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Revision of Uniform Commercial Code Article 9 – Secured Transactions

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Revision of Uniform Commercial Code Article 9 – Secured Transactions D R A F T FOR APPROVAL REVISION OF UNIFORM COMMERCIAL CODE ARTICLE 9 – SECURED TRANSACTIONS NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS MEETING IN ITS ONE-HUNDRED-AND-SEVENTH YEAR CLEVELAND, OHIO JULY 24 – 31, 1998 REVISION OF UNIFORM COMMERCIAL CODE ARTICLE 9 – SECURED TRANSACTIONS WITH PREFATORY NOTE AND REPORTER’S NOTES Copyright© 1998 By THE AMERICAN LAW INSTITUTE and the NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS The ideas and conclusions set forth in this draft, including the proposed statutory language and any comments or reporter’s notes, have not been passed upon by the National Conference of Commissioners on Uniform State Laws, the American Law Institute, or the Drafting Committee. They do not necessarily reflect the views of the Conference and its Commissioners, the Institute and its Members, and the Drafting Committee and its Members and Reporters. Proposed statutory language may not be used to ascertain the intent or meaning of any promulgated final statutory proposal. DRAFTING COMMITTEE TO REVISE UNIFORM COMMERCIAL CODE ARTICLE 9 – SECURED TRANSACTIONS WILLIAM M. BURKE, 20th Floor, Standard Chartered Bank Building, 4 Des Voeux Road, Hong Kong, China, Chair MARION W. BENFIELD, JR., University of Texas, School of Law, 10 Overlook Circle, New Braunfels, TX 78132 NEIL B. COHEN, Brooklyn Law School, Room 904A, 250 Joralemon Street, Brooklyn, NY 11201, The American Law Institute Representative DALE G. HIGER, Suite 1900, 101 S. Capitol Boulevard, Boise, ID 83702-5958 WILLIAM C. HILLMAN, U.S. Bankruptcy Court, Room 1101, 10 Causeway Street, Boston, MA 02222 MICHAEL HOUGHTON, P.O. Box 1347, 18th Floor, 1201 N. Market Street, Wilmington, DE 19899 RANDAL C. PICKER, University of Chicago Law School, 1111 E. 60th Street, Chicago, IL 60637 DONALD J. RAPSON, Room 3338, 650 CIT Drive, Livingston, NJ 07039-0491, The American Law Institute Representative HARRY C. SIGMAN, P.O. Box 67E08, Los Angeles, CA 90067, The American Law Institute Representative BRADLEY Y. SMITH, 20th Floor, 450 Lexington Avenue, New York, NY 10017, The American Law Institute Representative EDWIN E. SMITH, 15th Floor, 150 Federal Street, Boston, MA 02110 SANDRA S. STERN, 509 Madison Avenue, Suite 612, New York, NY 10022 STEVEN L. HARRIS, Chicago-Kent College of Law, 565 W. Adams Street, Chicago, IL 60661-3691, Co-Reporter CHARLES W. MOONEY, JR., University of Pennsylvania, School of Law, 3400 Chestnut Street, Philadelphia, PA 19104, Co-Reporter EX OFFICIO GENE N. LEBRUN, P.O. Box 8250, 9th Floor, 909 St. Joseph Street, Rapid City, SD 57709, President HENRY M. KITTLESON, P.O. Box 32092, 92 Lake Wire Drive, Lakeland, FL 33802-2092, Division Chair AMERICAN BAR ASSOCIATION ADVISORS ROBERT BAUER, 1300 N. 17th Street, #1800, Arlington, VA 22209, Intellectual Property Law Section Advisor RICHARD E. CHERIN, 1 Riverfront Plaza, Newark, NJ 07102, Business Law Section Advisor RICHARD R. GOLDBERG, 51st Floor, 1735 Market Street, Philadelphia, PA 19103, Real Property, Probate & Trust Law Section Advisor LAWRENCE A. MANZANARES, Courtroom 105A, City & County Building, Denver, CO 80202, Judicial Administration Division, National Conference of Special Court Judges Advisor STEVEN O. WEISE, 40th Floor, 601 S. Figueroa Street, Los Angeles, CA 90017, Advisor EXECUTIVE DIRECTOR FRED H. MILLER, University of Oklahoma, College of Law, 300 Timberdell Road, Norman, OK 73019, Executive Director WILLIAM J. PIERCE, 1505 Roxbury Road, Ann Arbor, MI 48104, Executive Director Emeritus Copies of this Act may be obtained from: NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS 211 E. Ontario Street, Suite 1300 Chicago, Illinois 60611 312/915-0195 REVISION OF UNIFORM COMMERCIAL CODE ARTICLE 9 – SECURED TRANSACTIONS TABLE OF CONTENTS PART 1. GENERAL PROVISIONS SUBPART 1. SHORT TITLE, DEFINITIONS, AND GENERAL CONCEPTS SECTION 9-101. SHORT TITLE .................................................... 21 SECTION 9-102. DEFINITIONS AND INDEX OF DEFINITIONS ......................... 21 SECTION 9-103. PURCHASE-MONEY SECURITY INTEREST; APPLICATION OF PAYMENTS; BURDEN OF ESTABLISHING PURCHASE-MONEY SECURITY INTEREST ............................................. 55 SECTION 9-104. CONTROL OF DEPOSIT ACCOUNT .................................. 61 SECTION 9-105. CONTROL OF ELECTRONIC CHATTEL PAPER ........................ 62 SECTION 9-106. CONTROL OF INVESTMENT PROPERTY ............................. 63 SECTION 9-107. CONTROL OF LETTER-OF-CREDIT RIGHT ........................... 64 SECTION 9-108. SUFFICIENCY OF DESCRIPTION .................................... 66 SUBPART 2. APPLICABILITY OF ARTICLE SECTION 9-109. SCOPE .......................................................... 68 SECTION 9-110. SECURITY INTERESTS ARISING UNDER ARTICLE 2 OR 2A ............. 76 PART 2. EFFECTIVENESS OF SECURITY AGREEMENT; ATTACHMENT OF SECURITY INTEREST; RIGHTS OF PARTIES TO SECURITY AGREEMENT SUBPART 1. EFFECTIVENESS AND ATTACHMENT SECTION 9-201. GENERAL EFFECTIVENESS OF SECURITY AGREEMENT ............... 79 SECTION 9-202. TITLE TO COLLATERAL IMMATERIAL .............................. 80 SECTION 9-203. ATTACHMENT AND ENFORCEABILITY OF SECURITY INTEREST; PROCEEDS; SUPPORTING OBLIGATIONS; FORMAL REQUISITES ........ 81 SECTION 9-204. AFTER-ACQUIRED PROPERTY; FUTURE ADVANCES .................. 86 SECTION 9-205. USE OR DISPOSITION OF COLLATERAL PERMISSIBLE ................ 87 SECTION 9-206. SECURITY INTEREST ARISING IN PURCHASE OR DELIVERY OF FINANCIAL ASSET ............................................... 88 SUBPART 2. RIGHTS AND DUTIES SECTION 9-207. RIGHTS AND DUTIES OF SECURED PARTY HAVING POSSESSION OR CONTROL OF COLLATERAL ....................................... 89 SECTION 9-208. ADDITIONAL DUTIES OF SECURED PARTY HAVING CONTROL OF COLLATERAL ................................................... 94 SECTION 9-209. DUTIES OF SECURED PARTY IF ACCOUNT DEBTOR HAS BEEN NOTIFIED OF ASSIGNMENT ....................................... 96 SECTION 9-210. REQUEST FOR ACCOUNTING; REQUEST REGARDING LIST OF COLLATERAL OR STATEMENT OF ACCOUNT ........................ 97 PART 3. PERFECTION AND PRIORITY SUBPART 1. LAW GOVERNING PERFECTION AND PRIORITY SECTION 9-301. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS .................................................... 102 SECTION 9-302. LAW GOVERNING PERFECTION AND PRIORITY OF AGRICULTURAL LIENS ......................................................... 107 SECTION 9-303. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS IN GOODS COVERED BY A CERTIFICATE OF TITLE ....... 108 SECTION 9-304. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS IN DEPOSIT ACCOUNTS ............................... 112 SECTION 9-305. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS IN INVESTMENT PROPERTY ........................... 113 SECTION 9-306. LAW GOVERNING PERFECTION AND PRIORITY OF SECURITY INTERESTS IN LETTER-OF-CREDIT RIGHTS ........................ 115 SECTION 9-307. LOCATION OF DEBTOR .......................................... 117 SUBPART 2. PERFECTION SECTION 9-308. WHEN SECURITY INTEREST OR AGRICULTURAL LIEN IS PERFECTED; CONTINUITY OF PERFECTION ........................ 122 SECTION 9-309. SECURITY INTEREST PERFECTED UPON ATTACHMENT ............. 124 SECTION 9-310. WHEN FILING REQUIRED TO PERFECT SECURITY INTEREST OR AGRICULTURAL LIEN; SECURITY INTERESTS AND AGRICULTURAL LIENS TO WHICH FILING PROVISIONS DO NOT APPLY ............... 127 SECTION 9-311. PERFECTION OF SECURITY INTERESTS IN PROPERTY SUBJECT TO CERTAIN STATUTES, REGULATIONS, AND TREATIES ................ 129 SECTION 9-312. PERFECTION OF SECURITY INTERESTS IN CHATTEL PAPER, DEPOSIT ACCOUNTS, DOCUMENTS, GOODS COVERED BY DOCUMENTS, INSTRUMENTS, INVESTMENT PROPERTY, MONEY, LETTER-OF-CREDIT RIGHTS, AND MONEY; PERFECTION BY PERMISSIVE FILING; TEMPORARY PERFECTION WITHOUT FILING OR TRANSFER OF POSSESSION ................................................... 133 SECTION 9-313. WHEN POSSESSION BY OR DELIVERY TO SECURED PARTY PERFECTS SECURITY INTEREST WITHOUT FILING ........................... 138 SECTION 9-314. PERFECTION BY CONTROL ....................................... 142 SECTION 9-315. SECURED PARTY’S RIGHTS ON DISPOSITION OF COLLATERAL AND IN PROCEEDS ..................................................... 144 SECTION 9-316. CONTINUED PERFECTION OF SECURITY INTEREST FOLLOWING CHANGE IN APPLICABLE LAW ................................... 148 SUBPART 3. PRIORITY SECTION 9-317. INTERESTS THAT TAKE PRIORITY OVER OR TAKE FREE OF UNPERFECTED SECURITY INTEREST OR AGRICULTURAL LIEN ....... 153 SECTION 9-318. RIGHTS AND TITLE OF SELLER OF ACCOUNT OR CHATTEL PAPER WITH RESPECT TO CREDITORS AND PURCHASERS .................. 156 SECTION 9-319. RIGHTS AND TITLE OF CONSIGNEE WITH RESPECT TO CREDITORS AND PURCHASERS .............................................. 157 SECTION 9-320. BUYER OF GOODS .............................................. 159 SECTION 9-321. LESSEE OF GOODS AND LICENSEE OF GENERAL INTANGIBLE IN ORDINARY COURSE OF BUSINESS ................................ 160 SECTION 9-322. PRIORITIES AMONG CONFLICTING SECURITY INTERESTS AND AGRICULTURAL LIENS IN SAME COLLATERAL ..................... 162 SECTION 9-323. FUTURE ADVANCES ............................................ 168 SECTION 9-324. PRIORITY OF PURCHASE-MONEY SECURITY INTERESTS ............ 171 SECTION 9-325. PRIORITY OF SECURITY INTERESTS IN TRANSFERRED COLLATERAL . 177 SECTION 9-326. PRIORITY OF SECURITY INTERESTS CREATED BY NEW DEBTOR ..... 179 SECTION 9-327. PRIORITY OF SECURITY INTERESTS IN DEPOSIT ACCOUNT .........
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