoriginal payee of the instrument if the claim arose from the transaction thatgave rise to the instrument; but the claim of the obligor may be assertedagainst a transferee of the instrument only to reduce the amount owing on theinstrument at the time the action is brought.

2. The right of a holder in due course to enforce theobligation of a party to pay the instrument is subject to defenses of theobligor stated in paragraph (a) of subsection 1, but is not subject to defensesof the obligor stated in paragraph (b) of subsection 1 or claims in recoupmentstated in paragraph (c) of subsection 1 against a person other than the holder.

3. Except as otherwise provided in subsection 4, in anaction to enforce the obligation of a party to pay the instrument, the obligormay not assert against the person entitled to enforce the instrument a defense,claim in recoupment or claim to the instrument (NRS 104.3306) of another person, but theother persons claim to the instrument may be asserted by the obligor if theother person is joined in the action and personally asserts the claim againstthe person entitled to enforce the instrument. An obligor is not obliged to paythe instrument if the person seeking enforcement of the instrument does nothave rights of a holder in due course and the obligor proves that theinstrument is a lost or stolen instrument.

4. In an action to enforce the obligation of anaccommodation party to pay an instrument, the accommodation party may assertagainst the person entitled to enforce the instrument any defense or claim inrecoupment under subsection 1 that the accommodated party could assert againstthe person entitled to enforce the instrument, except the defenses of dischargein insolvency proceedings, infancy and lack of legal capacity.

(Added to NRS by 1965, 826; A 1993, 1275; 2005, 1998)

NRS 104.3306 Claimsto an instrument. A person taking an instrument,other than a person having rights of a holder in due course, is subject to aclaim of a property or possessory right in the instrument or its proceeds,including a claim to rescind a negotiation and to recover the instrument or itsproceeds. A person having rights of a holder in due course takes free of theclaim to the instrument.

(Added to NRS by 1965, 826; A 1993, 1276)

NRS 104.3307 Noticeof breach of fiduciary duty.

1. In this section:

(a) Fiduciary means an agent, trustee, partner,corporate officer or director, or other representative owing a fiduciary dutywith respect to an instrument.

(b) Represented person means the principal,beneficiary, partnership, corporation or other person to whom the duty statedin paragraph (a) is owed.

2. If an instrument is taken from a fiduciary forpayment or collection or for value, the taker has knowledge of the fiduciarystatus of the fiduciary, and the represented person makes a claim to theinstrument or its proceeds on the basis that the transaction of the fiduciaryis a breach of fiduciary duty, the following rules apply:

(a) Notice of breach of fiduciary duty by the fiduciaryis notice of the claim of the represented person.

(b) In the case of an instrument payable to therepresented person or the fiduciary as such, the taker has notice of the breachof fiduciary duty if the instrument is:

(1) Taken in payment of or as security for adebt known by the taker to be the personal debt of the fiduciary;

(2) Taken in a transaction known by the taker tobe for the personal benefit of the fiduciary; or

(3) Deposited to an account other than anaccount of the fiduciary, as such, or an account of the represented person.

(c) If an instrument is issued by the representedperson or the fiduciary as such, and made payable to the fiduciary personally,the taker does not have notice of the breach of fiduciary duty unless the takerknows of the breach of fiduciary duty.

(d) If an instrument is issued by the representedperson or the fiduciary as such, to the taker as payee, the taker has notice ofthe breach of fiduciary duty if the instrument is:

(1) Taken in payment of or as security for adebt known by the taker to be the personal debt of the fiduciary;

(2) Taken in a transaction known by the taker tobe for the personal benefit of the fiduciary; or

(3) Deposited to an account other than anaccount of the fiduciary, as such, or an account of the represented person.

(Added to NRS by 1993, 1243)

NRS 104.3308 Proofof signatures and status as holder in due course.

1. In an action with respect to an instrument, theauthenticity of, and authority to make, each signature on the instrument isadmitted unless specifically denied in the pleadings. If the validity of asignature is denied in the pleadings, the burden of establishing validity is onthe person claiming validity, but the signature is presumed to be authentic andauthorized unless the action is to enforce the liability of the purportedsigner and the signer is dead or incompetent at the time of trial of the issueof validity of the signature. If an action to enforce the instrument is broughtagainst a person as the undisclosed principal of a person who signed theinstrument as a party to the instrument, the plaintiff has the burden ofestablishing that the defendant is liable on the instrument as a representedperson under subsection 1 of NRS 104.3402.

2. If the validity of signatures is admitted or provedand there is compliance with subsection 1, a plaintiff producing the instrumentis entitled to payment if the plaintiff proves entitlement to enforce theinstrument under NRS 104.3301, unlessthe defendant proves a defense or claim in recoupment. If a defense or claim inrecoupment is proved, the right to payment of the plaintiff is subject to thedefense or claim, except to the extent the plaintiff proves that he has rightsof a holder in due course which are not subject to the defense or claim.

(Added to NRS by 1965, 827; A 1993,1276)(Substituted in revision for NRS 104.3307)

NRS 104.3309 Enforcementof lost, destroyed or stolen instrument.

1. A person not in possession of an instrument isentitled to enforce the instrument if:

(a) The person seeking to enforce the instrument:

(1) Was entitled to enforce the instrument whenloss of possession occurred; or

(2) Has directly or indirectly acquiredownership of the instrument from a person who was entitled to enforce theinstrument when loss of possession occurred;

(b) The loss of possession was not the result of atransfer by the person or a lawful seizure; and

(c) The person cannot reasonably obtain possession ofthe instrument because the instrument was destroyed, its whereabouts cannot bedetermined, or it is in the wrongful possession of an unknown person or aperson that cannot be found or is not amenable to service of process.

2. A person seeking enforcement of an instrument undersubsection 1 must prove the terms of the instrument and his right to enforcethe instrument. If that proof is made, NRS104.3308 applies to the case as if the person seeking enforcement hadproduced the instrument. The court may not enter judgment in favor of theperson seeking enforcement unless it finds that the person required to pay theinstrument is adequately protected against loss that might occur by reason of aclaim by another person to enforce the instrument. Adequate protection may beprovided by any reasonable means.

(Added to NRS by 1993, 1244; A 2005, 1999)

NRS 104.3310 Effectof instrument on obligation for which taken.

1. Unless otherwise agreed, if a certified check,cashiers check or tellers check is taken for an obligation, the obligation isdischarged to the same extent discharge would result if an amount of moneyequal to the amount of the instrument were taken in payment of the obligation.Discharge of the obligation does not affect any liability that the obligor mayhave as an endorser of the instrument.

2. Unless otherwise agreed and except as otherwiseprovided in subsection 1, if a note or an uncertified check is taken for anobligation, the obligation is suspended to the same extent the obligation wouldbe discharged if an amount of money equal to the amount of the instrument weretaken, and the following rules apply:

(a) In the case of an uncertified check, suspension ofthe obligation continues until dishonor of the check or until it is paid orcertified. Payment or certification of the check results in discharge of theobligation to the extent of the amount of the check.

(b) In the case of a note, suspension of the obligationcontinues until dishonor of the note or until it is paid. Payment of the noteresults in discharge of the obligation to the extent of the payment.

(c) Except as otherwise provided in paragraph (d), ifthe check or note is dishonored and the obligee of the obligation for which theinstrument was taken is the person entitled to enforce the instrument, theobligee may enforce either the instrument or the obligation. In the case of aninstrument of a third person which is negotiated to the obligee by the obligor,discharge of the obligor on the instrument also discharges the obligation.

(d) If the person entitled to enforce the instrumenttaken for an obligation is a person other than the obligee, the obligee may notenforce the obligation to the extent the obligation is suspended. If theobligee is the person entitled to enforce the instrument but no longer haspossession of it because it was lost, stolen or destroyed, the obligation maynot be enforced to the extent of the amount payable on the instrument, and tothat extent the obligees rights against the obligor are limited to enforcementof the instrument.

3. If an instrument other than one described insubsection 1 or 2 is taken for an obligation, the effect is:

(a) That stated in subsection 1 if the instrument isone on which a bank is liable as maker or acceptor; or

(b) That stated in subsection 2 in any other case.

(Added to NRS by 1993, 1245)

NRS 104.3311 Accordand satisfaction by use of instrument.

1. If a person against whom a claim is asserted provesthat he in good faith tendered an instrument to the claimant as fullsatisfaction of the claim, the amount of the claim was unliquidated or subjectto a bona fide dispute, and the claimant obtained payment of the instrument,subsections 2, 3 and 4 apply.

2. Unless subsection 3 applies, the claim isdischarged if the person against whom the claim is asserted proves that theinstrument or an accompanying written communication contained a conspicuousstatement to the effect that the instrument was tendered as full satisfactionof the claim.

3. Except as otherwise provided in subsection 4, aclaim is not discharged under subsection 2 if either of the following applies:

(a) The claimant, if an organization, proves that:

(1) Within a reasonable time before the tender,the claimant sent a conspicuous statement to the person against whom the claimis asserted that communications concerning disputed debts, including aninstrument tendered as full satisfaction of a debt, are to be sent to adesignated person, office or place; and

(2) The instrument or accompanying communicationwas not received by that designated person, office or place.

(b) The claimant, whether or not an organization,proves that within 90 days after payment of the instrument, the claimanttendered repayment of the amount of the instrument to the person against whomthe claim is asserted. This paragraph does not apply if the claimant is anorganization that sent a statement complying with subparagraph (1) of paragraph(a).

4. A claim is discharged if the person against whomthe claim is asserted proves that within a reasonable time before collection ofthe instrument was initiated, the claimant, or an agent of the claimant havingdirect responsibility with respect to the disputed obligation, knew that theinstrument was tendered in full satisfaction of the claim.

(Added to NRS by 1993, 1245)

NRS 104.3312 Lost,destroyed or stolen cashiers check, tellers check or certified check.

1. In this section:

(a) Check means a cashiers check, tellers check orcertified check.

(b) Claimant means a person who claims the right toreceive the amount of a cashiers check, tellers check or certified check thatwas lost, destroyed or stolen.

(c) Declaration of loss means a statement, made in arecord under penalty of perjury, to the effect that:

(1) The declarer lost possession of a check;

(2) The declarer is the drawer or payee of thecheck, in the case of a certified check, or the remitter or payee of the check,in the case of a cashiers check or tellers check;

(3) The loss of possession was not the result ofa transfer by the declarer or a lawful seizure; and

(4) The declarer cannot reasonably obtainpossession of the check because the check was destroyed, its whereabouts cannotbe determined, or it is in the wrongful possession of an unknown person or aperson that cannot be found or is not amenable to service of process.

(d) Obligated bank means the issuer of a cashierscheck or tellers check or the acceptor of a certified check.

2. A claimant may assert a claim to the amount of acheck by a communication to the obligated bank describing the check withreasonable certainty and requesting payment of the amount of the check, if:

(a) The claimant is the drawer or payee of a certifiedcheck or the remitter or payee of a cashiers check or tellers check;

(b) The communication contains or is accompanied by adeclaration of loss of the claimant with respect to the check;

(c) The communication is received at a time and in amanner affording the bank a reasonable time to act on it before the check ispaid; and

(d) The claimant provides reasonable identification ifrequested by the obligated bank.

3. Delivery of a declaration of loss is a warranty ofthe truth of the statements made in the declaration. If a claim is asserted incompliance with this subsection, the following rules apply:

(a) The claim becomes enforceable at the later of:

(1) The time the claim is asserted; or

(2) The 90th day following the date of thecheck, in the case of a cashiers check or tellers check, or the 90th dayfollowing the date of the acceptance, in the case of a certified check.

(b) Until the claim becomes enforceable, it has nolegal effect and the obligated bank may pay the check or, in the case of atellers check, may permit the drawee to pay the check. Payment to a personentitled to enforce the check discharges all liability of the obligated bankwith respect to the check.

(c) If the claim becomes enforceable before the checkis presented for payment, the obligated bank is not obliged to pay the check.

(d) When the claim becomes enforceable, the obligatedbank becomes obliged to pay the amount of the check to the claimant if paymentof the check has not been made to a person entitled to enforce the check.Subject to paragraph (a) of subsection 1 of NRS104.4302, payment to the claimant discharges all liability of the obligatedbank with respect to the check.

4. If the obligated bank pays the amount of a check toa claimant under paragraph (d) of subsection 2 and the check is presented forpayment by a person having rights of a holder in due course, the claimant isobliged to refund the payment to the obligated bank if the check is paid, orpay the amount of the check to the person having rights of a holder in duecourse if the check is dishonored.

5. If a claimant has the right to assert a claim undersubsection 2 and is also a person entitled to enforce a cashiers check,tellers check or certified check which is lost, destroyed or stolen, theclaimant may assert rights with respect to the check either under this sectionor NRS 104.3309.

(Added to NRS by 1993, 1247; A 2005, 1999)

Part 4

Liability of Parties

NRS 104.3401 Signature.

1. A person is not liable on an instrument unless:

(a) He signed the instrument; or

(b) He is represented by an agent or representative whosigned the instrument and the signature is binding on him under NRS 104.3402.

2. A signature may be made manually or by means of adevice or machine, and by the use of any name, including a trade or assumedname, or by a word, mark, or symbol executed or adopted by a person withpresent intention to authenticate a writing.

(Added to NRS by 1965, 827; A 1993, 1277)

NRS 104.3402 Signatureby representative.

1. If a person acting, or purporting to act, as arepresentative signs an instrument by signing either the name of therepresented person or the name of the signer, the represented person is boundby the signature to the same extent he would be bound if the signature were ona simple contract. If the represented person is bound, the signature of therepresentative is the authorized signature of the represented person and therepresented person is liable on the instrument, whether or not identified inthe instrument.

2. If a representative signs his own name to aninstrument and the signature is an authorized signature of the representedperson, the following rules apply:

(a) If the form of the signature shows unambiguouslythat the signature is made on behalf of the represented person who isidentified in the instrument, the representative is not liable on theinstrument.

(b) Except as otherwise provided in subsection 3, ifthe form of the signature does not show unambiguously that the signature ismade in a representative capacity or the represented person is not identifiedin the instrument, the representative is liable on the instrument to a holderin due course that took the instrument without notice that the representativewas not intended to be liable on the instrument. With respect to any otherperson, the representative is liable on the instrument unless therepresentative proves that the original parties did not intend the representativeto be liable on the instrument.

3. If a representative signs his own name as drawer ofa check without indication of the representative status and the check ispayable from an account of the represented person who is identified on thecheck, the signer is not liable on the check if the signature is an authorizedsignature of the represented person.

(Added to NRS by 1965, 827; A 1993,1278)(Substituted in revision for NRS 104.3403)

NRS 104.3403 Unauthorizedsignature.

1. Unless otherwise provided in this article orarticle 4, an unauthorized signature is ineffective except as the signature ofthe unauthorized signer in favor of a person who in good faith pays theinstrument or takes it for value. An unauthorized signature may be ratified forall purposes of this article.

2. If the signature of more than one person isrequired to constitute the authorized signature of an organization, thesignature of the organization is unauthorized if one of the required signaturesis lacking.

3. The civil or criminal liability of a person whomakes an unauthorized signature is not affected by any provision of thisarticle which makes the unauthorized signature effective for the purposes ofthis article.

(Added to NRS by 1965, 827; A 1993, 1279)(Substitutedin revision for NRS 104.3404)

NRS 104.3404 Impostors;fictitious payees.

1. If an impostor, by use of the mails or otherwise,induces the issuer of an instrument to issue the instrument to the impostor, orto a person acting in concert with the impostor, by impersonating the payee ofthe instrument or a person authorized to act for the payee, an endorsement ofthe instrument by any person in the name of the payee is effective as theendorsement of the payee in favor of a person who, in good faith, pays theinstrument or takes it for value or for collection.

2. If a person whose intent determines to whom aninstrument is payable (subsection 1 or 2 of NRS104.3110) does not intend the person identified as payee to have anyinterest in the instrument, or the person identified as payee of an instrumentis a fictitious person, the following rules apply until the instrument isnegotiated by special endorsement:

(a) Any person in possession of the instrument is itsholder.

(b) An endorsement by any person in the name of thepayee stated in the instrument is effective as the endorsement of the payee infavor of a person who, in good faith, pays the instrument or takes it for valueor for collection.

3. Under subsection 1 or 2, an endorsement is made inthe name of a payee if it is made in a name substantially similar to that ofthe payee or the instrument, whether or not endorsed, is deposited in adepositary bank to an account in a name substantially similar to that of thepayee.

4. With respect to an instrument to which subsection 1or 2 applies, if a person paying the instrument or taking it for value or forcollection fails to exercise ordinary care in paying or taking the instrumentand that failure substantially contributes to loss resulting from payment ofthe instrument, the person bearing the loss may recover from the person failingto exercise ordinary care to the extent the failure to exercise ordinary carecontributed to the loss.

(Added to NRS by 1965, 828; A 1993,1280)(Substituted in revision for NRS 104.3405)

NRS 104.3405 Employersresponsibility for fraudulent endorsement by employee.

1. In this section:

(a) Employee includes an independent contractor andemployee of an independent contractor retained by the employer.

(b) Fraudulent endorsement means:

(1) In the case of an instrument payable to theemployer, a forged endorsement purporting to be that of the employer; or

(2) In the case of an instrument with respect towhich the employer is the issuer, a forged endorsement purporting to be that ofthe person identified as payee.

(c) Responsibility with respect to instruments meansauthority:

(1) To sign or endorse instruments on behalf ofthe employer;

(2) To act upon instruments received by theemployer for bookkeeping purposes, for deposit to an account, or for otherdisposition;

(3) To prepare or act upon instruments for issuein the name of the employer;

(4) To supply information determining the namesor addresses of payees of instruments to be issued in the name of the employer;

(5) To control the disposition of instruments tobe issued in the name of the employer; or

(6) To act otherwise with respect to instrumentsin a responsible capacity.

Responsibility does not include authority that merely allows an employee tohave access to instruments or blank or incomplete instrument forms that arebeing stored or transported or are part of incoming or outgoing mail, orsimilar access.

2. For the purpose of determining the rights andliabilities of a person who, in good faith, pays an instrument or takes it forvalue or for collection, if an employer entrusted an employee withresponsibility with respect to the instrument and the employee or a personacting in concert with the employee makes a fraudulent endorsement of theinstrument, the endorsement is effective as the endorsement of the person towhom the instrument is payable if it is made in the name of that person. If theperson paying the instrument or taking it for value or for collection fails toexercise ordinary care in paying or taking the instrument and that failuresubstantially contributes to loss resulting from the fraud, the person bearingthe loss may recover from the person failing to exercise ordinary care to theextent the failure to exercise ordinary care contributed to the loss.

3. Under subsection 2, an endorsement is made in thename of the person to whom an instrument is payable if:

(a) It is made in a name substantially similar to thename of that person; or

(b) The instrument, whether or not endorsed, isdeposited in a depositary bank to an account in a name substantially similar tothe name of that person.

(Added to NRS by 1965, 827; A 1993,1277)(Substituted in revision for NRS 104.3402)

NRS 104.3406 Negligencecontributing to forged signature or alteration of instrument.

1. A person whose failure to exercise ordinary caresubstantially contributes to an alteration of an instrument or to the making ofa forged signature on an instrument is precluded from asserting the alterationor the forgery against a person who, in good faith, pays the instrument ortakes it for value or for collection.

2. Under subsection 1, if the person asserting thepreclusion fails to exercise ordinary care in paying or taking the instrumentand that failure substantially contributes to loss, the loss is allocatedbetween the person precluded and the person asserting the preclusion accordingto the extent to which the failure of each to exercise ordinary carecontributed to the loss.

3. Under subsection 1, the burden of proving failureto exercise ordinary care is on the person asserting the preclusion. Undersubsection 2, the burden of proving failure to exercise ordinary care is on theperson precluded.

(Added to NRS by 1965, 828; A 1993, 1280)

NRS 104.3407 Alteration.

1. Alteration means an unauthorized:

(a) Change in an instrument that purports to modify inany respect the obligation of a party; or

(b) Addition of words or numbers or other change to anincomplete instrument relating to the obligation of a party.

2. Except as otherwise provided in subsection 3, analteration fraudulently made discharges a party whose obligation is affected bythe alteration unless that party assents or is precluded from asserting thealteration. No other alteration discharges a party, and the instrument may beenforced according to its original terms.

3. A payor bank or drawee paying a fraudulentlyaltered instrument or a person taking it for value, in good faith, and withoutnotice of the alteration, may enforce rights with respect to the instrument:

(a) According to its original terms; or

(b) In the case of an incomplete instrument altered byunauthorized completion, according to its terms as completed.

(Added to NRS by 1965, 828; A 1993, 1281)

NRS 104.3408 Draweenot liable on unaccepted draft. A check orother draft does not of itself operate as an assignment of funds in the handsof the drawee available for its payment, and the drawee is not liable on theinstrument until the drawee accepts it.

(Added to NRS by 1965, 829; A 1993,1282)(Substituted in revision for NRS 104.3409)

NRS 104.3409 Acceptanceof draft; certified check.

1. Acceptance means the drawees signed agreement topay a draft as presented. It must be written on the draft and may consist ofthe drawees signature alone. Acceptance may be made at any time and becomeseffective when notification pursuant to instructions is given or the accepteddraft is delivered for the purpose of giving rights on the acceptance to anyperson.

2. A draft may be accepted although it has not beensigned by the drawer, is otherwise incomplete, is overdue or has beendishonored.

3. If a draft is payable at a fixed period after sightand the acceptor fails to date the acceptance, the holder may complete theacceptance by supplying a date in good faith.

4. Certified check means a check accepted by thebank on which it is drawn. Acceptance may be made as stated in subsection 1 orby a writing on the check which indicates that the check is certified. Thedrawee of a check has no obligation to certify the check, and refusal tocertify is not dishonor of the check.

(Added to NRS by 1965, 829; A 1993,1282)(Substituted in revision for NRS 104.3410)

NRS 104.3410 Acceptancevarying draft.

1. If the terms of a drawees acceptance vary from theterms of the draft as presented, the holder may refuse the acceptance and treatthe draft as dishonored. In that case, the drawee may cancel the acceptance.

2. The terms of a draft are not varied by anacceptance to pay at a particular bank or place in the United States, unlessthe acceptance states that the draft is to be paid only at that bank or place.

3. If the holder assents to an acceptance varying theterms of a draft, the obligation of each drawer and endorser that does notexpressly assent to the acceptance is discharged.

(Added to NRS by 1965, 829; A 1993,1283)(Substituted in revision for NRS 104.3412)

NRS 104.3411 Refusalto pay cashiers checks, tellers checks and certified checks.

1. In this section, obligated bank means theacceptor of a certified check or the issuer of a cashiers check or tellerscheck bought from the issuer.

2. If the obligated bank wrongfully refuses to pay acashiers check or certified check, stops payment of a tellers check, orrefuses to pay a dishonored tellers check, the person asserting the right toenforce the check is entitled to compensation for expenses and loss of interestresulting from the nonpayment and may recover consequential damages if theobligated bank refuses to pay after receiving notice of particularcircumstances giving rise to the damages.

3. Expenses or consequential damages under subsection2 are not recoverable if the refusal of the obligated bank to pay occursbecause:

(a) The bank suspends payments;

(b) The obligated bank asserts a claim or defense ofthe bank that it has reasonable grounds to believe is available against theperson entitled to enforce the instrument;

(c) The obligated bank has a reasonable doubt whetherthe person demanding payment is the person entitled to enforce the instrument;or

(d) Payment is prohibited by law.

(Added to NRS by 1965, 828; A 1993,1281)(Substituted in revision for NRS 104.3408)

NRS 104.3412 Obligationof issuer of note or cashiers check.

1. The issuer of a note or cashiers check or otherdraft drawn on the drawer is obliged to pay the instrument:

(a) According to its terms at the time it was issuedor, if not issued, at the time it first came into possession of a holder; or

(b) If the issuer signed an incomplete instrument,according to its terms when completed, to the extent stated in NRS 104.3115 and 104.3407.

2. The obligation is owed to a person entitled toenforce the instrument or to an endorser who paid the instrument under NRS 104.3415.

(Added to NRS by 1965, 829; A 1993,1283)(Substituted in revision for NRS 104.3411)

NRS 104.3413 Obligationof acceptor.

1. The acceptor of a draft is obliged to pay thedraft:

(a) According to its terms at the time it was accepted,even though the acceptance states that the draft is payable as originallydrawn or equivalent terms;

(b) If the acceptance varies the terms of the draft,according to the terms of the draft as varied; or

(c) If the acceptance is of a draft that is anincomplete instrument, according to its terms when completed, to the extentstated in NRS 104.3115 and 104.3407.

Theobligation is owed to a person entitled to enforce the draft or to the draweror an endorser who paid the draft under NRS104.3414 or 104.3415.

2. If the certification of a check or other acceptanceof a draft states the amount certified or accepted, the obligation of theacceptor is that amount. If the certification or acceptance does not state anamount, the amount of the instrument is subsequently raised, and the instrumentis then negotiated to a holder in due course, the obligation of the acceptor isthe amount of the instrument at the time it was taken by the holder in duecourse.

(Added to NRS by 1965, 829; A 1993, 1283)

NRS 104.3414 Obligationof drawer.

1. This section does not apply to cashiers checks orother drafts drawn on the drawer.

2. If an unaccepted draft is dishonored, the drawer isobliged to pay the draft:

(a) According to its terms at the time it was issuedor, if not issued, at the time it first came into possession of a holder; or

(b) If the drawer signed an incomplete instrument,according to its terms when completed, to the extent stated in NRS 104.3115 and 104.3407.

Theobligation is owed to a person entitled to enforce the draft or to an endorserwho paid the draft under NRS 104.3415.

3. If a draft is accepted by a bank, the drawer isdischarged, regardless of when or by whom acceptance was obtained.

4. If a draft is accepted and the acceptor is not abank, the obligation of the drawer to pay the draft if the draft is dishonoredby the acceptor is the same as the obligation of an endorser under subsections1 and 3 of NRS 104.3415.

5. If a draft states that it is drawn withoutrecourse or otherwise disclaims liability of the drawer to pay the draft, thedrawer is not liable under subsection 2 to pay the draft if the draft is not acheck. A disclaimer of the liability stated in subsection 2 is not effective ifthe draft is a check.

6. If a check is not presented for payment or given toa depositary bank for collection within 30 days after its date, the draweesuspends payments after expiration of the 30-day period without paying thecheck, and because of the suspension of payments, the drawer is deprived offunds maintained with the drawee to cover payment of the check, the drawer tothe extent deprived of funds may discharge his obligation to pay the check byassigning to the person entitled to enforce the check his rights against thedrawee with respect to the funds.

(Added to NRS by 1993, 1246)

NRS 104.3415 Obligationof endorser.

1. Except as otherwise provided in subsections 2, 3and 4 of this section and in subsection 4 of NRS104.3419, if an instrument is dishonored, an endorser is obliged to pay theamount due on the instrument according to the terms of the instrument at thetime it was endorsed, or if the endorser endorsed an incomplete instrument, accordingto its terms when completed, to the extent stated in NRS 104.3115 and 104.3407. The obligation of the endorseris owed to a person entitled to enforce the instrument or to a subsequentendorser who paid the instrument under this section.

2. If an endorsement states that it is made withoutrecourse or otherwise disclaims liability of the endorser, the endorser is notliable under subsection 1 to pay the instrument.

3. If notice of dishonor of an instrument is requiredby NRS 104.3503 and notice of dishonorcomplying with that section is not given to an endorser, the liability of theendorser under subsection 1 is discharged.

4. If a draft is accepted by a bank after anendorsement is made, the liability of the endorser under subsection 1 isdischarged.

5. If an endorser of a check is liable undersubsection 1 and the check is not presented for payment, or given to adepositary bank for collection, within 30 days after the day the endorsementwas made, the liability of the endorser under subsection 1 is discharged.

(Added to NRS by 1965, 829; A 1993,1284)(Substituted in revision for NRS 104.3414)

NRS 104.3416 Transferwarranties.

1. A person who transfers an instrument forconsideration warrants to the transferee and, if the transfer is byendorsement, to any subsequent transferee that:

(a) The warrantor is a person entitled to enforce theinstrument;

(b) All signatures on the instrument are authentic andauthorized;

(c) The instrument has not been altered;

(d) The instrument is not subject to a defense or claimin recoupment of any party which can be asserted against the warrantor;

(e) The warrantor has no knowledge of any insolvencyproceeding commenced with respect to the maker or acceptor or, in the case ofan unaccepted draft, the drawer; and

(f) With respect to a remotely-created item, that theperson on whose account the item is drawn authorized the issuance of the itemin the amount for which the item is drawn.

2. A person to whom the warranties under subsection 1are made and who took the instrument in good faith may recover from thewarrantor as damages for breach of warranty an amount equal to the losssuffered as a result of the breach, but not more than the amount of theinstrument plus expenses and loss of interest incurred as a result of thebreach.

3. The warranties stated in subsection 1 cannot bedisclaimed with respect to checks. Unless notice of a claim for breach ofwarranty is given to the warrantor within 30 days after the claimant has reasonto know of the breach and the identity of the warrantor, the liability of thewarrantor under subsection 2 is discharged to the extent of any loss caused bythe delay in giving notice of the claim.

4. A cause of action for breach of warranty under thissection accrues when the claimant has reason to know of the breach.

5. No claim for breach of warranty in paragraph (f) ofsubsection 1 is available against a person to which an item was transferred tothe extent that under applicable law, including the applicable choice-of-lawprinciples, the person that transferred the item did not make the warranty inparagraph (f) of subsection 1.

(Added to NRS by 1965, 830; A 1993, 1287; 2005, 2000)

NRS 104.3417 Presentmentwarranties.

1. If an unaccepted draft is presented to the draweefor payment or acceptance and the drawee pays or accepts the draft, the personobtaining payment or acceptance, at the time of presentment, and a previoustransferor of the draft, at the time of transfer, warrant to the drawee makingpayment or accepting the draft in good faith that:

(a) The warrantor is, or was, at the time the warrantortransferred the draft, a person entitled to enforce the draft or authorized toobtain payment or acceptance of the draft on behalf of a person entitled toenforce the draft;

(b) The draft has not been altered;

(c) The warrantor has no knowledge that the signatureof the drawer of the draft is unauthorized; and

(d) With respect to a remotely-created item, that the personon whose account the item is drawn authorized the issuance of the item in theamount for which the item is drawn.

2. A drawee making payment may recover from anywarrantor damages for breach of warranty equal to the amount paid by the draweeless the amount the drawee received or is entitled to receive from the drawerbecause of the payment. In addition, the drawee is entitled to compensation forexpenses and loss of interest resulting from the breach. The right of thedrawee to recover damages under this subsection is not affected by any failureof the drawee to exercise ordinary care in making payment. If the draweeaccepts the draft, breach of warranty is a defense to the obligation of theacceptor. If the acceptor makes payment with respect to the draft, the acceptoris entitled to recover from any warrantor for breach of warranty the amountsstated in this subsection.

3. If a drawee asserts a claim for breach of warrantyunder subsection 1 based on an unauthorized endorsement of the draft or analteration of the draft, the warrantor may defend by proving that theendorsement is effective under NRS 104.3404or 104.3405 or the drawer is precludedunder NRS 104.3406 or 104.4406 from asserting against the draweethe unauthorized endorsement or alteration.

4. If a dishonored draft is presented for payment tothe drawer or an endorser or any other instrument is presented for payment to aparty obliged to pay the instrument, and payment is received, the followingrules apply:

(a) The person obtaining payment and a prior transferorof the instrument warrant to the person making payment in good faith that thewarrantor is, or was at the time he transferred the instrument, a personentitled to enforce the instrument or authorized to obtain payment on behalf ofa person entitled to enforce the instrument.

(b) The person making payment may recover from anywarrantor for breach of warranty an amount equal to the amount paid plusexpenses and loss of interest resulting from the breach.

5. The warranties stated in subsections 1 and 4 cannotbe disclaimed with respect to checks. Unless notice of a claim for breach ofwarranty is given to the warrantor within 30 days after the claimant has reasonto know of the breach and the identity of the warrantor, the liability of thewarrantor under subsection 2 or 4 is discharged to the extent of any losscaused by the delay in giving notice of the claim.

6. A cause of action for breach of warranty under thissection accrues when the claimant has reason to know of the breach.

7. No claim for breach of warranty in paragraph (d) ofsubsection 1 is available against a person to which an item was transferred tothe extent that under applicable law, including the applicable choice-of-lawprinciples, the person that transferred the item did not make the warranty inparagraph (d) of subsection 1.

(Added to NRS by 1965, 830; A 1993, 1286; 2005, 2001)

NRS 104.3418 Paymentor acceptance by mistake.

1. Except as otherwise provided in subsection 3, ifthe drawee of a draft pays or accepts the draft and he acted on the mistakenbelief that payment of the draft had not been stopped pursuant to NRS 104.4403 or the signature of thedrawer of the draft was authorized, he may recover the amount of the draft fromthe person to whom or for whose benefit payment was made or, in the case ofacceptance, may revoke the acceptance. Rights of the drawee under thissubsection are not affected by his failure to exercise ordinary care in payingor accepting the draft.

2. Except as otherwise provided in subsection 3, if aninstrument has been paid or accepted by mistake and the case is not covered bysubsection 1, the person paying or accepting may, to the extent permitted bythe law governing mistake and restitution:

(a) Recover the payment from the person to whom or forwhose benefit payment was made; or

(b) In the case of acceptance, may revoke theacceptance.

3. The remedies provided by subsection 1 or 2 may notbe asserted against a person who took the instrument in good faith and forvalue or who in good faith changed position in reliance on the payment oracceptance. This subsection does not limit remedies provided by NRS 104.3417 or 104.4407.

4. If an instrument is paid or accepted by mistake andthe payor or acceptor recovers payment or revokes acceptance under subsection 1or 2, the instrument is deemed not to have been paid or accepted and is treatedas dishonored, and the person from whom payment is recovered has rights as aperson entitled to enforce the dishonored instrument.

(Added to NRS by 1965, 831; A 1993, 1288)

NRS 104.3419 Instrumentssigned for accommodation.

1. If an instrument is issued for value given for thebenefit of a party to the instrument (accommodated party) and another partyto the instrument (accommodation party) signs the instrument for the purposeof incurring liability on the instrument without being a direct beneficiary ofthe value given for the instrument, the instrument is signed by theaccommodation party for accommodation.

2. An accommodation party may sign the instrument asmaker, drawer, acceptor or endorser and, subject to subsection 4, is obliged topay the instrument in the capacity in which he signs. The obligation of anaccommodation party may be enforced notwithstanding any statute of frauds andwhether or not he receives consideration for the accommodation.

3. A person signing an instrument is presumed to be anaccommodation party and there is notice that the instrument is signed foraccommodation if the signature is an anomalous endorsement or is accompanied bywords indicating that the signer is acting as surety or guarantor with respectto the obligation of another party to the instrument. Except as otherwiseprovided in NRS 104.3605, theobligation of an accommodation party to pay the instrument is not affected bythe fact that the person enforcing the obligation had notice when theinstrument was taken by that person that the accommodation party signed theinstrument for accommodation.

4. If the signature of a party to an instrument isaccompanied by words indicating unambiguously that the party is guaranteeingcollection rather than payment of the obligation of another party to theinstrument, the signer is obliged to pay the amount due on the instrument to aperson entitled to enforce the instrument only if:

(a) Execution of judgment against the other party hasbeen returned unsatisfied;

(b) The other party is insolvent or in an insolvencyproceeding;

(c) The other party cannot be served with process; or

(d) It is otherwise apparent that payment cannot beobtained from the other party.

5. If the signature of a party to an instrument isaccompanied by words indicating that the party guarantees payment or the signersigns the instrument as an accommodation party in some other manner that doesnot unambiguously indicate an intention to guarantee collection rather thanpayment, the signer is obliged to pay the amount due on the instrument to aperson entitled to enforce the instrument in the same circumstances as theaccommodated party would be obliged, without prior resort to the accommodatedparty by the person entitled to enforce the instrument.

6. An accommodation party that pays the instrument isentitled to reimbursement from the accommodated party and is entitled toenforce the instrument against the accommodated party. In proper circumstances,an accommodation party may obtain relief that requires the accommodated partyto perform its obligations on the instrument. An accommodated party that paysthe instrument has no right of recourse against, and is not entitled tocontribution from, an accommodation party.

(Added to NRS by 1965, 830; A 1993, 1285; 2005, 2002)

NRS 104.3420 Conversionof instrument.

1. The law applicable to conversion of personalproperty applies to instruments. An instrument is also converted if it is takenby transfer, other than a negotiation, from a person not entitled to enforcethe instrument or a bank makes or obtains payment with respect to theinstrument for a person not entitled to enforce the instrument or receivepayment. An action for conversion of an instrument may not be brought by theissuer or acceptor of the instrument or a payee or endorsee who did not receivedelivery of the instrument either directly or through delivery to an agent or aco-payee.

2. In an action under subsection 1, the measure ofliability is presumed to be the amount payable on the instrument, but recoverymay not exceed the amount of the plaintiffs interest in the instrument.

3. A representative, other than a depositary bank, whohas in good faith dealt with an instrument or its proceeds on behalf of one whowas not the person entitled to enforce the instrument is not liable inconversion to that person beyond the amount of any proceeds that it has notpaid out.

(Added to NRS by 1965, 831; A 1993,1289)(Substituted in revision for NRS 104.3419)

Part 5

Dishonor

NRS 104.3501 Presentment.

1. Presentment means a demand made by or on behalfof a person entitled to enforce an instrument:

(a) To pay the instrument made to the drawee or a partyobliged to pay the instrument or, in the case of a note or accepted draftpayable at a bank, to the bank; or

(b) To accept a draft made to the drawee.

2. The following rules are subject to article 4,agreement of the parties, and clearinghouse rules and the like:

(a) Presentment:

(1) May be made at the place of payment of theinstrument and must be made at the place of payment if the instrument ispayable at a bank in the United States;

(2) May be made by any commercially reasonablemeans, including an oral, written or electronic communication;

(3) Is effective when the demand for payment oracceptance is received by the person to whom presentment is made; and

(4) Is effective if made to any one of two ormore makers, acceptors, drawees or other payors.

(b) Upon demand of the person to whom presentment ismade, the person making presentment must:

(1) Exhibit the instrument;

(2) Give reasonable identification and, ifpresentment is made on behalf of another person, reasonable evidence ofauthority to do so; and

(3) Sign a receipt on the instrument for anypayment made or surrender the instrument if full payment is made.

(c) Without dishonoring the instrument, the party towhom presentment is made may:

(1) Return the instrument for lack of anecessary endorsement; or

(2) Refuse payment or acceptance for failure ofthe presentment to comply with the terms of the instrument, an agreement of theparties or other applicable law or rule.

(d) The party to whom presentment is made may treatpresentment as occurring on the next business day after the day of presentmentif he has established a cutoff hour not earlier than 2 p.m. for the receipt andaction upon instruments presented for payment or acceptance and presentment ismade after the cutoff hour.

(Added to NRS by 1965, 833; A 1993,1290)(Substituted in revision for NRS 104.3504)

NRS 104.3502 Dishonor.

1. Dishonor of a note is governed by the followingrules:

(a) If the note is payable on demand, the note isdishonored if presentment is duly made to the maker and the note is not paid onthe day of presentment.

(b) If the note is not payable on demand and is payableat or through a bank or the terms of the note require presentment, the note isdishonored if presentment is duly made and the note is not paid on the day itbecomes payable or the day of presentment, whichever is later.

(c) If the note is not payable on demand and paragraph(b) does not apply, the note is dishonored if it is not paid on the day itbecomes payable.

2. Dishonor of an unaccepted draft other than adocumentary draft is governed by the following rules:

(a) If a check is duly presented for payment to thepayor bank otherwise than for immediate payment over the counter, the check isdishonored if the payor bank makes timely return of the check or sends timelynotice of dishonor or nonpayment under NRS104.4301 or 104.4302, or becomesaccountable for the amount of the check under NRS 104.4302.

(b) If a draft is payable on demand and paragraph (a)does not apply, the draft is dishonored if presentment for payment is duly madeto the drawee and the draft is not paid on the day of presentment.

(c) If a draft is payable on a date stated in thedraft, the draft is dishonored if:

(1) Presentment for payment is duly made to thedrawee and payment is not made on the day the draft becomes payable or the dayof presentment, whichever is later; or

(2) Presentment for acceptance is duly madebefore the day the draft becomes payable and the draft is not accepted on theday of presentment.

(d) If a draft is payable on elapse of a period of timeafter sight or acceptance, the draft is dishonored if presentment foracceptance is duly made and the draft is not accepted on the day ofpresentment.

3. Dishonor of an unaccepted documentary draft occursaccording to the rules stated in paragraphs (b), (c) and (d) of subsection 2,except that payment or acceptance may be delayed without dishonor until nolater than the close of the third business day of the drawee following the dayon which payment or acceptance is required by those paragraphs.

4. Dishonor of an accepted draft is governed by thefollowing rules:

(a) If the draft is payable on demand, the draft isdishonored if presentment for payment is duly made to the acceptor and thedraft is not paid on the day of presentment.

(b) If the draft is not payable on demand, the draft isdishonored if presentment for payment is duly made to the acceptor and paymentis not made on the day it becomes payable or the day of presentment, whicheveris later.

5. In any case in which presentment is otherwiserequired for dishonor under this section and presentment is excused under NRS 104.3504, dishonor occurs withoutpresentment if the instrument is not duly accepted or paid.

6. If a draft is dishonored because timely acceptanceof the draft was not made and the person entitled to demand acceptance consentsto a late acceptance, from the time of acceptance the draft is treated as neverhaving been dishonored.

(Added to NRS by 1965, 834; A 1993, 1291)(Substitutedin revision for NRS 104.3507)

NRS 104.3503 Noticeof dishonor.

1. The obligation of an endorser stated in subsection1 of NRS 104.3415 and the obligation ofa drawer stated in subsection 4 of NRS104.3414 may not be enforced unless:

(a) The endorser or drawer is given notice of dishonorof the instrument complying with this section; or

(b) Notice of dishonor is excused under subsection 2 ofNRS 104.3504.

2. Notice of dishonor:

(a) May be given by any person;

(b) May be given by any commercially reasonable means,including an oral, written or electronic communication; and

(c) Is sufficient if it reasonably identifies theinstrument and indicates that the instrument has been dishonored or has notbeen paid or accepted.

Return of aninstrument given to a bank for collection is sufficient notice of dishonor.

3. Subject to subsection 3 of NRS 104.3504, with respect to aninstrument taken for collection by a collecting bank, notice of dishonor mustbe given by the bank before midnight of the next banking day following thebanking day on which it receives notice of dishonor of the instrument, or byany other person within 30 days following the day on which he receives noticeof dishonor. With respect to any other instrument, notice of dishonor must begiven within 30 days following the day on which dishonor occurs.

(Added to NRS by 1965, 835; A 1993,1292)(Substituted in revision for NRS 104.3508)

NRS 104.3504 Excusedpresentment and notice of dishonor.

1. Presentment for payment or acceptance of aninstrument is excused if:

(a) The person entitled to present the instrumentcannot with reasonable diligence make presentment;

(b) The maker or acceptor has repudiated an obligationto pay the instrument or is dead or in insolvency proceedings;

(c) By the terms of the instrument presentment is notnecessary to enforce the obligation of endorsers or the drawer;

(d) The drawer or endorser whose obligation is beingenforced has waived presentment or otherwise has no reason to expect or rightto require that the instrument be paid or accepted; or

(e) The drawer instructed the drawee not to pay oraccept the draft or the drawee was not obligated to the drawer to pay thedraft.

2. Notice of dishonor is excused if by the terms of theinstrument notice of dishonor is not necessary to enforce the obligation of aparty to pay the instrument, or the party whose obligation is being enforcedwaived notice of dishonor. A waiver of presentment is also a waiver of noticeof dishonor.

3. Delay in giving notice of dishonor is excused ifthe delay was caused by circumstances beyond the control of the person givingthe notice and the person giving the notice exercised reasonable diligenceafter the cause of the delay ceased to operate.

(Added to NRS by 1965, 836; A 1993,1294)(Substituted in revision for NRS 104.3511)

NRS 104.3505 Evidenceof dishonor.

1. The following are admissible as evidence and createa presumption of dishonor and of any notice of dishonor stated:

(a) A document regular in form as provided insubsection 2 which purports to be a protest.

(b) A purported stamp or writing of the drawee, payorbank or presenting bank on the instrument or accompanying it stating thatacceptance or payment has been refused unless reasons for the refusal arestated and the reasons are not consistent with dishonor.

(c) A book or record of the drawee, payor bank, orcollecting bank kept in the usual course of business which shows dishonor, eventhough there is no evidence of who made the entry.

2. A protest is a certificate of dishonor made by aUnited States consul or vice consul, or a notarial officer or other personauthorized to administer oaths by the law of the place where dishonor occurs.It may be made upon information satisfactory to him. The protest must identifythe instrument and certify either that presentment has been made or, if notmade, the reason why it was not made, and that the instrument has beendishonored by nonacceptance or nonpayment. The protest may also certify thatnotice of dishonor has been given to some or all parties.

(Added to NRS by 1965, 835; A 1993,1293)(Substituted in revision for NRS 104.3510)

Part 6

Discharge and Payment

NRS 104.3601 Dischargeand effect of discharge.

1. The obligation of a party to pay the instrument isdischarged as stated in this article or by an act or agreement with the partywhich would discharge an obligation to pay money under a simple contract.

2. Discharge of the obligation of a party is noteffective against a person acquiring rights of a holder in due course of theinstrument without notice of the discharge.

(Added to NRS by 1965, 836; A 1993, 1295)

NRS 104.3602 Payment.

1. Subject to subsection 5, an instrument is paid tothe extent payment is made by or on behalf of a party obliged to pay theinstrument, and to a person entitled to enforce the instrument.

2. Subject to subsection 5, a note is paid to theextent payment is made by or on behalf of a party obliged to pay the note to aperson who formerly was entitled to enforce the note only if at the time of thepayment the party obliged to pay has not received adequate notification thatthe note has been transferred and that payment is to be made to the transferee.A notification is adequate only if it:

(a) Is signed by the transferor or the transferee;

(b) Reasonably identifies the transferred note; and

(c) Provides an address at which payments subsequentlyare to be made.

Uponrequest, a transferee shall seasonably furnish reasonable proof that the notehas been transferred. Unless the transferee complies with the request, apayment to the person that formerly was entitled to enforce the note iseffective for purposes of subsection 3 even if the party obliged to pay thenote has received a notification under this subsection.

3. Subject to subsection 5, to the extent of a paymentunder subsections 1 and 2, the obligation of the party obliged to pay theinstrument is discharged even though payment is made with knowledge of a claimto the instrument under NRS 104.3306 byanother person.

4. Subject to subsection 5, a transferee, or any partythat has acquired rights in the instrument directly or indirectly from atransferee, including any such party that has rights as a holder in due course,is deemed to have notice of any payment that is made under subsection 2 afterthe date that the note is transferred to the transferee but before the partyobliged to pay the note receives adequate notification of the transfer.

5. The obligation of a party to pay the instrument isnot discharged under subsections 1 to 4, inclusive, if:

(a) A claim to the instrument under NRS 104.3306 is enforceable against theparty receiving payment and:

(1) Payment is made with knowledge by the payorthat payment is prohibited by injunction or similar process of a court ofcompetent jurisdiction; or

(2) In the case of an instrument other than acashiers check, tellers check or certified check, the party making paymentaccepted, from the person having a claim to the instrument, indemnity againstloss resulting from refusal to pay the person entitled to enforce theinstrument; or

(b) The person making payment knows that the instrumentis a stolen instrument and pays a person he knows is in wrongful possession ofthe instrument.

6. As used in this section, signed, with respect toa record that is not a writing, includes the attachment to or logical associationwith the record of an electronic symbol, sound, or process with the presentintent to adopt or accept the record.

(Added to NRS by 1965, 837; A 1993, 1297; 2005, 2003)

NRS 104.3603 Tenderof payment.

1. If tender of payment of an obligation to pay aninstrument is made to a person entitled to enforce the instrument, the effectof tender is governed by principles of law applicable to tender of paymentunder a simple contract.

2. If tender of payment of an obligation to pay aninstrument is made to a person entitled to enforce the instrument and thetender is refused, there is discharge, to the extent of the amount of thetender, of the obligation of an endorser or accommodation party having a rightof recourse with respect to the obligation to which the tender relates.

3. If tender of payment of an amount due on aninstrument is made to a person entitled to enforce the instrument, theobligation of the obligor to pay interest after the due date on the amounttendered is discharged. If presentment is required with respect to aninstrument and the obligor is able and ready to pay on the due date at everyplace of payment stated in the instrument, the obligor is deemed to have madetender of payment on the due date to the person entitled to enforce theinstrument.

(Added to NRS by 1965, 837; A 1993,1297)(Substituted in revision for NRS 104.3604)

NRS 104.3604 Dischargeby cancellation or renunciation.

1. A person entitled to enforce an instrument, with orwithout consideration, may discharge the obligation of a party to pay theinstrument:

(a) By an intentional voluntary act, such as surrenderof the instrument to the party, destruction, mutilation or cancellation of theinstrument, cancellation or striking out of the partys signature, or theaddition of words to the instrument indicating discharge; or

(b) By agreeing not to sue or otherwise renouncingrights against the party by a signed record.

2. Cancellation or striking out of an endorsementpursuant to subsection 1 does not affect the status and rights of a partyderived from the endorsement.

3. As used in this section, signed, with respect toa record that is not a writing, includes the attachment to or logicalassociation with the record of an electronic symbol, sound, or process with thepresent intent to adopt or accept the record.

(Added to NRS by 1965, 837; A 1993, 1298; 2005, 2004)

NRS 104.3605 Dischargeof endorsers and accommodation parties.

1. In this section, the term endorser includes adrawer having the obligation described in subsection 4 of NRS 104.3414.

2. Discharge, under NRS104.3604, of the obligation of a party to pay an instrument does notdischarge the obligation of an endorser or accommodation party having a rightof recourse against the discharged party.

3. If a person entitled to enforce an instrumentagrees, with or without consideration, to an extension of the due date of theobligation of a party to pay the instrument, the extension discharges an endorseror accommodation party having a right of recourse against the party whoseobligation is extended to the extent the endorser or accommodation party provesthat the extension caused loss to him with respect to the right of recourse.

4. If a person entitled to enforce an instrumentagrees, with or without consideration, to a material modification of theobligation of a party other than an extension of the due date, the modificationdischarges the obligation of an endorser or accommodation party having a rightof recourse against the person whose obligation is modified to the extent themodification causes loss to the endorser or accommodation party with respect tothe right of recourse. The loss suffered by the endorser or accommodation partyas a result of the modification is equal to the amount of the right of recourseunless the person enforcing the instrument proves that no loss was caused bythe modification or that the loss caused by the modification was an amount lessthan the amount of the right of recourse.

5. If the obligation of a party to pay an instrumentis secured by an interest in collateral and a person entitled to enforce theinstrument impairs the value of the interest in collateral, the obligation ofan endorser or accommodation party having a right of recourse against theobligor is discharged to the extent of the impairment. The value of an interestin collateral is impaired to the extent the value of the interest is reduced toan amount less than the amount of the right of recourse of the party assertingdischarge, or the reduction in value of the interest causes an increase in theamount by which the amount of the right of recourse exceeds the value of theinterest. The burden of proving impairment is on the party asserting discharge.

6. If the obligation of a party is secured by aninterest in collateral not provided by an accommodation party and a personentitled to enforce the instrument impairs the value of the interest incollateral, the obligation of any party who is jointly and severally liablewith respect to the secured obligation is discharged to the extent theimpairment causes the party asserting discharge to pay more than he would havebeen obliged to pay, taking into account rights of contribution, if impairmenthad not occurred. If the party asserting discharge is an accommodation partynot entitled to discharge under subsection 5, he is deemed to have a right tocontribution based on joint and several liability rather than a right toreimbursement. The burden of proving impairment is on the party assertingdischarge.

7. Under subsection 5 or 6, impairing value of aninterest in collateral includes:

(a) Failure to obtain or maintain perfection orrecordation of the interest in collateral;

(b) Release of collateral without substitution ofcollateral of equal value;

(c) Failure to perform a duty to preserve the value ofcollateral owed under Article 9 or other law to a debtor or surety or otherperson secondarily liable; or

(d) Failure to comply with applicable law in disposingof collateral.

8. An accommodation party is not discharged undersubsection 3, 4 or 5 unless the person entitled to enforce the instrument knowsof the accommodation or has notice under subsection 3 of NRS 104.3419 that the instrument wassigned for accommodation.

9. A party is not discharged under this section if:

(a) The party asserting discharge consents to the eventor conduct that is the basis of the discharge; or

(b) The instrument or a separate agreement of the partyprovides for waiver of discharge under this section either specifically or bygeneral language indicating that parties waive defenses based on suretyship orimpairment of collateral.

(Added to NRS by 1965, 837; A 1993,1295)(Substituted in revision for NRS 104.3602)

ARTICLE 4

BANK DEPOSITS AND COLLECTIONS

Part 1

General Provisions and Definitions

NRS 104.4101 Shorttitle. This article may be cited as UniformCommercial CodeBank Deposits and Collections.

(Added to NRS by 1965, 840; A 1993, 1298)

NRS 104.4102 Applicability.

1. To the extent that items within this article arealso within articles 3 and 8, they are subject to those articles. If there is aconflict, this article governs article 3 but article 8 governs this article.

2. The liability of a bank for action or nonactionwith respect to an item handled by it for purposes of presentment, payment orcollection is governed by the law of the place where the bank is located. Inthe case of action or nonaction by or at a branch or separate office of a bank,its liability is governed by the law of the place where the branch or separateoffice is located.

(Added to NRS by 1965, 840; A 1993, 1298)

NRS 104.4103 Variationby agreement; measure of damages; action constituting ordinary care.

1. The effect of the provisions of this article may bevaried by agreement, but the parties to the agreement cannot disclaim a banksresponsibility for its own lack of good faith or failure to exercise ordinary careor limit the measure of damages for the lack or failure. However, the partiesmay determine by agreement the standards by which the banks responsibility isto be measured if those standards are not manifestly unreasonable.

2. Federal Reserve regulations and operatingcirculars, clearinghouse rules, and the like have the effect of agreementsunder subsection 1, whether or not specifically assented to by all partiesinterested in items handled.

3. Action or nonaction approved by this article orpursuant to Federal Reserve regulations or operating circulars is the exerciseof ordinary care and, in the absence of special instructions, action ornonaction consistent with clearinghouse rules and the like or with a generalbanking usage not disapproved by this article, is prima facie the exercise ofordinary care.

4. The specification or approval of certain proceduresby this article is not disapproval of other procedures that may be reasonableunder the circumstances.

5. The measure of damages for failure to exerciseordinary care in handling an item is the amount of the item reduced by anamount that could not have been realized by the exercise of ordinary care. Ifthere is also bad faith, it includes other damages the party suffered as aproximate consequence.

(Added to NRS by 1965, 840; A 1993, 1299)

NRS 104.4104 Definitionsand index of definitions.

1. In this Article, unless the context otherwiserequires:

(a) Account means any deposit or credit account witha bank including a demand, time, savings, passbook, share draft or likeaccount, other than an account evidenced by a certificate of deposit.

(b) Afternoon means the period of a day between noonand midnight.

(c) Banking day means that part of any day on which abank is open to the public for carrying on substantially all of its bankingfunctions.

(d) Clearinghouse means any association of banks orother payors regularly clearing items.

(e) Customer means any person having an account witha bank or for whom a bank has agreed to collect items, including a bank thatmaintains an account at another bank.

(f) Documentary draft means a draft to be presentedfor acceptance or payment if specified documents, certificated securities orinstructions for uncertificated securities, or other certificates, statementsor the like are to be received by the drawee or other payor before acceptanceor payment of the draft.

(g) Draft means a draft as defined in NRS 104.3104 or an item, other than aninstrument, that is an order.

(h) Drawee means a person ordered in a draft to makepayment.

(i) Item means an instrument or a promise or order topay money handled by a bank for collection or payment. The term does notinclude a payment order governed by Article 4A or a credit or debit card slip.

(j) Midnight deadline with respect to a bank ismidnight on its next banking day following the banking day on which it receivesthe relevant item or notice or from which the time for taking action commencesto run, whichever is later.

(k) Settle means to pay in cash, by clearinghousesettlement, in a charge or credit or by remittance, or otherwise as instructed.A settlement may be either provisional or final.

(l) Suspends payments with respect to a bank meansthat it has been closed by order of the supervisory authorities, that a publicofficer has been appointed to take it over or that it ceases or refuses to makepayments in the ordinary course of business.

2. Other definitions applying to this Article and thesections in which they appear are:

 

Agreement for electronicpresentment. NRS 104.4110.

Collecting bank. NRS 104.4105.

Depositary bank. NRS 104.4105.

Intermediary bank. NRS 104.4105.

Payor bank. NRS 104.4105.

Presenting bank. NRS 104.4105.

Presentment notice. NRS 104.4110.

 

3. Control as provided in NRS 104.7106 and the following definitionsin other Articles apply to this Article:

 

Acceptance. NRS 104.3409.

Alteration. NRS 104.3407.

Cashiers check. NRS 104.3104.

Certificate of deposit. NRS 104.3104.

Certified check. NRS 104.3409.

Check. NRS 104.3104.

Holder in due course. NRS 104.3302.

Instrument. NRS 104.3104.

Notice of dishonor. NRS 104.3503.

Order. NRS 104.3103.

Ordinary care. NRS 104.3103.

Person entitled to enforce. NRS 104.3301.

Presentment. NRS 104.3501.

Promise. NRS 104.3103.

Prove. NRS 104.3103.

Record. NRS 104.3103.

Remotely-created item. NRS 104.3103.

Tellers check. NRS 104.3104.

Unauthorized signature. NRS 104.3403.

 

4. In addition, Article 1 contains general definitionsand principles of construction and interpretation applicable throughout thisArticle.

(Added to NRS by 1965, 841; A 1993, 1299; 1997, 374; 2005, 855, 2004)

NRS 104.4105 Depositarybank; payor bank; intermediary bank; collecting bank; presenting bank. In this Article:

1. Depositary bank means the first bank to take anitem even though it is also the payor bank, unless the item is presented forimmediate payment over the counter.

2. Payor bank means a bank that is the drawee of adraft.

3. Intermediary bank means any bank to which an itemis transferred in course of collection except the depositary or payor bank.

4. Collecting bank means any bank handling the itemfor collection except the payor bank.

5. Presenting bank means any bank presenting an itemexcept a payor bank.

(Added to NRS by 1965, 842; A 1993, 1301)

NRS 104.4106 Payablethrough or payable at bank.

1. If an item states that it is payable through abank identified in the item:

(a) The item designates the bank as a collecting bankand does not by itself authorize the bank to pay the item; and

(b) The item may be presented for payment only by orthrough the bank.

2. If an item states that it is payable at a bankidentified in the item, the item is equivalent to a draft drawn on the bank.

(Added to NRS by 1993, 1248)

NRS 104.4107 Separateoffice of bank. A branch or separate office ofa bank is a separate bank for the purpose of computing the time within whichand determining the place at or to which action may be taken or notices ororders must be given under this article and under article 3.

(Added to NRS by 1965, 842; A 1993,1301)(Substituted in revision for NRS 104.4106)

NRS 104.4108 Timeof receipt of items.

1. For the purpose of allowing time to process items,prove balances and make the necessary entries on its books to determine itsposition for the day, a bank may fix an afternoon hour of 2 p.m. or later as acutoff hour for the handling of money and items and the making of entries onits books.

2. Any item or deposit of money received on any dayafter a cutoff hour so fixed or after the close of the banking day may betreated as being received at the opening of the next banking day.

(Added to NRS by 1965, 842)(Substituted in revisionfor NRS 104.4107)

NRS 104.4109 Delays.

1. Unless otherwise instructed, a collecting bank in agood faith effort to secure payment of a specific item drawn on a payor otherthan a bank, and with or without the approval of any person involved, maywaive, modify or extend time limits imposed or permitted by this chapter for aperiod not exceeding two additional banking days without discharge of drawersor endorsers or liability to its transferor or a prior party.

2. Delay by a collecting bank or payor bank beyondtime limits prescribed or permitted by this chapter or by instructions isexcused if:

(a) The delay is caused by interruption ofcommunication or computer facilities, suspension of payments by another bank,war, emergency conditions, failure of equipment or other circumstances beyondthe control of the bank; and

(b) The bank exercises such diligence as thecircumstances require.

(Added to NRS by 1965, 842; A 1993,1301)(Substituted in revision for NRS 104.4108)

NRS 104.4110 Electronicpresentment.

1. Agreement for electronic presentment means anagreement, clearing-house rule or Federal Reserve regulation or operatingcircular, providing that presentment of an item may be made by transmission ofan image of an item or information describing the item (presentment notice)rather than delivery of the item itself. The agreement may provide forprocedures governing retention, presentment, payment, dishonor and othermatters concerning items subject to the agreement.

2. Presentment of an item pursuant to an agreement forpresentment is made when the presentment notice is received.

3. If presentment is made by presentment notice, areference to item or check in this article means the presentment noticeunless the context otherwise indicates.

(Added to NRS by 1993, 1248)

NRS 104.4111 Statuteof limitations. An action to enforce anobligation, duty or right arising under this article must be commenced withinthree years after the cause of action accrues.

(Added to NRS by 1993, 1248)

Part 2

Collection of Items: Depositary and Collecting Banks

NRS 104.4201 Statusof collecting bank as agent and provisional status of credits; item endorsedpay any bank.

1. Unless a contrary intent clearly appears and beforethe time that a settlement given by a collecting bank for an item is or becomesfinal, the bank, with respect to the item, is an agent or subagent of the ownerof the item and any settlement given for the item is provisional. Thisprovision applies regardless of the form of endorsement or lack of endorsementand even though credit given for the item is subject to immediate withdrawal asof right or is in fact withdrawn; but the continuance of ownership of an itemby its owner and any rights of the owner to proceeds of the item are subject torights of a collecting bank such as those resulting from outstanding advanceson the item and rights of recoupment or setoff. If an item is handled by banksfor purposes of presentment, payment, collection or return, the relevantprovisions of this article apply even though action of the parties clearly establishesthat a particular bank has purchased the item and is the owner of it.

2. After an item has been endorsed with the words payany bank or the like, only a bank may acquire the rights of a holder until theitem has been:

(a) Returned to the customer initiating collection; or

(b) Specially endorsed by a bank to a person who is nota bank.

(Added to NRS by 1965, 843; A 1993, 1302)

NRS 104.4202 Responsibilityfor collection or return; when action timely.

1. A collecting bank must exercise ordinary care in:

(a) Presenting an item or sending it for presentment;

(b) Sending notice of dishonor or nonpayment orreturning an item other than a documentary draft to the banks transferor afterlearning that the item has not been paid or accepted, as the case may be;

(c) Settling for an item when the bank receives finalsettlement; and

(d) Notifying its transferor of any loss or delay intransit within a reasonable time after discovery thereof.

2. A collecting bank exercises ordinary care undersubsection 1 by taking proper action before its midnight deadline followingreceipt of an item, notice or settlement. Taking proper action within areasonably longer time may constitute the exercise of ordinary care, but thebank has the burden of establishing timeliness.

3. Subject to paragraph (a) of subsection 1, a bank isnot liable for the insolvency, neglect, misconduct, mistake or default ofanother bank or person or for loss or destruction of or inability to obtainrepossession of an item in the possession of others or in transit.

(Added to NRS by 1965, 843; A 1985, 18; 1993, 1302)

NRS 104.4203 Effectof instructions. Subject to the provisions ofarticle 3 concerning conversion of instruments (NRS 104.3420) and restrictive endorsements(NRS 104.3206), only a collectingbanks transferor can give instructions that affect the bank or constitutenotice to it, and a collecting bank is not liable to prior parties for anyaction taken pursuant to the instructions or in accordance with any agreementwith its transferor.

(Added to NRS by 1965, 843; A 1993, 1303)

NRS 104.4204 Methodsof sending and presenting; sending directly to payor bank.

1. A collecting bank shall send items by a reasonablyprompt method, taking into consideration relevant instructions, the nature ofthe item, the number of such items on hand, the cost of collection involved,and the method generally used by it or others to present such items.

2. A collecting bank may send:

(a) An item directly to the payor bank;

(b) An item to a nonbank payor if authorized by itstransferor; and

(c) An item other than documentary drafts to a nonbankpayor, if authorized by Federal Reserve regulation or operating circular,clearinghouse rule or the like.

3. Presentment may be made by a presenting bank at aplace where the payor bank or other payor has requested that presentment bemade.

(Added to NRS by 1965, 844; A 1993, 1303)

NRS 104.4205 Depositorybank holder of unendorsed item. If a customerdelivers an item to a depositary bank for collection:

1. The depositary bank becomes a holder of the item atthe time it receives the item for collection if the customer at the time ofdelivery was a holder of the item, whether or not the customer endorses theitem, and, if the bank satisfies the other requirements of NRS 104.3302, it is a holder in duecourse; and

2. The depositary bank warrants to collecting banks,the payor bank or other payor, and the drawer that the amount of the item waspaid to the customer or deposited to the customers account.

(Added to NRS by 1965, 844; A 1993, 1303)

NRS 104.4206 Transferbetween banks. Any agreed method which identifiesthe transferor bank is sufficient for the items further transfer to anotherbank.

(Added to NRS by 1965, 844)

NRS 104.4207 Transferwarranties.

1. A customer or collecting bank that transfers anitem and receives a settlement or other consideration warrants to thetransferee and to any subsequent collecting bank that:

(a) The warrantor is a person entitled to enforce theitem;

(b) All signatures on the item are authentic andauthorized;

(c) The item has not been altered;

(d) The item is not subject to a defense or claim inrecoupment (subsection 1 of NRS 104.3305)of any party that can be asserted against the warrantor;

(e) The warrantor has no knowledge of any insolvencyproceeding commenced with respect to the maker or acceptor or, in the case ofan unaccepted draft, the drawer; and

(f) With respect to a remotely-created item, that theperson on whose account the item is drawn authorized the issuance of the itemin the amount for which the item is drawn.

2. If an item is dishonored, a customer or collectingbank transferring the item and receiving settlement or other consideration isobliged to pay the amount due on the item according to the terms of the item atthe time it was transferred, or if the transfer was of an incomplete item,according to its terms when completed as stated in NRS 104.3115 and 104.3407. The obligation of a transferoris owed to the transferee and to any subsequent collecting bank that takes theitem in good faith. A transferor cannot disclaim its obligation under thissubsection by an endorsement stating that it is made without recourse orotherwise disclaiming liability.

3. A person to whom the warranties under subsection 1are made and who took the item in good faith may recover from the warrantor asdamages for breach of warranty an amount equal to the loss suffered as a resultof the breach, but not more than the amount of the item plus expenses and lossof interest incurred as a result of the breach.

4. The warranties stated in subsection 1 cannot bedisclaimed with respect to checks. Unless notice of a claim for breach ofwarranty is given to the warrantor within 30 days after the claimant has reasonto know of the breach and the identity of the warrantor, the warrantor isdischarged to the extent of any loss caused by the delay in giving notice ofthe claim.

5. A cause of action for breach of warranty under thissection accrues when the claimant has reason to know of the breach.

6. No claim for breach of warranty in paragraph (f) ofsubsection 1 is available against a person to which an item was transferred tothe extent that under applicable law, including the applicable choice-of-lawprinciples, the person that transferred the item did not make the warranty inparagraph (f) of subsection 1.

(Added to NRS by 1965, 844; A 1993, 1304; 2005, 2006)

NRS 104.4208 Presentmentwarranties.

1. If an unaccepted draft is presented to the draweefor payment or acceptance and the drawee pays or accepts the draft, the personobtaining payment or acceptance, at the time of presentment, and a previoustransferor of the draft, at the time of transfer, warrant to the drawee thatpays or accepts the draft in good faith that:

(a) The warrantor is, or was at the time he transferredthe draft, a person entitled to enforce the draft or authorized to obtainpayment or acceptance of the draft on behalf of a person entitled to enforcethe draft;

(b) The draft has not been altered;

(c) The warrantor has no knowledge that the signatureof the purported drawer of the draft is unauthorized; and

(d) With respect to a remotely-created item, that theperson on whose account the item is drawn authorized the issuance of the itemin the amount for which the item is drawn.

2. A drawee making payment may recover from awarrantor damages for breach of warranty equal to the amount paid by the draweeless the amount the drawee received or is entitled to receive from the drawerbecause of the payment. In addition, the drawee is entitled to compensation forexpenses and loss of interest resulting from the breach. The right of thedrawee to recover damages under this subsection is not affected by any failureof the drawee to exercise ordinary care in making payment. If the draweeaccepts the draft:

(a) Breach of warranty is a defense to the obligationof the acceptor; and

(b) If the acceptor makes payment with respect to thedraft, the acceptor is entitled to recover from a warrantor for breach ofwarranty the amounts stated in this subsection.

3. If a drawee asserts a claim for breach of warrantyunder subsection 1 based on an unauthorized endorsement of the draft or analteration of the draft, the warrantor may defend by proving that theendorsement is effective under NRS 104.3404or 104.3405 or the drawer is precludedunder NRS 104.3406 or 104.4406 from asserting against the draweethe unauthorized endorsement or alteration.

4. If a dishonored draft is presented for payment tothe drawer or an endorser, or any other item is presented for payment to aparty obliged to pay the item, and the item is paid, the person obtainingpayment and a prior transferor of the item warrant to the person making paymentin good faith that the warrantor is, or was at the time he transferred theitem, a person entitled to enforce the item or authorized to obtain payment onbehalf of a person entitled to enforce the item. The person making payment mayrecover from any warrantor for breach of warranty an amount equal to the amountpaid plus expenses and loss of interest resulting from the breach.

5. The warranties stated in subsections 1 and 4 cannotbe disclaimed with respect to checks. Unless notice of a claim for breach ofwarranty is given to the warrantor within 30 days after the claimant has reasonto know of the breach and the identity of the warrantor, the warrantor isdischarged to the extent of any loss caused by the delay in giving notice ofthe claim.

6. A cause of action for breach of warranty under thissection accrues when the claimant has reason to know of the breach.

7. No claim for breach of warranty in paragraph (d) ofsubsection 1 is available against a person to which an item was transferred tothe extent that under applicable law, including the applicable choice-of-lawprinciples, the person that transferred the item did not make the warranty inparagraph (d) of subsection 1.

(Added to NRS by 1993, 1248; A 2005, 2006)

NRS 104.4209 Encodingand retention warranties.

1. A person who encodes information on or with respectto an item after issue, warrants to any subsequent collecting bank and to thepayor bank or other payor that the information is correctly encoded. If thecustomer of a depositary bank encodes, that bank also makes the warranty.

2. A person who undertakes to retain an item pursuantto an agreement for electronic presentment warrants to any subsequentcollecting bank and to the payor bank or other payor that retention andpresentment of the item comply with the agreement. If a customer of adepositary bank undertakes to retain an item, that bank also makes thiswarranty.

3. A person to whom warranties are made under thissection and who took the item in good faith may recover from the warrantor asdamages for breach of warranty an amount equal to the loss suffered as a resultof the breach, plus expenses and loss of interest incurred as a result of thebreach.

(Added to NRS by 1993, 1249)

NRS 104.4210 Securityinterest of collecting bank in items, accompanying documents and proceeds.

1. A collecting bank has a security interest in anitem and any accompanying documents or the proceeds of either:

(a) In case of an item deposited in an account to theextent to which credit given for the item has been withdrawn or applied;

(b) In case of an item for which it has given creditavailable for withdrawal as of right, to the extent of the credit given,whether or not the credit is drawn upon or there is a right of charge-back; or

(c) If it makes an advance on or against the item.

2. If credit given for several items received at onetime or pursuant to a single agreement is withdrawn or applied in part thesecurity interest remains upon all the items, any accompanying documents or theproceeds of either. For the purpose of this section, credits first given arefirst withdrawn.

3. Receipt by a collecting bank of a final settlementfor an item is a realization on its security interest in the item, accompanyingdocuments, and proceeds. To the extent and so long as the bank does not receivefinal settlement for the item or give up possession of the item or possessionor control of the accompanying documents for purposes other than collection,the security interest continues and is subject to the provisions of Article 9except that:

(a) No security agreement is necessary to make thesecurity interest enforceable (subparagraph (1) of paragraph (c) of subsection2 of NRS 104.9203);

(b) No filing is required to perfect the securityinterest; and

(c) The security interest has priority over conflictingperfected security interests in the item, accompanying documents, or proceeds.

(Added to NRS by 1965, 845; A 1993, 1305; 1999, 375; 2005, 856)

NRS 104.4211 Whenbank gives value for purposes of holder in due course.For purposes of determining its status as a holder in due course, a bankhas given value to the extent that it has a security interest in an item if thebank otherwise complies with the requirements of NRS 104.3302 on what constitutes a holderin due course.

(Added to NRS by 1965, 846; A 1993,1306)(Substituted in revision for NRS 104.4209)

NRS 104.4212 Presentmentby notice of item not payable by, through or at bank; liability of drawer orendorser.

1. Unless otherwise instructed, a collecting bank maypresent an item not payable by, through or at a bank by sending to the party toaccept or pay a record providing notice that the bank holds the item foracceptance or payment. The notice must be sent in time to be received on orbefore the day when presentment is due and the bank must meet any requirementof the party to accept or pay under NRS104.3501 by the close of the banks next banking day after it knows of therequirement.

2. If presentment is made by notice and payment,acceptance or request for compliance with a requirement under NRS 104.3501 is not received by the closeof business on the day after maturity or in the case of demand items by theclose of business on the third banking day after notice was sent, thepresenting bank may treat the item as dishonored and charge any drawer orendorser by sending him notice of the facts.

(Added to NRS by 1965, 846; A 1993, 1306; 2005, 2007)

NRS 104.4213 Mediumand time of settlement by bank.

1. With respect to settlement by a bank, the mediumand time of settlement may be prescribed by Federal Reserve regulations orcirculars, clearinghouse rules, and the like, or agreement. In the absence ofsuch prescription:

(a) The medium of settlement is cash or credit to anaccount in a Federal Reserve bank of or specified by the person to receivesettlement; and

(b) The time of settlement is:

(1) With respect to tender of settlement bycash, a cashiers check or tellers check, when the cash or check is sent ordelivered;

(2) With respect to tender of settlement bycredit in an account in a Federal Reserve bank, when the credit is made;

(3) With respect to tender of settlement by acredit or debit to an account in a bank, when the credit or debit is made or,in the case of tender of settlement by authority to charge an account, when theauthority is sent or delivered; or

(4) With respect to tender of settlement by afunds transfer, when payment is made pursuant to subsection 1 of NRS 104A.4406, to the person receivingsettlement.

2. If the tender of settlement is not by a mediumauthorized by subsection 1 or the time of settlement is not fixed by subsection1, no settlement occurs until the tender of settlement is accepted by theperson receiving settlement.

3. If settlement for an item is made by cashierscheck or tellers check and the person receiving settlement, before itsmidnight deadline:

(a) Presents or forwards the check for collection,settlement is final when the check is finally paid; or

(b) Fails to present or forward the check forcollection, settlement is final at the midnight deadline of the personreceiving settlement.

4. If settlement for an item is made by givingauthority to charge the account of the bank giving settlement in the bankreceiving settlement, settlement is final when the charge is made by the bankreceiving settlement if there are funds available in the account for the amountof the item.

(Added to NRS by 1965, 846; A 1991, 412; 1993,1306)(Substituted in revision for NRS 104.4211)

NRS 104.4214 Rightof charge-back or refund; liability of collecting bank; return of item.

1. If a collecting bank has made provisionalsettlement with its customer for an item and fails by reason of dishonor,suspension of payments by a bank, or otherwise to receive a settlement for theitem which is or becomes final, the bank may revoke the settlement given by it,charge back the amount of any credit given for the item to its customersaccount, or obtain refund from its customer, whether or not it is able toreturn the item, if by its midnight deadline or within a longer reasonable timeafter it learns the facts it returns the item or sends notification of thefacts. If the return or notice is delayed beyond the banks midnight deadlineor a longer reasonable time after it learns the facts, the bank may revoke thesettlement, charge back the credit, or obtain refund from its customer, but itis liable for any loss resulting from the delay. These rights to revoke, chargeback and obtain refund terminate if and when a settlement for the item receivedby the bank is or becomes final.

2. A collecting bank returns an item when it is sentor delivered to the banks customer or transferor or pursuant to itsinstructions.

3. A depositary bank that is also the payor may chargeback the amount of an item to its customers account or obtain refund inaccordance with the section governing return of an item received by a payorbank for credit on its books (NRS 104.4301).

4. The right to charge back is not affected by:

(a) Previous use of the credit given for the item; or

(b) Failure by any bank to exercise ordinary care withrespect to the item but a bank so failing remains liable.

5. A failure to charge back or claim refund does notaffect other rights of the bank against the customer or any other party.

6. If credit is given in dollars as the equivalent ofthe value of an item payable in foreign money, the dollar amount of any chargeback or refund must be calculated on the basis of the bank-offered spot ratefor the foreign money prevailing on the day when the person entitled to thecharge back or refund learns that it will not receive payment in ordinarycourse. If the return or notice is delayed beyond the banks midnight deadlineor a longer reasonable time after it learns the facts, the bank may revoke thesettlement, charge back the credit, or obtain refund from its customer, but itis liable for any loss resulting from the delay.

(Added to NRS by 1965, 847; A 1967, 117; 1985, 18;1993, 1308)(Substituted in revision for NRS 104.4212)

NRS 104.4215 Finalpayment of item by payor bank; when provisional debits and credits becomefinal; when certain credits become available for withdrawal.

1. Except as otherwise provided in NRS 104.3418, an item is finally paid by apayor bank when the bank has first done any of the following:

(a) Paid the item in cash;

(b) Settled for the item without having a right torevoke settlement under statute, clearinghouse rule, or agreement; or

(c) Made a provisional settlement for the item andfailed to revoke the settlement in the time and manner permitted by statute,clearinghouse rule, or agreement.

2. If provisional settlement for an item does notbecome final, the item is not finally paid.

3. If provisional settlement for an item between thepresenting and payor banks is made through a clearing house or by debits orcredits in an account between them, then to the extent that provisional debitsor credits for the item are entered in accounts between the presenting andpayor banks or between the presenting and successive prior collecting banksseriatim, they become final upon final payment of the item by the payor bank.

4. If a collecting bank receives a settlement for anitem which is or becomes final, the bank is accountable to its customer for theamount of the item and any provisional credit given for the item in an accountwith its customer becomes final.

5. Subject to applicable law stating a time foravailability of funds and any right of the bank to apply the credit to anobligation of the customer, credit given by a bank for an item in an accountwith its customer becomes available for withdrawal as of right:

(a) If the bank has received a provisional settlementfor the item, when the settlement becomes final and the bank has had areasonable time to receive return of the item and the item has not beenreceived within that time;

(b) If the bank is both a depositary bank and a payorbank and the item is finally paid, at the opening of the banks second bankingday following receipt of the item.

6. Subject to applicable law stating a time foravailability of funds and any right of the bank to apply the deposit to anobligation of the customer, the deposit becomes available for withdrawal as ofright at the opening of the banks next banking day after receipt of thedeposit.

(Added to NRS by 1965, 848; A 1993,1309)(Substituted in revision for NRS 104.4213)

NRS 104.4216 Insolvencyand preference.

1. If an item is in or comes into the possession of apayor or collecting bank that suspends payment and the item has not beenfinally paid the item must be returned by the receiver, trustee or agent incharge of the closed bank to the presenting bank or the closed banks customer.

2. If a payor bank finally pays an item and suspendspayments without making a settlement for the item with its customer or thepresenting bank which settlement is or becomes final, the owner of the item hasa preferred claim against the payor bank.

3. If a payor bank gives or a collecting bank gives orreceives a provisional settlement for an item and thereafter suspends payments,the suspension does not prevent or interfere with the settlements becomingfinal if the finality occurs automatically upon the lapse of certain time orthe happening of certain events.

4. If a collecting bank receives from subsequentparties settlement for an item, the settlement is or becomes final, and thebank suspends payments without making a settlement for the item with itscustomer which is or becomes final, the owner of the item has a preferred claimagainst the collecting bank.

(Added to NRS by 1965, 848; A 1993,1310)(Substituted in revision for NRS 104.4214)

Part 3

Collection of Items: Payor Banks

NRS 104.4301 Deferredposting; recovery of payment by return of items; time of dishonor; return ofitems by payor bank.

1. If a payor bank settles for a demand item otherthan a documentary draft presented otherwise than for immediate payment overthe counter before midnight of the banking day of receipt the payor bank mayrevoke the settlement and recover the settlement if, before it has made finalpayment and before its midnight deadline, it:

(a) Returns the item;

(b) Returns an image of the item, if the party to whichthe return is made has entered into an agreement to accept an image as a returnof the item and the image is returned in accordance with that agreement; or

(c) Sends a record providing notice of dishonor ornonpayment if the item is unavailable for return.

2. If a demand item is received by a payor bank forcredit on its books it may return the item or send notice of dishonor and mayrevoke any credit given or recover the amount thereof withdrawn by itscustomer, if it acts within the time limit and in the manner specified insubsection 1.

3. Unless previous notice of dishonor has been sent anitem is dishonored at the time when for purposes of dishonor it is returned ornotice sent in accordance with this section.

4. An item is returned:

(a) As to an item presented through a clearinghouse,when it is delivered to the presenting or last collecting bank or to theclearinghouse or is sent or delivered in accordance with clearinghouse rules;or

(b) In all other cases, when it is sent or delivered tothe banks customer or transferor or pursuant to his instructions.

(Added to NRS by 1965, 849; A 1993, 1310; 2005, 2008)

NRS 104.4302 Payorbanks responsibility for late return of item.

1. If an item is presented to and received by a payorbank, the bank is accountable for the amount of:

(a) A demand item, other than a documentary draft,whether properly payable or not, if the bank, in any case where it is not alsothe depositary bank, retains the item beyond midnight of the banking day ofreceipt without settling for it or, whether or not it is also the depositarybank, does not pay or return the item or send notice of dishonor until afterits midnight deadline; or

(b) Any other properly payable item unless, within thetime allowed for acceptance or payment of that item, the bank either accepts orpays the item or returns it and accompanying documents.

2. The liability of a payor bank to pay an itempursuant to subsection 1 is subject to defenses based on breach of apresentment warranty (NRS 104.4208) orproof that the person seeking enforcement of the liability presented or transferredthe item for the purpose of defrauding the payor bank.

(Added to NRS by 1965, 849; A 1993, 1311)

NRS 104.4303 Whenitems subject to notice, stop-payment order, legal process or setoff; order inwhich items may be charged or certified.

1. Any knowledge, notice or stop-payment orderreceived by, legal process served upon, or setoff exercised by a payor bankcomes too late to terminate, suspend or modify the banks right or duty to payan item or to charge its customers account for the item if the knowledge,notice, stop-payment order or legal process is received or served and areasonable time for the bank to act thereon expires or the setoff is exercisedafter the earliest of the following:

(a) The bank accepts or certifies the item;

(b) The bank pays the item in cash;

(c) The bank settles for the item without having aright to revoke the settlement under statute, clearinghouse rule, or agreement;

(d) The bank becomes accountable for the amount of theitem under NRS 104.4302 dealing withthe payor banks responsibility for late return of items; or

(e) With respect to checks, a cutoff hour no earlierthan 1 hour after the opening of the next banking day after the banking day onwhich the bank received the check and no later than the close of that nextbanking day or, if no cutoff hour is fixed, the close of the next banking dayafter the banking day on which the bank received the check.

2. Subject to the provisions of subsection 1 items maybe accepted, paid, certified or charged to the indicated account of itscustomer in any order.

(Added to NRS by 1965, 850; A 1993, 1311)

Part 4

Relationship Between Payor Bank and its Customer

NRS 104.4401 Whenbank may charge customers account.

1. A bank may charge against the account of a customerany item that is properly payable from that account even though the chargecreates an overdraft. An item is properly payable if it is authorized by thecustomer and is in accordance with any agreement between the customer and bank.

2. A customer is not liable for the amount of anoverdraft if the customer neither signed the item nor benefited from theproceeds of the item.

3. A bank may charge against the account of a customera check that is otherwise properly payable from the account, even thoughpayment was made before the date of the check, unless the customer has givennotice to the bank of the postdating describing the check with reasonablecertainty. The notice is effective for the period stated in subsection 2 of NRS 104.4403 for stop-payment orders, andmust be received at such time and in such manner as to afford the bank areasonable opportunity to act on it before the bank takes any action withrespect to the check described in NRS104.4303. If a bank charges against the account of a customer a checkbefore the date stated in the notice of postdating, the bank is liable fordamages for the loss resulting from its act. The loss may include damages fordishonor of subsequent items under NRS104.4402.

4. A bank which in good faith makes payment to aholder may charge the indicated account of its customer according to:

(a) The original terms of his altered item; or

(b) The terms of his completed item, even though thebank knows the item has been completed unless the bank has notice that thecompletion was improper.

(Added to NRS by 1965, 850; A 1993, 1312)

NRS 104.4402 Banksliability to customer for wrongful dishonor; time of determining insufficiencyof account.

1. Except as otherwise provided in this article, apayor bank wrongfully dishonors an item if it dishonors an item that isproperly payable, but a bank may dishonor an item that would create anoverdraft unless it has agreed to pay the overdraft.

2. A payor bank is liable to its customer for damagesproximately caused by the wrongful dishonor of an item. Liability is limited toactual damages proved and may include damages for an arrest or prosecution ofthe customer or other consequential damages. Whether any consequential damagesare proximately caused by the wrongful dishonor is a question of fact to bedetermined in each case.

3. A payor banks determination of the customersaccount balance on which a decision to dishonor for insufficiency of availablefunds is based may be made at any time between the time the item is received bythe payor bank and the time that the payor bank returns the item or givesnotice in lieu of return, and no more than one determination need be made. If,at the election of the payor bank, a subsequent determination is made for thepurpose of reevaluating the banks decision to dishonor the item, the accountbalance at that time is determinative of whether a dishonor for insufficiencyof available funds is wrongful.

(Added to NRS by 1965, 851; A 1993, 1312)

NRS 104.4403 Customersright to stop payment; burden of proof of loss.

1. A customer or any person authorized to draw on theaccount if there is more than one person, may stop payment of any item drawn onthe customers account or close the account by an order to the bank describingthe item or account with reasonable certainty received at a time and in amanner that affords the bank a reasonable opportunity to act on it before thehappening of any of the events described in NRS104.4303. If the signature of more than one person is required to draw onan account, any of these persons may stop payment or close the account.

2. A stop-payment order is effective for 6 months, butit lapses after 14 calendar days if the original order was oral and was notconfirmed in a record within that period. A stop-payment order may be renewedfor additional 6-month periods by a record given to the bank within a periodduring which the stop-payment order is effective.

3. The burden of establishing the fact and amount ofloss resulting from the payment of an item contrary to a stop-payment order ororder to close an account is on the customer. The loss from payment of an itemcontrary to a stop-payment order may include damages for dishonor of subsequentitems under NRS 104.4402.

(Added to NRS by 1965, 851; A 1993, 1313; 2005, 2008)

NRS 104.4404 Banknot obligated to pay check more than 6 months old. Abank is under no obligation to a customer having a checking account to pay acheck, other than a certified check, which is presented more than 6 monthsafter its date, but it may charge its customers account for a payment madethereafter.

(Added to NRS by 1965, 851)

NRS 104.4405 Deathor incompetence of customer.

1. A payor or collecting banks authority to accept,pay or collect an item or to account for proceeds of its collection, ifotherwise effective, is not rendered ineffective by incompetence of a customerof either bank existing at the time the item is issued or its collection isundertaken if the bank does not know of an adjudication of incompetence.Neither death nor incompetence of a customer revokes the authority to accept,pay, collect or account until the bank knows of the fact of death or of anadjudication of incompetence and has reasonable opportunity to act on it.

2. Even with knowledge, a bank may, for 10 days afterthe date of death, pay or certify checks drawn by the decedent on or beforethat date unless ordered to stop payment by a person claiming an interest inthe account.

(Added to NRS by 1965, 851; A 1971, 1008; 1993, 1313)

NRS 104.4406 Customersduty to discover or report unauthorized signature or alteration.

1. A bank that sends or makes available to a customera statement of account showing payment of items for the account shall eitherreturn or make available to the customer the items paid or provide informationin the statement of account sufficient to allow the customer reasonably toidentify the items paid. The statement of account provides sufficientinformation if the item is described by item number, amount and date ofpayment.

2. If the items are not returned to the customer, theperson retaining the items shall either retain the items or, if the items aredestroyed, maintain the capacity to furnish legible copies of the items untilthe expiration of 7 years after receipt of the items. A customer may request anitem from the bank that paid the item, and that bank must provide in areasonable time either the item or, if the item has been destroyed or is nototherwise obtainable, a legible copy of the item.

3. If a bank sends or makes available a statement ofaccount or items pursuant to subsection 1, the customer must exercisereasonable promptness in examining the statement or the items to determinewhether any payment was not authorized because of an alteration of an item orbecause a purported signature by or on behalf of the customer was notauthorized. If, based on the statement or items provided, the customer shouldreasonably have discovered the unauthorized payment, the customer must promptlynotify the bank of the relevant facts.

4. If the bank proves that the customer failed, withrespect to an item, to comply with the duties imposed on him by subsection 3,he is precluded from asserting against the bank:

(a) His unauthorized signature or any alteration on theitem, if the bank also proves that it suffered a loss by reason of the failure;and

(b) His unauthorized signature or alteration by thesame wrongdoer on any other item paid in good faith by the bank if the paymentwas made before the bank received notice from the customer of the unauthorizedsignature or alteration and after he had been afforded a reasonable period oftime, not exceeding 30 days, in which to examine the item or statement ofaccount and notify the bank.

5. If subsection 4 applies and the customer provesthat the bank failed to exercise ordinary care in paying the item and that thefailure substantially contributed to loss, the loss is allocated between thecustomer precluded and the bank asserting the preclusion according to theextent to which the failure of the customer to comply with subsection 3 and thefailure of the bank to exercise ordinary care contributed to the loss. If thecustomer proves that the bank did not pay the item in good faith, thepreclusion under subsection 4 does not apply.

6. Without regard to care or lack of care of eitherthe customer or the bank a customer who does not within 1 year after thestatement or items are made available to him (subsection 1) discover and reporthis unauthorized signature or any alteration on the item, is precluded fromasserting against the bank the unauthorized signature or the alteration. Ifthere is a preclusion under this subsection, the payor bank may not recover forbreach of warranty under NRS 104.4208with respect to the unauthorized signature or alteration to which thepreclusion applies.

(Added to NRS by 1965, 852; A 1971, 550; 1993, 1314)

NRS 104.4407 Payorbanks right to subrogation on improper payment. Ifa payor bank has paid an item over the order of the drawer or maker to stop payment,or after an account has been closed, or otherwise under circumstances giving abasis for objection by the drawer or maker, to prevent unjust enrichment andonly to the extent necessary to prevent loss to the bank by reason of itspayment of the item, the payor bank is subrogated to the rights:

1. Of any holder in due course on the item against thedrawer or maker;

2. Of the payee or any other holder of the itemagainst the drawer or maker either on the item or under the transaction out ofwhich the item arose; and

3. Of the drawer or maker against the payee or anyother holder of the item with respect to the transaction out of which the itemarose.

(Added to NRS by 1965, 852; A 1993, 1316)

Part 5

Collection of Documentary Drafts

NRS 104.4501 Handlingof documentary drafts; duty to send for presentment and to notify customer ofdishonor. A bank which takes a documentarydraft for collection must present or send the draft and accompanying documentsfor presentment and upon learning that the draft has not been paid or acceptedin due course must seasonably notify its customer of such fact even though itmay have discounted or bought the draft or extended credit available forwithdrawal as of right.

(Added to NRS by 1965, 853)

NRS 104.4502 Presentmentof on arrival drafts. When a draft or therelevant instructions require presentment on arrival, when goods arrive orthe like, the collecting bank need not present until in its judgment areasonable time for arrival of the goods has expired. Refusal to pay or acceptbecause the goods have not arrived is not dishonor; the bank must notify itstransferor of such refusal but need not present the draft again until it isinstructed to do so or learns of the arrival of the goods.

(Added to NRS by 1965, 853)

NRS 104.4503 Responsibilityof presenting bank for documents and goods; report of reasons for dishonor;referee in case of need. Unless otherwiseinstructed and except as provided in article 5 a bank presenting a documentarydraft:

1. Must deliver the documents to the drawee onacceptance of the draft if it is payable more than 3 days after presentment;otherwise, only on payment; and

2. Upon dishonor, either in the case of presentmentfor acceptance or presentment for payment, may seek and follow instructionsfrom any referee in case of need designated in the draft or if the presentingbank does not choose to utilize his services it must use diligence and goodfaith to ascertain the reason for dishonor, must notify its transferor of thedishonor and of the results of its effort to ascertain the reasons therefor andmust request instructions.

But thepresenting bank is under no obligation with respect to goods represented by thedocuments except to follow any reasonable instructions seasonably received; ithas a right to reimbursement for any expense incurred in following instructionsand to prepayment of or indemnity for such expenses.

(Added to NRS by 1965, 853)

NRS 104.4504 Privilegeof presenting bank to deal with goods; security interest for expenses.

1. A presenting bank which, following the dishonor ofa documentary draft, has seasonably requested instructions but does not receivethem within a reasonable time may store, sell or otherwise deal with the goodsin any reasonable manner.

2. For its reasonable expenses incurred by actionunder subsection 1 the presenting bank has a lien upon the goods or theirproceeds, which may be foreclosed in the same manner as an unpaid sellerslien.

(Added to NRS by 1965, 853)

ARTICLE 5

LETTERS OF CREDIT

NRS 104.5101 Shorttitle. This article may be cited as UniformCommercial CodeLetters of Credit.

(Added to NRS by 1965, 854; A 1997, 376)

NRS 104.5102 Definitions.

1. In this article:

(a) Adviser means a person who, at the request of theissuer, a confirmer or another adviser, notifies or requests another adviser tonotify the beneficiary that a letter of credit has been issued, confirmed oramended.

(b) Applicant means a person at whose request or forwhose account a letter of credit is issued. The term includes a person whorequests an issuer to issue a letter of credit on behalf of another person ifthe person making the request undertakes an obligation to reimburse the issuer.

(c) Beneficiary means a person who, under the termsof a letter of credit, is entitled to have its complying presentation honored.The term includes a person to whom drawing rights have been transferred under atransferable letter of credit.

(d) Confirmer means a nominated person whoundertakes, at the request or with the consent of the issuer, to honor apresentation under a letter of credit issued by another person.

(e) Dishonor of a letter of credit means failure tohonor or to take an interim action in a timely manner, such as acceptance of adraft, that may be required by the letter of credit.

(f) Document means a draft or other demand, documentof title, investment security, certificate, invoice or other record, statementor representation of fact, law, right or opinion which is presented in awritten or other medium permitted by a letter of credit or, unless prohibitedby the letter of credit, by the standard practice referred to in subsection 5of NRS 104.5108, and which is capableof being examined for compliance with the terms and conditions of the letter ofcredit. A document may not be oral.

(g) Good faith means honesty in fact in the conductor transaction concerned.

(h) Honor of a letter of credit means performance ofthe issuers undertaking in the letter of credit to pay or deliver an item ofvalue. Unless the letter of credit otherwise provides, honor occurs:

(1) Upon payment;

(2) If the letter of credit provides foracceptance, upon acceptance of a draft and, at maturity, its payment; or

(3) If the letter of credit provides forincurring a deferred obligation, upon incurring the obligation and, atmaturity, its performance.

(i) Issuer means a bank or other person that issues aletter of credit. The term does not include a natural person who makes anengagement for personal, family or household purposes.

(j) Letter of credit means a definite undertakingthat satisfies the requirements of NRS104.5104 by an issuer to a beneficiary at the request or for the account ofan applicant or, in the case of a financial institution, to itself or for itsown account, to honor a documentary presentation by payment or delivery of anitem of value.

(k) Nominated person means a person whom the issuerdesignates or authorizes to pay, accept, negotiate or otherwise give valueunder a letter of credit and undertakes by agreement or custom and practice toreimburse.

(l) Presentation means delivery of a document to anissuer or nominated person for honor or giving of value under a letter ofcredit.

(m) Presenter means a person making a presentation asor on behalf of a beneficiary or nominated person.

(n) Record means information which is inscribed on atangible medium, or which is stored in an electronic or other medium and isretrievable in perceivable form.

(o) Successor of a beneficiary means a person whosucceeds to substantially all of the rights of a beneficiary by operation oflaw, including a corporation with or into which the beneficiary has been mergedor consolidated, an administrator, executor, personal representative, trusteein bankruptcy, debtor in possession, liquidator and receiver.

2. Definitions in other articles applying to thisarticle and the sections in which they appear are:

 

Accept or acceptance. NRS 104.3409.

Value. NRS 104.3303 and 104.4211.

 

3. Article 1 contains general definitions andprinciples of construction and interpretation applicable throughout thisarticle.

(Added to NRS by 1965, 854; A 1997, 377)

NRS 104.5103 Scope.

1. This Article applies to letters of creditand to certain rights and obligations arising out of transactions involvingletters of credit.

2. The statement of a rule in this Article does not byitself require, imply or negate application of the same or a different rule toa situation not provided for, or to a person not specified, in this Article.

3. Except as otherwise provided in this subsection,subsections 1 and 4 of this section, paragraphs (i) and (j) of subsection 1 of NRS 104.5102, subsection 4 of NRS 104.5106 and subsection 4 of NRS 104.5114, and except to the extentprohibited in NRS 104.1302 andsubsection 4 of NRS 104.5117, theeffect of this Article may be varied by agreement or by a provision stated orincorporated by reference in an undertaking. A term in an agreement orundertaking generally excusing liability or generally limiting remedies forfailure to perform obligations is not sufficient to vary obligations prescribedby this Article.

4. Rights and obligations of an issuer to abeneficiary or a nominated person under a letter of credit are independent ofthe existence, performance or nonperformance of a contract or arrangement outof which the letter of credit arises or which underlies it, including contractsor arrangements between the issuer and the applicant and between the applicantand the beneficiary.

(Added to NRS by 1965, 854; A 1997, 376; 2005, 857)

NRS 104.5104 Formalrequirements. A letter of credit,confirmation, advice, transfer, amendment or cancellation may be issued in anyform that is a record and is authenticated by a signature or in accordance withthe agreement of the parties or the standard practice referred to in subsection5 of NRS 104.5108.

(Added to NRS by 1965, 855; A 1997, 379)

NRS 104.5105 Consideration. Consideration is not required to issue, amend, transfer orcancel a letter of credit, advice or confirmation.

(Added to NRS by 1965, 855; A 1997, 379)

NRS 104.5106 Issuance,amendment, cancellation and duration.

1. A letter of credit is issued and becomesenforceable according to its terms against the issuer when the issuer sends orotherwise transmits it to the person requested to advise or to the beneficiary.A letter of credit is revocable only if it so provides.

2. After a letter of credit is issued, rights andobligations of a beneficiary, applicant, confirmer and issuer are not affectedby an amendment or cancellation to which he has not consented except to theextent the letter of credit provides that it is revocable or that the issuermay amend or cancel the letter of credit without that consent.

3. If there is no stated expiration date or otherprovision that determines its duration, a letter of credit expires 1 year afterits stated date of issuance or, if none is stated, after the date on which itis issued.

4. A letter of credit which states that it isperpetual expires 5 years after its stated date of issuance, or if none isstated, after the date on which it is issued.

(Added to NRS by 1965, 855; A 1997, 379)

NRS 104.5107 Confirmer,nominated person and adviser.

1. A confirmer is directly obligated on a letter ofcredit and has the rights and obligations of an issuer to the extent of itsconfirmation. The confirmer also has rights against and obligations to theissuer as if the issuer were an applicant and the confirmer had issued theletter of credit at the request and for the account of the issuer.

2. A nominated person who is not a confirmer is notobligated to honor or otherwise give value for a presentation.

3. A person requested to advise may decline to act asan adviser. An adviser that is not a confirmer is not obligated to honor orgive value for a presentation. An adviser undertakes to the issuer and to thebeneficiary accurately to advise the terms of the letter of credit,confirmation, amendment or advice received by the adviser and undertakes to thebeneficiary to check the apparent authenticity of the request to advise. Evenif the advice is inaccurate, the letter of credit, confirmation or amendment isenforceable as issued.

4. A person who notifies a transferee beneficiary ofthe terms of a letter of credit, confirmation, amendment or advice has therights and obligations of an adviser under subsection 3. The terms in thenotice to the transferee beneficiary may differ from the terms in any notice tothe transferor beneficiary to the extent permitted by the letter of credit,confirmation, amendment or advice received by the person who so notifies.

(Added to NRS by 1965, 855; A 1997, 380)

NRS 104.5108 Issuersrights and obligations.

1. Except as otherwise provided in NRS 104.5109, an issuer shall honor a presentationthat, as determined by the standard practice referred to in subsection 5, appearson its face strictly to comply with the terms and conditions of the letter ofcredit. Except as otherwise provided in NRS104.5113 and unless otherwise agreed with the applicant, an issuer shalldishonor a presentation that does not appear so to comply.

2. An issuer has a reasonable time after presentation,but not beyond the end of the 7th business day of the issuer after the day ofits receipt of documents:

(a) To honor a letter of credit;

(b) If the letter of credit provides for honor to becompleted more than 7 business days after presentation, to accept a draft orincur a deferred obligation; or

(c) To give notice to the presenter of discrepancies inthe presentation.

3. Except as otherwise provided in subsection 4, anissuer is precluded from asserting as a basis for dishonor any discrepancy ifnotice is not given in a timely manner or any discrepancy not stated in thenotice if notice is given in a timely manner.

4. Failure to give the notice specified in subsection2 or to mention fraud, forgery or expiration in the notice does not precludethe issuer from asserting as a basis for dishonor, fraud or forgery as describedin subsection 1 of NRS 104.5109 or expirationof the letter of credit before presentation.

5. An issuer shall observe standard practice offinancial institutions that regularly issue letters of credit. Anydetermination of the issuers observance of the standard practice is a matterof interpretation for the court. The court shall offer the parties a reasonableopportunity to present evidence of the standard practice.

6. An issuer is not responsible for:

(a) The performance or nonperformance of the underlyingcontract, arrangement or transaction;

(b) An act or omission of others; or

(c) Observance or knowledge of the usage of aparticular trade other than the standard practice referred to in subsection 5.

7. If an undertaking constituting a letter of creditunder paragraph (j) of subsection 1 of NRS104.5102 contains nondocumentary conditions, an issuer shall disregard thenondocumentary conditions and treat them as if they were not stated.

8. An issuer that has dishonored a presentation shallreturn the documents or hold them at the disposal of, and send advice to theeffect to, the presenter.

9. An issuer that has honored a presentation aspermitted or required by this article:

(a) Is entitled to be reimbursed by the applicant inimmediately available funds not later than the date of its payment of funds;

(b) Takes the documents free of claims of the beneficiaryor presenter;

(c) Is precluded from asserting a right of recourse ona draft under NRS 104.3414 and 104.3415;

(d) Except as otherwise provided in NRS 104.5110 and 104.5117, is precluded from restitution ofmoney paid or other value given by mistake to the extent the mistake concernsdiscrepancies in the documents or tender which are apparent on the face of thepresentation; and

(e) Is discharged to the extent of its performanceunder the letter of credit unless the issuer honored a presentation in which arequired signature of a beneficiary was forged.

(Added to NRS by 1965, 856; A 1997, 381)

NRS 104.5109 Fraudand forgery.

1. If a presentation is made that appears onits face strictly to comply with the terms and conditions of a letter ofcredit, but a required document is forged or materially fraudulent, or honor ofthe presentation would facilitate a material fraud by the beneficiary on theissuer or applicant:

(a) The issuer shall honor the presentation, if honoris demanded by a nominated person who has given value in good faith and withoutnotice of forgery or material fraud, a confirmer who has honored hisconfirmation in good faith, a holder in due course of a draft drawn under theletter of credit which was taken after acceptance by the issuer or nominatedperson, or an assignee of the issuers or nominated persons deferredobligation that was taken for value and without notice of forgery or materialfraud after the obligation was incurred by the issuer or nominated person; and

(b) The issuer, acting in good faith, may honor ordishonor the presentation in any other case.

2. If an applicant claims that a required document isforged or materially fraudulent or that honor of the presentation wouldfacilitate a material fraud by the beneficiary on the issuer or applicant, acourt of competent jurisdiction may temporarily or permanently enjoin theissuer from honoring the presentation or grant similar relief against theissuer or other persons only if the court finds that:

(a) The relief is not prohibited under the lawapplicable to an accepted draft or deferred obligation incurred by the issuer;

(b) A beneficiary, issuer or nominated person who maybe adversely affected is adequately protected against loss that it may suffer becausethe relief is granted;

(c) All of the conditions to entitle a person to therelief under the law of this State have been met; and

(d) On the basis of the information submitted to thecourt, the applicant is more likely than not to succeed under its claim offorgery or material fraud and the person demanding honor does not qualify forprotection under paragraph (a) of subsection 1.

(Added to NRS by 1997, 356)

NRS 104.5110 Warranties.

1. If its presentation is honored, thebeneficiary warrants:

(a) To the issuer, any other person to whompresentation is made, and the applicant that there is no fraud or forgery ofthe kind described in subsection 1 of NRS104.5109; and

(b) To the applicant that the drawing does not violateany agreement between the applicant and beneficiary or any other agreementintended by them to be augmented by the letter of credit.

2. The warranties in subsection 1 are in addition towarranties arising under articles 3, 4, 7 and 8 because of the presentation ortransfer of documents covered by any of those articles.

(Added to NRS by 1965, 857; A 1997, 382)

NRS 104.5111 Remedies.

1. If an issuer wrongfully dishonors orrepudiates its obligation to pay money under a letter of credit beforepresentation, the beneficiary, successor or nominated person presenting on itsown behalf may recover from the issuer the amount that is the subject of thedishonor or repudiation. If the issuers obligation under the letter of creditis not for the payment of money, the claimant may obtain specific performanceor, at his election, recover an amount equal to the value of performance fromthe issuer. In either case, the claimant may also recover incidental but notconsequential damages. The claimant is not obligated to take action to avoiddamages that might be due from the issuer under this subsection. If, althoughnot obligated to do so, the claimant avoids damages, the claimants recoveryfrom the issuer must be reduced by the amount of damages avoided. The issuerhas the burden of proving the amount of damages avoided. In the case ofrepudiation the claimant need not present any document.

2. If an issuer wrongfully dishonors a draft or demandpresented under a letter of credit or honors a draft or demand in breach of itsobligation to the applicant, the applicant may recover damages resulting fromthe breach, including incidental but not consequential damages, less any amountsaved as a result of the breach.

3. If an adviser or nominated person other than aconfirmer breaches an obligation under this article or an issuer breaches anobligation not covered in subsection 1 or 2, a person to whom the obligation isowed may recover damages resulting from the breach, including incidental butnot consequential damages, less any amount saved as a result of the breach. Tothe extent of the confirmation, a confirmer has the liability of an issuerspecified in this subsection and subsections 1 and 2.

4. An issuer, nominated person or adviser who is foundliable under subsection 1, 2 or 3 shall pay interest on the amount owedthereunder from the date of wrongful dishonor or other appropriate date.

5. Reasonable attorneys fees and other expenses oflitigation must be awarded to the prevailing party in an action in which aremedy is sought under this article.

6. Damages that would otherwise be payable by a partyfor breach of an obligation under this article may be liquidated by agreementor undertaking, but only in an amount or by a formula that is reasonable inlight of the harm anticipated.

(Added to NRS by 1965, 858; A 1997, 383)

NRS 104.5112 Transferof letter of credit.

1. Except as otherwise provided in NRS 104.5113, unless a letter of credit providesthat it is transferable, the right of a beneficiary to draw or otherwise demandperformance under the letter of credit may not be transferred.

2. Even if a letter of credit provides that it istransferable, the issuer may refuse to recognize or carry out a transfer if:

(a) The transfer would violate applicable law; or

(b) The transferor or transferee has failed to complywith any requirement stated in the letter of credit or any other requirementrelating to transfer imposed by the issuer which is within the standardpractice referred to in subsection 5 of NRS104.5108 or is otherwise reasonable under the circumstances.

(Added to NRS by 1965, 858; A 1973, 934; 1997, 384)

NRS 104.5113 Transferby operation of law.

1. A successor of a beneficiary may consent toamendments, sign and present documents, and receive payment or other items ofvalue in the name of the beneficiary without disclosing its status as asuccessor.

2. A successor of a beneficiary may consent toamendments, sign and present documents, and receive payment or other items ofvalue in its own name as the disclosed successor of the beneficiary. Except asotherwise provided in subsection 5, an issuer shall recognize a disclosedsuccessor of a beneficiary as beneficiary in full substitution for itspredecessor upon compliance with the requirements for recognition by the issuerof a transfer of drawing rights by operation of law under the standard practicereferred to in subsection 5 of NRS 104.5108or, in the absence of such a practice, compliance with other reasonableprocedures sufficient to protect the issuer.

3. An issuer is not obliged to determine whether apurported successor is a successor of a beneficiary or whether the signature ofa purported successor is genuine or authorized.

4. Honor of a purported successors apparentlycomplying presentation under subsection 1 or 2 has the consequences specifiedin subsection 9 of NRS 104.5108 even ifthe purported successor is not the successor of a beneficiary. Documents signedin the name of the beneficiary or of a disclosed successor by a person who isneither the beneficiary nor the successor of the beneficiary are forgeddocuments for the purposes of NRS 104.5109.

5. An issuer whose rights of reimbursement are notcovered by subsection 4 or substantially similar law and any confirmer ornominated person may decline to recognize a presentation under subsection 2.

6. A beneficiary whose name is changed after theissuance of a letter of credit has the same rights and obligations as asuccessor of a beneficiary under this section.

(Added to NRS by 1997, 357)

NRS 104.5114 Assignmentof proceeds.

1. As used in this section, proceeds of aletter of credit means the cash, check, accepted draft or other item of valuepaid or delivered upon honor or giving of value by the issuer or any nominatedperson under the letter of credit. The term does not include a beneficiarysdrawing rights or documents presented by the beneficiary.

2. A beneficiary may assign its right to part or allof the proceeds of a letter of credit. The beneficiary may do so beforepresentation as a present assignment of its right to receive proceedscontingent upon its compliance with the terms and conditions of the letter ofcredit.

3. An issuer or nominated person need not recognize anassignment of proceeds of a letter of credit until it consents to theassignment.

4. An issuer or nominated person has no obligation togive or withhold its consent to an assignment of proceeds of a letter ofcredit, but consent may not be unreasonably withheld if the assignee possessesand exhibits the letter of credit and presentation of the letter of credit is acondition to honor.

5. The rights of a transferee beneficiary or nominatedperson are independent of the beneficiarys assignment of the proceeds of aletter of credit and are superior to the assignees right to the proceeds.

6. The rights recognized by this section between anassignee and an issuer, transferee beneficiary or nominated person and theissuers or nominated persons payment of proceeds to an assignee or a thirdperson do not affect the rights between the assignee and any person other thanthe issuer, transferee beneficiary or nominated person. The mode of creatingand perfecting a security interest in or granting an assignment of abeneficiarys rights to proceeds is governed by article 9 or other law. Againstpersons other than the issuer, transferee beneficiary or nominated person, therights and obligations arising upon the creation of a security interest orother assignment of a beneficiarys right to proceeds and its perfection aregoverned by article 9 or other law.

(Added to NRS by 1997, 357)

NRS 104.5115 Statuteof limitations. An action to enforce a rightor obligation arising under this article must be commenced within 1 year afterthe expiration date of the relevant letter of credit or 1 year after the claimfor relief accrues, whichever occurs later. A claim for relief accrues when thebreach occurs, regardless of the aggrieved partys lack of knowledge of thebreach.

(Added to NRS by 1997, 358)

NRS 104.5116 Choiceof law and forum.

1. The liability of an issuer, nominated personor adviser for action or omission is governed by the law of the jurisdictionchosen by an agreement in the form of a record signed or otherwiseauthenticated by the affected parties in the manner provided in NRS 104.5104 or by a provision in hisletter of credit, confirmation or other undertaking. The jurisdiction whose lawis chosen need not bear any relation to the transaction.

2. Unless subsection 1 applies, the liability of anissuer, nominated person or adviser for action or omission is governed by thelaw of the jurisdiction in which he is located. He is considered to be locatedat the address indicated in his undertaking. If more than one address isindicated, he is considered to be located at the address from which his undertakingwas issued. For the purpose of jurisdiction, choice of law and recognition ofinterbranch letters of credit, but not enforcement of a judgment, all branchesof a bank are considered separate juridical entities and a bank is consideredto be located at the place where its relevant branch is considered to belocated under this subsection.

3. Except as otherwise provided in this subsection,the liability of an issuer, nominated person or adviser is governed by anyrules of custom or practice, such as the Uniform Customs and Practice forDocumentary Credits, to which the letter of credit, confirmation or otherundertaking is expressly made subject. If:

(a) This article would govern the liability of anissuer, nominated person or adviser under subsection 1 or 2;

(b) The relevant undertaking incorporates rules ofcustom or practice; and

(c) There is conflict between this article and thoserules as applied to that undertaking,

those rulesgovern except to the extent of any conflict with the nonvariable provisionsspecified in subsection 3 of NRS 104.5103.

4. If there is conflict between this article andarticle 3, 4, 4A or 9, this article governs.

5. The forum for settling disputes arising out of anundertaking within this article may be chosen in the manner and with thebinding effect that governing law may be chosen in accordance with subsection1.

(Added to NRS by 1997, 358)

NRS 104.5117 Subrogationof issuer, applicant and nominated person.

1. An issuer that honors a beneficiaryspresentation is subrogated to the rights of the beneficiary to the same extentas if the issuer were a secondary obligor of the underlying obligation owed tothe beneficiary and of the applicant to the same extent as if the issuer werethe secondary obligor of the underlying obligation owed to the applicant.

2. An applicant that reimburses an issuer issubrogated to the rights of the issuer against any beneficiary, presenter ornominated person to the same extent as if the applicant were the secondaryobligor of the obligations owed to the issuer and has the rights of subrogationof the issuer to the rights of the beneficiary stated in subsection 1.

3. A nominated person who pays or gives value againsta draft or demand presented under a letter of credit is subrogated to therights of:

(a) The issuer against the applicant to the same extentas if the nominated person were a secondary obligor of the obligation owed tothe issuer by the applicant;

(b) The beneficiary to the same extent as if thenominated person were a secondary obligor of the underlying obligation owed tothe beneficiary; and

(c) The applicant to same extent as if the nominatedperson were a secondary obligor of the underlying obligation owed to theapplicant.

4. Notwithstanding any agreement or term to thecontrary, the rights of subrogation stated in subsections 1 and 2 do not ariseuntil the issuer honors the letter of credit or otherwise pays and the rightsstated in subsection 3 do not arise until the nominated person pays orotherwise gives value. Until then, the issuer, nominated person and applicantdo not derive under this section present or prospective rights forming thebasis of a claim, defense or excuse.

(Added to NRS by 1997, 359)

NRS 104.5118 Securityinterest of issuer or nominated person.

1. An issueror a nominated person has a security interest in a document presented under aletter of credit and any identifiable proceeds of the collateral to the extentthat the issuer or nominated person honors or gives value for the presentation.

2. As long asand to the extent that an issuer or a nominated person has not been reimbursedor has not otherwise recovered the value given with respect to a securityinterest in a document under subsection 1, the security interest continues andis subject to article 9, but:

(a) A securityagreement is not necessary to make the security interest enforceable underparagraph (c) of subsection 2 of NRS104.9203;

(b) If thedocument is presented in a medium other than a written or other tangiblemedium, the security interest is perfected; and

(c) If the document is presented in a written or othertangible medium and is not a certificated security, chattel paper, a documentof title, an instrument, or a letter of credit, so long as the debtor does nothave possession of the document, the security interest is perfected and haspriority over a conflicting security interest in the document.

(Added to NRS by 1999, 365)

ARTICLE 7

WAREHOUSE RECEIPTS, BILLS OF LADING AND OTHER DOCUMENTS OFTITLE

Part 1

General

NRS 104.7101 Shorttitle. This Article may be cited as theUniform Commercial CodeDocuments of Title.

(Added to NRS by 2005, 833)

NRS 104.7102 Definitionsand index of definitions.

1. In this Article, unless the context otherwiserequires:

(a) Bailee means a person that by a warehousereceipt, bill of lading or other document of title acknowledges possession ofgoods and contracts to deliver them.

(b) Carrier means a person that issues a bill of lading.

(c) Consignee means a person named in a bill oflading to which or to whose order the bill promises delivery.

(d) Consignor means a person named in a bill oflading as the person from whom the goods have been received for shipment.

(e) Delivery order means a record that contains anorder to deliver goods directed to a warehouse, carrier or other person that inthe ordinary course of business issues warehouse receipts or bills of lading.

(f) Goods means all things that are treated asmovable for the purposes of a contract for storage or transportation.

(g) Issuer means a bailee that issues a document oftitle or, in the case of an unaccepted delivery order, the person that ordersthe possessor of goods to deliver. The term includes a person for whom an agentor employee purports to act in issuing a document if the agent or employee hasreal or apparent authority to issue documents, even if the issuer did notreceive any goods, the goods were misdescribed, or in any other respect theagent or employee violated the issuers instructions.

(h) Person entitled under the document means theholder, in the case of a negotiable document of title, or the person to whomdelivery of the goods is to be made by the terms of, or pursuant toinstructions in a record under, a nonnegotiable document of title.

(i) Sign means, with present intent to authenticateor adopt a record:

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

(2) To attach to or logically associate with therecord an electronic sound, symbol or process.

(j) Shipper means a person that enters into acontract of transportation with a carrier.

(k) Warehouse means a person engaged in the businessof storing goods for hire.

2. Definitions in other Articles applying to thisArticle and the sections in which they appear are:

(a) Contract for sale, NRS 104.2106.

(b) Lessee in the ordinary course of business, NRS 104A.2103.

(c) Receipt of goods, NRS 104.2103.

3. In addition, Article 1 contains general definitionsand principles of construction and interpretation applicable throughout thisArticle.

(Added to NRS by 2005, 833)

NRS 104.7103 Relationof Article to treaty or statute.

1. This Article is subject to any treaty or statute ofthe United States or regulatory statute of this State to the extent the treaty,statute or regulatory statute is applicable.

2. This Article does not modify or repeal any lawprescribing the form or content of a document of title or the services orfacilities to be afforded by a bailee, or otherwise regulating a baileesbusiness in respects not specifically treated in this Article. However,violation of such a law does not affect the status of a document of title thatotherwise is within the definition of a document of title.

3. This Article modifies, limits and supersedes thefederal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. 7001 et. seq., but does not modify, limit or supersede Section 101(c) of thatact, 15 U.S.C. 7001(c), or authorize electronic delivery of any of thenotices described in Section 103(b) of that act, 15 U.S.C. 7003(b).

4. To the extent there is a conflict between theUniform Electronic Transactions Act and this Article, this Article governs.

(Added to NRS by 2005, 834)

NRS 104.7104 Negotiableand nonnegotiable document of title.

1. Except as otherwise provided in subsection 3, adocument of title is negotiable if by its terms the goods are to be deliveredto bearer or to the order of a named person.

2. A document of title other than one described insubsection 1 is nonnegotiable. A bill of lading that states that the goods areconsigned to a named person is not made negotiable by a provision that thegoods are to be delivered only against an order in a record signed by the sameor another named person.

3. A document of title is nonnegotiable if, at thetime it is issued, the document has a conspicuous legend, however expressed,that it is nonnegotiable.

(Added to NRS by 2005, 834)

NRS 104.7105 Reissuancein alternative medium.

1. Upon request of a person entitled under anelectronic document of title, the issuer of the electronic document may issue atangible document of title as a substitute for the electronic document if:

(a) The person entitled under the electronic documentsurrenders control of the document to the issuer; and

(b) The tangible document when issued contains astatement that it is issued in substitution for the electronic document.

2. Upon issuance of a tangible document of title insubstitution for an electronic document of title in accordance with subsection1:

(a) The electronic document ceases to have any effector validity; and

(b) The person that procured issuance of the tangibledocument warrants to all subsequent persons entitled under the tangibledocument that the warrantor was a person entitled under the electronic documentwhen the warrantor surrendered control of the electronic document to theissuer.

3. Upon request of a person entitled under a tangibledocument of title, the issuer of the tangible document may issue an electronicdocument of title as a substitute for the tangible document if:

(a) The person entitled under the tangible documentsurrenders possession of the document to the issuer; and

(b) The electronic document when issued contains astatement that it is issued in substitution for the tangible document.

4. Upon issuance of an electronic document of title insubstitution for a tangible document of title in accordance with subsection 3:

(a) The tangible document ceases to have any effect orvalidity; and

(b) The person that procured issuance of the electronicdocument warrants to all subsequent persons entitled under the electronicdocument that the warrantor was a person entitled under the tangible documentwhen the warrantor surrendered possession of the tangible document to theissuer.

(Added to NRS by 2005, 834)

NRS 104.7106 Controlof electronic document of title.

1. A person has control of an electronic document oftitle if a system employed for evidencing the transfer of interests in theelectronic document reliably establishes that person as the person to whom theelectronic document was issued or transferred.

2. A system satisfies subsection 1, and a person isdeemed to have control of an electronic document of title, if the document iscreated, stored and assigned in such a manner that:

(a) A single authoritative copy of the document existswhich is unique, identifiable and, except as otherwise provided in paragraphs(d), (e) and (f), unalterable;

(b) The authoritative copy identifies the personasserting control as:

(1) The person to whom the document was issued;or

(2) If the authoritative copy indicates that thedocument has been transferred, the person to whom the document was most recentlytransferred;

(c) The authoritative copy is communicated to andmaintained by the person asserting control or its designated custodian;

(d) Copies or amendments that add or change anidentified assignee of the authoritative copy can be made only with the consentof the person asserting control;

(e) Each copy of the authoritative copy and any copy ofa copy is readily identifiable as a copy that is not the authoritative copy;and

(f) Any amendment of the authoritative copy is readilyidentifiable as authorized or unauthorized.

(Added to NRS by 2005, 835)

Part 2

Warehouse Receipts: Special Provisions

NRS 104.7201 Personthat may issue warehouse receipt; storage under bond.

1. A warehouse receipt may be issued by any warehouse.

2. If goods, including distilled spirits andagricultural commodities, are stored under a statute requiring a bond againstwithdrawal or a license for the issuance of receipts in the nature of warehousereceipts, a receipt issued for the goods is deemed to be a warehouse receipteven if issued by a person that is the owner of the goods and is not awarehouse.

(Added to NRS by 2005, 835)

NRS 104.7202 Formof warehouse receipt; effect of omission.

1. A warehouse receipt need not be in any particularform.

2. Unless a warehouse receipt provides for each of thefollowing, the warehouse is liable for damages caused to a person injured byits omission:

(a) A statement of the location of the warehousefacility where the goods are stored;

(b) The date of issue of the receipt;

(c) The unique identification code of the receipt;

(d) A statement whether the goods received will bedelivered to the bearer, to a named person, or to a named person or its order;

(e) The rate of storage and handling charges, unlessgoods are stored under a field warehousing arrangement, in which case astatement of that fact is sufficient on a nonnegotiable receipt;

(f) A description of the goods or the packagescontaining them;

(g) The signature of the warehouse or its agent;

(h) If the receipt is issued for goods that thewarehouse owns, either solely, jointly or in common with others, a statement ofthe fact of that ownership; and

(i) A statement of the amount of advances made and ofliabilities incurred for which the warehouse claims a lien or securityinterest, unless the precise amount of advances made or liabilities incurred,at the time of the issue of the receipt, is unknown to the warehouse or to itsagent that issued the receipt, in which case a statement of the fact thatadvances have been made or liabilities incurred and the purpose of the advancesor liabilities is sufficient.

3. A warehouse may insert in its receipt any termsthat are not contrary to the Uniform Commercial Code and do not impair itsobligation of delivery under NRS 104.7403or its duty of care under NRS 104.7204.Any contrary provision is ineffective.

(Added to NRS by 2005, 835)

NRS 104.7203 Liabilityfor nonreceipt or misdescription. A party toor purchaser for value in good faith of a document of title, other than a billof lading, that relies upon the description of the goods in the document mayrecover from the issuer damages caused by the nonreceipt or misdescription ofthe goods, except to the extent that:

1. The document conspicuously indicates that theissuer does not know whether all or part of the goods in fact were received orconform to the description, such as a case in which the description is in termsof marks or labels or kind, quantity or condition, or the receipt ordescription is qualified by contents, condition and quality unknown, said tocontain, or words of similar import, if the indication is true; or

2. The party or purchaser otherwise has notice of thenonreceipt or misdescription.

(Added to NRS by 2005, 836)

NRS 104.7204 Dutyof care; contractual limitation of warehouses liability.

1. A warehouse is liable for damages for loss of orinjury to the goods caused by its failure to exercise care with regard to thegoods that a reasonably careful person would exercise under similarcircumstances. Unless otherwise agreed, the warehouse is not liable for damagesthat could not have been avoided by the exercise of that care.

2. Damages may be limited by a term in the warehousereceipt or storage agreement limiting the amount of liability in case of lossor damage beyond which the warehouse is not liable. Such a limitation is noteffective with respect to the warehouses liability for conversion to its ownuse. On request of the bailor in a record at the time of signing the storageagreement or within a reasonable time after receipt of the warehouse receipt,the warehouses liability may be increased on part or all of the goods coveredby the storage agreement or the warehouse receipt. In this event, increasedrates may be charged based on an increased valuation of the goods.

3. Reasonable provisions as to the time and manner ofpresenting claims and commencing actions based on the bailment may be includedin the warehouse receipt or storage agreement.

(Added to NRS by 2005, 836)

NRS 104.7205 Titleunder warehouse receipt defeated in certain cases. Abuyer in the ordinary course of business of fungible goods sold and deliveredby a warehouse that is also in the business of buying and selling such goodstakes the goods free of any claim under a warehouse receipt even if the receiptis negotiable and has been duly negotiated.

(Added to NRS by 2005, 836)

NRS 104.7206 Terminationof storage at warehouses option.

1. A warehouse, by giving notice to the person onwhose account the goods are held and any other person known to claim aninterest in the goods, may require payment of any charges and removal of thegoods from the warehouse at the termination of the period of storage fixed bythe document of title or, if a period is not fixed, within a stated period notless than 30 days after the warehouse gives notice. If the goods are notremoved before the date specified in the notice, the warehouse may sell thempursuant to NRS 104.7210.

2. If a warehouse in good faith believes that goodsare about to deteriorate or decline in value to less than the amount of itslien within the time provided in subsection 1 and NRS 104.7210, the warehouse may specify inthe notice given under subsection 1 any reasonable shorter time for removal ofthe goods and, if the goods are not removed, may sell them at public sale heldnot less than 1 week after a single advertisement or posting.

3. If, as a result of a quality or condition of thegoods of which the warehouse did not have notice at the time of deposit, thegoods are a hazard to other property, the warehouse facilities, or otherpersons, the warehouse may sell the goods at public or private sale withoutadvertisement or posting on reasonable notification to all persons known toclaim an interest in the goods. If the warehouse, after a reasonable effort, isunable to sell the goods, it may dispose of them in any lawful manner and doesnot incur liability by reason of that disposition.

4. A warehouse shall deliver the goods to any personentitled to them under this Article upon due demand made at any time beforesale or other disposition under this section.

5. A warehouse may satisfy its lien from the proceedsof any sale or disposition under this section but shall hold the balance fordelivery on the demand of any person to whom the warehouse would have beenbound to deliver the goods.

(Added to NRS by 2005, 836)

NRS 104.7207 Goodsmust be kept separate; fungible goods.

1. Unless the warehouse receipt provides otherwise, awarehouse shall keep separate the goods covered by each receipt so as to permitat all times identification and delivery of those goods. However, differentlots of fungible goods may be commingled.

2. If different lots of fungible goods are commingled,the goods are owned in common by the persons entitled thereto and the warehouseis severally liable to each owner for that owners share. If, because ofoverissue, a mass of fungible goods is insufficient to meet all the receiptsthe warehouse has issued against it, the persons entitled include all holdersto which overissued receipts have been duly negotiated.

(Added to NRS by 2005, 837)

NRS 104.7208 Alteredwarehouse receipts. If a blank in a negotiabletangible warehouse receipt has been filled in without authority, a good-faithpurchaser for value and without notice of the lack of authority may treat theinsertion as authorized. Any other unauthorized alteration leaves any tangibleor electronic warehouse receipt enforceable against the issuer according to itsoriginal tenor.

(Added to NRS by 2005, 837)

NRS 104.7209 Lienof warehouse.

1. A warehouse has a lien against the bailor on thegoods covered by a warehouse receipt or storage agreement or on the proceedsthereof in its possession for charges for storage or transportation, includingdemurrage and terminal charges, insurance, labor or other charges, present orfuture, in relation to the goods, and for expenses necessary for preservationof the goods or reasonably incurred in their sale pursuant to law. If theperson on whose account the goods are held is liable for similar charges orexpenses in relation to other goods whenever deposited and it is stated in thewarehouse receipt or storage agreement that a lien is claimed for charges andexpenses in relation to other goods, the warehouse also has a lien against thegoods covered by the warehouse receipt or storage agreement or on the proceedsthereof in its possession for those charges and expenses, whether or not theother goods have been delivered by the warehouse. However, as against a personto whom a negotiable warehouse receipt is duly negotiated, a warehouses lienis limited to charges in an amount or at a rate specified in the warehousereceipt or, if no charges are so specified, to a reasonable charge for storageof the specific goods covered by the receipt subsequent to the date of thereceipt.

2. A warehouse may also reserve a security interestagainst the bailor for the maximum amount specified on the receipt for chargesother than those specified in subsection 1, such as for money advanced andinterest. The security interest is governed by Article 9.

3. A warehouses lien for charges and expenses undersubsection 1 or a security interest under subsection 2 is also effectiveagainst any person that so entrusted the bailor with possession of the goodsthat a pledge of them by the bailor to a good-faith purchaser for value wouldhave been valid. However, the lien or security interest is not effectiveagainst a person that before issuance of a document of title had a legalinterest or a perfected security interest in the goods and that did not:

(a) Deliver or entrust the goods or any document oftitle covering the goods to the bailor or the bailors nominee with:

(1) Actual or apparent authority to ship, storeor sell;

(2) Power to obtain delivery under NRS 104.7403; or

(3) Power of disposition under NRS 104.2403, 104.9320, subsection 3 of NRS 104.9321, subsection 2 of NRS 104A.2304 or subsection 2 of NRS 104A.2305, or other statute or ruleof law; or

(b) Acquiesce in the procurement by the bailor or itsnominee of any document.

4. A warehouses lien on household goods for chargesand expenses in relation to the goods under subsection 1 is also effectiveagainst all persons if the depositor was the legal possessor of the goods atthe time of deposit. In this subsection, household goods means furniture,furnishings or personal effects used by the depositor in a dwelling.

5. A warehouse loses its lien on any goods that itvoluntarily delivers or unjustifiably refuses to deliver.

(Added to NRS by 2005, 837)

NRS 104.7210 Enforcementof warehouses lien.

1. Except as otherwise provided in subsection 2, awarehouses lien may be enforced by public or private sale of the goods, inbulk or in packages, at any time or place and on any terms that are commerciallyreasonable, after notifying all persons known to claim an interest in thegoods. The notification must include a statement of the amount due, the natureof the proposed sale, and the time and place of any public sale. The fact thata better price could have been obtained by a sale at a different time or in amethod different from that selected by the warehouse is not of itselfsufficient to establish that the sale was not made in a commercially reasonablemanner. The warehouse sells in a commercially reasonable manner if thewarehouse sells the goods in the usual manner in any recognized markettherefor, sells at the price current in that market at the time of the sale, orotherwise sells in conformity with commercially reasonable practices among dealersin the type of goods sold. A sale of more goods than apparently necessary to beoffered to ensure satisfaction of the obligation is not commerciallyreasonable, except in cases covered by the preceding sentence.

2. A warehouse may enforce its lien on goods, otherthan goods stored by a merchant in the course of its business, only if thefollowing requirements are satisfied:

(a) All persons known to claim an interest in the goodsmust be notified.

(b) The notification must include an itemized statementof the claim, a description of the goods subject to the lien, a demand forpayment within a specified time not less than 10 days after receipt of thenotification, and a conspicuous statement that unless the claim is paid withinthat time the goods will be advertised for sale and sold by auction at aspecified time and place.

(c) The sale must conform to the terms of thenotification.

(d) The sale must be held at the nearest suitable placeto where the goods are held or stored.

(e) After the expiration of the time given in thenotification, an advertisement of the sale must be published once a week for 2weeks consecutively in a newspaper of general circulation where the sale is tobe held. The advertisement must include a description of the goods, the name ofthe person on whose account the goods are being held, and the time and place ofthe sale. The sale must take place at least 15 days after the firstpublication. If there is no newspaper of general circulation where the sale isto be held, the advertisement must be posted at least 10 days before the salein not fewer than six conspicuous places in the neighborhood of the proposedsale.

3. Before any sale pursuant to this section, anyperson claiming a right in the goods may pay the amount necessary to satisfythe lien and the reasonable expenses incurred in complying with this section.In that event, the goods may not be sold but must be retained by the warehousesubject to the terms of the receipt and this Article.

4. A warehouse may buy at any public sale heldpursuant to this section.

5. A purchaser in good faith of goods sold to enforcea warehouses lien takes the goods free of any rights of persons against whomthe lien was valid, despite the warehouses noncompliance with this section.

6. A warehouse may satisfy its lien from the proceedsof any sale pursuant to this section but shall hold the balance, if any, fordelivery on demand to any person to whom the warehouse would have been bound todeliver the goods.

7. The rights provided by this section are in additionto all other rights allowed by law to a creditor against a debtor.

8. If a lien is on goods stored by a merchant in thecourse of its business, the lien may be enforced in accordance with subsection1 or 2.

9. A warehouse is liable for damages caused by failureto comply with the requirements for sale under this section and, in case ofwillful violation, is liable for conversion.

(Added to NRS by 2005, 838)

Part 3

Bills of Lading: Special Provisions

NRS 104.7301 Liabilityfor nonreceipt or misdescription; said to contain; shippers weight, loadand count; improper handling.

1. A consignee of a nonnegotiable bill of lading whichhas given value in good faith, or a holder to whom a negotiable bill has beenduly negotiated, relying upon the description of the goods in the bill or uponthe date shown in the bill, may recover from the issuer damages caused by themisdating of the bill or the nonreceipt or misdescription of the goods, exceptto the extent that the bill indicates that the issuer does not know whether anypart or all of the goods in fact were received or conform to the description,such as in a case in which the description is in terms of marks or labels orkind, quantity or condition, or the receipt or description is qualified bycontents or condition of contents of packages unknown, said to contain,shippers weight, load and count, or words of similar import, if that indicationis true.

2. If goods are loaded by the issuer of a bill oflading:

(a) The issuer shall count the packages of goods ifshipped in packages and ascertain the kind and quantity if shipped in bulk; and

(b) Words such as shippers weight, load and count,or words of similar import indicating that the description was made by theshipper are ineffective except as to goods concealed in packages.

3. If bulk goods are loaded by a shipper that makesavailable to the issuer of a bill of lading adequate facilities for weighingthose goods, the issuer shall ascertain the kind and quantity within areasonable time after receiving the shippers request in a record to do so. Inthat case, shippers weight or words of similar import are ineffective.

4. The issuer of a bill of lading, by including in thebill the words shippers weight, load and count, or words of similar import,may indicate that the goods were loaded by the shipper, and, if that statementis true, the issuer is not liable for damages caused by the improper loading.However, omission of such words does not imply liability for damages caused byimproper loading.

5. A shipper guarantees to an issuer the accuracy atthe time of shipment of the description, marks, labels, number, kind, quantity,condition and weight, as furnished by the shipper, and the shipper shallindemnify the issuer against damage caused by inaccuracies in thoseparticulars. This right of indemnity does not limit the issuers responsibilityor liability under the contract of carriage to any person other than theshipper.

(Added to NRS by 2005, 839)

NRS 104.7302 Throughbills of lading and similar documents of title.

1. The issuer of a through bill of lading, or otherdocument of title embodying an undertaking to be performed in part by a personacting as its agent or by a performing carrier, is liable to any personentitled to recover on the bill or other document for any breach by the otherperson or the performing carrier of its obligation under the bill or otherdocument. However, to the extent that the bill or other document covers anundertaking to be performed overseas or in territory not contiguous to thecontinental United States or an undertaking including matters other than transportation,this liability for breach by the other person or the performing carrier may bevaried by agreement of the parties.

2. If goods covered by a through bill of lading orother document of title embodying an undertaking to be performed in part by aperson other than the issuer are received by that person, the person issubject, with respect to its own performance while the goods are in itspossession, to the obligation of the issuer. The persons obligation isdischarged by delivery of the goods to another person pursuant to the bill orother document and does not include liability for breach by any other person orby the issuer.

3. The issuer of a through bill of lading or otherdocument of title described in subsection 1 is entitled to recover from theperforming carrier, or other person in possession of the goods when the breachof the obligation under the bill or other document occurred:

(a) The amount it may be required to pay to any personentitled to recover on the bill or other document for the breach, as may beevidenced by any receipt, judgment or transcript of judgment; and

(b) The amount of any expense reasonably incurred bythe issuer in defending any action commenced by any person entitled to recoveron the bill or other document for the breach.

(Added to NRS by 2005, 840)

NRS 104.7303 Diversion;reconsignment; change of instructions.

1. Unless the bill of lading otherwise provides, acarrier may deliver the goods to a person or destination other than that statedin the bill or may otherwise dispose of the goods, without liability formisdelivery, on instructions from:

(a) The holder of a negotiable bill;

(b) The consignor on a nonnegotiable bill, even if theconsignee has given contrary instructions;

(c) The consignee on a nonnegotiable bill in theabsence of contrary instructions from the consignor, if the goods have arrivedat the billed destination or if the consignee is in possession of the tangiblebill or in control of the electronic bill; or

(d) The consignee on a nonnegotiable bill, if theconsignee is entitled as against the consignor to dispose of the goods.

2. Unless instructions described in subsection 1 areincluded in a negotiable bill of lading, a person to whom the bill is dulynegotiated may hold the bailee according to the original terms.

(Added to NRS by 2005, 841)

NRS 104.7304 Tangiblebills of lading in set.

1. Except as customary in internationaltransportation, a tangible bill of lading may not be issued in a set of parts.The issuer is liable for damages caused by violation of this subsection.

2. If a tangible bill of lading is lawfully issued ina set of parts, each of which contains an identification code and is expressedto be valid only if the goods have not been delivered against any other part,the whole of the parts constitutes one bill.

3. If a tangible negotiable bill of lading is lawfullyissued in a set of parts and different parts are negotiated to differentpersons, the title of the holder to which the first due negotiation is madeprevails as to both the document of title and the goods even if any laterholder may have received the goods from the carrier in good faith anddischarged the carriers obligation by surrendering its part.

4. A person that negotiates or transfers a single partof a tangible bill of lading issued in a set is liable to holders of that partas if it were the whole set.

5. The bailee shall deliver in accordance with NRS 104.7401 to 104.7404, inclusive, against the firstpresented part of a tangible bill of lading lawfully issued in a set. Deliveryin this manner discharges the bailees obligation on the whole bill.

(Added to NRS by 2005, 841)

NRS 104.7305 Destinationbills.

1. Instead of issuing a bill of lading to theconsignor at the place of shipment, a carrier, at the request of the consignor,may procure the bill to be issued at destination or at any other placedesignated in the request.

2. Upon request of any person entitled as against acarrier to control the goods while in transit and on surrender of possession orcontrol of any outstanding bill of lading or other receipt covering the goods,the issuer, subject to NRS 104.7105,may procure a substitute bill to be issued at any place designated in therequest.

(Added to NRS by 2005, 841)

NRS 104.7306 Alteredbills of lading. An unauthorized alteration orfilling in of a blank in a bill of lading leaves the bill enforceable accordingto its original tenor.

(Added to NRS by 2005, 842)

NRS 104.7307 Lienof carrier.

1. A carrier has a lien on the goods covered by a billof lading or on the proceeds thereof in its possession for charges after the dateof the carriers receipt of the goods for storage or transportation, includingdemurrage and terminal charges, and for expenses necessary for preservation ofthe goods incident to their transportation or reasonably incurred in their salepursuant to law. However, against a purchaser for value of a negotiable bill oflading, a carriers lien is limited to charges stated in the bill or theapplicable tariffs or, if no charges are stated, a reasonable charge.

2. A lien for charges and expenses under subsection 1on goods that the carrier was required by law to receive for transportation iseffective against the consignor or any person entitled to the goods unless thecarrier had notice that the consignor lacked authority to subject the goods tothose charges and expenses. Any other lien under subsection 1 is effectiveagainst the consignor and any person that permitted the bailor to have controlor possession of the goods unless the carrier had notice that the bailor lackedauthority.

3. A carrier loses its lien on any goods that itvoluntarily delivers or unjustifiably refuses to deliver.

(Added to NRS by 2005, 842)

NRS 104.7308 Enforcementof carriers lien.

1. A carriers lien on goods may be enforced by publicor private sale of the goods, in bulk or in packages, at any time or place andon any terms that are commercially reasonable, after notifying all personsknown to claim an interest in the goods. The notification must include astatement of the amount due, the nature of the proposed sale, and the time andplace of any public sale. The fact that a better price could have been obtainedby a sale at a different time or in a method different from that selected bythe carrier is not of itself sufficient to establish that the sale was not madein a commercially reasonable manner. The carrier sells goods in a commerciallyreasonable manner if the carrier sells the goods in the usual manner in anyrecognized market therefor, sells at the price current in that market at thetime of the sale, or otherwise sells in conformity with commercially reasonablepractices among dealers in the type of goods sold. A sale of more goods thanapparently necessary to be offered to ensure satisfaction of the obligation isnot commercially reasonable, except in cases covered by the preceding sentence.

2. Before any sale pursuant to this section, anyperson claiming a right in the goods may pay the amount necessary to satisfythe lien and the reasonable expenses incurred in complying with this section.In that event, the goods may not be sold but must be retained by the carrier,subject to the terms of the bill of lading and this Article.

3. A carrier may buy at any public sale pursuant to thissection.

4. A purchaser in good faith of goods sold to enforcea carriers lien takes the goods free of any rights of persons against whom thelien was valid, despite the carriers noncompliance with this section.

5. A carrier may satisfy its lien from the proceeds ofany sale pursuant to this section but shall hold the balance, if any, fordelivery on demand to any person to which the carrier would have been bound todeliver the goods.

6. The rights provided by this section are in additionto all other rights allowed by law to a creditor against a debtor.

7. A carriers lien may be enforced pursuant to eithersubsection 1 or the procedure set forth in subsection 2 of NRS 104.7210.

8. A carrier is liable for damages caused by failureto comply with the requirements for sale under this section and, in case ofwillful violation, is liable for conversion.

(Added to NRS by 2005, 842)

NRS 104.7309 Dutyof care; contractual limitation of carriers liability.

1. A carrier that issues a bill of lading, whethernegotiable or nonnegotiable, shall exercise the degree of care in relation tothe goods which a reasonably careful person would exercise under similarcircumstances. This subsection does not affect any statute, regulation or ruleof law that imposes liability upon a common carrier for damages not caused byits negligence.

2. Damages may be limited by a term in the bill oflading or in a transportation agreement that the carriers liability may notexceed a value stated in the bill or transportation agreement if the carriersrates are dependent upon value and the consignor is afforded an opportunity todeclare a higher value and the consignor is advised of the opportunity.However, such a limitation is not effective with respect to the carriersliability for conversion to its own use.

3. Reasonable provisions as to the time and manner ofpresenting claims and commencing actions based on the shipment may be includedin a bill of lading or a transportation agreement.

(Added to NRS by 2005, 843)

Part 4

Warehouse Receipts and Bills of Lading: GeneralObligations

NRS 104.7401 Irregularitiesin issue of receipt or bill or conduct of issuer. Theobligations imposed by this Article on an issuer apply to a document of titleeven if:

1. The document does not comply with the requirementsof this Article or of any other statute, rule or regulation regarding itsissuance, form or content;

2. The issuer violated laws regulating the conduct ofits business;

3. The goods covered by the document were owned by thebailee when the document was issued; or

4. The person issuing the document is not a warehousebut the document purports to be a warehouse receipt.

(Added to NRS by 2005, 843)

NRS 104.7402 Duplicatedocument of title; overissue. A duplicate orany other document of title purporting to cover goods already represented by anoutstanding document of the same issuer does not confer any right in the goods,except as provided in the case of tangible bills of lading in a set of parts,overissue of documents for fungible goods, substitutes for lost, stolen ordestroyed documents, or substitute documents issued pursuant to NRS 104.7105. The issuer is liable fordamages caused by its overissue or failure to identify a duplicate document bya conspicuous notation.

(Added to NRS by 2005, 843)

NRS 104.7403 Obligationof bailee to deliver; excuse.

1. A bailee shall deliver the goods to a personentitled under a document of title if the person complies with subsections 2and 3, unless and to the extent that the bailee establishes any of thefollowing:

(a) Delivery of the goods to a person whose receipt wasrightful as against the claimant;

(b) Damage to or delay, loss or destruction of thegoods for which the bailee is not liable;

(c) Previous sale or other disposition of the goods inlawful enforcement of a lien or on a warehouses lawful termination of storage;

(d) The exercise by a seller of its right to stopdelivery pursuant to NRS 104.2705 or bya lessor of its right to stop delivery pursuant to NRS 104A.2526;

(e) A diversion, reconsignment or other dispositionpursuant to NRS 104.7303;

(f) Release, satisfaction or any other personal defenseagainst the claimant; or

(g) Any other lawful excuse.

2. A person claiming goods covered by a document oftitle shall satisfy the bailees lien if the bailee so requests or if thebailee is prohibited by law from delivering the goods until the charges arepaid.

3. Unless a person claiming the goods is a personagainst whom the document of title does not confer a right under subsection 1of NRS 104.7503:

(a) The person claiming under a document shallsurrender possession or control of any outstanding negotiable document coveringthe goods for cancellation or indication of partial deliveries; and

(b) The bailee shall cancel the document or conspicuouslyindicate in the document the partial delivery or the bailee is liable to anyperson to whom the document is duly negotiated.

(Added to NRS by 2005, 843)

NRS 104.7404 Noliability for good-faith delivery pursuant to document of title. A bailee that in good faith has received goods anddelivered or otherwise disposed of the goods according to the terms of adocument of title or pursuant to this Article is not liable for the goods evenif:

1. The person from whom the bailee received the goodsdid not have authority to procure the document or to dispose of the goods; or

2. The person to whom the bailee delivered the goodsdid not have authority to receive the goods.

(Added to NRS by 2005, 844)

Part 5

Warehouse Receipts and Bills of Lading: Negotiation andTransfers

NRS 104.7501 Formof negotiation and requirements of due negotiation.

1. The following rules apply to a negotiable tangibledocument of title:

(a) If the documents original terms run to the orderof a named person, the document is negotiated by the named persons endorsementand delivery. After the named persons endorsement in blank or to bearer, anyperson may negotiate the document by delivery alone.

(b) If the documents original terms run to bearer, itis negotiated by delivery alone.

(c) If the documents original terms run to the orderof a named person and it is delivered to the named person, the effect is thesame as if the document had been negotiated.

(d) Negotiation of the document after it has beenendorsed to a named person requires endorsement by the named person anddelivery.

(e) A document is duly negotiated if it is negotiatedin the manner stated in this subsection to a holder that purchases it in goodfaith, without notice of any defense against or claim to it on the part of anyperson, and for value, unless it is established that the negotiation is not inthe regular course of business or financing or involves receiving the documentin settlement or payment of a monetary obligation.

2. The following rules apply to a negotiableelectronic document of title:

(a) If the documents original terms run to the orderof a named person or to bearer, the document is negotiated by delivery of thedocument to another person. Endorsement by the named person is not required tonegotiate the document.

(b) If the documents original terms run to the orderof a named person and the named person has control of the document, the effectis the same as if the document had been negotiated.

(c) A document is duly negotiated if it is negotiatedin the manner stated in this subsection to a holder that purchases it in goodfaith, without notice of any defense against or claim to it on the part of anyperson, and for value, unless it is established that the negotiation is not inthe regular course of business or financing or involves taking delivery of thedocument in settlement or payment of a monetary obligation.

3. Endorsement of a nonnegotiable document of titleneither makes it negotiable nor adds to the transferees rights.

4. The naming in a negotiable bill of lading of aperson to be notified of the arrival of the goods does not limit thenegotiability of the bill or constitute notice to a purchaser of the bill ofany interest of that person in the goods.

(Added to NRS by 2005, 844)

NRS 104.7502 Rightsacquired by due negotiation.

1. Subject to NRS104.7205 and 104.7503, a holder towhom a negotiable document of title has been duly negotiated acquires thereby:

(a) Title to the document;

(b) Title to the goods;

(c) All rights accruing under the law of agency orestoppel, including rights to goods delivered to the bailee after the documentwas issued; and

(d) The direct obligation of the issuer to hold ordeliver the goods according to the terms of the document free of any defense orclaim by the issuer except those arising under the terms of the document orunder this Article, but in the case of a delivery order, the baileesobligation accrues only upon the bailees acceptance of the delivery order andthe obligation acquired by the holder is that the issuer and any endorser willprocure the acceptance of the bailee.

2. Subject to NRS104.7503, title and rights acquired by due negotiation are not defeated byany stoppage of the goods represented by the document of title or by surrenderof the goods by the bailee and are not impaired even if:

(a) The due negotiation or any prior due negotiationconstituted a breach of duty;

(b) Any person has been deprived of possession of anegotiable tangible document or control of a negotiable electronic document bymisrepresentation, fraud, accident, mistake, duress, loss, theft or conversion;or

(c) A previous sale or other transfer of the goods ordocument has been made to a third person.

(Added to NRS by 2005, 845)

NRS 104.7503 Documentof title to goods defeated in certain cases.

1. A document of title confers no right in goodsagainst a person that before issuance of the document had a legal interest or aperfected security interest in the goods and that did not:

(a) Deliver or entrust the goods or any document oftitle covering the goods to the bailor or the bailors nominee with:

(1) Actual or apparent authority to ship, storeor sell;

(2) Power to obtain delivery under NRS 104.7403; or

(3) Power of disposition under NRS 104.2403, 104.9320, subsection 3 of NRS 104.9321, subsection 2 of NRS 104A.2304 or subsection 2 of NRS 104A.2305, or other statute or ruleof law; or

(b) Acquiesce in the procurement by the bailor or itsnominee of any document.

2. Title to goods based upon an unaccepted deliveryorder is subject to the rights of any person to whom a negotiable warehousereceipt or bill of lading covering the goods has been duly negotiated. Thattitle may be defeated under NRS 104.7504to the same extent as the rights of the issuer or a transferee from the issuer.

3. Title to goods based upon a bill of lading issuedto a freight forwarder is subject to the rights of any person to whom a billissued by the freight forwarder is duly negotiated. However, delivery by thecarrier in accordance with NRS 104.7401to 104.7404, inclusive, pursuant to itsown bill of lading discharges the carriers obligation to deliver.

(Added to NRS by 2005, 845)

NRS 104.7504 Rightsacquired in absence of due negotiation; effect of diversion; stoppage ofdelivery.

1. A transferee of a document of title, whethernegotiable or nonnegotiable, to whom the document has been delivered but notduly negotiated, acquires the title and rights that its transferor had or hadactual authority to convey.

2. In the case of a transfer of a nonnegotiable documentof title, until but not after the bailee receives notice of the transfer, therights of the transferee may be defeated:

(a) By those creditors of the transferor which couldtreat the transfer as void under NRS104.2402 or 104A.2308;

(b) By a buyer from the transferor in ordinary courseof business if the bailee has delivered the goods to the buyer or receivednotification of the buyers rights;

(c) By a lessee from the transferor in ordinary courseof business if the bailee has delivered the goods to the lessee or receivednotification of the lessees rights; or

(d) As against the bailee, by good-faith dealings of thebailee with the transferor.

3. A diversion or other change of shippinginstructions by the consignor in a nonnegotiable bill of lading which causesthe bailee not to deliver the goods to the consignee defeats the consigneestitle to the goods if the goods have been delivered to a buyer in ordinarycourse of business or a lessee in ordinary course of business and, in anyevent, defeats the consignees rights against the bailee.

4. Delivery of the goods pursuant to a nonnegotiabledocument of title may be stopped by a seller under NRS 104.2705 or a lessor under NRS 104A.2526, subject to therequirements of due notification in those sections. A bailee that honors thesellers or lessors instructions is entitled to be indemnified by the selleror lessor against any resulting loss or expense.

(Added to NRS by 2005, 846)

NRS 104.7505 Endorsernot guarantor for other parties. The endorsementof a tangible document of title issued by a bailee does not make the endorserliable for any default by the bailee or previous endorsers.

(Added to NRS by 2005, 846)

NRS 104.7506 Deliverywithout endorsement; right to compel endorsement. Thetransferee of a negotiable tangible document of title has a specificallyenforceable right to have its transferor supply any necessary endorsement, butthe transfer becomes a negotiation only as of the time the endorsement issupplied.

(Added to NRS by 2005, 846)

NRS 104.7507 Warrantieson negotiation or delivery of document of title. Ifa person negotiates or delivers a document of title for value, otherwise thanas a mere intermediary under NRS 104.7508,unless otherwise agreed, the transferor, in addition to any warranty made inselling or leasing the goods, warrants to its immediate purchaser only that:

1. The document is genuine;

2. The transferor does not have knowledge of any factthat would impair the documents validity or worth; and

3. The negotiation or delivery is rightful and fullyeffective with respect to the title to the document and the goods itrepresents.

(Added to NRS by 2005, 846)

NRS 104.7508 Warrantiesof collecting bank as to documents of title. Acollecting bank or other intermediary known to be entrusted with documents oftitle on behalf of another or with collection of a draft or other claim againstdelivery of documents warrants by the delivery of the documents only its owngood faith and authority even if the collecting bank or other intermediary haspurchased or made advances against the claim or draft to be collected.

(Added to NRS by 2005, 847)

NRS 104.7509 Adequatecompliance with commercial contract. Whether adocument of title is adequate to fulfill the obligations of a contract for sale,a contract for lease, or the conditions of a letter of credit is determined byArticle 2, 5 or 2A.

(Added to NRS by 2005, 847)

Part 6

Warehouse Receipts and Bills of Lading: MiscellaneousProvisions

NRS 104.7601 Lost,stolen or destroyed documents of title.

1. If a document of title is lost, stolen ordestroyed, a court may order delivery of the goods or issuance of a substitutedocument and the bailee may without liability to any person comply with theorder. If the document was negotiable, a court may not order delivery of thegoods or issuance of a substitute document without the claimants postingsecurity unless it finds that any person that may suffer loss as a result ofnonsurrender of possession or control of the document is adequately protectedagainst the loss. If the document was nonnegotiable, the court may requiresecurity. The court may also order payment of the bailees reasonable costs andattorneys fees in any action under this subsection.

2. A bailee that, without a court order, deliversgoods to a person claiming under a missing negotiable document of title isliable to any person injured thereby. If the delivery is not in good faith, thebailee is liable for conversion. Delivery in good faith is not conversion ifthe claimant posts security with the bailee in an amount at least double thevalue of the goods at the time of posting to indemnify any person injured bythe delivery who files a notice of claim within 1 year after the delivery.

(Added to NRS by 2005, 847)

NRS 104.7602 Judicialprocess against goods covered by negotiable document of title. Unless a document of title was originally issued upondelivery of the goods by a person that did not have power to dispose of them, alien does not attach by virtue of any judicial process to goods in thepossession of a bailee for which a negotiable document of title is outstandingunless possession or control of the document is first surrendered to the baileeor the documents negotiation is enjoined. The bailee may not be compelled todeliver the goods pursuant to process until possession or control of thedocument is surrendered to the bailee or to the court. A purchaser of thedocument for value without notice of the process or injunction takes free ofthe lien imposed by judicial process.

(Added to NRS by 2005, 847)

NRS 104.7603 Conflictingclaims; interpleader. If more than one personclaims title to or possession of the goods, the bailee is excused from deliveryuntil the bailee has a reasonable time to ascertain the validity of the adverseclaims or to commence an action for interpleader. The bailee may assert aninterpleader either in defending an action for nondelivery of the goods or byoriginal action.

(Added to NRS by 2005, 847)

ARTICLE 8

INVESTMENT SECURITIES

Part 1

Short Title and General Matters

NRS 104.8101 Shorttitle. This article may be cited as UniformCommercial CodeInvestment Securities.

(Added to NRS by 1965, 876; A 1997, 384)

NRS 104.8102 Definitions.

1. In this Article:

(a) Adverse claim means a claim that a claimant has aproperty interest in a financial asset and that it is a violation of the rightsof the claimant for another person to hold, transfer or deal with the financialasset.

(b) Bearer form, as applied to a certificatedsecurity, means a form in which the security is payable to the bearer of thesecurity certificate according to its terms but not by reason of anendorsement.

(c) Broker means a person defined as a broker ordealer under the federal securities laws, but without excluding a bank actingin that capacity.

(d) Certificated security means a security that isrepresented by a certificate.

(e) Clearing corporation means:

(1) A person that is registered as a clearingagency under the federal securities laws;

(2) A Federal Reserve bank; or

(3) Any other person that provides clearance orsettlement with respect to financial assets that would require it to registeras a clearing agency under the federal securities laws but for an exclusion orexemption from the requirement of registration, if its activities as a clearingcorporation, including promulgation of rules, are subject to regulation by afederal or state governmental authority.

(f) Communicate means to:

(1) Send a signed writing; or

(2) Transmit information by any mechanism agreedupon by the persons transmitting and receiving the information.

(g) Endorsement means a signature that alone oraccompanied by other words is made on a security certificate in registered formor on a separate document for the purpose of assigning, transferring orredeeming the security or granting a power to assign, transfer or redeem it.

(h) Entitlement holder means a person identified inthe records of a securities intermediary as the person having a securityentitlement against the securities intermediary. If a person acquires asecurity entitlement by virtue of paragraph (a) or (b) of subsection 2 of NRS 104.8501, he is the entitlementholder.

(i) Entitlement order means a notificationcommunicated to a securities intermediary directing transfer or redemption of afinancial asset to which the entitlement holder has a security entitlement.

(j) Financial asset, except as otherwise provided in NRS 104.8103, means:

(1) A security;

(2) An obligation of a person or a share,participation or other interest in a person or in property or an enterprise ofa person, which is, or is of a type, dealt in or traded on financial markets,or which is recognized in any area in which it is issued or dealt in as amedium for investment; or

(3) Any property that is held by a securitiesintermediary for another person in a securities account if the securitiesintermediary has expressly agreed with the other person that the property is tobe treated as a financial asset under this Article.

As contextrequires, the term means the interest itself or the means by which a personsclaim to it is evidenced, including a certificated or uncertificated security,a security certificate or a security entitlement.

(k) Instruction means a notification communicated tothe issuer of an uncertificated security which directs that the transfer of thesecurity be registered or that the security be redeemed.

(l) Registered form, as applied to a certificatedsecurity, means a form in which:

(1) The security certificate specifies a personentitled to the security; and

(2) A transfer of the security may be registeredupon books maintained for that purpose by or on behalf of the issuer, or thesecurity certificate so states.

(m) Securities intermediary means:

(1) A clearing corporation; or

(2) A person, including a bank or broker, that inthe ordinary course of its business maintains securities accounts for othersand is acting in that capacity.

(n) Security, except as otherwise provided in NRS 104.8103, means an obligation of anissuer or a share, participation or other interest in an issuer or in propertyor an enterprise of an issuer:

(1) Which is represented by a securitycertificate in bearer or registered form, or the transfer of which may beregistered upon books maintained for that purpose by or on behalf of theissuer;

(2) Which is one of a class or series or by itsterms is divisible into a class or series of shares, participations, interestsor obligations; and

(3) Which:

(I) Is, or is of a type, dealt in ortraded on securities exchanges or securities markets; or

(II) Is a medium for investment and by itsterms expressly provides that it is a security governed by this Article.

(o) Security certificate means a certificaterepresenting a security.

(p) Security entitlement means the rights andproperty interest of an entitlement holder with respect to a financial assetspecified in part 5 of this Article.

(q) Uncertificated security means a security that isnot represented by a certificate.

2. Other definitions applying to this Article and thesections in which they appear are:

 

Appropriate person. NRS 104.8107.

Control. NRS 104.8106.

Delivery. NRS 104.8301.

Investment company security. NRS 104.8103.

Issuer. NRS 104.8201.

Overissue. NRS 104.8210.

Protected purchaser. NRS 104.8303.

Securities account. NRS 104.8501.

 

3. In addition, Article 1 contains general definitionsand principles of construction and interpretation applicable throughout thisArticle.

4. The characterization of a person, business ortransaction for purposes of this Article does not determine thecharacterization of the person, business or transaction for purposes of anyother law, regulation or rule.

(Added to NRS by 1965, 876; A 1973, 912; 1985, 85;1995, 1074; 1997, 385; 2005,857)

NRS 104.8103 Rulesfor determining whether certain obligations and interests are securities orfinancial assets.

1. A share or similar equity interest issued bya corporation, business trust, joint stock company or similar entity is asecurity.

2. An investment company security is a security.Investment company security means a share or similar equity interest issuedby an entity that is registered as an investment company under the federalinvestment company laws, an interest in a unit investment trust that is soregistered or a face-amount certificate issued by a face-amount certificatecompany that is so registered. The term does not include an insurance policy orendowment policy or annuity contract issued by an insurance company.

3. An interest in a partnership or limited-liabilitycompany is not a security unless it is dealt in or traded on securitiesexchanges or in securities markets, its terms expressly provide that it is asecurity governed by this Article, or it is an investment company security.However, an interest in a partnership or limited-liability company is afinancial asset if it is held in a securities account.

4. A writing that is a security certificate isgoverned by this Article and not by Article 3, even though it also meets therequirements of that Article. However, a negotiable instrument governed byArticle 3 is a financial asset if it is held in a securities account.

5. An option or similar obligation issued by aclearing corporation to its participants is not a security, but is a financialasset.

6. A commodity contract, as defined in paragraph (o)of subsection 1 of NRS 104.9102, is nota security or a financial asset.

7. A document of title is not a financial asset unlesssubparagraph 3 of paragraph (j) of subsection 1 of NRS 104.8102 applies.

(Added to NRS by 1997, 359; A 1999, 376; 2005, 859)

NRS 104.8104 Acquisitionof security or financial asset or interest therein.

1. A person acquires a security, or an interesttherein, under this article, if he:

(a) Is a purchaser to whom a security is deliveredpursuant to NRS 104.8301; or

(b) Acquires a security entitlement to the securitypursuant to NRS 104.8501.

2. A person acquires a financial asset, other than asecurity, or an interest therein, under this article, if he acquires a securityentitlement to the financial asset.

3. A person who acquires a security entitlement to asecurity or other financial asset has the rights specified in part 5 of thisarticle, but is a purchaser of any security, security entitlement or otherfinancial asset held by the securities intermediary only to the extent providedin NRS 104.8503.

4. Unless the context shows that a different meaningis intended, a person who is required by other law, regulation, rule oragreement to transfer, deliver, present, surrender, exchange or otherwise putin the possession of another person a security or financial asset satisfiesthat requirement by causing the other person to acquire an interest in thesecurity or financial asset pursuant to subsection 1 or 2.

(Added to NRS by 1997, 360)

NRS 104.8105 Noticeof adverse claim.

1. A person has notice of an adverse claim ifhe:

(a) Knows of the adverse claim;

(b) Is aware of facts sufficient to indicate that thereis a significant probability that the adverse claim exists and deliberatelyavoids information that would establish the existence of the adverse claim; or

(c) Has a duty, imposed by statute or regulation, toinvestigate whether an adverse claim exists, and the investigation so requiredwould establish the existence of the adverse claim.

2. Having knowledge that a financial asset or interesttherein is or has been transferred by a representative imposes no duty ofinquiry into the rightfulness of a transaction and is not notice of an adverseclaim. However, a person who knows that a representative has transferred a financialasset or interest therein in a transaction that is, or whose proceeds are beingused, for the individual benefit of the representative or otherwise in breachof duty has notice of an adverse claim.

3. An act or event that creates a right to immediateperformance of the principal obligation represented by a security certificateor sets a date on or after which the certificate is to be presented orsurrendered for redemption or exchange does not itself constitute notice of anadverse claim except in the case of a transfer more than:

(a) One year after a date set for presentment orsurrender for redemption or exchange; or

(b) Six months after a date set for payment of moneyagainst presentation or surrender of the certificate, if money was availablefor payment on that date.

4. A purchaser of a certificated security has noticeof an adverse claim if the security certificate:

(a) Whether in bearer or registered form, has beenendorsed for collection or for surrender or for some other purpose notinvolving transfer; or

(b) Is in bearer form and has on it an unambiguousstatement that it is the property of a person other than the transferor, butthe mere writing of a name on the certificate is not such a statement.

5. Filing of a financing statement under article 9 isnot notice of an adverse claim to a financial asset.

(Added to NRS by 1965, 881; A 1985, 95; 1997, 396)

NRS 104.8106 Control.

1. A purchaser has control of a certificatedsecurity in bearer form if it is delivered to him.

2. A purchaser has control of a certificatedsecurity in registered form if it is delivered to him and:

(a) The certificate is endorsed to him or in blank byan effective endorsement; or

(b) The certificate is registered in his name, uponoriginal issue or registration of transfer by the issuer.

3. A purchaser has control of an uncertificatedsecurity if:

(a) It is delivered to him; or

(b) The issuer has agreed that it will comply withinstructions originated by him without further consent by the registered owner.

4. A purchaser has control of a security entitlementif:

(a) He becomes the entitlement holder;

(b) The securities intermediary has agreed that it willcomply with entitlement orders originated by him without further consent by theentitlement holder; or

(c) Another person has control of the securityentitlement on his behalf or, having previously acquired control of thesecurity entitlement, acknowledges that it has control on his behalf.

5. If an interest in a security entitlement is grantedby the entitlement holder to the entitlement holders own securitiesintermediary, the securities intermediary has control.

6. A purchaser who has satisfied the requirements ofsubsection 3 or 4 has control even if the registered owner in the case ofsubsection 3 or the entitlement holder in the case of subsection 4 retains theright to make substitutions for the uncertificated security or securityentitlement, originate instructions or entitlement orders to the issuer orsecurities intermediary or otherwise deal with the uncertificated security orsecurity entitlement.

7. An issuer or a securities intermediary may notenter into an agreement of the kind described in paragraph (b) of subsection 3or paragraph (b) of subsection 4 without the consent of the registered owner orentitlement holder, but an issuer or a securities intermediary is not requiredto enter into such an agreement even if the registered owner or entitlementholder so directs. An issuer or securities intermediary that has entered intosuch an agreement is not required to confirm the existence of the agreement toanother party unless requested to do so by the registered owner or entitlementholder.

(Added to NRS by 1997, 360; A 1999, 376)

NRS 104.8107 Whetherendorsement, instruction or entitlement order is effective.

1. Appropriate person means:

(a) With respect to an endorsement, the personspecified by a security certificate or by an effective special endorsement tobe entitled to the security;

(b) With respect to an instruction, the registeredowner of an uncertificated security;

(c) With respect to an entitlement order, theentitlement holder;

(d) If the person designated in paragraph (a), (b) or(c) is deceased, his successor taking under other law or his personalrepresentative acting for his estate; or

(e) If the person designated in paragraph (a), (b) or(c) lacks capacity, his guardian, conservator or other similar representativewho has power under other law to transfer the security or financial asset.

2. An endorsement, instruction or entitlement order iseffective if:

(a) It is made by the appropriate person;

(b) It is made by a person who has power under the lawof agency to transfer the security or financial asset on behalf of theappropriate person, including, in the case of an instruction or entitlementorder, a person who has control under paragraph (b) of subsection 3 orparagraph (b) of subsection 4 of NRS104.8106; or

(c) The appropriate person has ratified it or isotherwise precluded from asserting its ineffectiveness.

3. An endorsement, instruction or entitlement ordermade by a representative is effective even if:

(a) The representative has failed to comply with acontrolling instrument or with the law of the state having jurisdiction of therepresentative relationship, including any law requiring the representative toobtain court approval of the transaction; or

(b) The representatives action in making theendorsement, instruction or entitlement order or using the proceeds of thetransaction is otherwise a breach of duty.

4. If a security is registered in the name of orspecially endorsed to a person described as a representative, or if asecurities account is maintained in the name of a person described as arepresentative, an endorsement, instruction or entitlement order made by him iseffective even though he is no longer serving in the described capacity.

5. Effectiveness of an endorsement, instruction orentitlement order is determined as of the date the endorsement, instruction orentitlement order is made, and an endorsement, instruction or entitlement orderdoes not become ineffective by reason of any later change of circumstances.

(Added to NRS by 1997, 361)

NRS 104.8108 Warrantiesin direct holding.

1. A person who transfers a certificatedsecurity to a purchaser for value warrants to the purchaser, and an endorser,if the transfer is by endorsement, warrants to any subsequent purchaser, that:

(a) The certificate is genuine and has not beenmaterially altered;

(b) The transferor or endorser does not know of anyfact that might impair the validity of the security;

(c) There is no adverse claim to the security;

(d) The transfer does not violate any restriction ontransfer;

(e) If the transfer is by endorsement, the endorsementis made by an appropriate person, or if the endorsement is by an agent, theagent has actual authority to act on behalf of the appropriate person; and

(f) The transfer is otherwise effective and rightful.

2. A person who originates an instruction forregistration of transfer of an uncertificated security to a purchaser for valuewarrants to the purchaser that:

(a) The instruction is made by an appropriate person,or if the instruction is by an agent, the agent has actual authority to act onbehalf of the appropriate person;

(b) The security is valid;

(c) There is no adverse claim to the security; and

(d) At the time the instruction is presented to theissuer:

(1) The purchaser will be entitled to theregistration of transfer;

(2) The transfer will be registered by theissuer free from all liens, security interests, restrictions and claims otherthan those specified in the instruction;

(3) The transfer will not violate anyrestriction on transfer; and

(4) The requested transfer will otherwise beeffective and rightful.

3. A person who transfers an uncertificated securityto a purchaser for value and does not originate an instruction in connectionwith the transfer warrants that:

(a) The uncertificated security is valid;

(b) There is no adverse claim to the security;

(c) The transfer does not violate any restriction ontransfer; and

(d) The transfer is otherwise effective and rightful.

4. A person who endorses a security certificatewarrants to the issuer that:

(a) There is no adverse claim to the security; and

(b) The endorsement is effective.

5. A person who originates an instruction forregistration of transfer of an uncertificated security warrants to the issuerthat:

(a) The instruction is effective; and

(b) At the time the instruction is presented to theissuer, the purchaser will be entitled to the registration of transfer.

6. A person who presents a certificated security forregistration of transfer or for payment or exchange warrants to the issuer thathe is entitled to the registration, payment or exchange, but a purchaser forvalue and without notice of adverse claims to whom transfer is registeredwarrants only that he has no knowledge of any unauthorized signature in anecessary endorsement.

7. If a person acts as an agent of another indelivering a certificated security to a purchaser, the identity of the principalwas known to the person to whom the certificate was delivered, and thecertificate delivered by the agent was received by the agent from the principalor received by the agent from another person at the direction of the principal,the person delivering the security certificate warrants only that he hasauthority to act for the principal and does not know of any adverse claim tothe certificated security.

8. A secured party who redelivers a securitycertificate received, or after payment and on order of the debtor delivers thesecurity certificate to another person, makes only the warranties of an agentunder subsection 7.

9. Except as otherwise provided in subsection 7, abroker acting for a customer makes to the issuer and a purchaser the warrantiesprovided in subsections 1 to 7, inclusive. A broker that delivers a securitycertificate to its customer, or causes its customer to be registered as theowner of an uncertificated security, makes to the customer the warrantiesprovided in subsection 1 or 2 and has the rights and privileges of a purchaserunder this section. The warranties of and in favor of the broker acting as anagent are in addition to applicable warranties given by and in favor of thecustomer.

(Added to NRS by 1997, 362)

NRS 104.8109 Warrantiesin indirect holding.

1. A person who originates an entitlement orderto a securities intermediary warrants to the securities intermediary that:

(a) The entitlement order is made by an appropriateperson, or if the entitlement order is by an agent, the agent has actualauthority to act on behalf of the appropriate person; and

(b) There is no adverse claim to the securityentitlement.

2. A person who delivers a security certificate to asecurities intermediary for credit to a securities account or originates aninstruction with respect to an uncertificated security directing that theuncertificated security be credited to a securities account makes to thesecurities intermediary the warranties specified in subsection 1 or 2 of NRS 104.8108.

3. If a securities intermediary delivers a securitycertificate to its entitlement holder or causes its entitlement holder to beregistered as the owner of an uncertificated security, the securitiesintermediary makes to the entitlement holder the warranties specified insubsection 1 or 2 of NRS 104.8108.

(Added to NRS by 1997, 363)

NRS 104.8110 Applicability;choice of law.

1. The local law of the issuers jurisdiction,as specified in subsection 4, governs:

(a) The validity of a security;

(b) The rights and duties of the issuer with respect toregistration of transfer;

(c) The effectiveness of registration of transfer bythe issuer;

(d) Whether the issuer owes any duties to an adverseclaimant to a security; and

(e) Whether an adverse claim can be asserted against aperson to whom transfer of a certificated or uncertificated security isregistered or a person who obtains control of an uncertificated security.

2. The local law of the securities intermediarysjurisdiction, as specified in subsection 5, governs:

(a) Acquisition of a security entitlement from thesecurities intermediary;

(b) The rights and duties of the securitiesintermediary and entitlement holder arising out of a security entitlement;

(c) Whether the securities intermediary owes any dutiesto an adverse claimant to a security entitlement; and

(d) Whether an adverse claim can be asserted against aperson who acquires a security entitlement from the securities intermediary ora person who purchases a security entitlement or interest therein from anentitlement holder.

3. The local law of the jurisdiction in which asecurity certificate is located at the time of delivery governs whether anadverse claim can be asserted against a person to whom the security certificateis delivered.

4. Issuers jurisdiction means the jurisdictionunder which the issuer of the security is organized or, if permitted by the lawof that jurisdiction, the law of another jurisdiction specified by the issuer.An issuer organized under the law of this State may specify the law of anotherjurisdiction as the law governing the matters specified in paragraphs (b) to(e), inclusive, of subsection 1.

5. The following rules determine a securitiesintermediarys jurisdiction for purposes of this section:

(a) If an agreement between the securities intermediaryand its entitlement holder expressly provides the securities intermediarysjurisdiction for purposes of this part, this article or the Uniform CommercialCode, that jurisdiction is the securities intermediarys jurisdiction.

(b) If paragraph (a) does not apply and an agreementbetween the securities intermediary and its entitlement holder governing thesecurities account expressly provides that the agreement is governed by the lawof a particular jurisdiction, that jurisdiction is the securitiesintermediarys jurisdiction.

(c) If neither paragraph (a) nor paragraph (b) appliesand an agreement between the securities intermediary and its entitlement holdergoverning the securities account expressly provides that the securities accountis maintained at an office in a particular jurisdiction, that jurisdiction isthe securities intermediarys jurisdiction.

(d) If neither paragraph (a) nor paragraph (b) norparagraph (c) applies, the securities intermediarys jurisdiction is thejurisdiction in which the office identified in an account statement as theoffice serving the entitlement holders account is located.

(e) If none of the preceding paragraphs applies, thesecurities intermediarys jurisdiction is the jurisdiction in which its chiefexecutive office is located.

6. A securities intermediarys jurisdiction is notdetermined by the physical location of certificates representing financialassets, or by the jurisdiction in which is organized the issuer of thefinancial asset with respect to which an entitlement holder has a securityentitlement or by the location of facilities for data processing or otherrecordkeeping concerning the account.

(Added to NRS by 1965, 878; A 1985, 89; 1997, 390; 1999, 377)

NRS 104.8111 Rulesof clearing corporation. A rule adopted by aclearing corporation governing rights and obligations among the clearingcorporation and its participants in the clearing corporation is effective evenif the rule conflicts with the Uniform Commercial Code and affects anotherparty who does not consent to the rule.

(Added to NRS by 1997, 364)

NRS 104.8112 Creditorslegal process.

1. Except as otherwise provided in subsection4, the interest of a debtor in a certificated security may be reached by acreditor only by actual seizure of the security certificate by the officermaking the attachment or levy. However, a certificated security for which thecertificate has been surrendered to the issuer may be reached by a creditor bylegal process upon the issuer.

2. Except as otherwise provided in subsection 4, theinterest of a debtor in an uncertificated security may be reached by a creditoronly by legal process upon the issuer at its chief executive office in theUnited States.

3. Except as otherwise provided in subsection 4, theinterest of a debtor in a security entitlement may be reached by a creditoronly by legal process upon the securities intermediary with whom the debtorssecurities account is maintained.

4. The interest of a debtor in a certificated securityfor which the certificate is in the possession of a secured party, or in anuncertificated security registered in the name of a secured party, or asecurity entitlement maintained in the name of a secured party, may be reachedby a creditor by legal process upon the secured party.

5. A creditor whose debtor is the owner of acertificated security, uncertificated security or security entitlement isentitled to aid from a court of competent jurisdiction, by injunction orotherwise, in reaching the certificated security, uncertificated security orsecurity entitlement or in satisfying the claim by means allowed at law or inequity in regard to property that cannot readily be reached by other legalprocess.

(Added to NRS by 1965, 885; A 1985, 106; 1989, 587;1997, 397)

NRS 104.8113 Statuteof frauds inapplicable. A contract ormodification of a contract for the sale or purchase of a security isenforceable whether or not there is a writing signed or record authenticated bya party against whom enforcement is sought, even if the contract ormodification is not capable of performance within 1 year after its making.

(Added to NRS by 1965, 885; A 1985, 107; 1997, 399)

NRS 104.8114 Evidentiaryrules concerning certificated securities. Thefollowing rules apply in an action on a certificated security against anissuer:

1. Unless specifically denied in the pleadings, eachsignature on a security certificate or in a necessary endorsement is admitted.

2. If the effectiveness of a signature is put inissue, the burden of establishing effectiveness is on the party claiming underthe signature, but the signature is presumed to be genuine or authorized.

3. If signatures on a security certificate areadmitted or established, production of the certificate entitles a holder torecover on it unless the defendant establishes a defense or a defect going tothe validity of the security.

4. If it is shown that a defense or defect exists, theplaintiff has the burden of establishing that he or some person under whom he claimsis a person against whom the defense or defect cannot be asserted.

(Added to NRS by 1965, 877; A 1985, 88; 1997, 389)

NRS 104.8115 Securitiesintermediary and others not liable to adverse claimant. A securities intermediary that has transferred a financialasset pursuant to an effective entitlement order, or a broker or other agent orbailee that has dealt with a financial asset at the direction of his customeror principal, is not liable to a person having an adverse claim to thefinancial asset, unless he:

1. Took the action afterhe had been served with an injunction, restraining order or other legal processenjoining him from doing so, issued by a court of competent jurisdiction, andhad a reasonable opportunity to act on the injunction, restraining order orother legal process;

2. Acted in collusionwith the wrongdoer in violating the rights of the adverse claimant; or

3. In the case of asecurity certificate that had been stolen, acted with notice of the adverseclaim.

(Added to NRS by 1965, 885; A 1985, 106; 1997, 398)

NRS 104.8116 Securitiesintermediary as purchaser for value. A securitiesintermediary that receives a financial asset and establishes a securityentitlement to the financial asset in favor of an entitlement holder is apurchaser for value of the financial asset. A securities intermediary thatacquires a security entitlement to a financial asset from another securitiesintermediary acquires the security entitlement for value if the securitiesintermediary acquiring the security entitlement establishes a securityentitlement to the financial asset in favor of an entitlement holder.

(Added to NRS by 1997, 364)

Part 2

Issue and Issuer

NRS 104.8201 Issuer.

1. With respect to an obligation on or adefense to a security, an issuer includes a person who:

(a) Places or authorizes the placing of his name on asecurity certificate, other than as authenticating trustee, registrar, transferagent or the like, to evidence a share, participation or other interest in hisproperty or in an enterprise, or to evidence his duty to perform an obligationrepresented by the certificate;

(b) Creates a share, participation or other interest inhis property or in an enterprise, or undertakes an obligation, that is anuncertificated security;

(c) Directly or indirectly creates a fractionalinterest in his rights or property, if the fractional interest is representedby a security certificate; or

(d) Becomes responsible for, or in place of, any otherperson described as an issuer in this section.

2. With respect to an obligation on or defense to asecurity, a guarantor is an issuer to the extent of his guaranty, whether ornot his obligation is noted on a security certificate.

3. With respect to registration of transfer, issuermeans a person on whose behalf transfer books are maintained.

(Added to NRS by 1965, 878; A 1985, 90; 1997, 391)

NRS 104.8202 Issuersresponsibility and defenses; notice of defect or defense.

1. Even against a purchaser for value andwithout notice, the terms of a certificated security include the terms statedon the certificate and the terms made part of the security by reference on thecertificate to another instrument, indenture, or document or to a constitution,statute, ordinance, rule, regulation, order or the like, to the extent theterms referred to do not conflict with terms stated on the certificate. Areference under this subsection does not of itself charge a purchaser for valuewith notice of a defect going to the validity of the security, even if thecertificate expressly states that a person accepting it admits notice. Theterms of an uncertificated security include those stated in any instrument,indenture or document, or in a constitution, statute, ordinance, rule,regulation, order or the like, pursuant to which the security was issued.

2. The following rules apply if an issuer asserts thata security is not valid:

(a) A security other than one issued by a government orgovernmental subdivision, agency or instrumentality, even though issued with adefect going to its validity, is valid in the hands of a purchaser for valueand without notice of the particular defect unless the defect involves aviolation of a constitutional provision. In that case the security is valid inthe hands of a purchaser for value and without notice of the defect other thanone who takes by original issue.

(b) Paragraph (a) applies to an issuer that is agovernment or governmental subdivision, agency or instrumentality only if therehas been substantial compliance with the legal requirements governing the issueor the issuer has received a substantial consideration for the issue as a wholeor for the particular security and a stated purpose of the issue is one forwhich the issuer has power to borrow money or issue the security.

3. Except as otherwise provided in NRS 104.8205, lack of genuineness of acertificated security is a complete defense even against a purchaser for valueand without notice.

4. All other defenses of the issuer of a security,including nondelivery and conditional delivery of a certificated security, areineffective against a purchaser for value who has taken the certificatedsecurity without notice of the particular defense.

5. This section does not affect the right of a partyto cancel a contract for a security when, as and if issued or whendistributed in the event of a material change in the character of the securitythat is the subject of the contract or in the plan or arrangement pursuant towhich the security is to be issued or distributed.

6. If a security is held by a securities intermediaryagainst whom an entitlement holder has a security entitlement with respect tothe security, the issuer may not assert any defense that it could not assert ifthe entitlement holder held the security directly.

(Added to NRS by 1965, 879; A 1985, 90; 1997, 392)

NRS 104.8203 Stalenessas notice of defect or defense. After an actor event, other than a call that has been revoked, creating a right toimmediate performance of the principal obligation represented by a certificatedsecurity or setting a date on or after which the security is to be presented orsurrendered for redemption or exchange, a purchaser is charged with notice ofany defect in its issue or defense of the issuer if the act or event:

1. Requires the payment of money, the delivery of acertificated security, the registration of transfer of an uncertificatedsecurity, or any of them on presentation or surrender of the securitycertificate, the money or security is available on the date set for payment orexchange, and he takes the security more than 1 year after that date; or

2. Is not covered by subsection 1 and he takes thesecurity more than 2 years after the date set for surrender or presentation orthe date on which performance became due.

(Added to NRS by 1965, 879; A 1985, 92; 1997, 393)

NRS 104.8204 Effectof issuers restriction on transfer. Arestriction on transfer of a security imposed by the issuer, even if otherwiselawful, is ineffective against any person without actual knowledge of therestriction unless:

1. The security is certificated and the restriction isnoted conspicuously on the security certificate; or

2. The security is uncertificated and the registeredowner has been notified of the restriction.

(Added to NRS by 1965, 880; A 1985, 92; 1997, 393)

NRS 104.8205 Effectof unauthorized signature on security certificate. Anunauthorized signature placed on a security certificate before or in the courseof issue is ineffective, but the signature is effective in favor of a purchaserfor value of the certificated security if the purchaser is without notice ofthe lack of authority and the signing has been done by:

1. An authenticating trustee, registrar, transferagent or other person entrusted by the issuer with the signing of the securitycertificate or of similar security certificates, or the immediate preparationfor signing of any of them; or

2. An employee of the issuer, or of any of the personslisted in subsection 1, entrusted with responsible handling of the securitycertificate.

(Added to NRS by 1965, 880; A 1985, 92; 1997, 393)

NRS 104.8206 Completionor alteration of security certificate.

1. If a security certificate contains the signaturesnecessary to its issue or transfer but is incomplete in any other respect:

(a) Any person may complete it by filling in the blanksas authorized; and

(b) Even though the blanks are incorrectly filled in,the security certificate as completed is enforceable by a purchaser who took itfor value and without notice of the incorrectness.

2. A complete security certificate that has beenimproperly altered, even though fraudulently, remains enforceable, but onlyaccording to its original terms.

(Added to NRS by 1965, 880; A 1985, 93; 1997, 394; 1999, 403)

NRS 104.8207 Rightsand duties of issuer with respect to registered owners.

1. Before the presentment for registration oftransfer of a certificated security in registered form or of an instructionrequesting transfer of an uncertificated security, the issuer or indenturetrustee may treat the registered owner as the person exclusively entitled tovote, receive notifications and otherwise exercise all the rights and powers ofan owner.

2. This article does not affect the liability of theregistered owner of a security for calls, assessments or the like.

(Added to NRS by 1965, 880; A 1985, 93; 1997, 394)

NRS 104.8208 Effectof signature of authenticating trustee, registrar or transfer agent.

1. A person signing a security certificate asauthenticating trustee, registrar, transfer agent or the like warrants to apurchaser for value of the certificated security, if the purchaser is withoutnotice of a particular defect, that:

(a) The certificate is genuine;

(b) His own participation in the issue or registrationof the transfer, pledge or release of the security is within his capacity andwithin the scope of the authority received by him from the issuer; and

(c) He has reasonable grounds to believe that thecertificated security is in the form and within the amount the issuer isauthorized to issue.

2. Unless otherwise agreed, a person signing undersubsection 1 does not assume responsibility for the validity of the security inother respects.

(Added to NRS by 1965, 880; A 1985, 94; 1997, 395)

NRS 104.8209 Issuerslien. A lien in favor of an issuer upon acertificated security is valid against a purchaser only if the right of theissuer to the lien is noted conspicuously on the security certificate.

(Added to NRS by 1965, 877; A 1985, 88; 1997, 388)

NRS 104.8210 Overissue.

1. As used in this section, overissue meansthe issue of securities in excess of the amount the issuer has corporate powerto issue, but an overissue does not occur if appropriate action has cured theoverissue.

2. Except as otherwise provided in subsections 3 and4, the provisions of this article which validate a security or compel its issueor reissue do not apply to the extent that validation, issue or reissue wouldresult in overissue.

3. If an identical security not constituting anoverissue is reasonably available for purchase, a person entitled to issue orvalidation may compel the issuer to purchase the security and deliver it ifcertificated or register its transfer if uncertificated, against surrender ofany security certificate he holds.

4. If a security is not reasonably available forpurchase, a person entitled to issue or validation may recover from the issuerthe price he or the last purchaser for value paid for it with interest from thedate of his demand.

(Added to NRS by 1965, 877; A 1985, 88; 1997, 389)

Part 3

Transfer of Certificated and Uncertificated Securities

NRS 104.8301 Delivery.

1. Delivery of a certificated security to a purchaseroccurs when:

(a) The purchaser acquires possession of the securitycertificate;

(b) Another person, other than a securitiesintermediary, acquires possession of the security certificate on behalf of thepurchaser or, having previously acquired possession of the certificate,acknowledges that it holds for the purchaser; or

(c) A securities intermediary acting on behalf of thepurchaser acquires possession of the security certificate, only if thecertificate is in registered form and is registered in the name of thepurchaser, payable to the order of the purchaser, or specially endorsed to thepurchaser by an effective endorsement and has not been endorsed to thesecurities intermediary or in blank.

2. Delivery of an uncertificated security to apurchaser occurs when:

(a) The issuer registers the purchaser as theregistered owner, upon original issue or registration of transfer; or

(b) Another person, other than a securitiesintermediary, becomes the registered owner of the uncertificated security onbehalf of the purchaser or, having previously become the registered owner,acknowledges that it holds for the purchaser.

(Added to NRS by 1997, 364; A 1999, 378)

NRS 104.8302 Rightsof purchaser.

1. Except as otherwise provided in subsections2 and 3, a purchaser of a certificated or uncertificated security acquires allrights in the security that the transferor had or had power to transfer.

2. A purchaser of a limited interest acquires rightsonly to the extent of the interest purchased.

3. A purchaser of a certificated security who as aprevious holder had notice of an adverse claim does not improve its position bytaking from a protected purchaser.

(Added to NRS by 1997, 364; A 1999, 379)

NRS 104.8303 Protectedpurchaser.

1. Protected purchaser means a purchaser of acertificated or uncertificated security, or of an interest therein, who:

(a) Gives value;

(b) Does not have notice of any adverse claim to thesecurity; and

(c) Obtains control of the certificated oruncertificated security.

2. In addition to acquiring the rights of a purchaser,a protected purchaser also acquires its interest in the security free of anyadverse claim.

(Added to NRS by 1997, 364)

NRS 104.8304 Endorsement.

1. An endorsement may be in blank or special.An endorsement in blank includes an endorsement to bearer. A specialendorsement specifies to whom a security is to be transferred or who has powerto transfer it. A holder may convert a blank endorsement to a specialendorsement.

2. An endorsement purporting to be only of part of asecurity certificate representing units intended by the issuer to be separatelytransferable is effective to the extent of the endorsement.

3. An endorsement, whether special or in blank, doesnot constitute a transfer until delivery of the certificate on which it appearsor, if the endorsement is on a separate document, until delivery of both thedocument and the certificate.

4. If a security certificate in registered form hasbeen delivered to a purchaser without a necessary endorsement, the purchasermay become a protected purchaser only when the endorsement is supplied.However, against a transferor, a transfer is complete upon delivery and thepurchaser has a specifically enforceable right to have any necessary endorsementsupplied.

5. An endorsement of a security certificate in bearerform may give notice of an adverse claim to the certificate, but it does nototherwise affect a right to registration that the holder possesses.

6. Unless otherwise agreed, a person making anendorsement assumes only the obligations provided in NRS 104.8108 and not an obligation thatthe security will be honored by the issuer.

(Added to NRS by 1997, 365)

NRS 104.8305 Instruction.

1. If an instruction has been originated by anappropriate person but is incomplete in any other respect, any person maycomplete it as authorized and the issuer may rely on it as completed, eventhough it has been completed incorrectly.

2. Unless otherwise agreed, a person initiating aninstruction assumes only the obligations imposed by NRS 104.8108 and not an obligation thatthe security will be honored by the issuer.

(Added to NRS by 1997, 365)

NRS 104.8306 Effectof guaranteeing signature, endorsement or instruction.

1. A person who guarantees a signature of anendorser of a security certificate warrants that at the time of signing:

(a) The signature was genuine;

(b) The signer was an appropriate person to endorse, orif the signature is by an agent, the agent had actual authority to act onbehalf of the appropriate person; and

(c) The signer had legal capacity to sign.

2. A person who guarantees a signature of theoriginator of an instruction warrants that at the time of signing:

(a) The signature was genuine;

(b) The signer was an appropriate person to originatethe instruction, or if the signature is by an agent, the agent had actualauthority to act on behalf of the appropriate person, if the person specifiedin the instruction as the registered owner was, in fact, the registered owner,as to which fact the signature guarantor does not make a warranty; and

(c) The signer had legal capacity to sign.

3. A person who specially guarantees the signature ofthe originator of an instruction makes the warranties of a guarantor undersubsection 2 and also warrants that at the time the instruction is presented tothe issuer:

(a) The person specified in the instruction as theregistered owner of the uncertificated security will be the registered owner;and

(b) The transfer of the uncertificated securityrequested in the instruction will be registered by the issuer free from allliens, security interests, restrictions and claims other than those specifiedin the instruction.

4. A guarantor under subsections 1 and 2 or a specialguarantor under subsection 3 does not otherwise warrant the rightfulness of thetransfer.

5. A person who guarantees an endorsement of asecurity certificate makes the warranties of a guarantor under subsection 1 andalso warrants the rightfulness of the transfer in all respects.

6. A person who guarantees an instruction requestingthe transfer of an uncertificated security makes the warranties of a specialguarantor under subsection 3 and also warrants the rightfulness of the transferin all respects.

7. An issuer may not require a special guaranty ofsignature, a guaranty of endorsement or a guaranty of instruction as acondition to registration of transfer.

8. The warranties under this section are made to aperson taking or dealing with the security in reliance on the guaranty, and theguarantor is liable to the person for loss resulting from their breach. Anendorser or originator of an instruction whose signature, endorsement orinstruction has been guaranteed is liable to a guarantor for any loss sufferedby the guarantor as a result of a breach of the warranties of the guarantor.

(Added to NRS by 1997, 365)

NRS 104.8307 Purchasersright to requisites for registration of transfer. Unlessotherwise agreed, the transferor of a security on due demand shall supply thepurchaser with proof of authority to transfer or with any other requisitenecessary to obtain registration of the transfer of the security, but if thetransfer is not for value, a transferor need not comply unless the purchaserpays the necessary expenses. If the transferor fails within a reasonable timeto comply with the demand, the purchaser may reject or rescind the transfer.

(Added to NRS by 1965, 885; A 1985, 105; 1997, 397)

Part 4

Registration

NRS 104.8401 Dutyof issuer to register transfer.

1. If a certificated security in registeredform is presented to an issuer with a request to register transfer or aninstruction is presented to an issuer with a request to register transfer of anuncertificated security, the issuer shall register the transfer, pledge orrelease as requested if:

(a) Under the terms of the security, the person seekingregistration of transfer is eligible to have the security registered in hisname;

(b) The endorsement or instruction is made by theappropriate person or by an agent who has actual authority to act on behalf ofthe appropriate person;

(c) Reasonable assurance is given that the endorsementor instruction is genuine and authorized;

(d) Any applicable law relating to the collection oftaxes has been complied with;

(e) The transfer does not violate any restriction ontransfer imposed by the issuer in accordance with NRS 104.8204;

(f) A demand that the issuer not register transfer hasnot become effective under NRS 104.8403,or the issuer has complied with subsection 2 of that section but no legalprocess or indemnity bond is obtained as provided in subsection 4 of that section;and

(g) The transfer is in fact rightful or is to aprotected purchaser.

2. If an issuer is under a duty to register a transferof a security, he is liable to the person presenting a certificated security oran instruction for registration or his principal for loss resulting fromunreasonable delay in registration or failure or refusal to register thetransfer.

(Added to NRS by 1965, 886; A 1985, 108; 1997, 399)

NRS 104.8402 Assurancethat endorsement or instruction is effective.

1. An issuer may require the followingassurance that each necessary endorsement or each instruction is genuine andauthorized:

(a) In all cases, a guaranty of the signature of theperson making an endorsement or originating an instruction including, in thecase of an instruction, reasonable assurance of identity;

(b) If the endorsement is made or the instruction isoriginated by an agent, appropriate assurance of actual authority to sign;

(c) If the endorsement is made or the instruction isoriginated by a fiduciary pursuant to paragraph (d) or (e) of subsection 1 of NRS 104.8107, appropriate evidence ofappointment or incumbency;

(d) If there is more than one fiduciary, reasonableassurance that all who are required to sign have done so; and

(e) If the endorsement is made or the instruction isoriginated by a person not covered by another provision of this subsection,assurance appropriate to the case corresponding as nearly as may be to theprovisions of this subsection.

2. An issuer may elect to require reasonable assurancebeyond that specified in this section.

3. As used in this section:

(a) Guaranty of the signature means a guaranty signedby or on behalf of a person reasonably believed by the issuer to beresponsible. An issuer may adopt standards with respect to responsibility ifthey are not manifestly unreasonable.

(b) Appropriate evidence of appointment or incumbencymeans:

(1) In the case of a fiduciary appointed orqualified by a court, a certificate issued by or under the direction orsupervision of the court or an officer thereof and dated within 60 days beforethe date of presentation for transfer; or

(2) In any other case, a copy of a documentshowing the appointment or a certificate issued by or on behalf of a personreasonably believed by the issuer to be responsible or, in the absence of thatdocument or certificate, other evidence reasonably deemed by the issuer to beappropriate.

(Added to NRS by 1965, 887; A 1985, 109; 1997, 400)

NRS 104.8403 Demandthat issuer not register transfer.

1. A person who is an appropriate person tomake an endorsement or originate an instruction may demand that the issuer notregister transfer of a security by communicating to the issuer a notificationthat identifies the registered owner and the issue of which the security is apart and provides an address for communications directed to the person makingthe demand. The demand is effective only if it is received by the issuer at atime and in a manner affording the issuer reasonable opportunity to act on it.

2. If a certificated security in registered form ispresented to an issuer with a request to register transfer or an instruction ispresented to an issuer with a request to register transfer of an uncertificatedsecurity after a demand that the issuer not register transfer has becomeeffective, the issuer shall promptly communicate to the person who initiatedthe demand at the address provided in the demand and the person who presentedthe security for registration of transfer or initiated the instruction requestingregistration of transfer a notification stating that:

(a) The certificated security has been presented forregistration of transfer or the instruction for registration of transfer of theuncertificated security has been received;

(b) A demand that the issuer not register transfer hadpreviously been received; and

(c) The issuer will withhold registration of transferfor a period of time stated in the notification in order to provide the personwho initiated the demand an opportunity to obtain legal process or an indemnitybond.

3. The period described in paragraph (c) of subsection2 may not exceed 30 days after the date of communication of the notification. Ashorter period may be specified by the issuer if it is not manifestlyunreasonable.

4. An issuer is not liable to a person who initiated ademand that the issuer not register transfer for any loss he suffers as aresult of registration of transfer pursuant to an effective endorsement orinstruction if he does not, within the time stated in the issuerscommunication:

(a) Obtain an appropriate restraining order, injunctionor other process from a court of competent jurisdiction enjoining the issuerfrom registering transfer; or

(b) File with the issuer an indemnity bond, sufficientin the issuers judgment to protect the issuer and any transfer agent,registrar or other agent of the issuer involved from any loss it or they maysuffer by refusing to register transfer.

5. This section does not relieve an issuer fromliability for registering transfer pursuant to an endorsement or instructionthat was not effective.

(Added to NRS by 1965, 888; A 1985, 110; 1997, 401)

NRS 104.8404 Wrongfulregistration.

1. Except as otherwise provided in NRS 104.8406, an issuer is liable for wrongfulregistration of transfer if the issuer has registered a transfer of a securityto a person not entitled to it, and the transfer was registered:

(a) Pursuant to an ineffective endorsement orinstruction;

(b) After a demand that the issuer not registertransfer became effective under subsection 1 of NRS 104.8403 and the issuer did not complywith subsection 2 of NRS 104.8403;

(c) After the issuer had been served with aninjunction, restraining order or other legal process enjoining it fromregistering the transfer, issued by a court of competent jurisdiction, and theissuer had a reasonable opportunity to act on the injunction, restraining orderor other legal process; or

(d) By an issuer acting in collusion with thewrongdoer.

2. An issuer that is liable for wrongful registrationof transfer under subsection 1 on demand shall provide the person entitled tothe security with a like certificated or uncertificated security and anypayments or distributions that the person did not receive as a result of thewrongful registration. If an overissue would result, the issuers liability toprovide the person with a like security is governed by NRS 104.8210.

3. Except as otherwise provided in subsection 1 or ina law relating to the collection of taxes, an issuer is not liable to an owneror any other person suffering loss as a result of the registration of transferof a security if registration was made pursuant to an effective endorsement orinstruction.

(Added to NRS by 1965, 888; A 1985, 112; 1997, 404)

NRS 104.8405 Replacementof lost, destroyed or wrongfully taken security certificate.

1. If an owner of a certificated security,whether in registered or bearer form, claims that the certificate has beenlost, destroyed or wrongfully taken, the issuer shall issue a new certificateif the owner:

(a) So requests before the issuer has notice that thesecurity has been acquired by a protected purchaser;

(b) Files with the issuer a sufficient indemnity bond;and

(c) Satisfies other reasonable requirements imposed bythe issuer.

2. If, after the issue of a new security certificate,a protected purchaser of the original certificate presents it for registrationof transfer, the issuer shall register the transfer unless an overissue wouldresult. In that case, the issuers liability is governed by NRS 104.8210. In addition to any rights onthe indemnity bond, the issuer may recover the new certificate from the personto whom it was issued or any person taking under him except a protectedpurchaser.

(Added to NRS by 1965, 889; A 1985, 112; 1997, 405)

NRS 104.8406 Obligationto notify issuer of lost, destroyed or wrongfully taken security certificate. If a security certificate has been lost, apparently destroyedor wrongfully taken and the owner fails to notify the issuer of that factwithin a reasonable time after the owner has notice of it and the issuerregisters a transfer of the security before receiving notification, the ownermay not assert against the issuer a claim for registering the transfer under NRS 104.8404 or a claim to a new securitycertificate under NRS 104.8405.

(Added to NRS by 1997, 366)

NRS 104.8407 Authenticatingtrustee, transfer agent and registrar. Aperson acting as authenticating trustee, transfer agent, registrar or otheragent for an issuer in the registration of a transfer of its securities, in theissue of new security certificates or uncertificated securities or in thecancellation of surrendered security certificates has the same obligation tothe holder or owner of a certificated or uncertificated security with regard tothe particular functions performed as the issuer has in regard to thosefunctions.

(Added to NRS by 1965, 889; A 1985, 113; 1997, 406)

Part 5

Security Entitlements

NRS 104.8501 Securitiesaccount; acquisition of security entitlement from securities intermediary.

1. Securities account means an account to which afinancial asset is or may be credited in accordance with an agreement underwhich the person maintaining the account undertakes to treat the person forwhom the account is maintained as entitled to exercise the rights that comprisethe financial asset.

2. Except as otherwise provided in subsections 4 and5, a person acquires a security entitlement if a securities intermediary:

(a) Indicates by book entry that a financial asset hasbeen credited to his securities account;

(b) Receives a financial asset from him or acquires afinancial asset for him and, in either case, accepts it for credit to hissecurities account; or

(c) Becomes obligated under other law, regulation orrule to credit a financial asset to his securities account.

3. If a condition of subsection 2 has been met, aperson has a security entitlement even though the securities intermediary doesnot itself hold the financial asset.

4. If a securities intermediary holds a financialasset for another person and the financial asset is registered in the name of,payable to the order of or specially endorsed to the other person and has notbeen endorsed to the securities intermediary or in blank, the other person istreated as holding the financial asset directly rather than as having asecurity entitlement with respect to the financial asset.

5. Issuance of a security is not establishment of asecurity entitlement.

(Added to NRS by 1997, 366)

NRS 104.8502 Assertionof adverse claim against entitlement holder. Anaction based on an adverse claim to a financial asset, whether framed inconversion, replevin, constructive trust, equitable lien or other theory, maynot be asserted against a person who acquires a security entitlement under NRS 104.8501 for value and without noticeof the adverse claim.

(Added to NRS by 1997, 367)

NRS 104.8503 Propertyinterest of entitlement holder in financial asset held by securitiesintermediary.

1. To the extent necessary for a securitiesintermediary to satisfy all security entitlements with respect to a particularfinancial asset, all interests in that financial asset held by the securitiesintermediary are held by the securities intermediary for the entitlement holders,are not the property of the securities intermediary and are not subject toclaims of creditors of the securities intermediary, except as otherwise providedin NRS 104.8511.

2. An entitlement holders property interest withrespect to a particular financial asset under subsection 1 is a pro rataproperty interest in all interests in that financial asset held by thesecurities intermediary, without regard to the time the entitlement holderacquired the security entitlement or the time the securities intermediary acquiredthe interest in that financial asset.

3. An entitlement holders property interest withrespect to a particular financial asset under subsection 1 may be enforcedagainst the securities intermediary only by exercise of the entitlementholders rights under NRS 104.8505 to 104.8508, inclusive.

4. An entitlement holders property interest withrespect to a particular financial asset under subsection 1 may be enforcedagainst a purchaser of the financial asset or interest therein only if:

(a) Insolvency proceedings have been initiated by oragainst the securities intermediary;

(b) The securities intermediary does not havesufficient interests in the financial asset to satisfy the securityentitlements of all of its entitlement holders to that financial asset;

(c) The securities intermediary violated itsobligations under NRS 104.8504 bytransferring the financial asset or interest therein to the purchaser; and

(d) The purchaser is not protected under subsection 5.

The trusteeor other liquidator, acting on behalf of all entitlement holders havingsecurity entitlements with respect to a particular financial asset, may recoverthe financial asset, or interest therein, from the purchaser. If the trustee orother liquidator elects not to pursue that right, an entitlement holder whosesecurity entitlement remains unsatisfied has the right to recover its interestin the financial asset from the purchaser.

5. An action based on the entitlement holdersproperty interest with respect to a particular financial asset under subsection1, whether framed in conversion, replevin, constructive trust, equitable lienor other theory, may not be asserted against any purchaser of a financial assetor interest therein who gives value, obtains control and does not act incollusion with the securities intermediary in violating the securitiesintermediarys obligations under NRS104.8504.

(Added to NRS by 1997, 367)

NRS 104.8504 Dutyof securities intermediary to maintain financial asset.

1. A securities intermediary shall promptlyobtain and thereafter maintain a financial asset in a quantity corresponding tothe aggregate of all security entitlements it has established in favor of itsentitlement holders with respect to that financial asset. The securitiesintermediary may maintain those financial assets directly or through one ormore other securities intermediaries.

2. Except to the extent otherwise agreed by itsentitlement holder, a securities intermediary may not grant any securityinterests in a financial asset it is obligated to maintain pursuant tosubsection 1.

3. A securities intermediary satisfies the duty undersubsection 1 if:

(a) It acts with respect to the duty as agreed upon bythe entitlement holder and the securities intermediary; or

(b) In the absence of agreement, it exercises due carein accordance with reasonable commercial standards to obtain and maintain thefinancial asset.

4. This section does not apply to a clearingcorporation that is the obligor of an option or similar obligation to which itsentitlement holders have security entitlements.

(Added to NRS by 1997, 368)

NRS 104.8505 Dutyof securities intermediary with respect to payments and distributions.

1. A securities intermediary shall take actionto obtain a payment or distribution made by the issuer of a financial asset. Asecurities intermediary satisfies the duty if:

(a) It acts with respect to the duty as agreed upon bythe entitlement holder and the securities intermediary; or

(b) In the absence of agreement, it exercises due carein accordance with reasonable commercial standards to attempt to obtain thepayment or distribution.

2. A securities intermediary is obligated to itsentitlement holder for a payment or distribution made by the issuer of afinancial asset if the payment or distribution is received by the securitiesintermediary.

(Added to NRS by 1997, 368)

NRS 104.8506 Dutyof securities intermediary to exercise rights as directed by entitlementholder. A securities intermediary shallexercise rights with respect to a financial asset if directed to do so by anentitlement holder. A securities intermediary satisfies the duty if:

1. It acts with respect to the duty as agreed upon bythe entitlement holder and the securities intermediary; or

2. In the absence of agreement, it either places theentitlement holder in a position to exercise the rights directly or exercisesdue care in accordance with reasonable commercial standards to follow thedirection of the entitlement holder.

(Added to NRS by 1997, 368)

NRS 104.8507 Dutyof securities intermediary to comply with entitlement order.

1. A securities intermediary shall comply withan entitlement order if the entitlement order is originated by the appropriateperson, the securities intermediary has had reasonable opportunity to assureitself that the entitlement order is genuine and authorized and the securitiesintermediary has had a reasonable opportunity to comply with the entitlementorder. A securities intermediary satisfies the duty if:

(a) It acts with respect to the duty as agreed upon bythe entitlement holder and the securities intermediary; or

(b) In the absence of agreement, it exercises due carein accordance with reasonable commercial standards to comply with theentitlement order.

2. If a securities intermediary transfers a financialasset pursuant to an ineffective entitlement order, the securities intermediaryshall reestablish a security entitlement in favor of the person entitled to itand pay or credit any payments or distributions that the person did not receiveas a result of the wrongful transfer. If the securities intermediary does notreestablish a security entitlement, the securities intermediary is liable tothe entitlement holder for damages.

(Added to NRS by 1997, 368)

NRS 104.8508 Dutyof securities intermediary to change entitlement holders position to otherform of security holding. A securitiesintermediary shall act at the direction of an entitlement holder to change asecurity entitlement into another available form of holding for which theentitlement holder is eligible or to cause the financial asset to betransferred to a securities account of the entitlement holder with anothersecurities intermediary. A securities intermediary satisfies the duty if:

1. It acts as agreed upon by the entitlement holderand the securities intermediary; or

2. In the absence of agreement, it exercises due carein accordance with reasonable commercial standards to follow the direction ofthe entitlement holder.

(Added to NRS by 1997, 369)

NRS 104.8509 Specificationof duties of securities intermediary by other statute or regulation; manner ofperformance of duties of securities intermediary and exercise of rights ofentitlement holder.

1. If the substance of a duty imposed upon asecurities intermediary by NRS 104.8504to 104.8508, inclusive, is the subjectof other statute, regulation or rule, compliance with that statute, regulationor rule satisfies the duty.

2. To the extent that specific standards for theperformance of the duties of a securities intermediary or the exercise of therights of an entitlement holder are not specified by other statute, regulationor rule or by agreement between the securities intermediary and entitlementholder, the securities intermediary shall perform its duties and theentitlement holder shall exercise its rights in a commercially reasonablemanner.

3. The obligation of a securities intermediary toperform the duties imposed by NRS 104.8504to 104.8508, inclusive, is subject to:

(a) Rights of the securities intermediary arising outof a security interest under a security agreement with the entitlement holderor otherwise; and

(b) Rights of the securities intermediary under otherlaw, regulation, rule or agreement to withhold performance of its duties as aresult of unfulfilled obligations of the entitlement holder to the securitiesintermediary.

4. NRS 104.8504to 104.8508, inclusive, do not requirea securities intermediary to take any action that is prohibited by otherstatute, regulation or rule.

(Added to NRS by 1997, 369)

NRS 104.8510 Rightsof purchaser of security entitlement from entitlement holder.

1. In a case not covered by the rules ofpriority in article 9 or the rules stated in subsection 3, an action based onan adverse claim to a financial asset or security entitlement, whether framedin conversion, replevin, constructive trust, equitable lien or other theory,may not be asserted against a person who purchases a security entitlement, oran interest therein, from an entitlement holder if the purchaser gives value,does not have notice of the adverse claim and obtains control.

2. If an adverse claim could not have been assertedagainst an entitlement holder under NRS104.8502, the adverse claim cannot be asserted against a person whopurchases a security entitlement, or an interest therein, from the entitlementholder.

3. In a case not covered by the rules of priority inarticle 9, a purchaser for value of a security entitlement, or an interesttherein, who obtains control has priority over a purchaser of a securityentitlement, or an interest therein, who does not obtain control. Except asotherwise provided in subsection 4, purchasers who have control rank according topriority in time of:

(a) Thepurchasers becoming the person for whom the securities account, in which thesecurity entitlement is carried, is maintained, if the purchaser obtainedcontrol under paragraph (a) of subsection 4 of NRS 104.8106;

(b) Thesecurities intermediarys agreement to comply with the purchasers entitlementorders with respect to security entitlements carried or to be carried in thesecurities account in which the security entitlement is carried, if thepurchaser obtained control under paragraph (b) of that subsection; or

(c) If the purchaser obtained control through anotherperson under paragraph (c) of that subsection, the time on which priority wouldbe based under this subsection if the other person were the secured party.

4. A securities intermediary as purchaser has priorityover a conflicting purchaser who has control unless otherwise agreed by thesecurities intermediary.

(Added to NRS by 1997, 369; A 1999, 379)

NRS 104.8511 Priorityamong security interests and entitlement holders.

1. Except as otherwise provided in subsections2 and 3, if a securities intermediary does not have sufficient interests in aparticular financial asset to satisfy both its obligations to entitlementholders who have security entitlements to that financial asset and itsobligation to a creditor of the securities intermediary who has a security interestin that financial asset, the claims of entitlement holders, other than the creditor,have priority over the claim of the creditor.

2. A claim of a creditor of a securities intermediarywho has a security interest in a financial asset held by a securitiesintermediary has priority over claims of the entitlement holders of thesecurities intermediary who have security entitlements with respect to thatfinancial asset if the creditor has control over the financial asset.

3. If a clearing corporation does not have sufficientfinancial assets to satisfy both its obligations to entitlement holders whohave security entitlements with respect to a financial asset and its obligationto a creditor of the clearing corporation who has a security interest in that financialasset, the claim of the creditor has priority over the claims of entitlementholders.

(Added to NRS by 1997, 370)

ARTICLE 9

SECURED TRANSACTIONS

Part 1

General Provisions

NRS 104.9101 Shorttitle. This article may be cited as UniformCommercial CodeSecured Transactions.

(Added to NRS by 1999, 281)

NRS 104.9102 Definitionsand index of definitions.

1. In this Article:

(a) Accession means goods that are physically unitedwith other goods in such a manner that the identity of the original goods isnot lost.

(b) Account, except as used in account for, means aright to payment of a monetary obligation, whether or not earned byperformance, for property that has been or is to be sold, leased, licensed,assigned, or otherwise disposed of; for services rendered or to be rendered;for a policy of insurance issued or to be issued; for a secondary obligationincurred or to be incurred; for energy provided or to be provided; for the useor hire of a vessel under a charter or other contract; arising out of the useof a credit or charge card or information contained on or for use with thecard; or as winnings in a lottery or other game of chance operated or sponsoredby a state, governmental unit of a state, or person licensed or authorized tooperate the game by a state or governmental unit of a state. The term includeshealth-care-insurance receivables. The term does not include rights to paymentevidenced by chattel paper or an instrument; commercial tort claims; depositaccounts; investment property; letter-of-credit rights or letters of credit; orrights to payment for money or funds advanced or sold, other than rightsarising out of the use of a credit or charge card or information contained onor for use with the card.

(c) Account debtor means a person obligated on anaccount, chattel paper or general intangible. The term does not include personsobligated to pay a negotiable instrument, even if the instrument constitutespart of chattel paper.

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

(1) Authenticated by a secured party;

(2) Indicating the aggregate unpaid securedobligations as of a date not more than 35 days earlier or 35 days later thanthe date of the record; and

(3) Identifying the components of theobligations in reasonable detail.

(e) Agricultural lien means an interest, other than asecurity interest, in farm products:

(1) Which secures payment or performance of anobligation for:

(I) Goods or services furnished inconnection with a debtors farming operation; or

(II) Rent on real property leased by adebtor in connection with its farming operation;

(2) Which is created by statute in favor of aperson that:

(I) In the ordinary course of its businessfurnished goods or services to a debtor in connection with his farmingoperation; or

(II) Leased real property to a debtor inconnection with his farming operation; and

(3) Whose effectiveness does not depend on thepersons possession of the personal property.

(f) As-extracted collateral means:

(1) Oil, gas or other minerals that are subjectto a security interest that:

(I) Is created by a debtor having aninterest in the minerals before extraction; and

(II) Attaches to the minerals asextracted; or

(2) Accounts arising out of the sale at thewellhead or minehead of oil, gas or other minerals in which the debtor had aninterest before extraction.

(g) Authenticate means:

(1) To sign; or

(2) To execute or otherwise adopt a symbol, orencrypt or similarly process a record in whole or in part, with the presentintent of the authenticating person to identify himself and adopt or accept arecord.

(h) Bank means an organization that is engaged in thebusiness of banking. The term includes savings banks, savings and loanassociations, credit unions and trust companies.

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

(j) Certificate of title means a certificate of titlewith respect to which a statute provides for the security interest in questionto be indicated on the certificate as a condition or result of the securityinterests obtaining priority over the rights of a lien creditor with respect tothe collateral.

(k) Chattel paper means a record or records thatevidence both a monetary obligation and a security interest in or a lease ofspecific goods or of specific goods and software used in the goods, or asecurity interest in or a lease of specific goods and a license of softwareused in the goods. The term does not include charters or other contractsinvolving the use or hire of a vessel, or records that evidence a right topayment arising out of the use of a credit or charge card or informationcontained on or for use with the card. If a transaction is evidenced by recordsthat include an instrument or series of instruments, the group of records takentogether constitutes chattel paper. As used in this paragraph, monetaryobligation means a monetary obligation secured by the goods or owed under alease of the goods and includes a monetary obligation with respect to softwareused in the goods.

(l) Collateral means the property subject to asecurity interest or agricultural lien. The term includes:

(1) Proceeds to which a security interestattaches;

(2) Accounts, chattel paper, payment intangiblesand promissory notes that have been sold; and

(3) Goods that are the subject of a consignment.

(m) Commercial tort claim means a claim arising intort with respect to which:

(1) The claimant is an organization; or

(2) The claimant is a natural person and theclaim:

(I) Arose in the course of his business orprofession; and

(II) Does not include damages arising outof personal injury to or the death of a natural person.

(n) Commodity account means an account maintained bya commodity intermediary in which a commodity contract is carried for acommodity customer.

(o) Commodity contract means a commodity futurescontract, an option on a commodity futures contract, a commodity option oranother contract if the contract or option is:

(1) Traded on or subject to the rules of a boardof trade that has been designated as a contract market for such a contractpursuant to federal commodities laws; or

(2) Traded on a foreign commodity board oftrade, exchange or market, and is carried on the books of a commodityintermediary for a commodity customer.

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

(q) Commodity intermediary means a person that:

(1) Is registered as a futures commissionmerchant under federal commodities law; or

(2) In the ordinary course of its businessprovides clearance or settlement services for a board of trade that has beendesignated as a contract market pursuant to federal commodities law.

(r) Communicate means:

(1) To send a written or other tangible record;

(2) To transmit a record by any means agreedupon by the persons sending and receiving the record; or

(3) In the case of transmission of a record toor by a filing office, to transmit a record by any means prescribed byfiling-office rule.

(s) Consignee means a merchant to which goods aredelivered in a consignment.

(t) Consignment means a transaction, regardless ofits form, in which a person delivers goods to a merchant for the purpose ofsale and:

(1) The merchant:

(I) Deals in goods of that kind under aname other than the name of the person making delivery;

(II) Is not an auctioneer; and

(III) Is not generally known by itscreditors to be substantially engaged in selling the goods of others;

(2) With respect to each delivery, the aggregatevalue of the goods is $1,000 or more at the time of delivery;

(3) The goods are not consumer goods immediatelybefore delivery; and

(4) The transaction does not create a securityinterest that secures an obligation.

(u) Consignor means a person that delivers goods to aconsignee in a consignment.

(v) Consumer debtor means a debtor in a consumertransaction.

(w) Consumer goods means goods that are used orbought for use primarily for personal, family or household purposes.

(x) Consumer-goods transaction means a consumertransaction to the extent that:

(1) A natural person incurs an obligationprimarily for personal, family or household purposes; and

(2) A security interest in consumer goods or inconsumer goods and software that is held or acquired primarily for personal,family or household purposes secures the obligation.

(y) Consumer obligor means an obligor who is anatural person and who incurred the obligation as part of a transaction enteredinto primarily for personal, family or household purposes.

(z) Consumer transaction means a transaction to theextent that a natural person incurs an obligation primarily for personal,family or household purposes; a security interest secures the obligation; andthe collateral is held or acquired primarily for personal, family or householdpurposes. The term includes consumer-goods transactions.

(aa) Continuation statement means a change of afinancing statement which: (1) Identifies, by itsfile number, the initial financing statement to which it relates; and

(2) Indicates that it is a continuationstatement for, or that it is filed to continue the effectiveness of, theidentified financing statement.

(bb) Debtor means:

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

(2) A seller of accounts, chattel paper, paymentintangibles or promissory notes; or

(3) A consignee.

(cc) Deposit account means a demand, time, savings,passbook or similar account maintained with a bank. The term does not includeinvestment property or accounts evidenced by an instrument.

(dd) Document means a document of title or a receiptof the type described in subsection 2 of NRS104.7201.

(ee) Electronic chattel paper means chattel paperevidenced by a record or records consisting of information stored in anelectronic medium.

(ff) Encumbrance means a right, other than anownership interest, in real property. The term includes mortgages and otherliens on real property.

(gg) Equipment means goods other than inventory, farmproducts or consumer goods.

(hh) Farm products means goods, other than standingtimber, with respect to which the debtor is engaged in a farming operation andwhich are:

(1) Crops grown, growing or to be grown,including:

(I) Crops produced on trees, vines andbushes; and

(II) Aquatic goods produced inaquacultural operations;

(2) Livestock, born or unborn, including aquaticgoods produced in aquacultural operations;

(3) Supplies used or produced in a farmingoperation; or

(4) Products of crops or livestock in theirunmanufactured states.

(ii) Farming operation means raising, cultivating,propagating, fattening, grazing, or any other farming, livestock, oraquacultural operation.

(jj) File number means the number assigned to aninitial financing statement pursuant to subsection 1 of NRS 104.9519.

(kk) Filing office means an office designated in NRS 104.9501 as the place to file afinancing statement.

(ll) Filing-office rule means a rule adopted pursuantto NRS 104.9526.

(mm) Financing statement means a record or recordscomposed of an initial financing statement and any filed record relating to theinitial financing statement.

(nn) Fixture filing means the filing of a financingstatement covering goods that are or are to become fixtures and satisfyingsubsections 1 and 2 of NRS 104.9502.The term includes the filing of a financing statement covering goods of atransmitting utility which are or are to become fixtures.

(oo) Fixtures means goods that have become so relatedto particular real property that an interest in them arises under real propertylaw.

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

(qq) Goods means all things that are movable when asecurity interest attaches. The term includes fixtures; standing timber that isto be cut and removed under a conveyance or contract for sale; the unborn youngof animals; crops grown, growing, or to be grown, even if the crops areproduced on trees, vines, or bushes; and manufactured homes. The term alsoincludes a computer program embedded in goods and any supporting informationprovided in connection with a transaction relating to the program if theprogram is associated with the goods in such a manner that it customarily isconsidered part of the goods, or by becoming the owner of the goods, a personacquires a right to use the program in connection with the goods. The term doesnot include a computer program embedded in goods that consist solely of themedium in which the program is embedded. The term also does not includeaccounts, 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.

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

(ss) Health-care-insurance receivable means aninterest in or claim under a policy of insurance which is a right to payment ofa monetary obligation for health-care goods or services provided.

(tt) Instrument means a negotiable instrument or anyother 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 ordinarycourse of business is transferred by delivery with any necessary endorsement orassignment. The term does not include investment property, letters of credit orwritings that evidence a right to payment arising out of the use of a credit orcharge card or information contained on or for use with the card.

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

(1) Are leased by a person as lessor;

(2) Are held by a person for sale or lease or tobe furnished under a contract of service;

(3) Are furnished by a person under a contractof service; or

(4) Consist of raw materials, work in process,or materials used or consumed in a business.

(vv) Investment property means a security, whethercertificated or uncertificated, security entitlement, securities account,commodity contract, or commodity account.

(ww) Jurisdiction of organization, with respect to aregistered organization, means the jurisdiction under whose law theorganization is organized.

(xx) Letter-of-credit right means a right to paymentor performance under a letter of credit, whether or not the beneficiary hasdemanded or is at the time entitled to demand payment or performance. The termdoes not include the right of a beneficiary to demand payment or performanceunder a letter of credit.

(yy) Lien creditor means:

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

(2) An assignee for benefit of creditors fromthe time of assignment;

(3) A trustee in bankruptcy from the date of thefiling of the petition; or

(4) A receiver in equity from the time ofappointment.

(zz) Manufactured home means a structure,transportable in one or more sections, which in the traveling mode, is 8 feetor more in body width or 40 feet or more in body length, or, when erected onsite, is 320 or more square feet, and which is built on a permanent chassis anddesigned to be used as a dwelling with or without a permanent foundation whenconnected to the required utilities, and includes the plumbing, heating,air-conditioning and electrical systems contained therein. The term includesany structure that meets all of the requirements of this paragraph except thesize requirements and with respect to which the manufacturer voluntarily filesa certification required by the United States Secretary of Housing and UrbanDevelopment and complies with the standards established under Title 42 of theUnited States Code.

(aaa) Manufactured-home transaction means a securedtransaction:

(1) That creates a purchase-money securityinterest in a manufactured home, other than a manufactured home held asinventory; or

(2) In which a manufactured home, other than amanufactured home held as inventory, is the primary collateral.

(bbb) Mortgage means a consensual interest in realproperty, including fixtures, which is created by a mortgage, deed of trust, orsimilar transaction.

(ccc) New debtor means a person that becomes bound asdebtor under subsection 4 of NRS 104.9203by a security agreement previously entered into by another person.

(ddd) New value means money; moneys worth inproperty, services or new credit; or release by a transferee of an interest inproperty previously transferred to the transferee. The term does not include anobligation substituted for another obligation.

(eee) Noncash proceeds means proceeds other than cashproceeds.

(fff) Obligor means a person that, with respect to anobligation secured by a security interest in or an agricultural lien on thecollateral, owes payment or other performance of the obligation, has providedproperty other than the collateral to secure payment or other performance ofthe obligation, or is otherwise accountable in whole or in part for payment orother performance of the obligation. The term does not include an issuer or anominated person under a letter of credit.

(ggg) Original debtor means, except as used insubsection 3 of NRS 104.9310, a personthat, as debtor, entered into a security agreement to which a new debtor hasbecome bound under subsection 4 of NRS104.9203.

(hhh) Payment intangible means a general intangibleunder which the account debtors principal obligation is a monetary obligation.

(iii) Person related to, with respect to a naturalperson, means:

(1) His spouse;

(2) His brother, brother-in-law, sister orsister-in-law;

(3) His or his spouses ancestor or linealdescendant; or

(4) Any other relative, by blood or marriage, ofthe person or his spouse who shares the same home with him.

(jjj) Person related to, with respect to anorganization, means:

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

(2) An officer or director of, or a personperforming similar functions with respect to, the organization;

(3) An officer or director of, or a personperforming similar functions with respect to, a person described insubparagraph (1);

(4) The spouse of a natural person described insubparagraph (1), (2) or (3); or

(5) A person who is related by blood or marriageto a person described in subparagraph (1), (2), (3) or (4) and shares the samehome with that person.

(kkk) Proceeds means, except as used in subsection 2of NRS 104.9609, the followingproperty:

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

(2) Whatever is collected on, or distributed onaccount of, collateral;

(3) Rights arising out of collateral;

(4) 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; and

(5) To the extent of the value of collateral andto the extent payable to the debtor or the secured party, insurance payable byreason of the loss or nonconformity of, defects or infringement of rights in,or damage to, the collateral.

(lll) Promissory note means an instrument thatevidences a promise to pay a monetary obligation, does not evidence an order topay, and does not contain an acknowledgment by a bank that the bank hasreceived for deposit a sum of money or funds.

(mmm) Proposal means a record authenticated by asecured party which includes the terms on which the secured party is willing toaccept collateral in full or partial satisfaction of the obligation it securespursuant to NRS 104.9620, 104.9621 and 104.9622.

(nnn) Public-finance transaction means a secured transactionin connection with which:

(1) Debt securities are issued;

(2) All or a portion of the securities issuedhave an initial stated maturity of at least 20 years; and

(3) The debtor, the obligor, the secured party,the account debtor or other person obligated on collateral, the assignor orassignee of a secured obligation, or the assignor or assignee of a securityinterest is a state or a governmental unit of a state.

(ooo) Pursuant to commitment, with respect to anadvance made or other value given by a secured party, means pursuant to thesecured partys obligation, whether or not a subsequent event of default orother event not within the secured partys control has relieved or may relievethe secured party from its obligation.

(ppp) Record, except as used in for record, ofrecord, record or legal title, and record owner, means information that isinscribed on a tangible medium or which is stored in an electronic or othermedium and is retrievable in perceivable form.

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

(rrr) Secondary obligor means an obligor to theextent that:

(1) The obligors obligation is secondary; or

(2) The obligor has a right of recourse withrespect to an obligation secured by collateral against the debtor, anotherobligor or property of either.

(sss) Secured party means:

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

(2) A person that holds an agricultural lien;

(3) A consignor;

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

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

(6) A person that holds a security interestarising under NRS 104.2401, 104.2505, subsection 3 of NRS 104.2711, NRS 104.4210, 104.5118 or subsection 5 of NRS 104A.2508.

(ttt) Security agreement means an agreement thatcreates or provides for a security interest.

(uuu) Send, in connection with a record ornotification, means:

(1) To deposit in the mail, deliver fortransmission or transmit by any other usual means of communication, withpostage or cost of transmission provided for, addressed to any addressreasonable under the circumstances; or

(2) To cause the record or notification to bereceived within the time that it would have been received if properly sentunder subparagraph (1).

(vvv) Software means a computer program and anysupporting information provided in connection with a transaction relating tothe program. The term does not include a computer program that is contained ingoods unless the goods are a computer or computer peripheral.

(www) State means a state of the United States, theDistrict of Columbia, Puerto Rico, the United States Virgin Islands, or anyterritory or insular possession subject to the jurisdiction of the UnitedStates.

(xxx) Supporting obligation means a letter-of-creditright or secondary obligation that supports the payment or performance of anaccount, chattel paper, document, general intangible, instrument or investmentproperty.

(yyy) Tangible chattel paper means chattel paperevidenced by a record or records consisting of information that is inscribed ona tangible medium.

(zzz) Termination statement means a subsequent filingwhich:

(1) Identifies, by its file number, the initialfinancing statement to which it relates; and

(2) Indicates either that it is a terminationstatement or that the identified financing statement is no longer effective.

(aaaa) Transmitting utility means a person primarilyengaged in the business of:

(1) Operating a railroad, subway, street railwayor trolley bus;

(2) Transmitting communications electrically,electromagnetically or by light;

(3) Transmitting goods by pipeline;

(4) Providing sewerage; or

(5) Transmitting or producing and transmittingelectricity, steam, gas or water.

2. Control as provided in NRS 104.7106 and the following definitionsin other Articles apply to this Article:

 

Applicant. NRS 104.5102.

Beneficiary. NRS 104.5102.

Broker. NRS 104.8102.

Certificated security. NRS 104.8102.

Check. NRS 104.3104.

Clearing corporation. NRS 104.8102.

Contract for sale. NRS 104.2106.

Customer. NRS 104.4104.

Entitlement holder. NRS 104.8102.

Financial asset. NRS 104.8102.

Holder in due course. NRS 104.3302.

Issuer (with respect to a letterof credit or letter-of-credit right). NRS104.5102.

Issuer (with respect to asecurity). NRS 104.8201.

Issuer (with respect to documentsof title). NRS 104.7102.

Lease. NRS 104A.2103.

Lease agreement. NRS 104A.2103.

Lease contract. NRS 104A.2103.

Leasehold interest. NRS 104A.2103.

Lessee. NRS 104A.2103.

Lessee in ordinary course ofbusiness. NRS 104A.2103.

Lessor. NRS 104A.2103.

Lessors residual interest. NRS 104A.2103.

Letter of credit. NRS 104.5102.

Merchant. NRS 104.2104.

Negotiable instrument. NRS 104.3104.

Nominated person. NRS 104.5102.

Note. NRS 104.3104.

Proceeds of a letter of credit. NRS 104.5114.

Prove. NRS 104.3103.

Sale. NRS 104.2106.

Securities account. NRS 104.8501.

Securities intermediary. NRS 104.8102.

Security. NRS 104.8102.

Security certificate. NRS 104.8102.

Security entitlement. NRS 104.8102.

Uncertificated security. NRS 104.8102.

 

3. Article 1 contains general definitions andprinciples of construction and interpretation applicable throughout thisArticle.

(Added to NRS by 1999, 281; A 2001, 710; 2005, 860)

NRS 104.9103 Purchase-moneysecurity interest: Circumstances of existence; applicability of payments;burden of establishing.

1. In thissection:

(a) Purchase-moneycollateral means goods or software that secures a purchase-money obligationincurred with respect to that collateral; and

(b) Purchase-moneyobligation means an obligation of an obligor incurred as all or part of theprice of the collateral or for value given to enable the debtor to acquirerights in or the use of the collateral if the value is in fact so used.

2. A securityinterest in goods is a purchase-money security interest:

(a) To theextent that the goods are purchase-money collateral with respect to that securityinterest;

(b) If thesecurity interest is in inventory that is or was purchase-money collateral,also to the extent that the security interest secures a purchase-moneyobligation incurred with respect to other inventory in which the secured partyholds or held a purchase-money security interest; and

(c) Also to theextent that the security interest secures a purchase-money obligation incurredwith respect to software in which the secured party holds or held a purchase-moneysecurity interest.

3. A securityinterest in software is a purchase-money security interest to the extent thatthe security interest also secures a purchase-money obligation incurred withrespect to goods in which the secured party holds or held a purchase-moneysecurity interest if:

(a) The debtoracquired its interest in the software in an integrated transaction in which itacquired an interest in the goods; and

(b) The debtoracquired its interest in the software for the principal purpose of using thesoftware in the goods.

4. Thesecurity interest of a consignor in goods that are the subject of a consignmentis a purchase-money security interest in inventory.

5. In atransaction other than a consumer-goods transaction, if the extent to which asecurity interest is a purchase-money security interest depends on the applicationof a payment to a particular obligation, the payment must be applied:

(a) Inaccordance with any reasonable method of application to which the partiesagree;

(b) In theabsence of the parties agreement to a reasonable method, in accordance withany intention of the obligor manifested at or before the time of payment; or

(c) In theabsence of an agreement to a reasonable method and a timely manifestation ofthe obligors intention, in the following order:

(1) Toobligations that are not secured; and

(2) Ifmore than one obligation is secured, to obligations secured by purchase-moneysecurity interests in the order in which those obligations were incurred.

6. In atransaction other than a consumer-goods transaction, a purchase-money securityinterest does not lose its status as such, even if:

(a) Thepurchase-money collateral also secures an obligation that is not a purchase-moneyobligation;

(b) Collateralthat is not purchase-money collateral also secures the purchase-moneyobligation; or

(c) Thepurchase-money obligation has been renewed, refinanced, consolidated orrestructured.

7. In atransaction other than a consumer-goods transaction, a secured party claiming apurchase-money security interest has the burden of establishing the extent towhich the security interest is a purchase-money security interest.

8. The limitation of the rules in subsections 5, 6 and7 to transactions other than consumer-goods transactions leaves to the courtthe determination of the proper rules in consumer-goods transactions. The courtmay not infer from that limitation the nature of the proper rule inconsumer-goods transactions and may continue to apply established approaches.

(Added to NRS by 1999, 291)

NRS 104.9104 Controlof deposit account.

1. A secured party has control of a deposit accountif:

(a) The secured party is the bank with which thedeposit account is maintained;

(b) The debtor, secured party and bank have agreed inan authenticated record that the bank will comply with instructions originatedby the secured party directing disposition of the funds in the deposit accountwithout further consent by the debtor; or

(c) The secured party becomes the banks customer withrespect to the deposit account.

2. A secured party that has satisfied subsection 1 hascontrol, even if the debtor retains the right to direct the disposition offunds from the deposit account.

(Added to NRS by 1999, 292; A 2001, 719)

NRS 104.9105 Control of electronic chattel paper. A secured party has control of electronic chattel paper ifthe record or records comprising the chattel paper are created, stored andassigned in such a manner that:

1. A singleauthoritative copy of the record or records exists which is unique, identifiableand, except as otherwise provided in subsections 4, 5 and 6, unalterable;

2. Theauthoritative copy identifies the secured party as the assignee of the recordor records;

3. Theauthoritative copy is communicated to and maintained by the secured party orits designated custodian;

4. Copies orrevisions that add or change an identified assignee of the authoritative copycan be made only with the participation of the secured party;

5. Each copyof the authoritative copy and any copy of a copy is readily identifiable as acopy that is not the authoritative copy; and

6. Any revision of the authoritative copy is readilyidentifiable as an authorized or unauthorized revision.

(Added to NRS by 1999, 292)

NRS 104.9106 Controlof investment property.

1. A personhas control of a certificated security, uncertificated security, or securityentitlement as provided in NRS 104.8106.

2. A securedparty has control of a commodity contract if:

(a) The securedparty is the commodity intermediary with which the commodity contract iscarried; or

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

3. A secured party having control of all securityentitlements or commodity contracts carried in a securities account orcommodity account has control over the securities account or commodity account.

(Added to NRS by 1999, 293)

NRS 104.9107 Controlof letter-of-credit right. A secured party hascontrol of a letter-of-credit right to the extent of any right to payment orperformance by the issuer or any nominated person if the issuer or nominatedperson has consented to an assignment of proceeds of the letter of credit undersubsection 3 of NRS 104.5114 orotherwise applicable law or practice.

(Added to NRS by 1999, 293)

NRS 104.9108 Sufficiencyof descriptions.

1. Except asotherwise provided in subsections 3, 4 and 5, a description of personal or realproperty is sufficient, whether or not it is specific, if it reasonably identifieswhat is described.

2. Except asotherwise provided in subsection 4, a description of collateral reasonablyidentifies the collateral if it identifies the collateral by:

(a) Specificlisting;

(b) Category;

(c) Except asotherwise provided in subsection 5, a type of collateral defined in the UniformCommercial Code;

(d) Quantity;

(e) Computationalor allocational formula or procedure; or

(f) Except asotherwise provided in subsection 3, any other method, if the identity of thecollateral is objectively determinable.

3. Adescription of collateral as all the debtors assets or all the debtorspersonal property or using words of similar import does not reasonablyidentify the collateral.

4. Except asotherwise provided in subsection 5, a description of a security entitlement,securities account, or commodity account is sufficient if it describes:

(a) Thecollateral by those terms or as investment property; or

(b) Theunderlying financial asset or commodity contract.

5. A descriptiononly by type of collateral defined in the Uniform Commercial Code is aninsufficient description of:

(a) Acommercial tort claim; or

(b) In a consumer transaction, consumer goods, asecurity entitlement, a securities account or a commodity account.

(Added to NRS by 1999, 293)

NRS 104.9109 Scopeof applicability.

1. Except as otherwise provided in subsections 3 and4, this Article applies to:

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

(b) An agricultural lien;

(c) A sale of accounts, chattel paper, paymentintangibles or promissory notes;

(d) A consignment;

(e) A security interest arising under NRS 104.2401, 104.2505, subsection 3 of NRS 104.2711 or subsection 5 of NRS 104A.2508, as provided in NRS 104.9110; and

(f) A security interest arising under NRS 104.4210 or 104.5118.

2. The application of this Article to a securityinterest in a secured obligation is not affected by the fact that theobligation is itself secured by a transaction or interest to which this Articledoes not apply.

3. This Article does not apply to the extent that:

(a) A statute, regulation or treaty of the UnitedStates preempts this Article; or

(b) The rights of a transferee beneficiary or nominatedperson under a letter of credit are independent and superior under NRS 104.5114.

4. This Article does not apply to:

(a) A landlords lien, other than an agricultural lien;

(b) A lien, other than an agricultural lien, given bystatute or other rule of law for services or materials, but NRS 104.9333 applies with respect topriority of the lien;

(c) An assignment of a claim for wages, salary or othercompensation of an employee;

(d) A sale of accounts, chattel paper, paymentintangibles or promissory notes as part of a sale of the business out of whichthey arose;

(e) An assignment of accounts, chattel paper, paymentintangibles or promissory notes which is for the purpose of collection only;

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

(g) An assignment of a single account, paymentintangible or promissory note to an assignee in full or partial satisfaction ofa preexisting indebtedness;

(h) A transfer of an interest in or an assignment of aclaim under a policy of insurance, other than an assignment by or to ahealth-care provider of a health-care-insurance receivable and any subsequentassignment of the right to payment, but NRS104.9315 and 104.9322 apply withrespect to proceeds and priorities in proceeds;

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

(j) A right of recoupment or setoff, but:

(1) NRS104.9340 applies with respect to the effectiveness of rights of recoupmentor setoff against deposit accounts; and

(2) NRS104.9404 applies with respect to defenses or claims of an account debtor;

(k) The creation or transfer of an interest in or lienon real property, including a lease or rents thereunder, except to the extentthat provision is made for:

(1) Liens on real property in NRS 104.9203 and 104.9308;

(2) Fixtures in NRS 104.9334;

(3) Fixture filings in NRS 104.9501, 104.9502, 104.9512, 104.9516 and 104.9519; and

(4) Security agreements covering personal andreal property in NRS 104.9604;

(l) An assignment of a claim arising in tort, otherthan a commercial tort claim, but NRS104.9315 and 104.9322 apply withrespect to proceeds and priorities in proceeds;

(m) An assignment of a deposit account in a consumertransaction, but NRS 104.9315 and 104.9322 apply with respect to proceedsand priorities in proceeds; or

(n) A transfer by a government or governmental unit.

(Added to NRS by 1999, 294; A 2001, 719)

NRS 104.9110 Applicabilityto security interests arising under Article 2 or 2A. Asecurity interest arising under NRS104.2401, 104.2505, subsection 3 of104.2711, or subsection 5 of NRS104A.2508 is subject to this Article. However, until the debtor obtainspossession of the goods:

1. The security interest is enforceable, even ifparagraph (c) of subsection 2 of NRS104.9203 has not been satisfied;

2. Filing is not required to perfect the securityinterest;

3. The rights of the secured party after default bythe debtor are governed by Article 2 or 2A; and

4. The security interest has priority over aconflicting security interest created by the debtor.

(Added to NRS by 1999, 295)

Part 2

Effectiveness of Security Agreement; Attachment ofSecurity Interest; Rights of Parties to Security Agreement

NRS 104.9201 Generaleffectiveness of security agreement.

1. Except asotherwise provided in the Uniform Commercial Code, a security agreement iseffective according to its terms between the parties, against purchasers of thecollateral, and against creditors.

2. Atransaction subject to this article is subject to any applicable rule of lawwhich establishes a different rule for consumers and to chapters 97 and 97Aof NRS.

3. In case ofconflict between this article and a rule of law, statute or regulationdescribed in subsection 2, the rule of law, statute or regulation controls.Failure to comply with a statute or regulation described in subsection 2 hasonly the effect the statute or regulation specifies.

4. Thisarticle does not:

(a) Validateany rate, charge, agreement, or practice that violates a rule of law, statuteor regulation described in subsection 2; or

(b) Extend the application of the rule of law, statuteor regulation to a transaction not otherwise subject to it.

(Added to NRS by 1999, 295)

NRS 104.9202 Titleto collateral immaterial. Except as otherwiseprovided with respect to consignments or sales of accounts, chattel paper,payment intangibles or promissory notes, the provisions of this article withregard to rights and obligations apply whether or not title to collateral is inthe secured party or the debtor.

(Added to NRS by 1999, 296)

NRS 104.9203 Attachmentand enforceability of security interest; proceeds; formal requisites;supporting obligations.

1. A securityinterest attaches to collateral when it becomes enforceable against the debtorwith respect to the collateral, unless an agreement expressly postpones thetime of attachment.

2. Except asotherwise provided in subsections 3 to 9, inclusive, a security interest isenforceable against the debtor and third parties with respect to the collateralonly if:

(a) Value hasbeen given;

(b) The debtorhas rights in the collateral or the power to transfer rights in the collateralto a secured party; and

(c) One of thefollowing conditions is met:

(1) Thedebtor has authenticated a security agreement that provides a description ofthe collateral and, if the security interest covers timber to be cut, a descriptionof the land concerned;

(2) Thecollateral is not a certificated security and is in the possession of thesecured party under NRS 104.9313pursuant to the debtors security agreement;

(3) Thecollateral is a certificated security in registered form and the securitycertificate has been delivered to the secured party under NRS 104.8301 pursuant to the debtorssecurity agreement; or

(4) Thecollateral is deposit accounts, electronic chattel paper, investment property,letter-of-credit rights or electronic documents, and the secured party hascontrol under NRS 104.7106, 104.9104, 104.9105, 104.9106 or 104.9107 pursuant to the debtors securityagreement.

3. Subsection2 is subject to NRS 104.4210 on thesecurity interest of a collecting bank, NRS104.5118 on the security interest of a letter-of-credit issuer or nominatedperson, NRS 104.9110 on a securityinterest arising under Article 2 or 2A, and NRS104.9206 on security interests in investment property.

4. A personbecomes bound as debtor by a security agreement entered into by another personif, by operation of law other than this Article or by contract:

(a) Thesecurity agreement becomes effective to create a security interest in hisproperty; or

(b) He becomesgenerally obligated for the obligations of the other person, including theobligation secured under the security agreement, and acquires or succeeds toall or substantially all of the assets of the other person.

5. If a newdebtor becomes bound as debtor by a security agreement entered into by anotherperson:

(a) Theagreement satisfies paragraph (c) of subsection 2 with respect to existing orafter-acquired property of the new debtor to the extent the property isdescribed in the agreement; and

(b) Anotheragreement is not necessary to make a security interest in the propertyenforceable.

6. Theattachment of a security interest in collateral gives the secured party therights to proceeds provided by NRS 104.9315and is also attachment of a security interest in a supporting obligation forthe collateral.

7. Theattachment of a security interest in a right to payment or performance securedby a security interest or other lien on personal or real property is also attachmentof a security interest in the security interest, mortgage or other lien.

8. Theattachment of a security interest in a securities account is also attachment ofa security interest in the security entitlements carried in the securities account.

9. The attachment of a security interest in acommodity account is also attachment of a security interest in the commoditycontracts carried in the commodity account.

(Added to NRS by 1999, 296; A 2005, 869)

NRS 104.9204 After-acquiredproperty; future advances.

1. Except asotherwise provided in subsection 2, a security agreement may create or providefor a security interest in after-acquired collateral.

2. A securityinterest does not attach under a term constituting an after-acquired propertyclause to:

(a) Consumergoods, other than an accession when given as additional security, unless thedebtor acquires rights in them within 10 days after the secured party givesvalue; or

(b) Acommercial tort claim.

3. A security agreement may provide that collateralsecures, or that accounts, chattel paper, payment intangibles or promissorynotes are sold in connection with, future advances or other value, whether ornot the advances or value are given pursuant to commitment.

(Added to NRS by 1999, 297)

NRS 104.9205 Useor disposition of collateral permissible.

1. A securityinterest is not invalid or fraudulent against creditors solely because:

(a) The debtorhas the right or ability to:

(1) Use,commingle or dispose of all or part of the collateral, including returned orrepossessed goods;

(2) Collect,compromise, enforce or otherwise deal with collateral;

(3) Acceptthe return of collateral or make repossessions; or

(4) Use,commingle or dispose of proceeds; or

(b) The securedparty fails to require the debtor to account for proceeds or replacecollateral.

2. This section does not relax the requirements ofpossession if attachment, perfection or enforcement of a security interestdepends upon possession of the collateral by the secured party.

(Added to NRS by 1999, 297)

NRS 104.9206 Securityinterest arising in purchase or delivery of financial asset.

1. A securityinterest in favor of a securities intermediary attaches to a persons securityentitlement if:

(a) He buys afinancial asset through the securities intermediary in a transaction in whichhe is obligated to pay the purchase price to the securities intermediary at thetime of the purchase; and

(b) Thesecurities intermediary credits the financial asset to his securities accountbefore he pays the securities intermediary.

2. Thesecurity interest described in subsection 1 secures the buyers obligation topay for the financial asset.

3. A securityinterest in favor of a person that delivers a certificated security or otherfinancial asset represented by a writing attaches to the security or other financialasset if:

(a) Thesecurity or other financial asset:

(1) Inthe ordinary course of business is transferred by delivery with any necessaryendorsement or assignment; and

(2) Isdelivered under an agreement between persons in the business of dealing withsuch securities or financial assets; and

(b) Theagreement calls for delivery against payment.

4. The security interest described in subsection 3secures the obligation to make payment for the delivery.

(Added to NRS by 1999, 297)

NRS 104.9207 Rightsand duties of secured party having possession or control of collateral.

1. Except asotherwise provided in subsection 4, a secured party shall use reasonable carein the custody and preservation of collateral in the secured partys possession.In the case of chattel paper or an instrument, reasonable care includes takingnecessary steps to preserve rights against prior parties unless otherwiseagreed.

2. Except asotherwise provided in subsection 4, if a secured party has possession ofcollateral:

(a) Reasonableexpenses, including the cost of insurance and payment of taxes or othercharges, incurred in the custody, preservation, use or operation of thecollateral are chargeable to the debtor and are secured by the collateral;

(b) The risk ofaccidental loss or damage is on the debtor to the extent of a deficiency in anyeffective insurance coverage;

(c) The securedparty shall keep the collateral identifiable, but fungible collateral may becommingled; and

(d) The securedparty may use or operate the collateral:

(1) Forthe purpose of preserving the collateral or its value;

(2) Aspermitted by an order of a court having competent jurisdiction; or

(3) Exceptin the case of consumer goods, in the manner and to the extent agreed by thedebtor.

3. Except asotherwise provided in subsection 4, a secured party having possession ofcollateral or control of collateral under NRS104.7106, 104.9104, 104.9105, 104.9106 or 104.9107:

(a) May hold asadditional security any proceeds, except money or funds, received from thecollateral;

(b) Shall applymoney or funds received from the collateral to reduce the secured obligation,unless remitted to the debtor; and

(c) May createa security interest in the collateral.

4. If thesecured party is a buyer of accounts, chattel paper, payment intangibles orpromissory notes or a consignor:

(a) Subsection1 does not apply unless the secured party is entitled under an agreement:

(1) Tocharge back uncollected collateral; or

(2) Otherwiseto full or limited recourse against the debtor or a secondary obligor based onthe nonpayment or other default of an account debtor or other obligor on thecollateral; and

(b) Subsections 2 and 3 do not apply.

(Added to NRS by 1999, 298; A 2005, 870)

NRS 104.9208 Additionalduties of secured party having control of collateral.If there is no outstanding secured obligation and the secured party isnot committed to make advances, incur obligations or otherwise give value,within 10 days after receiving an authenticated demand by the debtor:

1. A secured party having control of a deposit accountunder paragraph (b) of subsection 1 of NRS104.9104 shall send to the bank with which the deposit account ismaintained an authenticated statement that releases the bank from any further obligationto comply with instructions originated by the secured party;

2. A secured party having control of a deposit accountunder paragraph (c) of subsection 1 of NRS104.9104 shall:

(a) Pay the debtor the balance on deposit in thedeposit account; or

(b) Transfer the balance on deposit into a depositaccount in the debtors name;

3. A secured party, other than a buyer, having controlof electronic chattel paper under NRS104.9105 shall:

(a) Communicate the authoritative copy of theelectronic chattel paper to the debtor or its designated custodian;

(b) If the debtor designates a custodian that is thedesignated custodian with which the authoritative copy of the electronicchattel paper is maintained for the secured party, communicate to the custodianan authenticated record releasing the designated custodian from any furtherobligation to comply with instructions originated by the secured party andinstructing the custodian to comply with instructions originated by the debtor;and

(c) Take appropriate action to enable the debtor or itsdesignated custodian to make copies of or revisions to the authoritative copywhich add or change an identified assignee of the authoritative copy withoutthe consent of the secured party;

4. A secured party having control of investmentproperty under paragraph (b) of subsection 4 of NRS 104.8106 or under subsection 2 of NRS 104.9106 shall send to the securitiesintermediary or commodity intermediary with which the security entitlement orcommodity contract is maintained an authenticated record that releases thesecurities intermediary or commodity intermediary from any further obligationto comply with entitlement orders or directions originated by the securedparty;

5. A secured party having control of aletter-of-credit right under NRS 104.9107shall send to each person having an unfulfilled obligation to pay or deliverproceeds of the letter of credit to the secured party an authenticated releasefrom any further obligation to pay or deliver proceeds of the letter of creditto the secured party; and

6. A secured party having control of an electronicdocument shall:

(a) Give control of the electronic document to thedebtor or its designated custodian;

(b) If the debtor designates a custodian that is thedesignated custodian with which the authoritative copy of the electronicdocument is maintained for the secured party, communicate to the custodian anauthenticated record releasing the designated custodian from any furtherobligation to comply with instructions originated by the secured party andinstructing the custodian to comply with instructions originated by the debtor;and

(c) Take appropriate action to enable the debtor or itsdesignated custodian to make copies of or revisions to the authoritative copywhich add or change an identified assignee of the authoritative copy withoutthe consent of the secured party.

(Added to NRS by 1999, 299; A 2005, 871)

NRS 104.9209 Dutiesof secured party if account debtor has been notified of assignment.

1. Except asotherwise provided in subsection 3, this section applies if:

(a) There is nooutstanding secured obligation; and

(b) The securedparty is not committed to make advances, incur obligations or otherwise givevalue.

2. Within 10days after receiving an authenticated demand by the debtor, a secured partyshall send to an account debtor that has received notification of an assignmentto the secured party as assignee under subsection 1 of NRS 104.9406 an authenticated record thatreleases the account debtor from any further obligation to the secured party.

3. This section does not apply to an assignmentconstituting the sale of an account, chattel paper or payment intangible.

(Added to NRS by 1999, 300)

NRS 104.9210 Requestfor accounting; request regarding list of collateral or statement of account.

1. In thissection:

(a) Requestmeans a record of a type described in paragraph (b), (c) or (d).

(b) Requestfor an accounting means a record authenticated by a debtor requesting that therecipient provide an accounting of the unpaid obligations secured by collateraland reasonably identifying the transaction or relationship that is the subjectof the request.

(c) Requestregarding a list of collateral means a record authenticated by a debtorrequesting that the recipient approve or correct a list of what the debtor believesto be the collateral securing an obligation and reasonably identifying the transactionor relationship that is the subject of the request.

(d) Requestregarding a statement of account means a record authenticated by a debtorrequesting that the recipient approve or correct a statement indicating whatthe debtor believes to be the aggregate amount of unpaid obligations secured bycollateral as of a specified date and reasonably identifying the transaction orrelationship that is the subject of the request.

2. Subject tosubsections 3 to 6, inclusive, a secured party, other than a buyer of accounts,chattel paper, payment intangibles, or promissory notes or a consignor, shallcomply with a request within 14 days after receipt:

(a) In the caseof a request for an accounting, by authenticating and sending to the debtor anaccounting; and

(b) In the caseof a request regarding a list of collateral or a request regarding a statementof account, by authenticating and sending to the debtor an approval or correction.

3. A securedparty that claims a security interest in all of a particular type of collateralowned by the debtor may comply with a request regarding a list of collateral bysending to the debtor an authenticated record including a statement to thateffect within 14 days after receipt.

4. A personthat receives a request regarding a list of collateral, claims no interest inthe collateral when it receives the request, and claimed an interest in thecollateral at an earlier time shall comply with the request within 14 daysafter receipt by sending to the debtor an authenticated record:

(a) Disclaimingany interest in the collateral; and

(b) If known tothe recipient, providing the name and mailing address of any assignee of orsuccessor to the recipients interest in the collateral.

5. A personthat receives a request for an accounting or a request regarding a statement ofaccount, claims no interest in the obligations when it receives the request,and claimed an interest in the obligations at an earlier time shall comply withthe request within 14 days after receipt by sending to the debtor anauthenticated record:

(a) Disclaimingany interest in the obligations; and

(b) If known tothe recipient, providing the name and mailing address of any assignee of orsuccessor to the recipients interest in the obligations.

6. A debtor is entitled without charge to one responseto a request under this section during any 6-month period. The secured partymay require payment of a charge not exceeding $25 for each additional response.

(Added to NRS by 1999, 300; A 2001, 720)

Part 3

Perfection and Priority

NRS 104.9301 Determinationof law governing perfection and priority of security interests. Except as otherwise provided in NRS 104.9303 to 104.9306, inclusive, the following rulesdetermine the law governing perfection, the effect of perfection ornonperfection, and the priority of a security interest in collateral:

1. Except asotherwise provided in this section, while a debtor is located in ajurisdiction, the law of that jurisdiction governs perfection, the effect ofperfection or nonperfection, and the priority of a security interest incollateral.

2. Whilecollateral is located in a jurisdiction, the law of that jurisdiction governsperfection, the effect of perfection or nonperfection, and the priority of apossessory security interest in that collateral.

3. Except asotherwise provided in subsections 4, 5 and 6, while tangible negotiable documents,goods, instruments, money or tangible chattel paper is located in ajurisdiction, the law of that jurisdiction governs the effect of perfection ornonperfection, and the priority of a nonpossessory security interest.

4. While goodsare located in a jurisdiction, the law of that jurisdiction governs perfectionof a security interest in the goods by a fixture filing.

5. The law ofthe jurisdiction in which timber to be cut is located governs perfection of asecurity interest in the timber.

6. The law of the jurisdiction in which the wellheador minehead is located governs perfection, the effect of perfection ornonperfection, and the priority of a security interest in as-extractedcollateral.

(Added to NRS by 1999, 301; A 2005, 872)

NRS 104.9302 Determinationof law governing perfection and priority of agricultural liens. While farm products are located in a jurisdiction, the lawof that jurisdiction governs perfection, the effect of perfection ornonperfection, and the priority of an agricultural lien on the farm products.

(Added to NRS by 1999, 301)

NRS 104.9303 Determinationof law governing perfection and priority of security interests in goods coveredby certificate of title.

1. Thissection applies to goods covered by a certificate of title, even if there is noother relationship between the jurisdiction under whose certificate of titlethe goods are covered and the goods or the debtor.

2. Goodsbecome covered by a certificate of title when a valid application for thecertificate of title and the applicable fee are delivered to the appropriateauthority. Goods cease to be covered by a certificate of title at the earlierof the time the certificate of title ceases to be effective under the law ofthe issuing jurisdiction or the time the goods become covered subsequently by acertificate of title issued by another jurisdiction.

3. The law of the jurisdiction under whose certificateof title the goods are covered governs perfection, the effect of perfection ornonperfection, and the priority of a security interest in goods covered by acertificate of title from the time the goods become covered by the certificateof title until the goods cease to be covered by the certificate of title.

(Added to NRS by 1999, 301)

NRS 104.9304 Determinationof law governing perfection and priority of security interests in depositaccounts.

1. The law ofa banks jurisdiction governs perfection, the effect of perfection ornonperfection, and the priority of a security interest in a deposit account maintainedwith that bank.

2. Thefollowing rules determine a banks jurisdiction for purposes of this part:

(a) If anagreement between the bank and the debtor governing the deposit accountexpressly provides that a particular jurisdiction is the banks jurisdictionfor purposes of this part, this article or the Uniform Commercial Code, thatjurisdiction is the banks jurisdiction.

(b) Ifparagraph (a) does not apply and an agreement between the bank and its customergoverning the deposit account expressly provides that the agreement is governedby the law of a particular jurisdiction, that jurisdiction is the banks jurisdiction.

(c) If neitherparagraph (a) nor paragraph (b) applies and an agreement between the bank andits customer governing the deposit account expressly provides that the depositaccount is maintained at an office in a particular jurisdiction, thatjurisdiction is the banks jurisdiction.

(d) If neitherparagraph (a) nor paragraph (b) nor paragraph (c) applies, the banksjurisdiction is the jurisdiction in which the office identified in an accountstatement as the office serving the customers account is located.

(e) If none of the preceding paragraphs applies, the banksjurisdiction is the jurisdiction in which the chief executive office of thebank is located.

(Added to NRS by 1999, 302)

NRS 104.9305 Determinationof law governing perfection and priority of security interests in investmentproperty.

1. Except asotherwise provided in subsection 3, the following rules apply:

(a) While asecurity certificate is located in a jurisdiction, the law of that jurisdictiongoverns perfection, the effect of perfection or nonperfection, and the priorityof a security interest in the certificated security represented thereby.

(b) The law ofthe issuers jurisdiction as specified in subsection 4 of NRS 104.8110 governs perfection, theeffect of perfection or nonperfection, and the priority of a security interestin an uncertificated security.

(c) The law ofthe securities intermediarys jurisdiction as specified in subsection 5 of NRS 104.8110 governs perfection, theeffect of perfection or nonperfection, and the priority of a security interestin a security entitlement or securities account.

(d) The law ofthe commodity intermediarys jurisdiction governs perfection, the effect ofperfection or nonperfection, and the priority of a security interest in a commoditycontract or commodity account.

2. Thefollowing rules determine a commodity intermediarys jurisdiction for purposesof this part:

(a) If anagreement between the commodity intermediary and commodity customer governingthe commodity account expressly provides that a particular jurisdiction is thecommodity intermediarys jurisdiction for purposes of this part, this articleor the Uniform Commercial Code, that jurisdiction is the commodityintermediarys jurisdiction.

(b) Ifparagraph (a) does not apply and an agreement between the commodityintermediary and commodity customer governing the commodity account expresslyprovides that the agreement is governed by the law of a particularjurisdiction, that jurisdiction is the commodity intermediarys jurisdiction.

(c) If neitherparagraph (a) nor paragraph (b) applies and an agreement between the commodityintermediary and commodity customer governing the commodity account expresslyprovides that the commodity account is maintained at an office in a particularjurisdiction, that jurisdiction is the commodity intermediarys jurisdiction.

(d) If neitherparagraph (a) nor paragraph (b) nor paragraph (c) applies, the commodityintermediarys jurisdiction is the jurisdiction in which the office identifiedin an account statement as the office serving the commodity customers accountis located.

(e) If none ofthe preceding paragraphs applies, the commodity intermediarys jurisdiction isthe jurisdiction in which the chief executive office of the commodityintermediary is located.

3. The law ofthe jurisdiction in which the debtor is located governs:

(a) Perfectionof a security interest in investment property by filing;

(b) Automaticperfection of a security interest in investment property granted by a broker orsecurities intermediary; and

(c) Automatic perfection of a security interest in acommodity contract or commodity account granted by a commodity intermediary.

(Added to NRS by 1999, 302)

NRS 104.9306 Determinationof law governing perfection and priority of security interests inletter-of-credit rights.

1. Subject tosubsection 3, the law of the issuers jurisdiction or a nominated personsjurisdiction governs perfection, the effect of perfection or nonperfection, andthe priority of a security interest in a letter-of-credit right if the issuersjurisdiction or nominated persons jurisdiction is a state.

2. Forpurposes of this part, an issuers jurisdiction or nominated persons jurisdictionis the jurisdiction whose law governs the liability of the issuer or nominatedperson with respect to the letter-of-credit right as provided in NRS 104.5116.

3. This section does not apply to a security interestthat is perfected only under subsection 4 of NRS104.9308.

(Added to NRS by 1999, 303)

NRS 104.9307 Locationof debtor.

1. In thissection, place of business means a place where a debtor conducts its affairs.

2. Except asotherwise provided in this section, the following rules determine a debtorslocation:

(a) A naturalperson is located at his residence.

(b) Any otherdebtor having only one place of business is located at its place of business.

(c) Any otherdebtor having more than one place of business is located at its chief executiveoffice.

3. Subsection2 applies only if a debtors residence, place of business or chief executiveoffice, as applicable, is located in a jurisdiction whose law requires informationconcerning the existence of a nonpossessory security interest to be made generallyavailable in a filing, recording or registration system as a condition orresult of the security interests obtaining priority over the rights of a liencreditor with respect to the collateral. If subsection 2 does not apply, thedebtor is deemed to be located in the District of Columbia.

4. A personthat ceases to exist, have a residence or have a place of business continues tobe located in the jurisdiction specified by subsections 2 and 3.

5. Aregistered organization that is organized under the law of a state is locatedin that state.

6. Except asotherwise provided in subsection 9, a registered organization that is organizedunder the law of the United States and a branch or agency of a bank that is notorganized under the law of the United States or a state are located or deemedto be located:

(a) In thestate that the law of the United States designates, if the law designates astate of location;

(b) In thestate that the registered organization, branch or agency designates, if the lawof the United States authorizes the registered organization, branch or agencyto designate its state of location; or

(c) In theDistrict of Columbia, if neither paragraph (a) nor paragraph (b) applies.

7. Aregistered organization continues to be located in the jurisdiction specifiedby subsection 5 or 6 notwithstanding:

(a) Thesuspension, revocation, forfeiture or lapse of the registered organizationsstatus as such in its jurisdiction of organization; or

(b) Thedissolution, winding up or cancellation of the existence of the registeredorganization.

8. The UnitedStates is deemed to be located in the District of Columbia.

9. A branch oragency of a bank that is not organized under the law of the United States or astate is located in the state in which the branch or agency is licensed, if allbranches and agencies of the bank are licensed in only one state.

10. A foreignair carrier under the Federal Aviation Act of 1958, as amended, is located atthe designated office of the agent upon which service of process may be made onbehalf of the carrier.

11. This section applies only for purposes of thispart.

(Added to NRS by 1999, 303)

NRS 104.9308 Whensecurity interest or agricultural lien is perfected; continuity of perfection.

1. Except asotherwise provided in this section and NRS104.9309, a security interest is perfected if it has attached and all ofthe applicable requirements for perfection in NRS 104.9310 to 104.9316, inclusive, have been satisfied.A security interest is perfected when it attaches if the applicablerequirements are satisfied before the security interest attaches.

2. Anagricultural lien is perfected if it has become effective and all of the applicablerequirements for perfection in NRS 104.9310have been satisfied. An agricultural lien is perfected when it becomeseffective if the applicable requirements are satisfied before the agriculturallien becomes effective.

3. A securityinterest or agricultural lien is perfected continuously if it is originallyperfected in one manner under this article and is later perfected in anothermanner under this article, without an intermediate period when it wasunperfected.

4. Perfectionof a security interest in collateral also perfects a security interest in asupporting obligation for the collateral.

5. Perfectionof a security interest in a right to payment or performance also perfects asecurity interest in a security interest, mortgage, or other lien on personalor real property securing the right.

6. Perfectionof a security interest in a securities account also perfects a securityinterest in the security entitlements carried in the securities account.

7. Perfection of a security interest in a commodityaccount also perfects a security interest in the commodity contracts carried inthe commodity account.

(Added to NRS by 1999, 304)

NRS 104.9309 Securityinterest perfected upon attachment. The followingsecurity interests are perfected when they attach:

1. A purchase-money security interest in consumergoods, except as otherwise provided in subsection 2 of NRS 104.9311 with respect to consumergoods that are subject to a statute or treaty described in subsection 1 of thatsection;

2. An assignment of accounts or payment intangibleswhich does not by itself or in conjunction with other assignments to the sameassignee transfer a significant part of the assignors outstanding accounts orpayment intangibles;

3. A sale of a payment intangible;

4. A sale of a promissory note;

5. A security interest created by the assignment of ahealth-care-insurance receivable to the provider of the health-care goods orservices;

6. A security interest arising under NRS 104.2401, 104.2505, subsection 3 of NRS 104.2711, or subsection 5 of NRS 104A.2508, until the debtor obtainspossession of the collateral;

7. A security interest of a collecting bank arisingunder NRS 104.4210;

8. A security interest of an issuer or nominatedperson arising under NRS 104.5118;

9. A security interest arising in the purchase ordelivery of a financial asset under NRS104.9206;

10. A security interest in investment property createdby a broker or securities intermediary;

11. A security interest in a commodity contract or acommodity account created by a commodity intermediary;

12. An assignment for the benefit of all creditors ofthe transferor and subsequent transfers by the assignee thereunder; and

13. A security interest created by an assignment of abeneficial interest in a decedents estate.

(Added to NRS by 1999, 305)

NRS 104.9310 Whenfiling required to perfect security interest or agricultural lien; securityinterests and agricultural liens to which filing provisions do not apply.

1. Except asotherwise provided in subsection 2 or subsection 2 of NRS 104.9312, a financing statement must befiled to perfect all security interests and agricultural liens.

2. The filingof a financing statement is not necessary to perfect a security interest:

(a) That isperfected under subsection 4, 5, 6 or 7 of NRS104.9308;

(b) That isperfected under NRS 104.9309 when itattaches;

(c) In propertysubject to a statute, regulation or treaty described in subsection 1 of NRS 104.9311;

(d) In goods inpossession of a bailee which is perfected under paragraph (a) or (b) ofsubsection 4 of NRS 104.9312;

(e) Incertificated securities, documents, goods or instruments which is perfectedwithout filing, control or possession under subsection 5, 6 or 7 of NRS 104.9312;

(f) In collateralin the secured partys possession under NRS104.9313;

(g) In acertificated security which is perfected by delivery of the security certificateto the secured party under NRS 104.9313;

(h) In depositaccounts, electronic chattel paper, electronic documents, investment propertyor letter-of-credit rights which is perfected by control under NRS 104.9314;

(i) In proceedswhich is perfected under NRS 104.9315;or

(j) That isperfected under NRS 104.9316.

3. If a secured party assigns a perfected securityinterest or agricultural lien, a filing under this Article is not required toreconfirm the perfected status of the security interest against creditors ofand transferees from the original debtor.

(Added to NRS by 1999, 306; A 2005, 872)

NRS 104.9311 Perfectionof security interests in property subject to certain statutes, regulations andtreaties.

1. Except asotherwise provided in subsection 4, the filing of a financing statement is notnecessary or effective to perfect a security interest in property subject to:

(a) A statute,regulation or treaty of the United States whose requirements for a securityinterests obtaining priority over the rights of a lien creditor with respectto the property preempt subsection 1 of NRS104.9310;

(b) Chapter 105 of NRS, NRS 482.423 to 482.431, inclusive, 488.1793 to 488.1827, inclusive, and 489.501 to 489.581, inclusive; or

(c) Acertificate-of-title statute of another jurisdiction which provides for a securityinterest to be indicated on the certificate as a condition or result of thesecurity interests obtaining priority over the rights of a lien creditor withrespect to the property.

2. Compliancewith the requirements of a statute, regulation or treaty described insubsection 1 for obtaining priority over the rights of a lien creditor isequivalent to the filing of a financing statement under this article. Except asotherwise provided in subsection 4, NRS104.9313 and subsections 4 and 5 of NRS104.9316 for goods covered by a certificate of title, a security interestin property subject to a statute, regulation or treaty described in subsection1 may be perfected only by compliance with those requirements, and a securityinterest so perfected remains perfected notwithstanding a change in the use ortransfer of possession of the collateral.

3. Except asotherwise provided in subsection 4 and subsections 4 and 5 of NRS 104.9316, duration and renewal ofperfection of a security interest perfected by compliance with the requirementsprescribed by a statute, regulation or treaty described in subsection 1 aregoverned by the statute, regulation or treaty. In other respects, the securityinterest is subject to this article.

4. During any period in which collateral subject to astatute specified in paragraph (b) of subsection 1 is inventory held for saleor lease by a person or leased by that person as lessor and that person is inthe business of selling goods of that kind, this section does not apply to asecurity interest in that collateral created by that person.

(Added to NRS by 1999, 306; A 2001, 721)

NRS 104.9312 Perfectionof security interests in chattel paper, deposit accounts, documents, goods coveredby documents, instruments, investment property, letter-of-credit rights andmoney; perfection by permissive filing; temporary perfection without filing ortransfer of possession.

1. A securityinterest in chattel paper, negotiable documents, instruments or investmentproperty may be perfected by filing.

2. Except asotherwise provided in subsections 3 and 4 of NRS104.9315 for proceeds:

(a) A securityinterest in a deposit account may be perfected only by control under NRS 104.9314;

(b) A securityinterest in a letter-of-credit right may be perfected only by control under NRS 104.9314, except as otherwise providedin subsection 4 of NRS 104.9308; and

(c) A securityinterest in money may be perfected only by the secured partys taking possessionunder NRS 104.9313.

3. While goodsare in the possession of a bailee that has issued a negotiable documentcovering the goods:

(a) A securityinterest in the goods may be perfected by perfecting a security interest in thedocument; and

(b) A securityinterest perfected in the document has priority over any security interest thatbecomes perfected in the goods by another method during that time.

4. While goodsare in the possession of a bailee that has issued a nonnegotiable documentcovering the goods, a security interest in the goods may be perfected by:

(a) Issuance ofa document in the name of the secured party;

(b) Thebailees receipt of notification of the secured partys interest; or

(c) Filing asto the goods.

5. A securityinterest in certificated securities, negotiable documents or instruments isperfected without filing or the taking of possession or control for a period of20 days after the time it attaches to the extent that it arises for new valuegiven under an authenticated security agreement.

6. A perfectedsecurity interest in a negotiable document or goods in possession of a bailee,other than one that has issued a negotiable document for the goods, remainsperfected for 20 days without filing if the secured party makes available tothe debtor the goods or documents representing the goods for the purpose of:

(a) Ultimatesale or exchange; or

(b) Loading,unloading, storing, shipping, transshipping, manufacturing, processing orotherwise dealing with them in a manner preliminary to their sale or exchange.

7. A perfectedsecurity interest in a certificated security or instrument remains perfectedfor 20 days without filing if the secured party delivers the security certificateor instrument to the debtor for the purpose of:

(a) Ultimatesale or exchange; or

(b) Presentation,collection, enforcement, renewal or registration of transfer.

8. After the 20-day period specified in subsection 5,6 or 7 expires, perfection depends upon compliance with this Article.

(Added to NRS by 1999, 307; A 2005, 873)

NRS 104.9313 Whenpossession by or delivery to secured party perfects security interest withoutfiling.

1. Except asotherwise provided in subsection 2, a secured party may perfect a securityinterest in tangible negotiable documents, goods, instruments, money ortangible chattel paper by taking possession of the collateral. A secured partymay perfect a security interest in certificated securities by taking deliveryof the certificated securities under NRS104.8301.

2. Withrespect to goods covered by a certificate of title issued by this State, asecured party may perfect a security interest in the goods by taking possessionof the goods only in the circumstances described in subsection 5 of NRS 104.9316.

3. Withrespect to collateral other than certificated securities and goods covered by adocument, a secured party takes possession of collateral in the possession of aperson other than the debtor, the secured party or a lessee of the collateralfrom the debtor in the ordinary course of the debtors business, when:

(a) The personin possession authenticates a record acknowledging that it holds possession ofthe collateral for the secured partys benefit; or

(b) The persontakes possession of the collateral after having authenticated a recordacknowledging that it will hold possession of collateral for the securedpartys benefit.

4. Ifperfection of a security interest depends upon possession of the collateral bya secured party, perfection occurs no earlier than the time the secured partytakes possession and continues only while he retains possession.

5. A securityinterest in a certificated security in registered form is perfected by deliverywhen delivery of the certificated security occurs under NRS 104.8301 and remains perfected bydelivery until the debtor obtains possession of the security certificate.

6. A person inpossession of collateral is not required to acknowledge that it holdspossession for a secured partys benefit.

7. If a personacknowledges that it holds possession for the secured partys benefit:

(a) Theacknowledgment is effective under subsection 3 or subsection 1 of NRS 104.8301, even if the acknowledgmentviolates the rights of a debtor; and

(b) Unless theperson otherwise agrees or law other than this Article otherwise provides, hedoes not owe any duty to the secured party and is not required to confirm theacknowledgment to another person.

8. A securedparty having possession of collateral does not relinquish possession bydelivering the collateral to a person other than the debtor or a lessee of thecollateral from the debtor in the ordinary course of the debtors business ifhe was instructed before the delivery or is instructed contemporaneously withthe delivery:

(a) To holdpossession of the collateral for the secured partys benefit; or

(b) Toredeliver the collateral to the secured party.

9. A secured party does not relinquish possession,even if a delivery under subsection 8 violates the rights of a debtor. A personto which collateral is delivered under subsection 8 does not owe any duty tothe secured party and is not required to confirm the delivery to another personunless he otherwise agrees or law other than this Article otherwise provides.

(Added to NRS by 1999, 308; A 2005, 873)

NRS 104.9314 Perfectionby control.

1. A securityinterest in investment property, deposit accounts, letter-of-credit rights,electronic chattel paper or electronic documents may be perfected by control ofthe collateral under NRS 104.7106, 104.9104, 104.9105, 104.9106 or 104.9107.

2. A securityinterest in deposit accounts, letter-of-credit rights, electronic chattel paperor electronic documents is perfected by control under NRS 104.7106, 104.9104, 104.9105 or 104.9107 when the secured party obtainscontrol and remains perfected by control only while the secured party retainscontrol.

3. A securityinterest in investment property is perfected by control under NRS 104.9106 from the time the securedparty obtains control and remains perfected by control until:

(a) The securedparty does not have control; and

(b) One of thefollowing occurs:

(1) Ifthe collateral is a certificated security, the debtor has or acquires possessionof the security certificate;

(2) Ifthe collateral is an uncertificated security, the issuer has registered orregisters the debtor as the registered owner; or

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

(Added to NRS by 1999, 309; A 2001, 62; 2005, 874)

NRS 104.9315 Securedpartys rights on disposition of collateral and in proceeds.

1. Except asotherwise provided in this article and in subsection 2 of NRS 104.2403:

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

(b) A securityinterest attaches to any identifiable proceeds of collateral.

2. Proceedsthat are commingled with other property are identifiable proceeds:

(a) If theproceeds are goods, to the extent provided by NRS 104.9336; and

(b) If theproceeds are not goods, to the extent that the secured party identifies theproceeds by a method of tracing, including application of equitable principles,that is permitted under law other than this article with respect to commingledproperty of the type involved.

3. A securityinterest in proceeds is a perfected security interest if the security interestin the original collateral was perfected.

4. A perfectedsecurity interest in proceeds becomes unperfected on the 21st day after thesecurity interest attaches to the proceeds unless:

(a) Thefollowing conditions are satisfied:

(1) Afiled financing statement covers the original collateral;

(2) Theproceeds are collateral in which a security interest may be perfected by filingin the office in which the financing statement has been filed; and

(3) Theproceeds are not acquired with cash proceeds;

(b) Theproceeds are identifiable cash proceeds; or

(c) Thesecurity interest in the proceeds is perfected when the security interestattaches to the proceeds or within 20 days thereafter.

5. If a filedfinancing statement covers the original collateral, a security interest inproceeds which remains perfected under paragraph (a) of subsection 4 becomesunperfected at the later of:

(a) When theeffectiveness of the filed financing statement lapses under NRS 104.9515 or is terminated under NRS 104.9513; or

(b) The 21st day after the security interest attachesto the proceeds.

(Added to NRS by 1999, 309)

NRS 104.9316 Continuedperfection of security interest following change in governing law.

1. A securityinterest perfected pursuant to the law of the jurisdiction designated insubsection 1 of NRS 104.9301 orsubsection 3 of NRS 104.9305 remainsperfected until the earliest of:

(a) The timeperfection would have ceased under the law of that jurisdiction;

(b) Theexpiration of 4 months after a change of the debtors location to anotherjurisdiction; or

(c) Theexpiration of 1 year after a transfer of collateral to a person that therebybecomes a debtor and is located in another jurisdiction.

2. If asecurity interest described in subsection 1 becomes perfected under the law ofthe other jurisdiction before the earliest time or event described in thatsubsection, it remains perfected thereafter. If the security interest does notbecome perfected under the law of the other jurisdiction before the earliesttime or event, it becomes unperfected and is deemed never to have beenperfected as against a purchaser of the collateral for value.

3. Apossessory security interest in collateral, other than goods covered by acertificate of title and as-extracted collateral consisting of goods, remainscontinuously perfected if:

(a) Thecollateral is located in one jurisdiction and subject to a security interestperfected under the law of that jurisdiction;

(b) Thereafterthe collateral is brought into another jurisdiction; and

(c) Upon entryinto the other jurisdiction, the security interest is perfected under the lawof the other jurisdiction.

4. Except asotherwise provided in subsection 5, a security interest in goods covered by acertificate of title which is perfected by any method under the law of anotherjurisdiction when the goods become covered by a certificate of title from thisState remains perfected until the security interest would have becomeunperfected under the law of the other jurisdiction had the goods not become socovered.

5. A securityinterest described in subsection 4 becomes unperfected as against a purchaserof the goods for value and is deemed never to have been perfected as against apurchaser of the goods for value if the applicable requirements for perfectionunder subsection 2 of NRS 104.9311 orunder NRS 104.9313 are not satisfiedbefore the earlier of:

(a) The timethe security interest would have become unperfected under the law of the otherjurisdiction had the goods not become covered by a certificate of title fromthis State; or

(b) Theexpiration of 4 months after the goods had become so covered.

6. A securityinterest in deposit accounts, letter-of-credit rights or investment propertywhich is perfected under the law of the banks jurisdiction, the issuers jurisdiction,a nominated persons jurisdiction, the securities intermediarys jurisdictionor the commodity intermediarys jurisdiction, as applicable, remains perfecteduntil the earlier of:

(a) The timethe security interest would have become unperfected under the law of thatjurisdiction; or

(b) Theexpiration of 4 months after a change of the applicable jurisdiction to anotherjurisdiction.

7. If a security interest described in subsection 6becomes perfected under the law of the other jurisdiction before the earlier ofthe time or the end of the period described in that subsection, it remainsperfected thereafter. If the security interest does not become perfected underthe law of the other jurisdiction before the earlier of that time or the end ofthat period, it becomes unperfected and is deemed never to have been perfectedas against a purchaser of the collateral for value.

(Added to NRS by 1999, 310)

NRS 104.9317 Intereststhat take priority over or take free of unperfected security interest oragricultural lien.

1. A securityinterest or agricultural lien is subordinate to the rights of:

(a) A personentitled to priority under NRS 104.9322;and

(b) A personthat becomes a lien creditor before the earlier of the time:

(1) Thesecurity interest or agricultural lien is perfected; or

(2) Oneof the conditions specified in paragraph (c) of subsection 2 of NRS 104.9203 is met and a financingstatement covering the collateral is filed.

2. Except asotherwise provided in subsection 5, a buyer, other than a secured party, oftangible chattel paper, tangible documents, goods, instruments, or a securitycertificate takes free of a security interest or agricultural lien if the buyergives value and receives delivery of the collateral without knowledge of thesecurity interest or agricultural lien and before it is perfected.

3. Except asotherwise provided in subsection 5, a lessee of goods takes free of a securityinterest or agricultural lien if he gives value and receives delivery of thecollateral without knowledge of the security interest or agricultural lien andbefore it is perfected.

4. A licenseeof a general intangible or a buyer, other than a secured party, of accounts,electronic chattel paper, electronic documents, general intangibles or investmentproperty other than a certificated security takes free of a security interestif he gives value without knowledge of the security interest and before it isperfected.

5. Except as otherwise provided in NRS 104.9320 and 104.9321, if a person files a financingstatement with respect to a purchase-money security interest before or within20 days after the debtor receives delivery of the collateral, the security interesttakes priority over the rights of a buyer, lessee or lien creditor which arisebetween the time the security interest attaches and the time of filing.

(Added to NRS by 1999, 311; A 2001, 722; 2005, 875)

NRS 104.9318 Nointerest retained in right to payment that is sold; rights and title of sellerof account or chattel paper with respect to creditors and purchasers.

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

2. For purposes of determining the rights of creditorsof, and purchasers for value of an account or chattel paper from, a debtor thathas sold an account or chattel paper, while the buyers security interest isunperfected, the debtor has rights and title to the account or chattel paperidentical to those the debtor sold.

(Added to NRS by 1999, 312; A 2003, 3190)

NRS 104.9319 Rightsand title of consignee with respect to creditors and purchasers.

1. Except asotherwise provided in subsection 2, for purposes of determining the rights ofcreditors of, and purchasers for value of goods from, a consignee, while thegoods are in the possession of the consignee, the consignee is deemed to haverights and title to the goods identical to those the consignor had or had powerto transfer.

2. For purposes of determining the rights of acreditor of a consignee, law other than this article determines the rights andtitle of a consignee while goods are in the consignees possession if, underthis part, a perfected security interest held by the consignor would havepriority over the rights of the creditor.

(Added to NRS by 1999, 312)

NRS 104.9320 Protectionof certain buyers of goods.

1. Except asotherwise provided in subsection 5, a buyer in the ordinary course of business,other than a person buying farm products from a person engaged in farmingoperations, takes free of a security interest created by the buyers seller,even if the security interest is perfected and the buyer knows of itsexistence.

2. Except asotherwise provided in subsection 5, a buyer of goods from a person who used orbought the goods for use primarily for personal, family or household purposestakes free of a security interest, even if perfected, if he buys:

(a) Withoutknowledge of the security interest;

(b) For value;

(c) Primarilyfor his personal, family or household purposes; and

(d) Before thefiling of a financing statement covering the goods.

3. To theextent that it affects the priority of a security interest over a buyer ofgoods under subsection 2, the period of effectiveness of a filing made in thejurisdiction in which the seller is located is governed by subsections 1 and 2of NRS 104.9316.

4. A buyer inthe ordinary course of business buying oil, gas, or other minerals at thewellhead or minehead or after extraction takes free of an interest arising outof an encumbrance.

5. Subsections 1 and 2 do not affect a securityinterest in goods in the possession of the secured party under NRS 104.9313.

(Added to NRS by 1999, 312)

NRS 104.9321 Protectionof licensee of general intangible and lessee of goods in ordinary course ofbusiness.

1. In thissection, licensee in ordinary course of business means a person that becomesa licensee of a general intangible in good faith, without knowledge that thelicense violates the rights of another person in the general intangible, and inthe ordinary course from a person in the business of licensing generalintangibles of that kind. A person becomes a licensee in the ordinary course ifthe license to him comports with the usual or customary practices in the kindof business in which the licensor is engaged or with the licensors own usualor customary practices.

2. A licenseein the ordinary course of business takes his rights under a nonexclusivelicense free of a security interest in the general intangible created by the licensor,even if the security interest is perfected and he knows of its existence.

3. A lessee in the ordinary course of business takeshis leasehold interest free of a security interest in the goods created by thelessor, even if the security interest is perfected and he knows of itsexistence.

(Added to NRS by 1999, 312)

NRS 104.9322 Prioritiesamong conflicting security interests in and agricultural liens on samecollateral.

1. Except asotherwise provided in this section, priority among conflicting securityinterests and agricultural liens in the same collateral is determined accordingto the following rules:

(a) Conflictingperfected security interests and agricultural liens rank according to priorityin time of filing or perfection. Priority dates from the earlier of the time afiling covering the collateral is first made or the security interest oragricultural lien is first perfected, if there is no period thereafter whenthere is neither filing nor perfection.

(b) A perfectedsecurity interest or agricultural lien has priority over a conflictingunperfected security interest or agricultural lien.

(c) The firstsecurity interest or agricultural lien to attach or become effective haspriority if conflicting security interests and agricultural liens areunperfected.

2. For thepurposes of paragraph (a) of subsection 1:

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

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

3. Except asotherwise provided in subsection 6, a security interest in collateral whichqualifies for priority over a conflicting security interest under NRS 104.9327, 104.9328, 104.9329, 104.9330 or 104.9331 also has priority over aconflicting security interest in:

(a) Anysupporting obligation for the collateral; and

(b) Proceeds ofthe collateral if:

(1) Thesecurity interest in proceeds is perfected;

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

(3) Inthe case of proceeds that are proceeds of proceeds, all intervening proceedsare cash proceeds, proceeds of the same type as the collateral, or an accountrelating to the collateral.

4. Subject tosubsection 5 and except as otherwise provided in subsection 6, if a securityinterest in chattel paper, deposit accounts, negotiable documents, instruments,investment property or letter-of-credit rights is perfected by a method otherthan filing, conflicting perfected security interests in proceeds of thecollateral rank according to priority in time of filing.

5. Subsection4 applies only if the proceeds of the collateral are not cash proceeds, chattelpaper, negotiable documents, instruments, investment property or letter-of-creditrights.

6. Subsections1 to 5, inclusive, are subject to:

(a) Subsection7 and the other provisions of this part;

(b) NRS 104.4210 with respect to a securityinterest of a collecting bank;

(c) NRS 104.5118 with respect to a securityinterest of an issuer or nominated person; and

(d) NRS 104.9110 with respect to a securityinterest arising under article 2 or 2A.

7. A perfected agricultural lien on collateral haspriority over a conflicting security interest in or agricultural lien on thesame collateral if the statute creating the agricultural lien so provides.

(Added to NRS by 1999, 313)

NRS 104.9323 Futureadvances.

1. Except asotherwise provided in subsection 3, for purposes of determining the priority ofa perfected security interest under subsection 1 of NRS 104.9322, perfection of the securityinterest dates from the time an advance is made to the extent that the securityinterest secures an advance that:

(a) Is madewhile the security interest is perfected only:

(1) UnderNRS 104.9309 when it attaches; or

(2) Temporarilyunder subsection 5, 6 or 7 of NRS 104.9312;and

(b) Is not madepursuant to a commitment entered into before or while the security interest isperfected by a method other than under NRS104.9309 or subsection 5, 6 or 7 of NRS104.9312.

2. Except asotherwise provided in subsection 3, a security interest is subordinate to therights of a person that becomes a lien creditor to the extent that the securityinterest secures an advance made more than 45 days after he becomes a liencreditor unless the advance is made:

(a) Without knowledgeof the lien; or

(b) Pursuant toa commitment entered into without knowledge of the lien.

3. Subsections1 and 2 do not apply to a security interest held by a secured party that is abuyer of accounts, chattel paper, payment intangibles, or promissory notes or aconsignor.

4. Except asotherwise provided in subsection 5, a buyer of goods other than a buyer in theordinary course of business takes free of a security interest to the extentthat it secures advances made after the earlier of:

(a) The timethe secured party acquires knowledge of the buyers purchase; or

(b) Forty-fivedays after the purchase.

5. Subsection4 does not apply if the advance is made pursuant to a commitment entered intowithout knowledge of the buyers purchase and before the expiration of the45-day period.

6. Except asotherwise provided in subsection 7, a lessee of goods, other than a lessee inordinary course of business, takes the leasehold free of a security interest tothe extent that it secures advances made after the earlier of:

(a) The timethe secured party acquires knowledge of the lease; or

(b) Forty-fivedays after the lease contract becomes enforceable.

7. Subsection 6 does not apply if the advance is madepursuant to a commitment entered into without knowledge of the lease and beforethe expiration of the 45-day period.

(Added to NRS by 1999, 314; A 2001, 722)

NRS 104.9324 Priorityof purchase-money security interests.

1. Subject tosubsection 2 and except as otherwise provided in subsection 7, a perfectedpurchase-money security interest in inventory has priority over a conflictingsecurity interest in the same inventory, has priority over a conflictingsecurity interest in chattel paper or an instrument constituting proceeds ofthe inventory and in proceeds of the chattel paper, if so provided in NRS 104.9330, and, except as otherwiseprovided in NRS 104.9327, also haspriority in identifiable cash proceeds of the inventory to the extent theidentifiable cash proceeds are received on or before the delivery of theinventory to a buyer, if:

(a) Thepurchase-money security interest is perfected when the debtor receivespossession of the inventory;

(b) Thepurchase-money secured party sends an authenticated notification to the holderof the conflicting security interest;

(c) The holderof the conflicting security interest receives the notification within 5 yearsbefore the debtor receives possession of the inventory; and

(d) Thenotification states that the person sending the notification has or expects toacquire a purchase-money security interest in inventory of the debtor and describesthe inventory.

2. Paragraphs(b), (c) and (d) of subsection 1 apply only if the holder of the conflictingsecurity interest had filed a financing statement covering the same types ofinventory:

(a) If thepurchase-money security interest is perfected by filing, before the date of thefiling; or

(b) If thepurchase-money security interest is temporarily perfected without filing orpossession under subsection 6 of NRS104.9312, before the beginning of the 20-day period thereunder.

3. Subject tosubsection 5 and except as otherwise provided in subsection 7, a perfectedpurchase-money security interest in livestock that are farm products haspriority over a conflicting security interest in the same livestock, and,except as otherwise provided in NRS104.9327, a perfected security interest in their identifiable proceeds andidentifiable products in their unmanufactured states also has priority, if:

(a) Thepurchase-money security interest is perfected when the debtor receivespossession of the livestock;

(b) Thepurchase-money secured party sends an authenticated notification to the holderof the conflicting security interest;

(c) The holderof the conflicting security interest receives the notification within 6 monthsbefore the debtor receives possession of the livestock; and

(d) Thenotification states that the person sending the notification has or expects toacquire a purchase-money security interest in livestock of the debtor anddescribes the livestock.

4. Paragraphs(b), (c) and (d) of subsection 3 apply only if the holder of the conflictingsecurity interest had filed a financing statement covering the same types oflivestock:

(a) If thepurchase-money security interest is perfected by filing, before the date of thefiling; or

(b) If thepurchase-money security interest is temporarily perfected without filing orpossession under subsection 6 of NRS104.9312, before the beginning of the 20-day period thereunder.

5. Except asotherwise provided in subsection 7, a perfected purchase-money securityinterest in goods other than inventory or livestock has priority over a conflictingsecurity interest in the same goods, and, except as otherwise provided in NRS 104.9327, a perfected securityinterest in its identifiable proceeds also has priority, if the purchase-moneysecurity interest is perfected when the debtor receives possession of thecollateral or within 20 days thereafter.

6. Except asotherwise provided in subsection 7, a perfected purchase-money securityinterest in software has priority over a conflicting security interest in thesame collateral, and, except as otherwise provided in NRS 104.9327, a perfected securityinterest in its identifiable proceeds also has priority, to the extent that thepurchase-money security interest in the goods in which the software wasacquired for use has priority in the goods and proceeds of the goods under thissection.

7. If morethan one security interest qualifies for priority in the same collateral undersubsection 1, 3, 5 or 6:

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

(b) In all other cases, subsection 1 of NRS 104.9322 applies to the qualifyingsecurity interests.

(Added to NRS by 1999, 315)

NRS 104.9325 Priorityof security interests in transferred collateral.

1. Except asotherwise provided in subsection 2, a security interest created by a debtor issubordinate to a security interest in the same collateral created by anotherperson if:

(a) The debtoracquired the collateral subject to the security interest created by the otherperson;

(b) Thesecurity interest created by the other person was perfected when the debtoracquired the collateral; and

(c) There is noperiod thereafter when the security interest is unperfected.

2. Subsection1 subordinates a security interest only if the security interest:

(a) Otherwisewould have priority solely under subsection 1 of NRS 104.9322 or NRS 104.9324; or

(b) Arose solely under subsection 3 of NRS 104.2711 or subsection 5 of NRS 104A.2508.

(Added to NRS by 1999, 316)

NRS 104.9326 Priorityof security interests created by new debtor.

1. Subject tosubsection 2, a security interest created by a new debtor which is perfected bya filed financing statement that is effective solely under NRS 104.9508 in collateral in which a newdebtor has or acquires rights is subordinate to a security interest in the samecollateral which is perfected other than by a filed financing statement that iseffective solely under that section.

2. The other provisions of this part determine thepriority among conflicting security interests in the same collateral perfectedby filed financing statements that are effective solely under NRS 104.9508. However, if the securityagreements to which a new debtor became bound as debtor were not entered intoby the same original debtor, the conflicting security interests rank accordingto priority in time of the new debtors having become bound.

(Added to NRS by 1999, 316)

NRS 104.9327 Priorityamong conflicting security interests in same deposit account. The following rules govern priority among conflictingsecurity interests in the same deposit account:

1. A securityinterest held by a secured party having control of the deposit account under NRS 104.9104 has priority over aconflicting security interest held by a secured party that does not havecontrol.

2. Except asotherwise provided in subsections 3 and 4, security interests perfected bycontrol under NRS 104.9314 rankaccording to priority in time of obtaining control.

3. Except asotherwise provided in subsection 4, a security interest held by the bank withwhich the deposit account is maintained has priority over a conflictingsecurity interest held by another secured party.

4. A security interest perfected by control underparagraph (c) of subsection 1 of NRS104.9104 has priority over a security interest held by the bank with whichthe deposit account is maintained.

(Added to NRS by 1999, 317)

NRS 104.9328 Priorityamong conflicting security interests in same investment property. The following rules govern priority among conflicting securityinterests in the same investment property:

1. A security interest held by a secured party havingcontrol of investment property under NRS104.9106 has priority over a security interest held by a secured party thatdoes not have control of the investment property.

2. A security interest in a certificated security inregistered form which is perfected by taking delivery under subsection 1 of NRS 104.9313 and not by control under NRS 104.9314 has priority over aconflicting security interest perfected by a method other than control.

3. Except as otherwise provided in subsections 4 and5, conflicting security interests held by secured parties each of which hascontrol under NRS 104.9106 rankaccording to priority in time of:

(a) If the collateral is a security, obtaining control;

(b) If the collateral is a security entitlement carriedin a securities account:

(1) The secured partys becoming the person forwhich the securities account is maintained, if the secured party obtainedcontrol under paragraph (a) of subsection 4 of NRS 104.8106;

(2) The securities intermediarys agreement tocomply with the secured partys entitlement orders with respect to securityentitlements carried or to be carried in the securities account, if the securedparty obtained control under paragraph (b) of that subsection; or

(3) If the secured party obtained controlthrough another person under paragraph (c) of that subsection, the time onwhich priority would be based under this paragraph if the other person were thesecured party; or

(c) If the collateral is a commodity contract carriedwith a commodity intermediary, the satisfaction of the requirement for controlspecified in paragraph (b) of subsection 2 of NRS 104.9106 with respect to commoditycontracts carried or to be carried with the commodity intermediary.

4. A security interest held by a securitiesintermediary in a security entitlement or a securities account maintained withthe securities intermediary has priority over a conflicting security interestheld by another secured party.

5. A security interest held by a commodityintermediary in a commodity contract or a commodity account maintained with thecommodity intermediary has priority over a conflicting security interest heldby another secured party.

6. Conflicting security interests granted by a broker,securities intermediary or commodity intermediary which are perfected withoutcontrol under NRS 104.9106 rankequally.

7. In all other cases, priority among conflictingsecurity interests in investment property is governed by NRS 104.9322 and 104.9323.

(Added to NRS by 1999, 317)

NRS 104.9329 Priority among conflicting securityinterests in same letter-of-credit right. Thefollowing rules govern priority among conflicting security interests in thesame letter-of-credit right:

1. A securityinterest held by a secured party having control of the letter-of-credit rightunder NRS 104.9107 has priority to theextent of its control over a conflicting security interest held by a securedparty that does not have control.

2. Security interests perfected by control under NRS 104.9314 rank according to priority intime of obtaining control.

(Added to NRS by 1999, 318)

NRS 104.9330 Priorityof purchaser of chattel paper or instrument.

1. A purchaserof chattel paper has priority over a security interest in the chattel paperwhich is claimed merely as proceeds of inventory subject to a security interestif:

(a) In goodfaith and in the ordinary course of the purchasers business, the purchasergives new value and takes possession of the chattel paper or obtains control ofthe chattel paper under NRS 104.9105;and

(b) The chattelpaper does not indicate that it has been assigned to an identified assigneeother than the purchaser.

2. A purchaserof chattel paper has priority over a security interest in the chattel paperwhich is claimed other than merely as proceeds of inventory subject to a securityinterest if the purchaser gives new value and takes possession of the chattel paperor obtains control of the chattel paper under NRS 104.9105 in good faith, in theordinary course of the purchasers business, and without knowledge that the purchaseviolates the rights of the secured party.

3. Except asotherwise provided in NRS 104.9327, apurchaser having priority in chattel paper under subsection 1 or 2 also haspriority in proceeds of the chattel paper to the extent that:

(a) NRS 104.9322 provides for priority in theproceeds; or

(b) The proceedsconsist of the specific goods covered by the chattel paper or cash proceeds ofthe specific goods, even if the purchasers security interest in the proceedsis unperfected.

4. Except asotherwise provided in subsection 1 of NRS104.9331, a purchaser of an instrument has priority over a securityinterest in the instrument perfected by a method other than possession if thepurchaser gives value and takes possession of the instrument in good faith andwithout knowledge that the purchase violates the rights of the secured party.

5. Forpurposes of subsections 1 and 2, the holder of a purchase-money securityinterest in inventory gives new value for chattel paper constituting proceeds ofthe inventory.

6. For purposes of subsections 2 and 4, if chattelpaper or an instrument indicates that it has been assigned to an identifiedsecured party other than the purchaser, a purchaser of the chattel paper orinstrument has knowledge that the purchase violates the rights of the securedparty.

(Added to NRS by 1999, 318)

NRS 104.9331 Priorityof rights of purchasers of instruments, documents and securities under otherarticles; priority of interests in financial assets and security entitlementsunder article 8.

1. Thisarticle does not limit the rights of a holder in due course of a negotiableinstrument, a holder to which a negotiable document of title has been dulynegotiated, or a protected purchaser of a security. These holders or purchaserstake priority over an earlier security interest, even if perfected, to theextent provided in articles 3, 7 and 8.

2. Thisarticle does not limit the rights of or impose liability on a person to theextent that the person is protected against the assertion of a claim underarticle 8.

3. Filing under this article does not constitutenotice of a claim or defense to the holders, or purchasers, or personsdescribed in subsections 1 and 2.

(Added to NRS by 1999, 319; A 2001, 723)

NRS 104.9332 Effectof transfer of money; effect of transfer of funds from deposit account.

1. Atransferee of money takes the money free of a security interest unless thetransferee acts in collusion with the debtor in violating the rights of thesecured party.

2. A transferee of funds from a deposit account takesthe funds free of a security interest in the deposit account unless thetransferee acts in collusion with the debtor in violating the rights of thesecured party.

(Added to NRS by 1999, 319)

NRS 104.9333 Priorityof certain possessory liens arising by operation of law.

1. In thissection, possessory lien means an interest, other than a security interest oran agricultural lien:

(a) Which securespayment or performance of an obligation for services or materials furnishedwith respect to goods by a person in the ordinary course of his business;

(b) Which iscreated by statute or rule of law in his favor; and

(c) Whoseeffectiveness depends on his possession of the goods.

2. A possessory lien on goods has priority over asecurity interest in the goods unless the lien is created by a statute thatexpressly provides otherwise.

(Added to NRS by 1999, 319)

NRS 104.9334 Priorityof security interests in fixtures and crops.

1. A securityinterest under this article may be created in goods that are fixtures or maycontinue in goods that become fixtures. A security interest does not existunder this article in ordinary building materials incorporated into animprovement on land.

2. Thisarticle does not prevent creation of an encumbrance upon fixtures under realproperty law.

3. In casesnot governed by subsections 4 to 8, inclusive, a security interest in fixturesis subordinate to a conflicting interest of an encumbrancer or owner of therelated real property other than the debtor.

4. Except asotherwise provided in subsection 8, a perfected security interest in fixtureshas priority over a conflicting interest of an encumbrancer or owner of thereal property if the debtor has an interest of record in or is in possession ofthe real property and:

(a) Thesecurity interest is a purchase-money security interest;

(b) Theinterest of the encumbrancer or owner arises before the goods become fixtures;and

(c) Thesecurity interest is perfected by a fixture filing before the goods becomefixtures or within 20 days thereafter.

5. A perfectedsecurity interest in fixtures has priority over a conflicting interest of anencumbrancer or owner of the real property if:

(a) The debtorhas an interest of record in the real property or is in possession of the realproperty and the security interest:

(1) Isperfected by a fixture filing before the interest of the encumbrancer or owneris of record; and

(2) Haspriority over any conflicting interest of a predecessor in title of theencumbrancer or owner;

(b) Before thegoods become fixtures, the security interest is perfected by any methodpermitted by this article and the fixtures are readily removable:

(1) Factoryor office machines;

(2) Equipmentthat is not primarily used or leased for use in the operation of the realproperty; or

(3) Replacementsof domestic appliances that are consumer goods;

(c) Theconflicting interest is a lien on the real property obtained by legal or equitableproceedings after the security interest was perfected by any method permittedby this article; or

(d) Thesecurity interest is:

(1) Createdin a manufactured home in a manufactured-home transaction; and

(2) Perfectedpursuant to a statute described in paragraph (b) of subsection 1 of NRS 104.9311.

6. A securityinterest in fixtures, whether or not perfected, has priority over a conflictinginterest of an encumbrancer or owner of the real property if:

(a) Theencumbrancer or owner has, in an authenticated record, consented to thesecurity interest or disclaimed an interest in the goods as fixtures; or

(b) The debtorhas a right to remove the goods as against the encumbrancer or owner.

7. Thepriority of the security interest under paragraph (b) of subsection 6 continuesfor a reasonable time if the debtors right to remove the goods as against theencumbrancer or owner terminates.

8. A mortgageis a construction mortgage to the extent that it secures an obligation incurredfor the construction of an improvement on land, including the acquisition costof the land, if the recorded record so indicates. Except as otherwise providedin subsections 5 and 6, a security interest in fixtures is subordinate to a constructionmortgage recorded before the goods become fixtures if the goods become fixturesbefore the completion of the construction. A mortgage has this priority to thesame extent as a construction mortgage to the extent that it is given torefinance a construction mortgage.

9. A perfected security interest in crops growing onreal property has priority over a conflicting interest of an encumbrancer orowner of the real property if the debtor has an interest of record in or is inpossession of the real property.

(Added to NRS by 1999, 319; A 2001, 723)

NRS 104.9335 Accessions.

1. A securityinterest may be created in an accession and continues in collateral thatbecomes an accession.

2. If asecurity interest is perfected when the collateral becomes an accession, thesecurity interest remains perfected in the collateral.

3. Except asotherwise provided in subsection 4, the other provisions of this part determinethe priority of a security interest in an accession.

4. A securityinterest in an accession is subordinate to a security interest in the wholewhich is perfected by compliance with the requirements of acertificate-of-title statute under subsection 2 of NRS 104.9311.

5. Afterdefault, subject to part 6, a secured party may remove an accession from othergoods if the security interest in the accession has priority over the claims ofevery person having an interest in the whole.

6. A secured party that removes an accession fromother goods under subsection 5 shall promptly reimburse any holder of asecurity interest or other lien on, or owner of, the whole or of the othergoods, other than the debtor, for the cost of repair of any physical injury tothe whole or the other goods. The secured party need not reimburse the holderor owner for any diminution in value of the whole or the other goods caused bythe absence of the accession removed or by any necessity for replacing it. Aperson entitled to reimbursement may refuse permission to remove until thesecured party gives adequate assurance for the performance of the obligation toreimburse.

(Added to NRS by 1999, 321)

NRS 104.9336 Commingledgoods.

1. In thissection, commingled goods means goods that are physically united with othergoods in such a manner that their identity is lost in a product or mass.

2. A securityinterest does not exist in commingled goods as such. However, a securityinterest may attach to a product or mass that results when goods becomecommingled goods.

3. Ifcollateral becomes commingled goods, a security interest attaches to theproduct or mass.

4. If asecurity interest in collateral is perfected before the collateral becomescommingled goods, the security interest that attaches to the product or massunder subsection 3 is perfected.

5. Except asotherwise provided in subsection 6, the other provisions of this part determinethe priority of a security interest that attaches to the product or mass undersubsection 3.

6. If morethan one security interest attaches to the product or mass under subsection 3,the following rules determine priority:

(a) A securityinterest that is perfected under subsection 4 has priority over a securityinterest that is unperfected at the time the collateral becomes commingledgoods.

(b) If more than one security interest is perfected undersubsection 4, the security interests rank equally in proportion to the value ofthe collateral at the time it became commingled goods.

(Added to NRS by 1999, 321; A 2001, 725)

NRS 104.9337 Priorityof security interests in goods covered by certificate of title. If, while a security interest in goods is perfected by anymethod under the law of another jurisdiction, this State issues a certificateof title that does not show that the goods are subject to the security interestor contain a statement that they may be subject to security interests not shownon the certificate:

1. A buyer ofthe 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 deliveryof the goods after issuance of the certificate and without knowledge of thesecurity interest; and

2. The security interest is subordinate to aconflicting security interest in the goods that attaches, and is perfectedunder subsection 2 of NRS 104.9311,after issuance of the certificate and without the conflicting secured partysknowledge of the security interest.

(Added to NRS by 1999, 322)

NRS 104.9338 Priorityof security interest or agricultural lien perfected by filed financingstatement providing certain incorrect information. Ifa security interest or agricultural lien is perfected by a filed financingstatement providing information described in paragraph (e) of subsection 2 of NRS 104.9516 which is incorrect at thetime the financing statement is filed:

1. Thesecurity interest or agricultural lien is subordinate to a conflicting perfectedsecurity interest in the collateral to the extent that the holder of theconflicting security interest gives value in reasonable reliance upon theincorrect information; and

2. A purchaser, other than a secured party, of thecollateral takes free of the security interest or agricultural lien to theextent that, in reasonable reliance upon the incorrect information, thepurchaser gives value and, in the case of tangible chattel paper, tangibledocuments, goods, instruments or a security certificate, receives delivery ofthe collateral.

(Added to NRS by 1999, 322; A 2005, 875)

NRS 104.9339 Prioritysubject to subordination by agreement. Thisarticle does not preclude subordination by agreement by a person entitled topriority.

(Added to NRS by 1999, 322)

NRS 104.9340 Effectivenessof right of recoupment or setoff against deposit account.

1. Except asotherwise provided in subsection 3, a bank with which a deposit account ismaintained may exercise any right of recoupment or setoff against a securedparty that holds a security interest in the deposit account.

2. Except asotherwise provided in subsection 3, the application of this article to asecurity interest in a deposit account does not affect a right of recoupment orsetoff of the secured party as to a deposit account maintained with the securedparty.

3. The exercise by a bank of a setoff against adeposit account is ineffective against a secured party that holds a securityinterest in the deposit account which is perfected by control under paragraph(c) of subsection 1 of NRS 104.9104, ifthe setoff is based on a claim against the debtor.

(Added to NRS by 1999, 322)

NRS 104.9341 Banks rights and duties with respectto deposit account. Except as otherwiseprovided in subsection 3 of NRS 104.9340,and unless the bank otherwise agrees in an authenticated record, a banksrights and duties with respect to a deposit account maintained with the bankare not terminated, suspended or modified by:

1. Thecreation, attachment or perfection of a security interest in the depositaccount;

2. The banksknowledge of the security interest; or

3. The banks receipt of instructions from the securedparty.

(Added to NRS by 1999, 322)

NRS 104.9342 Banksright to refuse to enter into or disclose existence of control agreement. This article does not require a bank to enter into anagreement of the kind described in paragraph (b) of subsection 1 of NRS 104.9104, even if its customer sorequests or directs. A bank that has entered into such an agreement is notrequired to confirm the existence of the agreement to another person unless requestedto do so by its customer.

(Added to NRS by 1999, 323)

Part 4

Rights of Third Parties

NRS 104.9401 Alienabilityof debtors rights.

1. Except asotherwise provided in subsection 2 and NRS104.9406 to 104.9409, inclusive,whether a debtors rights in collateral may be voluntarily or involuntarilytransferred is governed by law other than this article.

2. An agreement between the debtor and secured partywhich prohibits a transfer of the debtors rights in collateral or makes thetransfer a default does not prevent the transfer from taking effect.

(Added to NRS by 1999, 323; A 2001, 62)

NRS 104.9402 Securedparty not obligated in contract of debtor or in tort.The existence of a security interest, agricultural lien, or authoritygiven to a debtor to dispose of or use collateral, without more, does notimpose upon a secured party liability in contract or tort for the debtors actsor omissions.

(Added to NRS by 1999, 323)

NRS 104.9403 Agreementnot to assert defenses against assignee.

1. In thissection, value has the meaning provided in subsection 1 of NRS 104.3303.

2. Except as otherwiseprovided in this section, an agreement between an account debtor and anassignor not to assert against an assignee any claim or defense that theaccount debtor may have against the assignor is enforceable by an assignee thattakes an assignment:

(a) For value;

(b) In goodfaith;

(c) Withoutnotice of a claim of a property or possessory right to the property assigned;and

(d) Withoutnotice of a defense or claim in recoupment of the type that may be assertedagainst a person entitled to enforce a negotiable instrument under subsection 1of NRS 104.3305.

3. Anagreement described in subsection 2 is not enforceable with respect to defensesof a type that may be asserted against a holder in due course of a negotiableinstrument under subsection 2 of NRS104.3305.

4. In aconsumer transaction, if a record evidences the account debtors obligation,law other than this article requires that the record include a statement to theeffect that the rights of an assignee are subject to claims or defenses thatthe account debtor could assert against the original obligee, and the recorddoes not include such a statement:

(a) The recordhas the same effect as if the record included such a statement; and

(b) The accountdebtor may assert against an assignee those claims and defenses that would havebeen available if the record included such a statement.

5. Thissection is subject to law other than this article which establishes a differentrule for an account debtor who is a natural person and who incurred the obligationprimarily for personal, family or household purposes.

6. Except as otherwise provided in subsection 4, thissection does not displace law other than this article which gives effect to anagreement by an account debtor not to assert a claim or defense against anassignee.

(Added to NRS by 1999, 323)

NRS 104.9404 Rightsacquired by assignee; claims and defenses against assignee.

1. Unless anaccount debtor has made an enforceable agreement not to assert defenses orclaims, and subject to subsections 2 to 5, inclusive, the rights of an assigneeare subject to:

(a) All termsof the agreement between the account debtor and assignor and any defense orclaim in recoupment arising from the transaction that gave rise to the contract;and

(b) Any otherdefense or claim of the account debtor against the assignor which accruesbefore the account debtor receives a notification of the assignment authenticatedby the assignor or the assignee.

2. Subject tosubsection 3 and except as otherwise provided in subsection 4, the claim of anaccount debtor against an assignor may be asserted against an assignee undersubsection 1 only to reduce the amount the account debtor owes.

3. Thissection is subject to law other than this article which establishes a differentrule for an account debtor who is a natural person and who incurred the obligationprimarily for personal, family or household purposes.

4. In aconsumer transaction, if a record evidences the account debtors obligation,law other than this article requires that the record include a statement to theeffect that the account debtors recovery against an assignee with respect toclaims and defenses against the assignor may not exceed amounts paid by theaccount debtor under the record, and the record does not include such astatement, the extent to which a claim of an account debtor against theassignor may be asserted against an assignee is determined as if the recordincluded such a statement.

5. This section does not apply to an assignment of ahealth-care-insurance receivable.

(Added to NRS by 1999, 324)

NRS 104.9405 Modificationof or substitution for assigned contract.

1. Amodification of or substitution for an assigned contract is effective againstan assignee if made in good faith. The assignee acquires corresponding rightsunder the modified or substituted contract. The assignment may provide that themodification or substitution is a breach of contract by the assignor. Thissubsection is subject to subsections 2, 3 and 4.

2. Subsection1 applies to the extent that:

(a) The rightto payment or a part thereof under an assigned contract has not been fullyearned by performance; or

(b) The rightto payment or a part thereof has been fully earned by performance and theaccount debtor has not received notification of the assignment under subsection1 of NRS 104.9406.

3. Thissection is subject to law other than this article which establishes a differentrule for an account debtor who is a natural person and who incurred the obligationprimarily for personal, family or household purposes.

4. This section does not apply to an assignment of ahealth-care-insurance receivable.

(Added to NRS by 1999, 324)

NRS 104.9406 Dischargeof account debtor; notification of assignment; identification and proof ofassignment; restrictions on assignment of accounts, chattel paper, paymentintangibles and promissory notes ineffective.

1. Subject tosubsections 2 to 8, inclusive, an account debtor on an account, chattel paperor a payment intangible may discharge its obligation by paying the assignoruntil, but not after, the account debtor receives a notification, authenticatedby the assignor or the assignee, that the amount due or to become due has beenassigned and that payment is to be made to the assignee. After receipt of thenotification, the account debtor may discharge its obligation by paying theassignee and may not discharge the obligation by paying the assignor.

2. Subject tosubsection 8, notification is ineffective under subsection 1:

(a) If it doesnot reasonably identify the rights assigned;

(b) To theextent that an agreement between an account debtor and a seller of a paymentintangible limits the account debtors duty to pay a person other than theseller and the limitation is effective under law other than this article; or

(c) At theoption of an account debtor, if the notification notifies the account debtor tomake less than the full amount of any installment or other periodic payment tothe assignee, even if:

(1) Onlya portion of the account, chattel paper or payment intangible has been assignedto that assignee;

(2) Aportion has been assigned to another assignee; or

(3) Theaccount debtor knows that the assignment to that assignee is limited.

3. Subject tosubsection 8, if requested by the account debtor, an assignee shall seasonablyfurnish reasonable proof that the assignment has been made. Unless the assigneecomplies, the account debtor may discharge its obligation by paying theassignor, even if the account debtor has received a notification undersubsection 1.

4. Except asotherwise provided in subsection 5 and NRS104.9407 and 104A.2303, andsubject to subsection 8, a term in an agreement between an account debtor andan 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 onthe 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) Providesthat the assignment or transfer, or the creation, attachment, perfection orenforcement of the security interest may give rise to a default, breach, rightof recoupment, claim, defense, termination, right of termination, or remedyunder the account, chattel paper, payment intangible or promissory note.

5. Subsection4 does not apply to the sale of a payment intangible or promissory note.

6. Subject tosubsections 7 and 8, 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 securityinterest in, an account or chattel paper is ineffective to the extent that therule of law, statute or regulation:

(a) Prohibits,restricts, or requires the consent of the government, governmental body orofficial, or account debtor to the assignment or transfer of, or the creation,attachment, perfection, or enforcement of a security interest in, the accountor chattel paper; or

(b) Providesthat the assignment or transfer, or the creation, attachment, perfection, orenforcement of the security interest may give rise to a default, breach, rightof recoupment, claim, defense, termination, right of termination, or remedyunder the account or chattel paper.

7. Subject tosubsection 8, an account debtor may not waive or vary its option underparagraph (c) of subsection 2.

8. Thissection is subject to law other than this article which establishes a differentrule for an account debtor who is an individual and who incurred the obligationprimarily for personal, family or household purposes.

9. This section does not apply to an assignment of ahealth-care-insurance receivable or to a transfer of a right to receivepayments pursuant to NRS 42.030.

(Added to NRS by 1999, 325; A 2001, 725; 2003, 1667)

NRS 104.9407 Restrictionson assignment, transfer, creation or enforcement of security interest inleasehold interest or in lessors residual interest.

1. Except asotherwise provided in subsection 2, a term in a lease agreement is ineffectiveto the extent that it:

(a) Prohibits,restricts, or requires the consent of a party to the lease to the assignment ortransfer, or the creation, attachment, perfection, or enforcement of a securityinterest in an interest of a party under the lease contract or in the lessorsresidual interest in the goods; or

(b) Providesthat the assignment or transfer, or the creation, attachment, perfection, orenforcement of the security interest may give rise to a default, breach, right ofrecoupment, claim, defense, termination, right of termination or remedy underthe lease.

2. Except asotherwise provided in subsection 7 of NRS104A.2303, a term described in paragraph (b) of subsection 1 is effectiveto the extent that there is:

(a) A transferby the lessee of the lessees right of possession or use of the goods inviolation of the term; or

(b) Adelegation of a material performance of either party to the lease contract inviolation of the term.

3. The creation, attachment, perfection, orenforcement of a security interest in the lessors interest under the leasecontract or the lessors residual interest in the goods is not a transfer thatmaterially impairs the lessees prospect of obtaining return performance ormaterially changes the duty of or materially increases the burden or riskimposed on the lessee within the purview of subsection 4 of NRS 104A.2303 unless, and then only tothe extent that, enforcement results in a delegation of a material performanceof the lessor. Even in that event, the creation, attachment, perfection andenforcement of the security interest remain effective.

(Added to NRS by 1999, 326; A 2001, 726)

NRS 104.9408 Restrictionson assignment or transfer of promissory notes, health-care insurancereceivables and certain general intangibles ineffective.

1. Except asotherwise provided in subsection 2, a term in a promissory note or in anagreement between an account debtor and a debtor which relates to a health-care-insurancereceivable or a general intangible, including a contract, permit, license orfranchise, and prohibits, restricts or requires the consent of the person obligatedon the promissory note or the account debtor to, the assignment or transfer of,or creation, attachment, or perfection of a security interest in, thepromissory note, health-care-insurance receivable or general intangible, isineffective to the extent that the term:

(a) Wouldimpair the creation, attachment or perfection of a security interest; or

(b) Providesthat the assignment or transfer, or the creation, attachment or perfection ofthe security interest may give rise to a default, breach, right of recoupment,claim, defense, termination, right of termination or remedy under thepromissory note, health-care-insurance receivable or general intangible.

2. Subsection1 applies to a security interest in a payment intangible or promissory noteonly if the security interest arises out of a sale of the payment intangible orpromissory note.

3. A rule oflaw, statute, or regulation that prohibits, restricts, or requires the consentof a government, governmental body or official, person obligated on a promissorynote, or account debtor to the assignment or transfer of, or creation of a securityinterest in, a promissory note, health-care-insurance receivable or generalintangible, including a contract, permit, license or franchise between anaccount debtor and a debtor, is ineffective to the extent that the rule of law,statute or regulation:

(a) Wouldimpair the creation, attachment or perfection of a security interest; or

(b) Providesthat the assignment or transfer, or the creation, attachment or perfection ofthe security interest may give rise to a default, breach, right of recoupment,claim, defense, termination, right of termination or remedy under thepromissory note, health-care-insurance receivable or general intangible.

4. To theextent that a term in a promissory note or in an agreement between an accountdebtor and a debtor which relates to a health-care-insurance receivable orgeneral intangible or a rule of law, statute, or regulation described insubsection 3 would be effective under law other than this article but isineffective under subsection 1 or 3, the creation, attachment or perfection ofa security interest in the promissory note, health-care-insurance receivable orgeneral intangible:

(a) Is notenforceable against the person obligated on the promissory note or the accountdebtor;

(b) Does notimpose a duty or obligation on the person obligated on the promissory note orthe account debtor;

(c) Does notrequire the person obligated on the promissory note or the account debtor torecognize the security interest, pay or render performance to the secured partyor accept payment or performance from the secured party;

(d) Does notentitle the secured party to use or assign the debtors rights under thepromissory note, health-care-insurance receivable or general intangible, includingany related information or materials furnished to the debtor in the transactiongiving rise to the promissory note, health-care-insurance receivable or generalintangible;

(e) Does notentitle the secured party to use, assign, possess or have access to any tradesecrets or confidential information of the person obligated on the promissorynote or the account debtor; and

(f) Does not entitle the secured party to enforce thesecurity interest in the promissory note, health-care-insurance receivable orgeneral intangible.

(Added to NRS by 1999, 327; A 2001, 727)

NRS 104.9409 Restrictionson assignment of letter-of-credit rights ineffective.

1. A term in aletter of credit or a rule of law, statute, regulation, custom or practiceapplicable to the letter of credit which prohibits, restricts or requires theconsent of an applicant, issuer, or nominated person to a beneficiarys assignmentof or creation of a security interest in a letter-of-credit right isineffective to the extent that the term or rule of law, statute, regulation,custom or practice:

(a) Wouldimpair the creation, attachment or perfection of a security interest in theletter-of-credit right; or

(b) Providesthat the assignment or the creation, attachment or perfection of the securityinterest may give rise to a default, breach, right of recoupment, claim, defense,termination, right of termination or remedy under the letter-of-credit right.

2. To theextent that a term in a letter of credit is ineffective under subsection 1 butwould be effective under law other than this article or a custom or practiceapplicable to the letter of credit, to the transfer of a right to draw orotherwise demand performance under the letter of credit, or to the assignmentof a right to proceeds of the letter of credit, the creation, attachment orperfection of a security interest in the letter-of-credit right:

(a) Is notenforceable against the applicant, issuer, nominated person or transfereebeneficiary;

(b) Imposes noduties or obligations on the applicant, issuer, nominated person or transfereebeneficiary; and

(c) Does not require the applicant, issuer, nominatedperson or transferee beneficiary to recognize the security interest, pay orrender performance to the secured party or accept payment or other performancefrom the secured party.

(Added to NRS by 1999, 328; A 2001, 728)

Part 5

Filing

NRS 104.9501 Filingoffice.

1. Except asotherwise provided in subsection 2, if the law of this State governs perfectionof a security interest or agricultural lien, the office in which to file a financingstatement to perfect the security interest or agricultural lien is:

(a) The officedesignated for the filing or recording of a mortgage on the real property, if:

(1) Thecollateral is as-extracted collateral or timber to be cut; or

(2) Thefinancing statement is filed as a fixture filing and the collateral is goodsthat are or are to become fixtures; or

(b) The officeof the Secretary of State in all other cases, including a case in which thecollateral is goods that are or are to become fixtures and the financingstatement is not filed as a fixture filing.

2. The office in which to file a financing statementto perfect a security interest in collateral, including fixtures, of atransmitting utility is the office of the Secretary of State or the countyrecorder of the appropriate county, as determined pursuant to chapter 105 of NRS. The financing statement alsoconstitutes a fixture filing as to the collateral indicated in the financingstatement which is or is to become fixtures.

(Added to NRS by 1999, 328)

NRS 104.9502 Contentsof financing statement; record of mortgage as financing statement; time offiling financing statement.

1. Subject tosubsection 2, a financing statement is sufficient only if it:

(a) Providesthe name of the debtor;

(b) Providesthe name of the secured party or a representative of the secured party; and

(c) Indicatesthe collateral covered by the financing statement.

2. Except asotherwise provided in subsection 2 of NRS104.9501, to be sufficient, a financing statement that covers as-extractedcollateral or timber to be cut, or which is filed as a fixture filing andcovers goods that are or are to become fixtures, must satisfy subsection 1 andalso:

(a) Indicatethat it covers this type of collateral;

(b) Indicatethat it is to be filed for record in the real property records;

(c) Provide adescription of the real property to which the collateral is related sufficientto give constructive notice of the mortgage under the law of this State if thedescription were contained in a mortgage of the real property; and

(d) If thedebtor does not have an interest of record in the real property, provide thename of a record owner.

3. A record ofa mortgage is effective, from the date of recording, as a financing statementfiled as a fixture filing or as a financing statement covering as-extractedcollateral or timber to be cut only if:

(a) The recordindicates the goods or accounts that it covers;

(b) The goodsare or are to become fixtures related to the real property described in themortgage or the collateral is related to the real property described in the mortgageand is as-extracted collateral or timber to be cut;

(c) The recordsatisfies the requirements for a financing statement in this section other thanan indication that it is to be filed in the real property records; and

(d) Themortgage is recorded.

4. A financing statement may be filed before asecurity agreement is made or a security interest otherwise attaches.

(Added to NRS by 1999, 329)

NRS 104.9503 Nameof debtor and secured party provided in financing statement.

1. A financingstatement sufficiently provides the name of the debtor:

(a) If thedebtor is a registered organization, only if the financing statement providesthe name of the debtor indicated on the public record of the debtors jurisdictionof organization which shows the debtor to have been organized;

(b) If thedebtor is a decedents estate, only if the financing statement provides thename of the decedent and indicates that the debtor is an estate;

(c) If thedebtor is a trust or a trustee acting with respect to property held in trust,only if the financing statement:

(1) Providesthe name specified for the trust in its organic documents or, if no name isspecified, provides the name of the settlor and additional informationsufficient to distinguish the debtor from other trusts having one or more ofthe same settlors; and

(2) Indicates,in the debtors name or otherwise, that the debtor is a trust or is a trusteeacting with respect to property held in trust; and

(d) In othercases:

(1) Ifthe debtor has a name, only if it provides the name of the debtor as a naturalperson or an organization; and

(2) Ifthe debtor does not have a name, only if it provides the names of the partners,members, associates or other persons comprising the debtor.

2. A financingstatement that provides the name of the debtor in accordance with subsection 1is not rendered ineffective by the absence of:

(a) A tradename or other name of the debtor; or

(b) Unlessrequired under subparagraph (2) of paragraph (d) of subsection 1, names ofpartners, members, associates or other persons comprising the debtor.

3. A financingstatement that provides only the debtors trade name does not sufficientlyprovide the name of the debtor.

4. Failure toindicate the representative capacity of a secured party or representative of asecured party does not affect the sufficiency of a financing statement.

5. A financing statement may provide the name of morethan one debtor and the name of more than one secured party.

(Added to NRS by 1999, 329)

NRS 104.9504 Indication of collateral in financingstatement. A financing statement sufficientlyindicates the collateral that it covers if the financing statement provides:

1. Adescription of the collateral pursuant to NRS104.9108; or

2. An indication that the financing statement coversall assets or all personal property.

(Added to NRS by 1999, 330; A 2001, 729)

NRS 104.9505 Filingof financing statement in compliance with other statutes and treaties forconsignments, leases, other bailments and other transactions.

1. Aconsignor, lessor, or other bailor of goods, a licensor, or a buyer of a paymentintangible or promissory note may file a financing statement, or may complywith a statute or treaty described in subsection 1 of NRS 104.9311, using the terms consignor,consignee, lessor, lessee, bailor, bailee, licensor, licensee,owner, registered owner, buyer, seller or words of similar import, insteadof the terms secured party and debtor.

2. This part applies to the filing of a financingstatement under subsection 1 and, as appropriate, to compliance that isequivalent to filing a financing statement under subsection 2 of NRS 104.9311, but the filing or complianceis not of itself a factor in determining whether the collateral secures anobligation. If it is determined for another reason that the collateral securesan obligation, a security interest held by the consignor, lessor, bailor,licensor, owner or buyer which attaches to the collateral is perfected by thefiling or compliance.

(Added to NRS by 1999, 330)

NRS 104.9506 Effectof errors or omissions in financing statement.

1. A financingstatement substantially satisfying the requirements of this part is effective,even if it has minor errors or omissions, unless the errors or omissions makethe financing statement seriously misleading.

2. Except asotherwise provided in subsection 3, a financing statement that failssufficiently to provide the name of the debtor in accordance with subsection 1of NRS 104.9503 is seriouslymisleading.

3. If a searchof the records of the filing office under the debtors correct name, using thefiling offices standard search logic, if any, would disclose a financingstatement that fails sufficiently to provide the name of the debtor inaccordance with subsection 1 of NRS104.9503, the name provided does not make the financing statement seriouslymisleading.

4. For purposes of subsection 2 of NRS 104.9508, the debtors correct namein subsection 3 means the correct name of the new debtor.

(Added to NRS by 1999, 331)

NRS 104.9507 Effectof certain events on effectiveness of financing statement.

1. A filedfinancing statement remains effective with respect to collateral that is sold,exchanged, leased, licensed or otherwise disposed of and in which a securityinterest or agricultural lien continues, even if the secured party knows of orconsents to the disposition.

2. Except asotherwise provided in subsection 3 and NRS104.9508, a financing statement is not rendered ineffective if, after thefinancing statement is filed, the information provided in the financingstatement becomes seriously misleading under NRS104.9506.

3. If a debtorso changes its name that a filed financing statement becomes seriouslymisleading under NRS 104.9506:

(a) Thefinancing statement is effective to perfect a security interest in collateralacquired by the debtor before, or within 4 months after, the change; and

(b) The financing statement is not effective to perfecta security interest in collateral acquired by the debtor more than 4 monthsafter the change, unless an amendment to the financing statement which rendersthe financing statement not seriously misleading is filed within 4 months afterthe change.

(Added to NRS by 1999, 331)

NRS 104.9508 Effectivenessof financing statement if new debtor becomes bound by security agreement.

1. Except asotherwise provided in this section, a filed financing statement naming anoriginal debtor is effective to perfect a security interest in collateral inwhich a new debtor has or acquires rights to the extent that the financingstatement would have been effective had the original debtor acquired rights inthe collateral.

2. If thedifference between the name of the original debtor and that of the new debtorcauses a filed financing statement that is effective under subsection 1 to beseriously misleading under NRS 104.9506:

(a) Thefinancing statement is effective to perfect a security interest in collateralacquired by the new debtor before, and within 4 months after, the new debtor becomesbound under subsection 4 of NRS 104.9203;and

(b) Thefinancing statement is not effective to perfect a security interest in collateralacquired by the new debtor more than 4 months after the new debtor becomesbound under subsection 4 of NRS 104.9203unless an initial financing statement providing the name of the new debtor isfiled before the expiration of that time.

3. This section does not apply to collateral as towhich a filed financing statement remains effective against the new debtorunder subsection 1 of NRS 104.9507.

(Added to NRS by 1999, 331)

NRS 104.9509 Personsentitled to file record.

1. A personmay file an initial financing statement, amendment that adds collateral coveredby a financing statement or amendment that adds a debtor to a financingstatement only if:

(a) The debtorauthorizes the filing in an authenticated record;

(b) The personholds an agricultural lien that has become effective at the time of filing andthe financing statement covers only collateral in which he holds an agriculturallien; or

(c) Otherwiseauthorized by subsection 2 or 3.

2. Byauthenticating or becoming bound as debtor by a security agreement, a debtor ornew debtor authorizes the filing of an initial financing statement, and anamendment, covering:

(a) Thecollateral described in the security agreement; and

(b) Propertythat becomes collateral under paragraph (b) of subsection 1 of NRS 104.9315, whether or not the securityagreement expressly covers proceeds.

3. A personmay file an amendment other than an amendment that adds collateral covered by afinancing statement or an amendment that adds a debtor to a financing statementonly if:

(a) The securedparty of record authorizes the filing; or

(b) The changeis a termination statement for a financing statement as to which the securedparty of record has failed to file or send a termination statement as requiredby subsection 1 or 3 of NRS 104.9513.

4. If there is more than one secured party of record fora financing statement, each secured party of record may authorize the filing ofan amendment under subsection 3.

(Added to NRS by 1999, 332; A 2001, 729)

NRS 104.9510 Effectivenessof filed record.

1. Subject tosubsection 3, a filed record is effective only to the extent that it was filedby a person that may file it under NRS104.9509.

2. A recordauthorized by one secured party of record does not affect the financingstatement with respect to another secured party of record.

3. If a personmay file a termination statement only under paragraph (b) of subsection 3 of NRS 104.9509, the filed terminationstatement is effective only if the debtor authorizes the filing and thetermination statement indicates that the debtor authorized it to be filed.

4. A continuation statement that is not filed withinthe 6-month period prescribed by subsection 4 of NRS 104.9515 is ineffective.

(Added to NRS by 1999, 332)

NRS 104.9511 Securedparty of record.

1. A securedparty of record with respect to a financing statement is a person whose name isprovided as the name of the secured party or a representative of the securedparty in an initial financing statement that has been filed. If an initialfinancing statement is filed under subsection 1 of NRS 104.9514, the assignee named in theinitial financing statement is the secured party of record with respect to thefinancing statement.

2. If anamendment of a financing statement which provides the name of a person as asecured party or a representative of a secured party is filed, the person namedin the amendment is a secured party of record. If an amendment is filed undersubsection 2 of NRS 104.9514, theassignee named in the amendment is a secured party of record.

3. A person remains a secured party of record untilthe filing of an amendment of the financing statement which deletes him.

(Added to NRS by 1999, 332)

NRS 104.9512 Amendmentof financing statement.

1. Subject to NRS 104.9509, a person may add or deletecollateral covered by, continue or terminate the effectiveness of, or, subjectto subsection 5, otherwise amend the information provided in, a financingstatement by filing an amendment that:

(a) Identifies,by its file number, the initial financing statement to which the amendmentrelates; and

(b) If theamendment relates to an initial financing statement filed or recorded in afiling office described in paragraph (a) of subsection 1 of NRS 104.9501, provides the date that theinitial financing statement was filed or recorded and the information specifiedin subsection 2 of NRS 104.9502.

2. Except asotherwise provided in NRS 104.9515, thefiling of an amendment does not extend the period of effectiveness of thefinancing statement.

3. A financingstatement that is amended by an amendment that adds collateral is effective asto the added collateral only from the date of the filing of the amendment.

4. A financingstatement that is amended by an amendment that adds a debtor is effective as tothe added debtor only from the date of the filing of the amendment.

5. Anamendment is ineffective to the extent it:

(a) Purports todelete all debtors and fails to provide the name of a debtor to be covered bythe financing statement; or

(b) Purports to delete all secured parties of recordand fails to provide the name of a new secured party of record.

(Added to NRS by 1999, 333)

NRS 104.9513 Terminationstatement.

1. A securedparty shall cause the secured party of record for a financing statement to filea termination statement for the financing statement if the financing statementcovers consumer goods and:

(a) There is noobligation secured by the collateral covered by the financing statement and nocommitment to make an advance, incur an obligation or otherwise give value; or

(b) The debtordid not authorize the filing of the initial financing statement.

2. To complywith subsection 1, a secured party shall cause the secured party of record tofile the termination statement:

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

(b) If earlier,within 20 days after the secured party receives an authenticated demand from adebtor.

3. In casesnot governed by subsection 1, within 20 days after a secured party receives anauthenticated demand from a debtor, the secured party shall cause the securedparty of record for a financing statement to send to the debtor a terminationstatement for the financing statement or file the termination statement in thefiling office if:

(a) Except inthe case of a financing statement covering accounts or chattel paper that hasbeen sold or goods that are the subject of a consignment, there is no obligationsecured by the collateral covered by the financing statement and no commitmentto make an advance, incur an obligation or otherwise give value;

(b) Thefinancing statement covers accounts or chattel paper that has been sold but asto which the account debtor or other person obligated has discharged its obligation;

(c) Thefinancing statement covers goods that were the subject of a consignment to thedebtor but are not in the debtors possession; or

(d) The debtordid not authorize the filing of the initial financing statement.

4. Except as otherwise provided in NRS 104.9510, upon the filing of a terminationstatement with the filing office:

(a) The financing statement to which the terminationstatement relates ceases to be effective.

(b) For the purposes of subsection 7 of NRS 104.9519, subsection 1 of NRS 104.9522 and subsection 3 of NRS 104.9523, a financing statement thatindicates that the debtor is a transmitting utility causes the effectiveness ofthe financing statement to lapse.

(Added to NRS by 1999, 333; A 2001, 729)

NRS 104.9514 Assignmentof certain powers of secured party of record.

1. Except asotherwise provided in subsection 3, an initial financing statement may reflectan assignment of all of the secured partys power to authorize an amendment tothe financing statement by providing the name and mailing address of theassignee as the name and address of the secured party.

2. Except asotherwise provided in subsection 3, a secured party of record may assign ofrecord all or part of its power to authorize an amendment to a financingstatement by filing in the filing office an amendment of the financingstatement which:

(a) Identifies,by its file number, the initial financing statement to which it relates;

(b) Providesthe name of the assignor; and

(c) Providesthe name and mailing address of the assignee.

3. An assignment of record of a security interest in afixture covered by a mortgage of real property which is effective as a fixturefiling under NRS 104.9502 may be madeonly by an assignment of record of the mortgage in the manner provided by lawof this State other than the Uniform Commercial Code.

(Added to NRS by 1999, 334)

NRS 104.9515 Durationand effectiveness of financing statement; effect of lapsed financing statement.

1. Except asotherwise provided in subsections 2, 5, 6 and 7, a filed financing statement iseffective for a period of 5 years after the date of filing.

2. Except asotherwise provided in subsections 5, 6 and 7, an initial financing statementfiled in connection with a public-finance transaction or manufactured-hometransaction is effective for a period of 30 years after the date of filing ifit indicates that it is filed in connection with a public-finance transactionor manufactured-home transaction.

3. Theeffectiveness of a filed financing statement lapses on the expiration of theperiod of its effectiveness unless before the lapse a continuation statement isfiled pursuant to subsection 4. Upon lapse, a financing statement ceases to beeffective and any security interest or agricultural lien that was perfected bythe financing statement becomes unperfected, unless the security interest isperfected otherwise. If the security interest or agricultural lien becomesunperfected upon lapse, it is deemed never to have been perfected as against apurchaser of the collateral for value.

4. Acontinuation statement may be filed only within 6 months before the expirationof the 5-year period specified in subsection 1 or the 30-year period specifiedin subsection 2, whichever is applicable.

5. Except asotherwise provided in NRS 104.9510,upon timely filing of a continuation statement, the effectiveness of theinitial financing statement continues for a period of 5 years commencing on theday on which the financing statement would have become ineffective in theabsence of the filing. Upon the expiration of the 5-year period, the financingstatement lapses in the same manner as provided in subsection 3, unless, beforethe lapse, another continuation statement is filed pursuant to subsection 4.Succeeding continuation statements may be filed in the same manner to continuethe effectiveness of the initial financing statement.

6. If a debtoris a transmitting utility and a filed financing statement so indicates, thefinancing statement is effective until a termination statement is filed.

7. A real property mortgage that is effective as afixture filing under subsection 3 of NRS104.9502 remains effective as a fixture filing until the mortgage isreleased or satisfied of record or its effectiveness otherwise terminates as tothe real property.

(Added to NRS by 1999, 334)

NRS 104.9516 Whatconstitutes filing; effectiveness of filing.

1. Except asotherwise provided in subsection 2, communication of a record to a filingoffice and tender of the filing fee or acceptance of the record by the filingoffice constitutes filing.

2. Filing doesnot occur with respect to a record that a filing office refuses to acceptbecause:

(a) The recordis not communicated by a method or medium of communication authorized by thefiling office;

(b) An amountequal to or greater than the applicable filing fee is not tendered;

(c) The filingoffice is unable to index the record because:

(1) Inthe case of an initial financing statement, the record does not provide a namefor the debtor;

(2) Inthe case of an amendment or correction statement, the record:

(I)Does not identify the initial financing statement as required by NRS 104.9512 or 104.9518, as applicable; or

(II)Identifies an initial financing statement whose effectiveness has lapsed under NRS 104.9515;

(3) Inthe case of an initial financing statement that provides the name of a debtoridentified as a natural person or an amendment that provides a name of a debtoridentified as a natural person which was not previously provided in the financingstatement to which the record relates, the record does not identify thedebtors last name; or

(4) Inthe case of a record filed or recorded in the filing office described inparagraph (a) of subsection 1 of NRS104.9501, the record does not provide a sufficient description of the realproperty to which it relates;

(d) In the caseof an initial financing statement or an amendment that adds a secured party ofrecord, the record does not provide a name and mailing address for the securedparty of record;

(e) In the caseof an initial financing statement or an amendment that provides a name of adebtor which was not previously provided in the financing statement to whichthe amendment relates, the record does not:

(1) Providea mailing address for the debtor;

(2) Indicatewhether the debtor is a natural person or an organization; or

(3) Ifthe 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 thedebtor has none;

(f) In the caseof an assignment reflected in an initial financing statement under subsection 1of NRS 104.9514 or an amendment filedunder subsection 2 of that section, the record does not provide a name andmailing address for the assignee; or

(g) In the case of a continuation statement, the recordis not filed within the 6-month period prescribed by subsection 4 of NRS 104.9515.

(h) The record lists a public official of agovernmental unit as a debtor and the public official has not authorized thefiling of the information in an authenticated record as required pursuant to NRS 104.9509.

3. For purposes of subsection 2:

(a) A recorddoes not provide information if the filing office is unable to read or decipherthe information; and

(b) A recordthat does not indicate that it is an amendment or identify an initial financingstatement to which it relates, as required by NRS 104.9512, 104.9514 or 104.9518, is an initial financingstatement.

4. A record that is communicated to the filing officewith tender of the filing fee, but which the filing office refuses to acceptfor a reason other than one set forth in subsection 2, is effective as a filedrecord except as against a purchaser of the collateral which gives value inreasonable reliance upon the absence of the record from the files.

(Added to NRS by 1999, 335; A 2003, 837)

NRS 104.9517 Effectof indexing errors. The failure of the filingoffice to index a record correctly does not affect the effectiveness of thefiled record.

(Added to NRS by 1999, 336)

NRS 104.9518 Claimconcerning inaccurate or wrongfully filed record: Filing of correctionstatement.

1. A personmay file in the filing office a correction statement with respect to a recordindexed there under his name if he believes that the record is inaccurate orwas wrongfully filed.

2. Acorrection statement must:

(a) Identifythe record to which it relates by:

(1) Thefile number assigned to the initial financing statement to which the recordrelates; and

(2) Ifthe correction statement relates to a record filed or recorded in a filingoffice described in paragraph (a) of subsection 1 of NRS 104.9501, the date that the initialfinancing statement was filed or recorded and the information specified insubsection 2 of NRS 104.9502;

(b) Indicatethat it is a correction statement; and

(c) Provide thebasis for the persons belief that the record is inaccurate and indicate themanner in which he believes the record should be amended to cure any inaccuracyor provide the basis for his belief that the record was wrongfully filed.

3. The filing of a correction statement does notaffect the effectiveness of an initial financing statement or other filedrecord.

(Added to NRS by 1999, 336)

NRS 104.9519 Numbering,maintaining and indexing records; communicating information provided inrecords.

1. For eachrecord filed in a filing office, the filing office shall:

(a) Assign aunique number to the filed record;

(b) Create a recordthat bears the number assigned to the filed record and the date and time offiling;

(c) Maintainthe filed record for public inspection; and

(d) Index thefiled record in accordance with subsections 3, 4 and 5.

2. Except asotherwise provided in subsection 9, a file number assigned after January 1,2002, may include a digit that:

(a) Ismathematically derived from or related to the other digits of the file number;and

(b) Enables thefiling office to detect whether a number communicated as the file numberincludes a single-digit or transpositional error.

3. Except asotherwise provided in subsections 4 and 5, the filing office shall:

(a) Index aninitial financing statement according to the name of the debtor and index allfiled records relating to the initial financing statement in a manner that associateswith one another an initial financing statement and all filed records relatingto the initial financing statement; and

(b) Index arecord that provides a name of a debtor which was not previously provided inthe financing statement to which the record relates also according to the namethat was not previously provided.

4. If afinancing statement is filed as a fixture filing or covers as-extracted collateralor timber to be cut, it must be filed for record and the filing office shallindex it:

(a) Under thenames of the debtor and of each owner of record shown on the financingstatement as if they were the mortgagors under a mortgage of the real propertydescribed; and

(b) To theextent that the law of this State provides for indexing of mortgages under thename of the mortgagee, under the name of the secured party as if the securedparty were the mortgagee thereunder.

5. If afinancing statement is filed as a fixture filing or covers as-extracted collateralor timber to be cut, the filing office shall index an assignment filed under subsection1 of NRS 104.9514 or an amendment filedunder subsection 2 of that section:

(a) Under thename of the assignor as grantor; and

(b) To theextent that the law of this State provides for indexing the assignment of amortgage of real property under the name of the assignee, under the name of theassignee.

6. The filingoffice shall maintain a capability:

(a) To retrievea record by the name of the debtor and:

(1) Ifthe filing office is described in paragraph (a) of subsection 1 of NRS 104.9501, by the file number assignedto the initial financing statement to which the record relates and the date andtime that the record was filed or recorded; or

(2) Ifthe filing office is described in paragraph (b) of subsection 1 of NRS 104.9501, by the file number assignedto the initial financing statement to which the record relates; and

(b) Toassociate and retrieve with one another an initial financing statement and eachfiled record relating to the initial financing statement.

7. The filingoffice may not remove a debtors name from the index until 1 year after theeffectiveness of a financing statement naming the debtor lapses under NRS 104.9515 with respect to all securedparties of record.

8. The filingoffice shall perform the acts required by subsections 1 to 5, inclusive, withina reasonable time and in the manner prescribed by filing-office rule.

9. Subsections 2 and 8 do not apply to a filing officedescribed in paragraph (a) of subsection 1 of NRS 104.9501.

(Added to NRS by 1999, 337; A 2001, 730)

NRS 104.9520 Acceptanceand refusal to accept record.

1. A filingoffice shall refuse to accept a record for filing for a reason set forth insubsection 2 of NRS 104.9516 and mayrefuse to accept a record for filing only for a reason set forth in thatsubsection.

2. If a filingoffice refuses to accept a record for filing, it shall communicate to theperson that presented the record the fact of and reason for the refusal and thedate and time the record would have been filed had the filing office acceptedit. The communication must be made within a reasonable time and in the mannerprescribed by filing-office rule.

3. A filedfinancing statement satisfying subsections 1 and 2 of NRS 104.9502 is effective, even if thefiling office is required to refuse to accept it for filing under subsection 1.However, NRS 104.9338 applies to afiled financing statement providing information described in paragraph (e) ofsubsection 2 of NRS 104.9516 which isincorrect at the time the financing statement is filed.

4. If a record communicated to a filing officeprovides information that relates to more than one debtor, this part applies toeach debtor separately.

(Added to NRS by 1999, 338)

NRS 104.9521 Acceptanceof certain written records including initial financing statements by filingoffice; format of written records.

1. A filing office that accepts written records maynot refuse to accept a written initial financing statement submitted on a formprescribed and made available by the Secretary of State, except for a reasonset forth in subsection 2 of NRS 104.9516.

2. A filing office that accepts written records maynot refuse to accept a written record submitted on a form prescribed and madeavailable by the Secretary of State, except for a reason set forth insubsection 2 of NRS 104.9516.

3. A form that a filing office may not refuse toaccept under subsection 1 or 2 must conform to the format prescribed for theform by the National Conference of Commissioners on Uniform State Laws.

4. A filing officer may add optional blocks for theaddress of the secured party or the address of the debtor to any form orrecord.

(Added to NRS by 1999, 338; A 2003, 838)

NRS 104.9522 Maintenanceand destruction of records.

1. The filingoffice shall maintain a record of the information provided in a filed financingstatement for at least 1 year after the effectiveness of the financingstatement has lapsed under NRS 104.9515with respect to all secured parties of record. The record must be retrievableby using the name of the debtor and:

(a) If therecord was filed or recorded in the filing office described in paragraph (a) ofsubsection 1 of NRS 104.9501, by usingthe file number assigned to the initial financing statement to which the recordrelates and the date that the record was filed or recorded; or

(b) If therecord was filed in the filing office described in paragraph (b) of subsection1 of NRS 104.9501, by using the filenumber assigned to the initial financing statement to which the record relates.

2. Except to the extent that a statute governingdisposition of public records provides otherwise, the filing office immediatelymay destroy any written record evidencing a financing statement. However, ifthe filing office destroys a written record, it shall maintain another recordof the financing statement which complies with subsection 1.

(Added to NRS by 1999, 343)

NRS 104.9523 Informationfrom filing office; sale or license of records.

1. If a personthat files a written record requests an acknowledgment of the filing, thefiling office shall send him an image of the record showing the number assignedto the record pursuant to paragraph (a) of subsection 1 of NRS 104.9519 and the date and time of thefiling of the record. However, if he furnishes two copies of the record to thefiling office, the filing office may instead:

(a) Note uponone copy the number assigned to the record pursuant to that paragraph and thedate and time of the filing of the record; and

(b) Send thatcopy to him.

2. If a personfiles a record other than a written record, the filing office shall communicateto him an acknowledgment that provides:

(a) Theinformation in the record;

(b) The numberassigned to the record pursuant to paragraph (a) of subsection 1 of NRS 104.9519; and

(c) The dateand time of the filing of the record.

3. The filingoffice shall communicate or otherwise make available in a record the followinginformation to any person that requests it:

(a) Whetherthere is on file on a date and time specified by the filing office, but not adate earlier than 3 business days before the filing office receives therequest, any financing statement that:

(1) Designatesa particular debtor;

(2) Hasnot lapsed under NRS 104.9515 withrespect to all secured parties of record; and

(3) Ifthe request so states, has lapsed under that section and a record of which ismaintained by the filing office under subsection 1 of NRS 104.9522;

(b) The dateand time of filing of each financing statement; and

(c) The informationprovided in each financing statement.

4. Incomplying with its duty under subsection 3, the filing office may communicateinformation in any medium. However, if requested, the filing office shallcommunicate information by issuing its written certificate.

5. The filingoffice described in paragraph (b) of subsection 1 of NRS 104.9501 shall perform the actsrequired by subsections 1 to 4, inclusive, within a reasonable time and in themanner prescribed by filing-office rule.

6. Periodically, the Secretary of State shall offer tosell or license to the public on a nonexclusive basis, in bulk, copies of allrecords filed in it under this part, in every medium from time to time availableto the filing office.

(Added to NRS by 1999, 343)

NRS 104.9524 Excuseddelay by filing office. Delay by the filingoffice beyond a time limit prescribed by this part is excused if:

1. The delayis caused by interruption of communication or computer facilities, war,emergency conditions, failure of equipment or other circumstances beyond controlof the filing office; and

2. The filing office exercises reasonable diligenceunder the circumstances.

(Added to NRS by 1999, 344)

NRS 104.9525 Fees.

1. Except asotherwise provided in subsection 5, the fee for filing and indexing a recordunder this part, other than an initial financing statement of the kind describedin subsection 2 of NRS 104.9502, is:

(a) Fortydollars if the record is communicated in writing and consists of one or twopages;

(b) Sixtydollars if the record is communicated in writing and consists of more than twopages, and $2 for each page over 20 pages;

(c) Twentydollars if the record is communicated by another medium authorized byfiling-office rule; and

(d) Two dollarsfor each additional debtor, trade name or reference to another name under whichbusiness is done.

2. The filingofficer may charge and collect $2 for each page of copy or record of filingsproduced by him at the request of any person.

3. Except asotherwise provided in subsection 5, the fee for filing and indexing an initialfinancing statement of the kind described in subsection 3 of NRS 104.9502 is:

(a) Sixtydollars if the financing statement indicates that it is filed in connectionwith a public-finance transaction; and

(b) Fortydollars if the financing statement indicates that it is filed in connectionwith a manufactured-home transaction.

4. The fee forresponding to a request for information from the filing office, including forissuing a certificate showing whether there is on file any financing statementnaming a particular debtor, is:

(a) Fortydollars if the request is communicated in writing; and

(b) Twentydollars if the request is communicated by another medium authorized byfiling-office rule.

5. This section does not require a fee with respect toa mortgage that is effective as a financing statement filed as a fixture filingor as a financing statement covering as-extracted collateral or timber to becut under subsection 3 of NRS 104.9502.However, the fees for recording and satisfaction which otherwise would beapplicable to the mortgage apply.

(Added to NRS by 1999, 344; A 2001, 731; 2003, 20thSpecial Session, 129)

NRS 104.9526 Filing-officerules.

1. TheSecretary of State shall adopt and publish rules to effectuate this article.The filing-office rules must be:

(a) Consistentwith this article; and

(b) Adopted inaccordance with the provisions of chapter 233Bof NRS.

2. To keep thefiling-office rules and the practices of the filing office in harmony with therules and practices of filing offices in other jurisdictions that enactsubstantially this part, and to keep the technology used by the filing officecompatible with the technology used by filing offices in other jurisdictionsthat enact substantially this part, the Secretary of State, so far as isconsistent with the purposes, policies, and provisions of this article, inadopting, amending, and repealing filing-office rules, shall:

(a) Consultwith filing offices in other jurisdictions that enact substantially this part;

(b) Consult themost recent version of the Model Rules promulgated by the InternationalAssociation of Corporation Administrators or any successor organization; and

(c) Take into consideration the rules and practices of,and the technology used by, filing offices in other jurisdictions that enactsubstantially this part.

(Added to NRS by 1999, 344)

NRS 104.9527 Dutyof Secretary of State to report. The Secretaryof State shall report biennially on or before the first Monday of February ineach odd-numbered year to the Governor and Legislature on the operation of thefiling office. The report must contain a statement of the extent to which:

1. The filing-officerules are not in harmony with the rules of filing offices in otherjurisdictions that enact substantially this part and the reasons for these variations;and

2. The filing-office rules are not in harmony with themost recent version of the Model Rules promulgated by the InternationalAssociation of Corporation Administrators, or any successor organization, andthe reasons for these variations.

(Added to NRS by 1999, 345)

Part 6

Default

NRS 104.9601 Rightsafter default; judicial enforcement; effect on consignor or buyer of accounts,chattel paper, payment intangibles or promissory notes.

1. Afterdefault, a secured party has the rights provided in this part and, except asotherwise provided in NRS 104.9602,those provided by agreement of the parties. A secured party:

(a) May reducea claim to judgment, foreclose, or otherwise enforce the claim, securityinterest, or agricultural lien by any available judicial procedure; and

(b) If thecollateral is documents, may proceed either as to the documents or as to thegoods they cover.

2. A securedparty in possession of collateral or control of collateral under NRS 104.7106, 104.9104, 104.9105, 104.9106 or 104.9107 has the rights and duties providedin NRS 104.9207.

3. The rightsunder subsections 1 and 2 are cumulative and may be exercised simultaneously.

4. Except asotherwise provided in subsection 7 and NRS104.9605, after default, a debtor and an obligor have the rights providedin this part and by agreement of the parties.

5. If asecured party has reduced its claim to judgment, the lien of any levy that maybe made upon the collateral by virtue of an execution based upon the judgmentrelates back to the earliest of:

(a) The date ofperfection of the security interest or agricultural lien in the collateral;

(b) The date offiling a financing statement covering the collateral; or

(c) Any datespecified in a statute under which the agricultural lien was created.

6. A salepursuant to an execution is a foreclosure of the security interest oragricultural lien by judicial procedure within the meaning of this section. Asecured party may purchase at the sale and thereafter hold the collateral freeof any other requirements of this Article.

7. Except as otherwise provided in subsection 3 of NRS 104.9607, this part imposes no dutiesupon a secured party that is a consignor or is a buyer of accounts, chattelpaper, payment intangibles or promissory notes.

(Added to NRS by 1999, 345; A 2005, 876)

NRS 104.9602 Waiver and variance of rights andduties of debtor and obligor. Except asotherwise provided in NRS 104.9624, tothe extent that they give rights to a debtor or obligor and impose duties on asecured party, the debtor or obligor may not waive or vary the rules stated inthe following listed sections:

1. Subparagraph(3) of paragraph (d) of subsection 2 of NRS104.9207, which deals with use and operation of the collateral by thesecured party;

2. NRS 104.9210, which deals with requestsfor an accounting and requests concerning a list of collateral and statement ofaccount;

3. Subsection3 of NRS 104.9607, which deals withcollection and enforcement of collateral;

4. Subsection1 of NRS 104.9608 and subsection 3 of NRS 104.9615 to the extent that they dealwith application or payment of noncash proceeds of collection, enforcement ordisposition;

5. Subsection1 of NRS 104.9608 and subsection 4 of NRS 104.9615 to the extent that theyrequire accounting for or payment of surplus proceeds of collateral;

6. NRS 104.9609 to the extent that it imposesupon a secured party that takes possession of collateral without judicialprocess the duty to do so without breach of the peace;

7. Subsection2 of NRS 104.9610 and NRS 104.9611, 104.9613 and 104.9614, which deal with disposition ofcollateral;

8. Subsection6 of NRS 104.9615, which deals withcalculation of a deficiency or surplus when a disposition is made to thesecured party, a person related to the secured party or a secondary obligor;

9. NRS 104.9616, which deals with explanationof the calculation of a surplus or deficiency;

10. NRS 104.9620, 104.9621 and 104.9622, which deal with acceptance ofcollateral in satisfaction of obligation;

11. NRS 104.9623, which deals with redemptionof collateral;

12. NRS 104.9624, which deals with permissiblewaivers; and

13. NRS 104.9625and 104.9626, which deal with thesecured partys liability for failure to comply with this article.

(Added to NRS by 1999, 346)

NRS 104.9603 Agreementon standards concerning rights and duties of parties.

1. The partiesmay determine by agreement the standards measuring the fulfillment of therights of a debtor or obligor and the duties of a secured party under a rulestated in NRS 104.9602 if the standardsare not manifestly unreasonable.

2. Subsection 1 does not apply to the duty under NRS 104.9609 to refrain from breaching thepeace.

(Added to NRS by 1999, 346)

NRS 104.9604 Procedureif security agreement covers real property or fixtures.

1. If asecurity agreement covers both personal and real property, a secured party mayproceed:

(a) Under thispart as to the personal property without prejudicing any rights with respect tothe real property; or

(b) As to boththe personal property and the real property in accordance with the rights withrespect to the real property, in which case the other provisions of this partdo not apply.

2. Subject tosubsection 3, if a security agreement covers goods that are or become fixtures,a secured party may proceed:

(a) Under thispart; or

(b) Inaccordance with the rights with respect to real property, in which case theother provisions of this part do not apply.

3. Subject tothe other provisions of this part, if a secured party holding a securityinterest in fixtures has priority over all owners and encumbrancers of the realproperty, the secured party, after default, may remove the collateral from thereal property.

4. A secured party that removes collateral shallpromptly reimburse any encumbrancer or owner of the real property, other thanthe debtor, for the cost of repair of any physical injury caused by theremoval. The secured party need not reimburse the encumbrancer or owner for anydiminution in value of the real property caused by the absence of the goodsremoved or by any necessity of replacing them. A person entitled toreimbursement may refuse permission to remove until the secured party givesadequate assurance for the performance of the obligation to reimburse.

(Added to NRS by 1999, 347)

NRS 104.9605 Dutyto unknown debtor or secondary obligor. Asecured party does not owe a duty based on its status as secured party:

1. To a personthat is a debtor or obligor, unless the secured party knows:

(a) That he isa debtor or obligor;

(b) Hisidentity; and

(c) How tocommunicate with him; or

2. To asecured party or lienholder that has filed a financing statement against aperson, unless the secured party knows:

(a) That theperson is a debtor; and

(b) His identity.

(Added to NRS by 1999, 347)

NRS 104.9606 Timeof default for agricultural lien. For purposesof this part, a default occurs in connection with an agricultural lien at thetime the secured party becomes entitled to enforce the lien in accordance withthe statute under which it was created.

(Added to NRS by 1999, 347)

NRS 104.9607 Collectionand enforcement by secured party.

1. If soagreed, and in any event after default, a secured party:

(a) May notifyan account debtor or other person obligated on collateral to make payment orotherwise render performance to or for the benefit of the secured party;

(b) May takeany proceeds to which the secured party is entitled under NRS 104.9315;

(c) May enforcethe obligations of an account debtor or other person obligated on collateraland exercise the rights of the debtor with respect to the obligation of theaccount debtor or other person obligated on collateral to make payment orotherwise render performance to the debtor, and with respect to any propertythat secures the obligations of the account debtor or other person obligated onthe collateral;

(d) If it holdsa security interest in a deposit account perfected by control under paragraph(a) of subsection 1 of NRS 104.9104,may apply the balance of the deposit account to the obligation secured by thedeposit account; and

(e) If it holdsa security interest in a deposit account perfected by control under paragraph(b) or (c) of subsection 1 of NRS 104.9104,may instruct the bank to pay the balance of the deposit account to or for thebenefit of the secured party.

2. If necessaryto enable a secured party to exercise under paragraph (c) of subsection 1 theright of a debtor to enforce a mortgage nonjudicially, the secured party mayrecord in the office in which the mortgage is recorded:

(a) A copy ofthe security agreement that creates or provides for a security interest in theobligation secured by the mortgage; and

(b) The securedpartys sworn affidavit in recordable form stating that:

(1) Adefault has occurred; and

(2) Thesecured party is entitled to enforce the mortgage nonjudicially.

3. A securedparty shall proceed in a commercially reasonable manner if the secured party:

(a) Undertakesto collect from or enforce an obligation of an account debtor or other personobligated on collateral; and

(b) Is entitledto charge back uncollected collateral or otherwise to full or limited recourseagainst the debtor or a secondary obligor.

4. A securedparty may deduct from the collections made pursuant to subsection 3 reasonableexpenses of collection and enforcement, including reasonable attorneys feesand legal expenses incurred by the secured party.

5. This section does not determine whether an accountdebtor, bank or other person obligated on collateral owes a duty to a securedparty.

(Added to NRS by 1999, 347)

NRS 104.9608 Applicationof proceeds of collection or enforcement; liability for deficiency and right tosurplus.

1. If asecurity interest or agricultural lien secures payment or performance of anobligation, the following rules apply:

(a) A securedparty shall apply or pay over for application the cash proceeds of collectionor enforcement under NRS 104.9607 inthe following order to:

(1) Thereasonable expenses of collection and enforcement and, to the extent providedfor by agreement and not prohibited by law, reasonable attorneys fees andlegal expenses incurred by the secured party;

(2) Thesatisfaction of obligations secured by the security interest or agriculturallien under which the collection or enforcement is made; and

(3) Thesatisfaction of obligations secured by any subordinate security interest in orother lien on the collateral subject to the security interest or agriculturallien under which the collection or enforcement is made if the secured partyreceives an authenticated demand for proceeds before distribution of theproceeds is completed.

(b) Ifrequested by a secured party, a holder of a subordinate security interest orother lien shall furnish reasonable proof of the interest or lien within areasonable time. Unless the holder complies, the secured party need not complywith the holders demand under subparagraph (3) of paragraph (a).

(c) A securedparty need not apply or pay over for application noncash proceeds of collectionand enforcement under NRS 104.9607unless the failure to do so would be commercially unreasonable. A secured partythat applies or pays over for application noncash proceeds shall do so in acommercially reasonable manner.

(d) A securedparty shall account to and pay a debtor for any surplus, and the obligor isliable for any deficiency.

2. If the underlying transaction is a sale ofaccounts, chattel paper, payment intangibles or promissory notes, the debtor isnot entitled to any surplus, and the obligor is not liable for any deficiency.

(Added to NRS by 1999, 348; A 2001, 732)

NRS 104.9609 Securedpartys right to take possession or dispose of collateral after default.

1. Afterdefault, a secured party:

(a) May takepossession of the collateral;

(b) If a debtorso agrees, may require the debtor to assemble the collateral and make itavailable to the secured party at a place to be designated by the secured partywhich is reasonably convenient to both parties; and

(c) Withoutremoval may render equipment unusable and dispose of collateral on a debtorspremises under NRS 104.9610.

2. A securedparty may proceed under subsection 1:

(a) Pursuant tojudicial process; or

(b) Without judicial process, if it proceeds withoutbreach of the peace.

(Added to NRS by 1999, 349)

NRS 104.9610 Dispositionof collateral after default.

1. Afterdefault, a secured party may sell, lease, license or otherwise dispose of anyor all of the collateral in its present condition or following any commerciallyreasonable preparation or processing.

2. Everyaspect 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, byone or more contracts, as a unit or in parcels, and at any time and place andon any terms.

3. A securedparty may purchase collateral:

(a) At a publicsale; or

(b) At aprivate sale only if the collateral is of a kind that is customarily sold on arecognized market or the subject of widely distributed standard pricequotations.

4. A contractfor sale, lease, license or other disposition includes the warranties relatingto title, possession, quiet enjoyment and the like which by operation of lawaccompany a voluntary disposition of property of the kind subject to thecontract.

5. A securedparty may disclaim or modify warranties under subsection 4:

(a) In a mannerthat would be effective to disclaim or modify the warranties in a voluntarydisposition of property of the kind subject to the contract of disposition; or

(b) Bycommunicating to the purchaser a record evidencing the contract for dispositionand including an express disclaimer or modification of the warranties.

6. A record is sufficient to disclaim warranties undersubsection 5 if it indicates There is no warranty relating to title,possession, quiet enjoyment or the like in this disposition or uses words ofsimilar import.

(Added to NRS by 1999, 349)

NRS 104.9611 Notificationbefore disposition of collateral.

1. In thissection, notification date means the earlier of the date on which:

(a) A securedparty sends to the debtor and any secondary obligor an authenticatednotification of disposition; or

(b) The debtorand any secondary obligor waive the right to notification.

2. Except asotherwise provided in subsection 4, a secured party that disposes of collateralunder NRS 104.9610 shall send to thepersons specified in subsection 3 a reasonable authenticated notification ofdisposition.

3. To complywith subsection 2, the secured party shall send an authenticated notificationof disposition to:

(a) The debtor;

(b) Anysecondary obligor; and

(c) If thecollateral is other than consumer goods:

(1) Anyother person from which the secured party has received, before the notificationdate, an authenticated notification of a claim of an interest in the collateral;

(2) Anyother secured party or lienholder that, 10 days before the notification date,held a security interest in or other lien on the collateral perfected by thefiling of a financing statement that:

(I)Identified the collateral;

(II)Was indexed under the debtors name as of that date; and

(III)Was filed in the office in which to file a financing statement against thedebtor covering the collateral as of that date; and

(3) Anyother secured party that, 10 days before the notification date, held a securityinterest in the collateral perfected by compliance with a statute, regulationor treaty described in subsection 1 of NRS104.9311.

4. Subsection2 does not apply if the collateral is perishable or threatens to declinespeedily in value or is of a type customarily sold on a recognized market.

5. A securedparty complies with the requirement for notification prescribed by subparagraph(2) of paragraph (c) of subsection 3 if:

(a) Not laterthan 20 days or earlier than 30 days before the notification date, the securedparty requests, in a commercially reasonable manner, information concerningfinancing statements indexed under the debtors name in the office indicated inthat subparagraph; and

(b) Before thenotification date, the secured party:

(1) Didnot receive a response to the request for information; or

(2) Received a response to the request forinformation and sent an authenticated notification of disposition to eachsecured party named in that response whose financing statement covered thecollateral.

(Added to NRS by 1999, 350)

NRS 104.9612 Timelinessof notification before disposition of collateral.

1. Except asotherwise provided in subsection 2, whether a notification is sent within areasonable time is a question of fact.

2. In a transaction other than a consumer transaction,a notification of disposition sent after default and 10 days or more before theearliest time of disposition set forth in the notification is sent within areasonable time before the disposition.

(Added to NRS by 1999, 351)

NRS 104.9613 Contents and form of notificationbefore disposition of collateral: General. Exceptin a consumer-goods transaction, the following rules apply:

1. Thecontents of a notification of disposition are sufficient if the notification:

(a) Describesthe debtor and the secured party;

(b) Describesthe collateral that is the subject of the intended disposition;

(c) States themethod of intended disposition;

(d) States thatthe debtor is entitled to an accounting of the unpaid indebtedness and statesthe charge, if any, for an accounting; and

(e) States thetime and place of a public disposition or the time after which any otherdisposition is to be made.

2. Whether thecontents of a notification that lacks any of the information specified insubsection 1 are nevertheless sufficient is a question of fact.

3. Thecontents of a notification providing substantially the information specified insubsection 1 are sufficient, even if the notification includes:

(a) Informationnot specified by that subsection; or

(b) Minorerrors that are not seriously misleading.

4. Aparticular phrasing of the notification is not required.

5. Thefollowing form of notification and the form appearing in subsection 3 of NRS 104.9614, when completed, eachprovides sufficient information:

 

NOTIFICATION OF DISPOSITION OF COLLATERAL

 

To: [Nameof debtor, obligor, or other person to which the notification is sent]

From: [Name,address, and telephone number of secured party]

Name ofDebtor(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] inpublic 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 anddate].

 

You are entitled to an accounting of the unpaid indebtednesssecured by the property that we intend to sell [or lease or license, asapplicable] [for a charge of $.]. You may request an accounting bycalling us at [telephone number].

 

(Added to NRS by 1999, 351; A 2001, 732)

NRS 104.9614 Contentsand form of notification before disposition of collateral: Consumer-goodstransaction. In a consumer-goods transaction,the following rules apply:

1. Anotification of disposition must provide the following information:

(a) Theinformation specified in subsection 1 of NRS104.9613;

(b) Adescription of any liability for a deficiency of the person to which the notificationis sent;

(c) A telephonenumber from which the amount that must be paid to the secured party to redeemthe collateral under NRS 104.9623 isavailable; and

(d) A telephonenumber or mailing address from which additional information concerning thedisposition and the obligation secured is available.

2. Aparticular phrasing of the notification is not required.

3. Thefollowing form of notification, when completed, provides sufficient information:

 

[Name andaddress of secured party]

[Date]

 

NOTICE OF OUR PLAN TO SELL PROPERTY

 

[Name andaddress of any obligor who is also a debtor]

 

Subject: [Identificationof Transaction]

 

We have your [describecollateral], because you broke promises in our agreement.

 

[For a publicdisposition:]

We will sell [describecollateral] at public sale. A sale could include a lease or license.The sale will be held as follows:

 

Date: .....................................

Time: .....................................

Place: .....................................

 

You may attendthe sale and bring bidders if you want.

 

[For aprivate disposition:]

We will sell [describecollateral] at private sale sometime after [date]. A salecould include a lease or license.

 

The money thatwe 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 getthe extra money, unless we must pay it to someone else.

 

You can get theproperty back at any time before we sell it by paying us the full amount youowe (not just the past due payments), including our expenses. To learn theexact amount you must pay, call us at [telephone number].

 

If you want usto 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 [securedpartys address]] and request a written explanation. [We will chargeyou $. for the explanation if we sent you another written explanation of theamount you owe us within the last 6 months.]

 

If you needmore information about the sale call us at [telephone number] [orwrite us at [secured partys address]].

 

We are sendingthis notice to the following other people who have an interest in [describecollateral] or who owe money under your agreement:

 

[Names ofall other debtors and obligors, if any]

 

4. Anotification in the form of subsection 3 is sufficient, even if additionalinformation appears at the end of the form.

5. Anotification in the form of subsection 3 is sufficient, even if it includeserrors in information not required by subsection 1, unless the error ismisleading with respect to rights arising under this article.

6. If a notification under this section is not in theform of subsection 3, law other than this article determines the effect ofincluding information not required by subsection 1.

(Added to NRS by 1999, 352)

NRS 104.9615 Applicationof proceeds of disposition; liability for deficiency and right to surplus.

1. A securedparty shall apply or pay over for application the cash proceeds of dispositionunder NRS 104.9610 in the followingorder to:

(a) Thereasonable expenses of retaking, holding, preparing for disposition, processingand disposing, and, to the extent provided for by agreement and not prohibitedby law, reasonable attorneys fees and legal expenses incurred by the securedparty;

(b) Thesatisfaction of obligations secured by the security interest or agriculturallien under which the disposition is made;

(c) Thesatisfaction of obligations secured by any subordinate security interest in orother subordinate lien on the collateral if:

(1) Thesecured party receives from the holder of the subordinate security interest orother lien an authenticated demand for proceeds before distribution of theproceeds is completed; and

(2) In acase in which a consignor has an interest in the collateral, the subordinatesecurity interest or other lien is senior to the interest of the consignor; and

(d) A securedparty that is a consignor of the collateral if the secured party receives fromthe consignor an authenticated demand for proceeds before distribution of theproceeds is completed.

2. Ifrequested by a secured party, a holder of a subordinate security interest orother lien shall furnish reasonable proof of the interest or lien within areasonable time. Unless the holder does so, the secured party need not complywith the holders demand under paragraph (c) of subsection 1.

3. A securedparty need not apply or pay over for application noncash proceeds of dispositionunder NRS 104.9610 unless the failureto do so would be commercially unreasonable. A secured party that applies orpays over for application noncash proceeds shall do so in a commerciallyreasonable manner.

4. If thesecurity interest under which a disposition is made secures payment orperformance of an obligation, after making the payments and applicationsrequired by subsection 1 and permitted by subsection 3:

(a) Unless paragraph(d) of subsection 1 requires the secured party to apply or pay over cashproceeds to a consignor, the secured party shall account to and pay a debtorfor any surplus; and

(b) The obligoris liable for any deficiency.

5. If theunderlying transaction is a sale of accounts, chattel paper, paymentintangibles or promissory notes:

(a) The debtoris not entitled to any surplus; and

(b) The obligoris not liable for any deficiency.

6. The surplusor deficiency following a disposition is calculated based on the amount ofproceeds that would have been realized in a disposition complying with thispart to a transferee other than the secured party, a person related to thesecured party or a secondary obligor if:

(a) Thetransferee in the disposition is the secured party, a person related to thesecured party or a secondary obligor; and

(b) The amountof proceeds of the disposition is significantly below the range of proceedsthat a complying disposition to a person other than the secured party, a personrelated to the secured party or a secondary obligor would have brought.

7. A securedparty that receives cash proceeds of a disposition in good faith and withoutknowledge that the receipt violates the rights of the holder of a security interestor other lien that is not subordinate to the security interest or agriculturallien under which the disposition is made:

(a) Takes thecash proceeds free of the security interest or other lien;

(b) Is notobligated to apply the proceeds of the disposition to the satisfaction ofobligations secured by the security interest or other lien; and

(c) Is not obligated to account to or pay the holder ofthe security interest or other lien for any surplus.

(Added to NRS by 1999, 353; A 2001, 733)

NRS 104.9616 Explanationof calculation of surplus or deficiency.

1. In thissection:

(a) Explanationmeans a writing that:

(1) Statesthe amount of the surplus or deficiency;

(2) Providesan explanation in accordance with subsection 3 of how the secured partycalculated the surplus or deficiency;

(3) States,if applicable, that future debits, credits, charges, including additionalcredit service charges or interest rebates, and expenses may affect the amountof the surplus or deficiency; and

(4) Providesa telephone number or mailing address from which additional informationconcerning the transaction is available.

(b) Requestmeans a record:

(1) Authenticatedby a debtor or consumer obligor;

(2) Requestingthat the recipient provide an explanation; and

(3) Sentafter disposition of the collateral under NRS104.9610.

2. In aconsumer-goods transaction in which the debtor is entitled to a surplus or aconsumer obligor is liable for a deficiency under NRS 104.9615, the secured party shall:

(a) Send anexplanation to the debtor or consumer obligor, as applicable, after thedisposition and:

(1) Beforeor when the secured party accounts to the debtor and pays any surplus or firstmakes written demand on the consumer obligor after the disposition for paymentof the deficiency; and

(2) Within14 days after receipt of a request; or

(b) In the caseof a consumer obligor who is liable for a deficiency, within 14 days afterreceipt of a request, send to the consumer obligor a record waiving the securedpartys right to a deficiency.

3. To complywith subparagraph (2) of paragraph (a) of subsection 1, a writing must providethe following information in the following order:

(a) Theaggregate amount of obligations secured by the security interest under whichthe disposition was made, and, if the amount reflects a rebate of unearned interestor credit service charge, an indication of that fact, calculated as of aspecified date:

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

(2) Ifthe secured party takes or receives possession of the collateral before defaultor does not take possession of the collateral, not more than 35 days before thedisposition;

(b) The amountof proceeds of the disposition;

(c) Theaggregate amount of the obligations after deducting the amount of proceeds;

(d) The amount,in the aggregate or by type, and types of expenses, including expenses ofretaking, holding, preparing for disposition, processing and disposing of thecollateral, and attorneys fees secured by the collateral which are known tothe secured party and relate to the current disposition;

(e) The amount,in the aggregate or by type, and types of credits, including rebates ofinterest or credit service charges, to which the obligor is known to be entitledand which are not reflected in the amount in paragraph (a); and

(f) The amountof the surplus or deficiency.

4. Aparticular phrasing of the explanation is not required. An explanationcomplying substantially with the requirements of paragraph (a) of subsection 1is sufficient, even if it includes minor errors that are not seriouslymisleading.

5. A debtor or consumer obligor is entitled withoutcharge to one response to a request under this section during any 6-monthperiod in which the secured party did not send to the debtor or consumerobligor an explanation pursuant to paragraph (a) of subsection 2. The securedparty may require payment of a charge not exceeding $25 for each additionalresponse.

(Added to NRS by 1999, 354)

NRS 104.9617 Effectof disposition of collateral by secured party after default; rights oftransferee regarding collateral.

1. A securedpartys disposition of collateral after default:

(a) Transfersto a transferee for value all of the debtors rights in the collateral;

(b) Dischargesthe security interest under which the disposition is made; and

(c) Dischargesany subordinate security interest or other subordinate lien.

2. Atransferee that acts in good faith takes free of the rights and interests describedin subsection 1, even if the secured party fails to comply with this article orthe requirements of any judicial proceeding.

3. If atransferee does not take free of the rights and interests described in subsection1, he takes the collateral subject to:

(a) Thedebtors rights in the collateral;

(b) Thesecurity interest or agricultural lien under which the disposition is made; and

(c) Any other security interest or other lien.

(Added to NRS by 1999, 355)

NRS 104.9618 Rightsand duties of certain secondary obligors.

1. A secondaryobligor acquires the rights and becomes obligated to perform the duties of thesecured party after the secondary obligor:

(a) Receives anassignment of a secured obligation from the secured party;

(b) Receives atransfer of collateral from the secured party and agrees to accept the rightsand assume the duties of the secured party; or

(c) Issubrogated to the rights of a secured party with respect to collateral.

2. Anassignment, transfer or subrogation described in subsection 1:

(a) Is not adisposition of collateral under NRS104.9610; and

(b) Relieves the secured party of further duties underthis article.

(Added to NRS by 1999, 356)

NRS 104.9619 Transferof record or legal title.

1. In thissection, transfer statement means a record authenticated by a secured partystating:

(a) That thedebtor has defaulted in connection with an obligation secured by specifiedcollateral;

(b) That thesecured party has exercised its postdefault remedies with respect to thecollateral;

(c) That, byreason of the exercise, a transferee has acquired the rights of the debtor inthe collateral; and

(d) The nameand mailing address of the secured party, debtor and transferee.

2. A transferstatement entitles the transferee to the transfer of record of all rights ofthe 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 formto the official or office responsible for maintaining the system, the officialor office shall:

(a) Accept thetransfer statement;

(b) Promptlyamend its records to reflect the transfer; and

(c) Ifapplicable, issue a new appropriate certificate of title in the name of thetransferee.

3. A transfer of the record or legal title tocollateral to a secured party under subsection 2 or otherwise is not of itselfa disposition of collateral under this article and does not of itself relievethe secured party of its duties under this article.

(Added to NRS by 1999, 356)

NRS 104.9620 Acceptanceof collateral in full or partial satisfaction of obligation; compulsorydisposition of collateral.

1. Except asotherwise provided in subsection 7, a secured party may accept collateral infull or partial satisfaction of the obligation it secures only if:

(a) The debtorconsents to the acceptance under subsection 3;

(b) The securedparty does not receive, within the time set forth in subsection 5, anotification of objection to the proposal authenticated by:

(1) Aperson to which the secured party was required to send a proposal under NRS 104.9621; or

(2) Anyother person, other than the debtor, holding an interest in the collateralsubordinate to the security interest that is the subject of the proposal;

(c) If thecollateral is consumer goods, the collateral is not in the possession of thedebtor when the debtor consents to the acceptance; and

(d) Subsection5 does not require the secured party to dispose of the collateral.

2. A purportedor apparent acceptance of collateral under this section is ineffective unless:

(a) The securedparty consents to the acceptance in an authenticated record or sends a proposalto the debtor; and

(b) Theconditions of subsection 1 are met.

3. Forpurposes of this section:

(a) A debtorconsents to an acceptance of collateral in partial satisfaction of theobligation it secures only if he agrees to the terms of the acceptance in arecord authenticated after default; and

(b) A debtorconsents to an acceptance of collateral in full satisfaction of the obligationit secures only if he agrees to the terms of the acceptance in a record authenticatedafter default or the secured party:

(1) Sendsto the debtor after default a proposal that is unconditional or subject only toa condition that collateral not in the possession of the secured party bepreserved or maintained;

(2) Inthe proposal, proposes to accept collateral in full satisfaction of theobligation it secures; and

(3) Doesnot receive a notification of objection authenticated by the debtor within 20days after the proposal is sent.

4. To beeffective under paragraph (b) of subsection 1, a notification of objection mustbe received by the secured party:

(a) In the caseof a person to which the proposal was sent pursuant to NRS 104.9621, within 20 days afternotification was sent to him; and

(b) In othercases:

(1) Within20 days after the last notification was sent pursuant to NRS 104.9621; or

(2) If anotification was not sent, before the debtor consents to the acceptance undersubsection 3.

5. A securedparty that has taken possession of collateral shall dispose of the collateralpursuant to NRS 104.9610 within thetime specified in subsection 6 if:

(a) Sixtypercent of the cash price has been paid in the case of a purchase-moneysecurity interest in consumer goods; or

(b) Sixtypercent of the principal amount of the obligation secured has been paid in thecase of a non-purchase-money security interest in consumer goods.

6. To complywith subsection 5, the secured party shall dispose of the collateral:

(a) Within 90days after taking possession; or

(b) Within anylonger period to which the debtor and all secondary obligors have agreed in anagreement to that effect entered into and authenticated after default.

7. In a consumer transaction, a secured party may notaccept collateral in partial satisfaction of the obligation it secures.

(Added to NRS by 1999, 357)

NRS 104.9621 Notificationof proposal to accept collateral in satisfaction of obligation.

1. A securedparty that desires to accept collateral in full or partial satisfaction of theobligation it secures shall send its proposal to:

(a) Any personfrom which the secured party has received, before the debtor consented to theacceptance, an authenticated notification of a claim of an interest in thecollateral;

(b) Any othersecured party or lienholder that, 10 days before the debtor consented to theacceptance, held a security interest in or other lien on the collateral perfectedby the filing of a financing statement that:

(1) Identifiedthe collateral;

(2) Wasindexed under the debtors name as of that date; and

(3) Wasfiled in the office or offices in which to file a financing statement againstthe debtor covering the collateral as of that date; and

(c) Any othersecured party that, 10 days before the debtor consented to the acceptance, helda security interest in the collateral perfected by compliance with a statute,regulation or treaty described in subsection 1 of NRS 104.9311.

2. A secured party that desires to accept collateralin partial satisfaction of the obligation it secures shall send its proposal toany secondary obligor in addition to the persons described in subsection 1.

(Added to NRS by 1999, 358)

NRS 104.9622 Effectof acceptance of collateral in satisfaction of obligation.

1. A securedpartys acceptance of collateral in full or partial satisfaction of theobligation it secures:

(a) Dischargesthe obligation to the extent consented to by the debtor;

(b) Transfersto the secured party all of a debtors rights in the collateral;

(c) Dischargesthe security interest or agricultural lien that is the subject of the debtorsconsent and any subordinate security interest or other subordinate lien; and

(d) Terminatesany other subordinate interest.

2. A subordinate interest is discharged or terminatedunder subsection 1 even if the secured party fails to comply with this article.

(Added to NRS by 1999, 358)

NRS 104.9623 Redemptionof collateral.

1. A debtor,any secondary obligor or any other secured party or lienholder may redeemcollateral.

2. To redeemcollateral, a person must tender:

(a) Fulfillmentof all obligations secured by the collateral; and

(b) Thereasonable expenses and attorneys fees described in paragraph (a) ofsubsection 1 of NRS 104.9615.

3. Aredemption may occur at any time before a secured party:

(a) Hascollected collateral under NRS 104.9607;

(b) Hasdisposed of collateral or entered into a contract for its disposition under NRS 104.9610; or

(c) Has accepted collateral in full or partialsatisfaction of the obligation it secures under NRS 104.9622.

(Added to NRS by 1999, 358)

NRS 104.9624 Waiverof right to notification of disposition of collateral; waiver of right toredeem collateral.

1. A debtor orsecondary obligor may waive the right to notification of disposition ofcollateral under NRS 104.9611 only byan agreement to that effect entered into and authenticated after default.

2. Except in a consumer-goods transaction, a debtor orsecondary obligor may waive the right to redeem collateral under NRS 104.9623 only by an agreement to thateffect entered into and authenticated after default.

(Added to NRS by 1999, 359)

NRS 104.9625 Remediesfor secured partys failure to comply with article.

1. If it isestablished that a secured party is not proceeding in accordance with thisarticle, a court may order or restrain collection, enforcement or dispositionof collateral on appropriate terms and conditions.

2. Subject tosubsections 3, 4 and 6, a person is liable for damages in the amount of anyloss caused by a failure to comply with this article. Loss caused by a failureto comply may include loss resulting from the debtors inability to obtain, orincreased costs of, alternative financing.

3. Except asotherwise provided in NRS 104.9628:

(a) A personthat, at the time of the failure, was a debtor, was an obligor or held asecurity interest in or other lien on the collateral may recover damages undersubsection 2 for its loss; and

(b) If thecollateral is consumer goods, a person that was a debtor or a secondary obligorat the time a secured party failed to comply with this part may recover forthat failure in any event an amount not less than the credit service chargeplus 10 percent of the principal amount of the obligation or the time-pricedifferential plus 10 percent of the cash price.

4. A debtorwhose deficiency is eliminated under NRS104.9626 may recover damages for the loss of any surplus. However, a debtoror secondary obligor whose deficiency is eliminated or reduced under thatsection may not otherwise recover under subsection 2 for noncompliance with theprovisions of this part relating to collection, enforcement, disposition oracceptance.

5. In additionto any damages recoverable under subsection 2, the debtor, consumer obligor orperson named as a debtor in a filed record, as applicable, may recover $500 ineach case from a person that:

(a) Fails tocomply with NRS 104.9208;

(b) Fails tocomply with NRS 104.9209;

(c) Files arecord that he is not entitled to file under subsection 1 of NRS 104.9509;

(d) Fails tocause the secured party of record to file or send a termination statement asrequired by subsection 1 or 3 of NRS104.9513;

(e) Fails tocomply with paragraph (a) of subsection 2 of NRS104.9616 and whose failure is part of a pattern, or consistent with apractice, of noncompliance; or

(f) Fails tocomply with paragraph (b) of subsection 2 of NRS104.9616.

6. A debtor orconsumer obligor may recover damages under subsection 2 and, in addition, $500in each case from a person that, without reasonable cause, fails to comply witha request under NRS 104.9210. Arecipient of a request under that section which never claimed an interest inthe collateral or obligations that are the subject of a request under thatsection has a reasonable excuse for failure to comply with the request withinthe meaning of this subsection.

7. If a secured party fails to comply with a requestregarding a list of collateral or a statement of account under NRS 104.9210, the secured party may claima security interest only as shown in the list or statement included in therequest as against a person that is reasonably misled by the failure.

(Added to NRS by 1999, 359; A 2001, 734)

NRS 104.9626 Actionin which deficiency or surplus is in issue.

1. In anaction arising from a transaction, other than a consumer transaction, in whichthe amount of a deficiency or surplus is in issue, the following rules apply:

(a) A securedparty need not prove compliance with the provisions of this part relating tocollection, enforcement, disposition or acceptance unless the debtor or asecondary obligor places the secured partys compliance in issue.

(b) If thesecured partys compliance is placed in issue, the secured party has the burdenof establishing that the collection, enforcement, disposition or acceptance wasconducted in accordance with this part.

(c) Except asotherwise provided in NRS 104.9628, ifa secured party fails to prove that the collection, enforcement, disposition oracceptance was conducted in accordance with the provisions of this partrelating to collection, enforcement, disposition or acceptance, the liabilityof a debtor or a secondary obligor for a deficiency is limited to an amount bywhich the sum of the secured obligation, expenses and attorneys fees exceedsthe greater of:

(1) Theproceeds of the collection, enforcement, disposition or acceptance; or

(2) Theamount of proceeds that would have been realized had the noncomplying securedparty proceeded in accordance with the provisions of this part relating tocollection, enforcement, disposition or acceptance.

(d) For purposesof subparagraph (2) of paragraph (c), the amount of proceeds that would havebeen realized is equal to the sum of the secured obligation, expenses andattorneys fees unless the secured party proves that the amount is less thanthat sum.

(e) If a deficiencyor surplus is calculated under subsection 6 of NRS 104.9615, the debtor or obligor hasthe burden of establishing that the amount of proceeds of the disposition issignificantly below the range of prices that a complying disposition to aperson other than the secured party, a person related to the secured party or asecondary obligor would have brought.

2. The limitation of the rules in subsection 1 totransactions other than consumer transactions leaves to the court thedetermination of the proper rules in consumer transactions. The court may notinfer from that limitation the nature of the proper rule in consumertransactions and may continue to apply established approaches.

(Added to NRS by 1999, 360)

NRS 104.9627 Determinationof whether conduct was commercially reasonable.

1. The factthat a greater amount could have been obtained by a collection, enforcement,disposition or acceptance at a different time or in a different method fromthat selected by the secured party is not of itself sufficient to preclude thesecured party from establishing that the collection, enforcement, dispositionor acceptance was made in a commercially reasonable manner.

2. Adisposition of collateral is made in a commercially reasonable manner if thedisposition is made:

(a) In theusual manner on any recognized market;

(b) At theprice current in any recognized market at the time of the disposition; or

(c) Otherwisein conformity with reasonable commercial practices among dealers in the type ofproperty that was the subject of the disposition.

3. Acollection, enforcement, disposition or acceptance is commercially reasonableif it has been approved:

(a) In ajudicial proceeding;

(b) By agenuine creditors committee;

(c) By arepresentative of creditors; or

(d) By anassignee for the benefit of creditors.

4. Approval under subsection 3 need not be obtained,and lack of approval does not mean that the collection, enforcement,disposition or acceptance is not commercially reasonable.

(Added to NRS by 1999, 361)

NRS 104.9628 Nonliabilityand limitation on liability of secured party; liability of secondary obligor.

1. Unless asecured party knows that a person is a debtor or obligor, knows his identity,and knows how to communicate with him:

(a) The securedparty is not liable to the person, or to a secured party or lienholder that hasfiled a financing statement against him, for failure to comply with thisarticle; and

(b) The securedpartys failure to comply with this article does not affect the liability ofthe person for a deficiency.

2. A securedparty is not liable because of its status as a secured party:

(a) To a personthat is a debtor or obligor, unless the secured party knows:

(1) Thathe is a debtor or obligor;

(2) Hisidentity; and

(3) Howto communicate with him; or

(b) To asecured party or lienholder that has filed a financing statement against aperson, unless the secured party knows:

(1) Thathe is a debtor; and

(2) Hisidentity.

3. A securedparty is not liable to any person, and a persons liability for a deficiency isnot affected, because of any act or omission arising out of the secured partysreasonable belief that a transaction is not a consumer-goods transaction or aconsumer transaction or that goods are not consumer goods, if the securedpartys belief is based on its reasonable reliance on:

(a) A debtorsrepresentation concerning the purpose for which collateral was to be used,acquired or held; or

(b) Anobligors representation concerning the purpose for which a secured obligationwas incurred.

4. A securedparty is not liable to any person under paragraph (b) of subsection 3 of NRS 104.9625 for its failure to complywith NRS 104.9616.

5. A secured party is not liable under paragraph (b)of subsection 3 of NRS 104.9625 morethan once with respect to any one secured obligation.

(Added to NRS by 1999, 361)

Part 7

Transitional Provisions Regarding 2001 Amendments

NRS 104.9702 Applicabilityof amendatory provisions to preexisting transactions, liens, actions, cases andproceedings.

1. Except asotherwise provided in NRS 104.9702 to 104.9709, inclusive, this article as amendedapplies to a transaction or lien within its scope, even if the transaction orlien was entered into or created before the amendments to this article takeeffect.

2. Except asotherwise provided in subsection 3 and NRS104.9703 to 104.9709, inclusive:

(a) Transactionsand liens that were not governed by this article before July 1, 2001, werevalidly entered into or created before that date, and would be subject to thisarticle if they had been entered into or created after that date, and therights, duties and interests flowing from those transactions and liens remainvalid on and after that date; and

(b) The transactionsand liens may be terminated, completed, consummated or enforced as required orpermitted by this article or by the law that otherwise would apply if thisarticle had not taken effect.

3. This article as amended does not affect an action,case or proceeding commenced before July 1, 2001.

(Added to NRS by 1999, 362)

NRS 104.9703 Securityinterest perfected before July 1, 2001.

1. A securityinterest that is enforceable immediately before July 1, 2001, and would havepriority over the rights of a person that becomes a lien creditor at that timeis a perfected security interest under this article if, when this article asamended takes effect, the applicable requirements for enforceability andperfection under this article as amended are satisfied without further action.

2. Except asotherwise provided in NRS 104.9705, if,immediately before July 1, 2001, a security interest is enforceable and wouldhave priority over the rights of a person that becomes a lien creditor at thattime, but the applicable requirements for enforceability or perfection underthis article as amended are not satisfied on July 1, 2001, the securityinterest:

(a) Is aperfected security interest for 1 year after July 1, 2001;

(b) Remainsenforceable thereafter only if the security interest becomes enforceable under NRS 104.9203 before the year expires; and

(c) Remains perfected thereafter only if the applicablerequirements for perfection under this article as amended are satisfied beforethe year expires.

(Added to NRS by 1999, 362)

NRS 104.9704 Security interest unperfected beforeJuly 1, 2001. A security interest that isenforceable immediately before July 1, 2001, but which would be subordinate tothe rights of a person that becomes a lien creditor at that time:

1. Remains anenforceable security interest for 1 year after July 1, 2001;

2. Remainsenforceable thereafter if the security interest becomes enforceable under NRS 104.9203 when this article as amendedtakes effect or within 1 year thereafter; and

3. Becomesperfected:

(a) Withoutfurther action, on July 1, 2001, if the applicable requirements for perfectionunder this article as amended are satisfied before or at that time; or

(b) When the applicable requirements for perfection aresatisfied if the requirements are satisfied after that time.

(Added to NRS by 1999, 362)

NRS 104.9705 Effectivenessof action taken before July 1, 2001.

1. If action,other than the filing of a financing statement, is taken before July 1, 2001,and the action would have resulted in priority of a security interest over therights of a person that becomes a lien creditor had the security interestbecome enforceable before that date, the action is effective to perfect asecurity interest that attaches under this article as amended within 1 yearafter that date. An attached security interest becomes unperfected 1 year afterJuly 1, 2001, unless the security interest becomes a perfected securityinterest under this article as amended before the expiration of that period.

2. The filingof a financing statement before July 1, 2001, is effective to perfect asecurity interest to the extent the filing would satisfy the applicablerequirements for perfection under this article as amended.

3. Thisarticle as amended does not render ineffective an effective financing statementthat was filed before July 1, 2001, and satisfied the applicable requirementsfor perfection under the law of the jurisdiction governing perfection as providedin NRS 104.9103 as that section read atthe time of filing. However, except as otherwise provided in subsections 4 and5 and NRS 104.9706, the financing statementceases to be effective at the earlier of:

(a) The timethe financing statement would have ceased to be effective under the law of thejurisdiction in which it is filed; or

(b) June 30,2006.

4. The filingof a continuation statement on or after July 1, 2001, does not continue theeffectiveness of the financing statement filed before that date. However, uponthe timely filing of a continuation statement after that date and in accordancewith the law of the jurisdiction governing perfection as provided in part 3,the effectiveness of a financing statement filed in the same office in thatjurisdiction before that date continues for the period provided by the law ofthat jurisdiction.

5. Paragraph(b) of subsection 3 applies to a financing statement that was filed against atransmitting utility before July 1, 2001, and satisfied the applicable requirementsfor perfection under the law of the jurisdiction governing perfection asprovided in NRS 104.9103 as thatsection read at the time of filing only to the extent that part 3 provides thatthe law of a jurisdiction other than the jurisdiction in which the financingstatement is filed governs perfection of a security interest in collateralcovered by the financing statement.

6. A financing statement that includes a financingstatement filed before July 1, 2001, and a continuation statement filed afterthat date are effective only to the extent that the financing statementsatisfies the requirements of part 5 for an initial financing statement.

(Added to NRS by 1999, 363; A 2001, 62, 735)

NRS 104.9706 Wheninitial financing statement suffices to continue effectiveness of financingstatement filed before July 1, 2001.

1. The filingof an initial financing statement in the office specified in NRS 104.9501 continues the effectivenessof a financing statement filed before July 1, 2001, if:

(a) The filingof an initial financing statement in that office would be effective to perfecta security interest under this article as amended;

(b) Thepre-effective-date financing statement was filed in an office in another stateor another office in this State; and

(c) The initialfinancing statement satisfies subsection 3.

2. The filingof an initial financing statement under subsection 1 continues theeffectiveness of the pre-effective-date financing statement:

(a) If theinitial financing statement is filed before July 1, 2001, for the periodprovided in NRS 104.9403 before thatdate with respect to a financing statement; and

(b) If theinitial financing statement is filed on or after July 1, 2001, for the periodprovided in NRS 104.9515 with respectto an initial financing statement.

3. To beeffective for purposes of subsection 1, an initial financing statement must:

(a) Satisfy therequirements of part 5 for an initial financing statement;

(b) Identifythe pre-effective-date financing statement by indicating the office in whichthe financing statement was filed and providing the dates of filing and filenumbers, if any, of the financing statement and of the most recent continuationstatement filed with respect to the financing statement; and

(c) Indicate that the pre-effective-date financingstatement remains effective.

(Added to NRS by 1999, 364)

NRS 104.9707 Personsentitled to file initial financing statement or continuation statement. A person may file an initial financing statement or a continuationstatement under NRS 104.9702 to 104.9709, inclusive, if:

1. The securedparty of record authorizes the filing; and

2. The filingis necessary under those sections:

(a) To continuethe effectiveness of a financing statement filed before July 1, 2001; or

(b) To perfect or continue the perfection of a securityinterest.

(Added to NRS by 1999, 364)

NRS 104.9708 Determinationof priority of conflicting claims to collateral.

1. NRS 104.9101 to 104.9709, inclusive, determine thepriority of conflicting claims to collateral. However, if the relativepriorities of the parties were fixed before July 1, 2001, the provisions ofarticle 9 which were in effect before July 1, 2001, determine priority.

2. For purposes of subsection 1 of NRS 104.9322, the priority of a security interestthat becomes enforceable under NRS 104.9203dates from July 1, 2001, if the security interest is perfected under thisarticle as amended by the filing of a financing statement before July 1, 2001,which would not have been effective to perfect the security interest under theprovisions of article 9 which were in effect before that date. This subsectiondoes not apply to conflicting security interests each of which is perfected bythe filing of such a financing statement.

(Added to NRS by 1999, 364)

NRS 104.9709 Effectiveness,amendment and termination of financing statement filed before July 1, 2001.

1. In this section, pre-effective-date financingstatement means a financing statement filed before July 1, 2001.

2. A person may add or delete collateral covered by,continue or terminate the effectiveness of, or otherwise amend the informationprovided in, a pre-effective-date financing statement pursuant to the law ofthe jurisdiction governing perfection as provided in part 3. The effectivenessof a pre-effective-date financing statement also may be terminated in accordancewith the law of the jurisdiction in which the financing statement is filed.

3. Except as otherwise provided in subsection 4, ifthe law of this State governs perfection of a security interest, theinformation in a pre-effective-date financing statement may be amended on orafter July 1, 2001, if:

(a) The pre-effective-date financing statement and anamendment are filed in the office specified in NRS 104.9501;

(b) An amendment is filed in the office specified in NRS 104.9501 concurrently with, or afterthe filing in that office of, an initial financing statement that satisfies therequirements of subsection 3 of NRS104.9706; or

(c) An initial financing statement that provides theinformation as amended and satisfies the requirements of subsection 3 of NRS 104.9706 is filed in the officespecified in NRS 104.9501.

4. If the law of this State governs perfection of asecurity interest, the effectiveness of a pre-effective-date financingstatement may be continued only under subsections 4 and 6 of NRS 104.9705 or NRS 104.9706.

5. Whether or not the law of this State governsperfection of a security interest, the effectiveness of a pre-effective-datefinancing statement filed in this State may be terminated on or after July 1,2001, by filing a termination statement in the office in which the pre-effective-datefinancing statement is filed, unless an initial financing statement thatsatisfies the requirements of subsection 3 of NRS 104.9706 has been filed in the officespecified by the law of the jurisdiction governing perfection as provided inpart 3.

(Added to NRS by 2001, 708)

 

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