Citations Affected: IC 26-1; IC 32-31.
Synopsis: Uniform Commercial Code. Modifies the Indiana Uniform
Commercial Code - General Provisions to conform with the Uniform
Commercial Code - General Provisions. Modifies the Indiana Uniform
Commercial Code - Documents of Title to conform with the Uniform
Commercial Code - Documents of Title. Makes conforming
amendments to other articles of the Indiana Uniform Commercial
Code.
Effective: July 1, 2007.
January 11, 2007, read first time and referred to Committee on Insurance and Financial
Institutions.
February 6, 2007, amended, reported favorably _ Do Pass.
February 12, 2007, read second time, amended, ordered engrossed.
A BILL FOR AN ACT to amend the Indiana Code concerning
commercial law.
are applicable to specific provisions, and unless the context otherwise
requires, in IC 26-1:
(1) "Action" in the sense of a judicial proceeding includes
recoupment, counterclaim, setoff, suit in equity, and any other
proceedings in which rights are determined.
(2) "Aggrieved party" means a party entitled to resort to a remedy.
(3) "Agreement" means the bargain of the parties in fact as found
in their language or by implication from other circumstances
including course of dealing or usage of trade or course of
performance as provided in IC 26-1-1-205. and IC 26-1-2-208.
Whether an agreement has legal consequences is determined by
the provisions of IC 26-1, if applicable; otherwise by the law of
contracts (IC 26-1-1-103). (Compare "Contract".)
(4) "Bank" means any person engaged in the business of banking.
(5) "Bearer" means the person:
(A) in control of a negotiable electronic document of title;
or
(B) in possession of an a negotiable instrument, a negotiable
tangible document of title, or a certificated security payable
to bearer or endorsed in blank.
(6) "Bill of lading" means a document of title evidencing the
receipt of goods for shipment issued by a person engaged in the
business of directly or indirectly transporting or forwarding
goods. and The term does not include a warehouse receipt. The
term includes an airbill. "Airbill" means a document serving for
air transportation as a bill of lading does for marine or rail
transportation, and includes an air consignment note or air
waybill.
(7) "Branch" includes a separately incorporated foreign branch of
a bank.
(8) "Burden of establishing" a fact means the burden of
persuading the triers of fact that the existence of the fact is more
probable than its nonexistence.
(9) "Buyer in ordinary course of business" means a person that
buys goods in good faith without knowledge that the sale violates
the rights of another person in the goods, and in the ordinary
course from a person, other than a pawnbroker, in the business of
selling goods of that kind. A person buys goods in the ordinary
course of business if the sale to the person comports with the
usual or customary practices in the kind of business in which the
seller is engaged or with the seller's own usual or customary
practices. A person that sells oil, gas, or other minerals at the
wellhead or minehead is a person in the business of selling goods
of that kind. A buyer in ordinary course of business may buy for
cash, by exchange of other property, or on secured or unsecured
credit, and may require goods or documents of title under a
preexisting contract for sale. Only a buyer that takes possession
of the goods or has a right to recover the goods from that seller
under IC 26-1-2 may be a buyer in ordinary course of business. A
person that acquires goods in a transfer in bulk or as security for
or total or partial satisfaction of a money debt is not a buyer in
ordinary course of business.
(10) "Conspicuous". A term or clause is conspicuous when it is so
written that a reasonable person against whom it is to operate
ought to have noticed it. A printed heading in capitals (as:
NONNEGOTIABLE BILL OF LADING) is conspicuous.
Language in the body of a form is conspicuous if it is in larger or
other contrasting type or color. But in a telegram any stated term
is conspicuous. Whether a term or clause is conspicuous or not is
for decision by the court.
(11) "Contract" means the total legal obligation which results
from the parties' agreement as affected by this Act and any other
applicable rules of law. (Compare "Agreement".)
(12) "Creditor" includes a general creditor, a secured creditor, a
lien creditor and any representative of creditors, including an
assignee for the benefit of creditors, a trustee in bankruptcy, a
receiver in equity, and an executor or administrator of an
insolvent debtor's or assignor's estate.
(13) "Defendant" includes a person in the position of defendant
in a cross-action or counterclaim.
(14) "Delivery" means the following:
(A) With respect to an electronic document of title,
voluntary transfer of control.
(B) With respect to instruments, tangible documents of title,
chattel paper, or certificated securities, means voluntary
transfer of possession.
(15) "Document of title" includes bill of lading, dock warrant,
dock receipt, warehouse receipt, or order for the delivery of goods
and also any other document, which means a record that:
(A) in the regular course of business or financing, is treated as
adequately evidencing that the person in possession or control
of it the record is entitled to receive, control, hold, and
dispose of the document record and the goods it covers; To be
a document of title, a document must purport and
(B) purports to be issued by or addressed to a bailee and
purport purports to cover goods in the bailee's possession
which are either identified or are fungible portions of an
identified mass.
The term includes a bill of lading, transport document, dock
warrant, dock receipt, warehouse receipt, or order for
delivery of goods. An electronic document of title means a
document of title evidenced by a record consisting of
information stored in an electronic medium. A tangible
document of title means a document of title evidenced by a
record consisting of information that is inscribed on a tangible
medium.
(16) "Fault" means wrongful act, omission, or breach.
(17) "Fungible" with respect to goods or securities means goods
or securities of which any unit is, by nature or usage of trade, the
equivalent of any other like unit. Goods which are not fungible
shall be deemed fungible for the purposes of IC 26-1 to the extent
that under a particular agreement or document unlike units are
treated as equivalents.
(18) "Genuine" means free of forgery or counterfeiting.
(19) "Good faith" means honesty in fact in the conduct or
transaction concerned.
(20) "Holder" with respect to means:
(A) the person in possession of a negotiable instrument
means the person in possession if the instrument that is
payable either to bearer or in the case of an instrument,
payable to an identified person if the identified person is in
possession of the instrument; "Holder" with respect to
(B) the person in possession of a negotiable tangible
document of title means the person in possession if the goods
are deliverable either to bearer or to the order of the person in
possession; or
(C) the person in control of a negotiable electronic
document of title.
(21) To "honor" is to pay or to accept and pay or where a credit so
engages to purchase or discount a draft complying with the terms
of the credit.
(22) "Insolvency proceedings" includes any assignment for the
benefit of creditors or other proceedings intended to liquidate or
rehabilitate the estate of the person involved.
(23) A person is "insolvent" who either has ceased to pay his the
person's debts in the ordinary course of business or cannot pay
his the person's debts as they become due or is insolvent within
the meaning of the federal bankruptcy law.
(24) "Money" means a medium of exchange authorized or
adopted by a domestic or foreign government and includes a
monetary unit of account established by an intergovernmental
organization or by agreement between two (2) or more nations.
(25) A person has "notice" of a fact when:
(a) he the person has actual knowledge of it;
(b) he the person has received a notice or notification of it; or
(c) from all the facts and circumstances known to him the
person at the time in question, he the person has reason to
know that it exists.
A person "knows" or has "knowledge" of a fact when he the
person has actual knowledge of it. "Discover" or "learn" or a
word or phrase of similar import refers to knowledge rather than
to reason to know. The time and circumstances under which a
notice or notification may cease to be effective are not determined
by IC 26-1.
(26) A person "notifies" or "gives" a notice or notification to
another by taking such steps as may be reasonably required to
inform the other in ordinary course whether or not such other
actually comes to know of it. A person "receives" a notice or
notification when:
(a) it comes to his the person's attention; or
(b) it is duly delivered at the place of business through which
the contract was made or at any other place held out by him
the person as the place for receipt of such communications.
(27) Notice, knowledge, or a notice of notification received by an
organization is effective for a particular transaction from the time
when it is brought to the attention of the individual conducting
that transaction and, in any event, from the time when it would
have been brought to his the person's attention if the organization
had exercised due diligence. An organization exercises due
diligence if it maintains reasonable routines for communicating
significant information to the person conducting the transaction
and there is reasonable compliance with the routines. Due
diligence does not require an individual acting for the
organization to communicate information unless such
communication is part of his the person's regular duties or unless
he the person has reason to know of the transaction and that the
transaction would be materially affected by the information.
(28) "Organization" includes a corporation, government or
governmental subdivision or agency, business trust, estate, trust,
partnership or association, two (2) or more persons having a joint
or common interest, or any other legal or commercial entity.
(29) "Party", as distinct from "third party", means a person who
has engaged in a transaction or made an agreement within
IC 26-1.
(30) "Person" includes an individual or an organization. (See
IC 26-1-1-102.)
(31) "Presumption" or "presumed" means that the trier of fact
must find the existence of the fact presumed unless and until
evidence is introduced which would support a finding of its
nonexistence.
(32) "Purchase" includes taking by sale, discount, negotiation,
mortgage, pledge, lien, security interest, issue or reissue, gift, or
any other voluntary transaction creating an interest in property.
(33) "Purchaser" means a person who takes by purchase.
(33a) "Registered mail" includes certified mail.
(34) "Remedy" means any remedial right to which an aggrieved
party is entitled with or without resort to a tribunal.
(35) "Representative" includes an agent, an officer of a
corporation or association, and a trustee, executor, or
administrator of an estate, or any other person empowered to act
for another.
(36) "Rights" includes remedies.
(37) "Security interest" means an interest in personal property or
fixtures which secures payment or performance of an obligation.
The term also includes any interest of a consignor and a buyer of
accounts, chattel paper, a payment intangible, or a promissory
note in a transaction that is subject to IC 26-1-9.1. The special
property interest of a buyer of goods on identification of such
goods to a contract for sale under IC 26-1-2-401 is not a security
interest, but a buyer may also acquire a security interest by
complying with IC 26-1-9.1. Except as otherwise provided in
IC 26-1-2-505, the right of a seller or lessor of goods under
IC 26-1-2 or IC 26-1-2.1 to retain or acquire possession of the
goods is not a "security interest", but a seller or lessor may also
acquire a "security interest" by complying with IC 26-1-9.1. The
retention or reservation of title by a seller of goods
notwithstanding shipment or delivery to the buyer
(IC 26-1-2-401) is limited in effect to a reservation of a "security
interest". Whether a transaction creates a lease or security interest
is determined by the facts of each case. However, a transaction
creates a security interest if the consideration the lessee is to pay
the lessor for the right to possession and use of the goods is an
obligation for the term of the lease not subject to termination by
the lessee and:
(a) the original term of the lease is equal to or greater than the
remaining economic life of the goods;
(b) the lessee is bound to renew the lease for the remaining
economic life of the goods or is bound to become the owner of
the goods;
(c) the lessee has an option to renew the lease for the
remaining economic life of the goods for no additional
consideration or nominal additional consideration upon
compliance with the lease agreement; or
(d) the lessee has an option to become the owner of the goods
for no additional consideration or nominal additional
consideration upon compliance with the lease agreement.
A transaction does not create a security interest merely because
it provides that:
(a) the present value of the consideration the lessee is
obligated to pay the lessor for the right to possession and use
of the goods is substantially equal to or is greater than the fair
market value of the goods at the time the lease is entered into;
(b) the lessee assumes risk of loss of the goods, or agrees to
pay taxes, insurance, filing, recording, or registration fees, or
service or maintenance costs with respect to the goods;
(c) the lessee has an option to renew the lease or to become the
owner of the goods;
(d) the lessee has an option to renew the lease for a fixed rent
that is equal to or greater than the reasonably predictable fair
market rent for the use of the goods for the term of the renewal
at the time the option is to be performed; or
(e) the lessee has an option to become the owner of the goods
for a fixed price that is equal to or greater than the reasonably
predictable fair market value of the goods at the time the
option is to be performed.
For purposes of this subsection:
(x) Additional consideration is not nominal if:
(i) when the option to renew the lease is granted to the lessee
the rent is stated to be the fair market rent for the use of the
goods for the term of the renewal determined at the time the
option is to be performed; or
(ii) when the option to become the owner of the goods is
granted to the lessee the price is stated to be the fair market
value of the goods determined at the time the option is to be
performed.
Additional consideration is nominal if it is less than the
lessee's reasonably predictable cost of performing under the
lease agreement if the option is not exercised.
(y) "Reasonably predictable" and "remaining economic life of
the goods" are to be determined with reference to the facts and
circumstances at the time the transaction is entered into.
(z) "Present value" means the amount as of a date certain of
one (1) or more sums payable in the future, discounted to the
date certain. The discount is determined by the interest rate
specified by the parties if the rate is not manifestly
unreasonable at the time the transaction is entered into.
Otherwise, the discount is determined by a commercially
reasonable rate that takes into account the facts and
circumstances of each case at the time the transaction was
entered into.
(38) "Send" in connection with any writing or notice means to
deposit in the mail or deliver for transmission by any other usual
means of communication with postage or cost of transmission
provided for and properly addressed and, in the case of an
instrument, to an address specified thereon or otherwise agreed
or, if there be none, to any address reasonable under the
circumstances. The receipt of any writing or notice within the
time at which it would have arrived if properly sent has the effect
of a proper sending.
(39) "Signed" includes any symbol executed or adopted by a party
with present intention to authenticate a writing.
(40) "Surety" includes guarantor.
(41) "Telegram" includes a message transmitted by radio,
teletype, cable, any mechanical method of transmission, or the
like.
(42) "Term" means that portion of an agreement which relates to
a particular matter.
(43) "Unauthorized" signature means one made without actual,
implied, or apparent authority and includes a forgery.
(44) "Value". Except as otherwise provided with respect to
negotiable instruments and bank collections (IC 26-1-3.1-303,
IC 26-1-4-208, and IC 26-1-4-209) a person gives value for rights
if he the person acquires them:
(a) in return for a binding commitment to extend credit or for
the extension of immediately available credit whether or not
drawn upon and whether or not a chargeback is provided for
in the event of difficulties in collection;
(b) as security for or in total or partial satisfaction of a
preexisting claim;
(c) by accepting delivery pursuant to a preexisting contract for
purchase; or
(d) generally, in return for any consideration sufficient to
support a simple contract.
(45) "Warehouse receipt" means a receipt document of title
issued by a person engaged in the business of storing goods for
hire.
(46) "Written" or "writing" includes printing, typewriting, or any
other intentional reduction to tangible form.
unreasonable:
(a) express terms control both prevail over course of dealing and
course of performance;
(b) course of performance prevails over course of dealing and
usage of trade; and
(c) course of dealing controls prevails over usage of trade.
(5) (6) An applicable usage of trade in the place where any part of
performance is to occur shall be used in interpreting the agreement as
to that part of the performance.
(6) (7) Evidence of a relevant usage of trade offered by one party is
not admissible unless and until he the party has given the other party
such notice as the court finds sufficient to prevent unfair surprise to the
latter.
(8) Subject to IC 26-1-2-209, a course of performance is relevant
to show a waiver or modification of any term inconsistent with the
course of performance.
obligation by agreement with either the person obligated or
another creditor of the person obligated.
(2) Subordination does not create a security interest as against
either the common debtor or a subordinated creditor.
shipment is "overseas" insofar as by usage of trade or agreement it is
subject to the commercial, financing, or shipping practices
characteristic of international deep water commerce.
and no documents of title are to be delivered, title passes at
the time and place of contracting.
(4) A rejection or other refusal by the buyer to receive or retain
the goods, whether or not justified, or a justified revocation of
acceptance revests title to the goods in the seller. Such revesting
occurs by operation of law and is not a "sale".
withhold or reclaim the goods.
(2) As against such buyer the seller may stop delivery until:
(a) receipt of the goods by the buyer; or
(b) acknowledgment to the buyer by any bailee of the goods
except a carrier that the bailee holds the goods for the buyer; or
(c) such acknowledgment to the buyer by a carrier by reshipment
or as warehouseman a warehouse; or
(d) negotiation to the buyer of any negotiable document of title
covering the goods.
(3) (a) To stop delivery, the seller must so notify as to enable the
bailee by reasonable diligence to prevent delivery of the goods.
(b) After such notification, the bailee must hold and deliver the
goods according to the directions of the seller, but the seller is liable to
the bailee for any ensuing charges or damages.
(c) If a negotiable document of title has been issued for goods, the
bailee is not obliged to obey a notification to stop until surrender of
possession or control of the document.
(d) A carrier who has issued a nonnegotiable bill of lading is not
obliged to obey a notification to stop received from a person other than
the consignor.
treated in use or in the relevant market as a single whole.
(d) "Conforming" goods or performance under a lease contract
means goods or performance that are in accordance with the
obligations under the lease contract.
(e) "Consumer lease" means a lease that a lessor regularly
engaged in the business of leasing or selling makes to a lessee
who is an individual and who takes under the lease primarily for
a personal, family, or household purpose if the total payments to
be made under the lease contract, excluding payments for options
to renew or buy, do not exceed twenty-five thousand dollars
($25,000).
(f) "Fault" means wrongful act, omission, breach, or default.
(g) "Finance lease" means a lease with respect to which:
(i) the lessor does not select, manufacture, or supply the goods;
(ii) the lessor acquires the goods or the right to possession and
use of the goods in connection with the lease; and
(iii) one (1) of the following occurs:
(A) the lessee receives a copy of the contract by which the
lessor acquired the goods or the right to possession and use
of the goods before signing the lease contract;
(B) the lessee's approval of the contract by which the lessor
acquired the goods or the right to possession and use of the
goods is a condition to effectiveness of the lease contract;
(C) the lessee, before signing the lease contract, receives an
accurate and complete statement designating the promises
and warranties, and any disclaimers of warranties,
limitations, or modifications of remedies, or liquidated
damages, including those of a third party, such as the
manufacturer of the goods, provided to the lessor by the
person supplying the goods in connection with or as part of
the contract by which the lessor acquired the goods or the
right to possession and use of the goods; or
(D) if the lease is not a consumer lease, the lessor, before the
lessee signs the lease contract, informs the lessee in writing:
(a) of the identity of the person supplying the goods to the
lessor, unless the lessee has selected that person and
directed the lessor to acquire the goods or the right to
possession and use of the goods from that person; (b) that
the lessee is entitled under IC 26-1-2.1 to the promises and
warranties, including those of any third party, provided to
the lessor by the person supplying the goods in connection
with or as part of the contract by which the lessor acquired
the goods or the right to possession and use of the goods;
and (c) that the lessee may communicate with the person
supplying the goods to the lessor and receive an accurate
and complete statement of those promises and warranties,
including any disclaimers and limitations of them or of
remedies.
(h) "Goods" means all things that are movable at the time of
identification to the lease contract, or are fixtures
(IC 26-1-2.1-309), but the term does not include money,
documents, instruments, accounts, chattel paper, general
intangibles, or minerals or the like, including oil and gas, before
extraction. The term also includes the unborn young of animals.
(i) "Installment lease contract" means a lease contract that
authorizes or requires the delivery of goods in separate lots to be
separately accepted, even though the lease contract contains a
clause "each delivery is a separate lease" or its equivalent.
(j) "Lease" means a transfer of the right to possession and use of
goods for a term in return for consideration, but a sale, including
a sale on approval or a sale or return, or retention or creation of a
security interest is not a lease. Unless the context clearly indicates
otherwise, the term includes a sublease.
(k) "Lease agreement" means the bargain, with respect to the
lease, of the lessor and the lessee in fact as found in their
language or by implication from other circumstances including
course of dealing or usage of trade or course of performance as
provided in IC 26-1-2.1. Unless the context clearly indicates
otherwise, the term includes a sublease agreement.
(l) "Lease contract" means the total legal obligation that results
from the lease agreement as affected by IC 26-1-2.1 and any other
applicable rules of law. Unless the context clearly indicates
otherwise, the term includes a sublease contract.
(m) "Leasehold interest" means the interest of the lessor or the
lessee under a lease contract.
(n) "Lessee" means a person who acquires the right to possession
and use of goods under a lease. Unless the context clearly
indicates otherwise, the term includes a sublessee.
(o) "Lessee in ordinary course of business" means a person who
in good faith and without knowledge that the lease to the person
is in violation of the ownership rights or security interest or
leasehold interest of a third party in the goods leases in ordinary
course from a person in the business of selling or leasing goods of
that kind but does not include a pawnbroker. "Leasing" may be for
cash or by exchange of other property or on secured or unsecured
credit and includes receiving acquiring goods or documents of
title under a pre-existing lease contract but does not include a
transfer in bulk or as security for or in total or partial satisfaction
of a money debt.
(p) "Lessor" means a person who transfers the right to possession
and use of goods under a lease. Unless the context clearly
indicates otherwise, the term includes a sublessor.
(q) "Lessor's residual interest" means the lessor's interest in the
goods after expiration, termination, or cancellation of the lease
contract.
(r) "Lien" means a charge against or interest in goods to secure
payment of a debt or performance of an obligation, but the term
does not include a security interest.
(s) "Lot" means a parcel or a single article that is the subject
matter of a separate lease or delivery, whether or not it is
sufficient to perform the lease contract.
(t) "Merchant lessee" means a lessee that is a merchant with
respect to goods of the kind subject to the lease.
(u) "Present value" means the amount as of a date certain of one
(1) or more sums payable in the future, discounted to the date
certain. The discount is determined by the interest rate specified
by the parties if the rate was not manifestly unreasonable at the
time the transaction was entered into; otherwise, the discount is
determined by a commercially reasonable rate that takes into
account the facts and circumstances of each case at the time the
transaction was entered into.
(v) "Purchase" includes taking by sale, lease, mortgage, security
interest, pledge, gift, or any other voluntary transaction creating
an interest in goods.
(w) "Sublease" means a lease of goods the right to possession and
use of which was acquired by the lessor as a lessee under an
existing lease.
(x) "Supplier" means a person from whom a lessor buys or leases
goods to be leased under a finance lease.
(y) "Supply contract" means a contract under which a lessor buys
or leases goods to be leased.
(z) "Termination" occurs when either party pursuant to a power
created by agreement or law puts an end to the lease contract
otherwise than for default.
(2) Other definitions applying to IC 26-1-2.1 and the sections in
which they appear are:
stop delivery of goods in the possession of a carrier or other bailee if
the lessor discovers the lessee to be insolvent and may stop delivery of
carload, truckload, planeload, or larger shipments of express or freight
if the lessee repudiates or fails to make a payment due before delivery,
whether for rent, security, or otherwise under the lease contract, or for
any other reason the lessor has a right to withhold or take possession of
the goods.
(2) In pursuing its remedies under subsection (1), the lessor may
stop delivery until:
(a) receipt of the goods by the lessee;
(b) acknowledgment to the lessee by any bailee of the goods,
except a carrier, that the bailee holds the goods for the lessee; or
(c) such an acknowledgment to the lessee by a carrier via
reshipment or as warehouseman a warehouse.
(3)(a) To stop delivery, a lessor shall so notify as to enable the
bailee by reasonable diligence to prevent delivery of the goods.
(b) After notification, the bailee shall hold and deliver the goods
according to the directions of the lessor, but the lessor is liable to
the bailee for any ensuing charges or damages.
(c) A carrier who has issued a nonnegotiable bill of lading is not
obliged to obey a notification to stop received from a person other
than the consignor.
securities (IC 26-1-8.1-102), or instructions for uncertificated
securities (IC 26-1-8.1-102) or other certificates, statements, or
the like are to be received by the drawee or other payor before
acceptance or payment of the draft.
(7) "Draft" means a draft (as defined in IC 26-1-3.1-104) or an
item, other than an instrument, that is an order.
(8) "Drawee" means a person ordered in a draft to make payment.
(9) "Item" means an instrument or a promise or order to pay
money handled by a bank for collection or payment. The term
does not include a payment order governed by IC 26-1-4.1 or a
credit or debit card slip.
(10) "Midnight deadline" with respect to a bank is midnight on its
next banking day following the banking day on which it receives
the relevant item or notice or from which the time for taking
action commences to run, whichever is later.
(11) "Settle" means to pay in cash, by clearing-house settlement,
in a charge or credit, or by remittance, or otherwise as instructed.
A settlement may be either provisional or final.
(12) "Suspends payments" with respect to a bank means that it has
been closed by order of the supervisory authorities, that a public
officer has been appointed to take it over, or that it ceases or
refuses to make payments in the ordinary course of business.
(b) Other definitions applying to IC 26-1-4 and the sections in which
they appear are:
"Agreement for electronic presentment". IC 26-1-4-110.
"Bank". IC 26-1-4-105.
"Collecting bank". IC 26-1-4-105.
"Depositary bank". IC 26-1-4-105.
"Intermediary bank". IC 26-1-4-105.
"Payor bank". IC 26-1-4-105.
"Presenting bank". IC 26-1-4-105.
"Presentment notice". IC 26-1-4-110.
(c) "Control" as provided in IC 26-1-7-106 and the following
definitions in IC 26-1-3.1 apply to IC 26-1-4:
"Acceptance". IC 26-1-3.1-409.
"Alteration". IC 26-1-3.1-407.
"Cashier's check". IC 26-1-3.1-104.
"Certificate of deposit". IC 26-1-3.1-104.
"Certified check". IC 26-1-3.1-409.
"Check". IC 26-1-3.1-104.
"Holder in due course". IC 26-1-3.1-302.
"Instrument". IC 26-1-3.1-104.
known and This chapter may be cited as Uniform Commercial Code
. Documents of Title.
medium and is retrievable in perceivable form.
(11) "Shipper" means a person that enters into a contract of
transportation with a carrier.
(12) "Sign" means, with present intent to authenticate or
adopt a record:
(A) to execute or adopt a tangible symbol; or
(B) to attach to or logically associate with the record an
electronic sound, symbol, or process.
(h) "Warehouseman" is (13) "Warehouse" means a person
engaged in the business of storing goods for hire.
(2) (b) Other definitions applying to IC 26-1-7 this chapter and the
sections in which they appear are:
"Duly negotiate". IC 26-1-7-501.
"Person entitled under the document". IC 26-1-7-403(4).
(3) Definitions in IC 26-1-2 applying to IC 26-1-7 and the sections
in which they appear are:
"Contract for sale". IC 26-1-2-106.
"Overseas". IC 26-1-2-323.
"Lessee in the ordinary course of business".
IC 26-1-2.1-103(o).
"Receipt" of goods. IC 26-1-2-103.
(4) (c) In addition, IC 26-1-1 contains general definitions and
principles of construction and interpretation applicable throughout
IC 26-1-7. this chapter.
delivery of any of the notices described in section 103(b) of that act
(15 U.S.C. 7003(b)).
(d) To the extent there is a conflict between IC 26-2-8 and this
chapter, this chapter governs.
entitled under the electronic document when the warrantor
surrendered control of the electronic document to the issuer.
(c) Upon request of a person entitled under a tangible document
of title, the issuer of the tangible document may issue an electronic
document of title as a substitute for the tangible document if:
(1) the person entitled under the tangible document
surrenders possession of the document to the issuer; and
(2) the electronic document when issued contains a statement
that it is issued in substitution for the tangible document.
(d) Upon issuance of an electronic document of title in
substitution for a tangible document of title in accordance with
subsection (c):
(1) the tangible document ceases to have any effect or validity;
and
(2) the person that procured issuance of the electronic
document warrants to all subsequent persons entitled under
the electronic document that the warrantor was a person
entitled under the tangible document when the warrantor
surrendered possession of the tangible document to the issuer.
consent of the person asserting control;
(5) each copy of the authoritative copy and any copy of a copy
is readily identifiable as a copy that is not the authoritative
copy; and
(6) any amendment of the authoritative copy is readily
identifiable as authorized or unauthorized.
ownership; and
(i) (9) a statement of the amount of advances made and of
liabilities incurred for which the warehouseman warehouse
claims a lien or security interest (IC 26-1-7-209). If unless the
precise amount of such advances made or of such liabilities
incurred is, at the time of the issue of the receipt is unknown to
the warehouseman warehouse or to his its agent who issues it,
that issued the receipt, in which case a statement of the fact that
advances have been made or liabilities incurred and the purpose
thereof of the advances or liabilities is sufficient.
(3) (c) A warehouseman warehouse may insert in his its receipt any
other terms which that are not contrary to the provisions of IC 26-1 and
do not impair his its obligation of delivery (IC 26-1-7-403) under
section 403 of this chapter or his its duty of care (IC 26-1-7-204).
under section 204 of this chapter. Any contrary provisions shall be
are ineffective.
or storage agreement limiting the amount of liability in case of loss or
damage and setting forth a specific liability per article or item, or value
per unit of weight, beyond which the warehouseman shall warehouse
is not be liable. provided, however, that such liability may on written
Such a limitation is not effective with respect to the warehouse's
liability for conversion to its own use. On request of the bailor in a
record at the time of signing such the storage agreement or within a
reasonable time after receipt of the warehouse receipt, the
warehouse's liability may be increased on part or all of the goods
thereunder, in which covered by the storage agreement or the
warehouse receipt. In this event, increased rates may be charged
based on such an increased valuation but that no such increase shall be
permitted contrary to a lawful limitation of liability contained in the
warehouseman's tariff, if any. No such limitation is effective with
respect to the warehouseman's liability for conversion to his own use.
of the goods.
(3) (c) Reasonable provisions as to the time and manner of
presenting claims and instituting commencing actions based on the
bailment may be included in the warehouse receipt or tariff. storage
agreement.
amount of his its lien within the time prescribed provided in
subsection (1) for notification, advertisement, and sale, (a) and section
210 of this chapter, the warehouseman warehouse may specify in the
notification notice given under subsection (a) any reasonable shorter
time for removal of the goods and, in case if the goods are not
removed, may sell them at public sale held not less than one (1) week
after a single advertisement or posting.
(3) (c) If, as a result of a quality or condition of the goods of which
the warehouseman had no warehouse did not have notice at the time
of deposit, the goods are a hazard to other property, or to the warehouse
facilities, or to other persons, the warehouseman warehouse may sell
the goods at public or private sale without advertisement or posting on
reasonable notification to all persons known to claim an interest in the
goods. If the warehouseman warehouse, after a reasonable effort, is
unable to sell the goods, he the warehouse may dispose of them in any
lawful manner and shall does not incur no liability by reason of such
the disposition.
(4) The warehouseman must (d) A warehouse shall deliver the
goods to any person entitled to them under IC 26-1-7 this chapter
upon due demand made at any time prior to before sale or other
disposition under this section.
(5) The warehouseman (e) A warehouse may satisfy his its lien
from the proceeds of any sale or disposition under this section but must
shall hold the balance for delivery on the demand of any person to
whom he which the warehouse would have been bound to deliver the
goods.
in a negotiable tangible warehouse receipt has been filled in without
authority, a good faith purchaser for value and without notice of the
want lack of authority may treat the insertion as authorized. Any other
unauthorized alteration leaves any tangible or electronic warehouse
receipt enforceable against the issuer according to its original tenor.
interest in the goods and that did not:
(1) deliver or entrust the goods or any document of title
covering the goods to the bailor or the bailor's nominee with:
(A) actual or apparent authority to ship, store, or sell;
(B) power to obtain delivery under section 403 of this
chapter; or
(C) power of disposition under IC 26-1-2-403,
IC 26-1-2.1-304(2), IC 26-1-2.1-305(2), IC 26-1-9.1-320, or
IC 26-1-9.1-321 or any other statute or rule of law; or
(2) acquiesce in the procurement by the bailor or its nominee
of any document.
(d) For purposes of this subsection, "household goods" means
furniture, furnishings, or personal effects used by the depositor in
a dwelling. A warehouse's lien on household goods for charges and
expenses in relation to the goods under subsection (a) is also
effective against all persons if the depositor was the legal possessor
of the goods at the time of deposit.
(4) (e) A warehouseman warehouse loses his its lien on any goods
which he that the warehouse voluntarily delivers or which he
unjustifiably refuses to deliver.
preceding sentence.
(2) (b) A warehouseman's warehouse may enforce its lien on
goods other than goods stored by a merchant in the course of his its
business may be enforced only as follows: if the following
requirements are satisfied:
(a) (1) All persons known to claim an interest in the goods must
be notified.
(b) The notification must be delivered in person or sent by
registered letter to the last known address of any person to be
notified.
(c) (2) The notification must include an itemized statement of the
claim, a description of the goods subject to the lien, a demand for
payment within a specified time not less than ten (10) days after
receipt of the notification, and a conspicuous statement that
unless the claim is paid within that time the goods will be
advertised for sale and sold by auction at a specified time and
place.
(d) (3) The sale must conform to the terms of the notification.
(e) (4) The sale must be held at the nearest suitable place to that
where the goods are held or stored.
(f) (5) After the expiration of the time given in the notification, an
advertisement of the sale must be published once a week for two
(2) weeks consecutively in a newspaper of general circulation
where the sale is to be held. The advertisement must include a
description of the goods, the name of the person on whose
account they the goods are being held, and the time and place of
the sale. The sale must take place at least fifteen (15) days after
the first publication. If there is no newspaper of general
circulation where the sale is to be held, the advertisement must be
posted at least ten (10) days before the sale in not less fewer than
six (6) conspicuous places in the neighborhood of the proposed
sale.
(3) (c) Before any sale pursuant to this section, any person claiming
a right in the goods may pay the amount necessary to satisfy the lien
and the reasonable expenses incurred under in complying with this
section. In that event, the goods must may not be sold but must be
retained by the warehouseman warehouse subject to the terms of the
receipt and IC 26-1-7. this chapter.
(4) The warehouseman (d) A warehouse may buy at any public sale
held pursuant to this section.
(5) (e) A purchaser in good faith of goods sold to enforce a
warehouseman's warehouse's lien takes the goods free of any rights of
persons against whom which the lien was valid, despite noncompliance
by the warehouseman warehouse's noncompliance with the
requirements of this section.
(6) The warehouseman (f) A warehouse may satisfy his its lien
from the proceeds of any sale pursuant to this section but must shall
hold the balance, if any, for delivery on demand to any person to whom
he which the warehouse would have been bound to deliver the goods.
(7) (g) The rights provided by this section shall be are in addition
to all other rights allowed by law to a creditor against his a debtor.
(8) Where (h) If a lien is on goods stored by a merchant in the
course of his its business, the lien may be enforced in accordance with
either subsection (1) (a) or (2). (b).
(9) The warehouseman (i) A warehouse is liable for damages
caused by failure to comply with the requirements for sale under this
section and, in case of willful violation, is liable for conversion.
for weighing such freight, an the goods, the issuer who is a common
carrier must shall ascertain the kind and quantity within a reasonable
time after receiving the written shipper's request of the shipper in a
record to do so. In such cases that case, "shipper's weight" or other
words of like purport similar import are ineffective.
(4) (d) The issuer may of a bill of lading, by inserting including in
the bill the words "shipper's weight, load, and count" or other words of
like purport similar import indicate that the goods were loaded by the
shipper, and if such the statement be is true, the issuer shall is not be
liable for damages caused by the improper loading. But their However,
omission of such words does not imply liability for such damages
caused by improper loading.
(5) The (e) A shipper shall be deemed to have guaranteed
guarantees to the an issuer the accuracy at the time of shipment of the
description, marks, labels, number, kind, quantity, condition, and
weight, as furnished by him; the shipper, and the shipper shall
indemnify the issuer against damage caused by inaccuracies in such
those particulars. The This right of the issuer to such indemnity shall
in no way does not limit his the issuer's responsibility and or liability
under the contract of carriage to any person other than the shipper.
constitutes one (1) bill.
(3) Where (c) If a tangible negotiable bill of lading is lawfully
issued in a set of parts and different parts are negotiated to different
persons, the title of the holder to whom which the first due negotiation
is made prevails as to both the document of title and the goods even
though if any later holder may have received the goods from the carrier
in good faith and discharged the carrier's obligation by surrender of his
surrendering its part.
(4) Any (d) A person who that negotiates or transfers a single part
of a tangible bill of lading drawn issued in a set is liable to holders of
that part as if it were the whole set.
(5) (e) The bailee is obliged to shall deliver in accordance with
IC 26-1-7-401 through IC 26-1-7-404 sections 401 through 404 of this
chapter against the first presented part of a tangible bill of lading
lawfully drawn issued in a set. Such Delivery in this manner
discharges the bailee's obligation on the whole bill.
authority to subject the goods to such those charges and expenses. Any
other lien under subsection (1) (a) is effective against the consignor
and any person who that permitted the bailor to have control or
possession of the goods unless the carrier had notice that the bailor
lacked such authority.
(3) (c) A carrier loses his its lien on any goods which he that it
voluntarily delivers or which he unjustifiably refuses to deliver.
for delivery on demand to any person to whom he which the carrier
would have been bound to deliver the goods.
(6) (f) The rights provided by this section shall be are in addition to
all other rights allowed by law to a creditor against his a debtor.
(7) (g) A carrier's lien may be enforced in accordance with
pursuant to either subsection (1) (a) or the procedure set forth in
IC 26-1-7-210(2). section 210(b) of this chapter.
(8) The (h) A carrier is liable for damages caused by failure to
comply with the requirements for sale under this section and, in case
of willful violation, is liable for conversion.
bailee at the time when the document was issued; or
(d) (4) the person issuing the document does not come within the
definition of warehouseman if it is not a warehouse but the
document purports to be a warehouse receipt.
shall satisfy the bailee's lien where if the bailee so requests or where if
the bailee is prohibited by law from delivering the goods until the
charges are paid.
(3) (c) Unless the a person claiming the goods is one a person
against whom which the document confers no of title does not confer
a right under IC 26-1-7-503(1), he must section 503(a) of this
chapter:
(1) the person claiming the goods under a document shall
surrender for cancellation possession or notation control of
partial deliveries any outstanding negotiable document covering
the goods for cancellation or indication of partial deliveries;
and
(2) the bailee must shall cancel the document or conspicuously
note indicate in the document the partial delivery thereon or be
the bailee is liable to any person to whom which the document is
duly negotiated.
(4) "Person entitled under the document" means holder in the case
of a negotiable document, or the person to whom delivery is to be made
by the terms of or pursuant to written instructions under a
nonnegotiable document.
original terms run to bearer, it is also negotiated by delivery
alone. when by its original terms it runs to bearer.
(b) When a document running (3) If the document's original
terms run to the order of a named person and it is delivered to
him the named person, the effect is the same as if the document
had been negotiated.
(3) (4) Negotiation of a negotiable the document of title after it
has been endorsed to a specified named person requires
endorsement by the special endorsee as well as and delivery.
(4) (5) A negotiable document of title is "duly negotiated" when
it is negotiated in the manner stated in this section to a holder who
purchases it in good faith without notice of any defense against or
claim to it on the part of any person and for value, unless it is
established that the negotiation is not in the regular course of
business or financing or involves receiving the document in
settlement or payment of a money obligation.
(b) The following rules apply to a negotiable electronic
document of title:
(1) If the document's original terms run to the order of a
named person or to bearer, the document is negotiated by
delivery of the document to another person. Endorsement by
the named person is not required to negotiate the document.
(2) If the document's original terms run to the order of a
named person and the named person has control of the
document, the effect is the same as if the document had been
negotiated.
(3) A document is duly negotiated if it is negotiated in the
manner stated in this subsection to a holder that purchases it
in good faith, without notice of any defense against or claim
to it on the part of any person, and for value, unless it is
established that the negotiation is not in the regular course of
business or financing or involves taking delivery of the
document in settlement or payment of a monetary obligation.
(5) (c) Endorsement of a nonnegotiable document of title neither
makes it negotiable nor adds to the transferee's rights.
(6) (d) The naming in a negotiable bill of lading of a person to be
notified of the arrival of the goods does not limit the negotiability of the
bill nor or constitute notice to a purchaser thereof of the bill of any
interest of such that person in the goods.
goods, sections 205 and 503 of this chapter, a holder to whom which
a negotiable document of title has been duly negotiated acquires
thereby:
(a) (1) title to the document;
(b) (2) title to the goods;
(c) (3) all rights accruing under the law of agency or estoppel,
including rights to goods delivered to the bailee after the
document was issued; and
(d) (4) the direct obligation of the issuer to hold or deliver the
goods according to the terms of the document free of any defense
or claim by him the issuer except those arising under the terms
of the document or under IC 26-1-7. this chapter. In the case of
a delivery order, the bailee's obligation accrues only upon the
bailee's acceptance of the delivery order, and the obligation
acquired by the holder is that the issuer and any endorser will
procure the acceptance of the bailee.
(2) (b) Subject to IC 26-1-7-503, section 503 of this chapter, title
and rights so acquired by due negotiation are not defeated by any
stoppage of the goods represented by the document of title or by
surrender of such the goods by the bailee and are not impaired even
though: if:
(1) the due negotiation or any prior due negotiation constituted a
breach of duty; or even though
(2) any person has been deprived of possession of the a
negotiable tangible document or control of a negotiable
electronic document by misrepresentation, fraud, accident,
mistake, duress, loss, theft, or conversion; or even though
(3) a previous sale or other transfer of the goods or document has
been made to a third person.
under IC 26-1-2.1-526 and subject to the requirement requirements
of due notification there provided in those sections. A bailee honoring
that honors the seller's or lessor's instructions is entitled to be
indemnified by the seller or the lessor against any resulting loss or
expense.
or IC 26-1-5.1. on letters of credit.
(1) person claims title to or possession of the goods, the bailee is
excused from delivering delivery until he the bailee has had a
reasonable time to ascertain the validity of the adverse claims or to
bring commence an action to compel all claimants to interplead and
may compel such for interpleader. The bailee may assert an
interpleader either in defending an action for nondelivery of the goods
or by original action, whichever is appropriate.
performance (i) for property that has been or is to be sold, leased,
licensed, assigned, or otherwise disposed of, (ii) for services
rendered or to be rendered, (iii) for a policy of insurance issued or
to be issued, (iv) for a secondary obligation incurred or to be
incurred, (v) for energy provided or to be provided, (vi) for the
use or hire of a vessel under a charter or other contract, (vii)
arising out of the use of a credit or charge card or information
contained on or for use with the card, or (viii) as winnings in a
lottery or other game of chance operated or sponsored by a state,
governmental unit of a state, or person licensed or authorized to
operate the game by a state or governmental unit of a state. The
term includes health-care-insurance receivables. The term does
not include (i) rights to payment evidenced by chattel paper or an
instrument, (ii) commercial tort claims, (iii) deposit accounts, (iv)
investment property, (v) letter-of-credit rights or letters of credit,
or (vi) rights to payment for money or funds advanced or sold,
other than rights arising out of the use of a credit or charge card
or information contained on or for use with the card.
(3) "Account debtor" means a person obligated on an account,
chattel paper, or general intangible. The term does not include
persons obligated to pay a negotiable instrument, even if the
instrument constitutes part of chattel paper.
(4) "Accounting", except as used in "accounting for", means a
record:
(A) authenticated by a secured party;
(B) indicating the aggregate unpaid secured obligations as of
a date not more than thirty-five (35) days earlier or thirty-five
(35) days later than the date of the record; and
(C) identifying the components of the obligations in
reasonable detail.
(5) "Agricultural lien" means an interest, other than a security
interest, in farm products:
(A) that secures payment or performance of an obligation for:
(i) goods or services furnished in connection with a debtor's
farming operation; or
(ii) rent on real property leased by a debtor in connection
with the debtor's farming operation;
(B) that is created by statute in favor of a person that:
(i) in the ordinary course of its business furnished goods or
services to a debtor in connection with the debtor's farming
operation; or
(ii) leased real property to a debtor in connection with the
debtor's farming operation; and
(C) whose effectiveness does not depend on the person's
possession of the personal property.
(6) "As-extracted collateral" means:
(A) oil, gas, or other minerals that are subject to a security
interest that:
(i) is created by a debtor having an interest in the minerals
before extraction; and
(ii) attaches to the minerals as extracted; or
(B) accounts arising out of the sale at the wellhead or
minehead of oil, gas, or other minerals in which the debtor had
an interest before extraction.
(7) "Authenticate" means:
(A) to sign; or
(B) to execute or otherwise adopt a symbol, or encrypt or
similarly process a record in whole or in part, with the present
intent of the authenticating person to identify the person and
adopt or accept a record.
(8) "Bank" means an organization that is engaged in the business
of banking. The term includes savings banks, savings and loan
associations, credit unions, and trust companies.
(9) "Cash proceeds" means proceeds that are money, checks,
deposit accounts, or the like.
(10) "Certificate of title" means a certificate of title with respect
to which a statute provides for the security interest in question to
be indicated on the certificate as a condition or result of the
security interest's obtaining priority over the rights of a lien
creditor with respect to the collateral.
(11) "Chattel paper" means a record or records that evidence both
a monetary obligation and a security interest in specific goods, a
security interest in specific goods and software used in the goods,
a security interest in specific goods and license of software used
in the goods, a lease of specific goods, or a lease of specific goods
and license of software used in the goods. In this subdivision,
"monetary obligation" means a monetary obligation secured by
the goods or owed under a lease of the goods and includes a
monetary obligation with respect to software used in the goods.
The term "chattel paper" does not include: (i) charters or other
contracts involving the use or hire of a vessel; or (ii) records that
evidence a right to payment arising out of the use of a credit or
charge card or information contained on or for use with the card.
If a transaction is evidenced by records that include an instrument
or series of instruments, the group of records taken together
constitutes chattel paper.
(12) "Collateral" means the property subject to a security interest
or agricultural lien. The term includes:
(A) proceeds to which a security interest attaches;
(B) accounts, chattel paper, payment intangibles, and
promissory notes that have been sold; and
(C) goods that are the subject of a consignment.
(13) "Commercial tort claim" means a claim arising in tort with
respect to which:
(A) the claimant is an organization; or
(B) the claimant is an individual and the claim:
(i) arose in the course of the claimant's business or
profession; and
(ii) does not include damages arising out of personal injury
to or the death of an individual.
(14) "Commodity account" means an account maintained by a
commodity intermediary in which a commodity contract is carried
for a commodity customer.
(15) "Commodity contract" means a commodity futures contract,
an option on a commodity futures contract, a commodity option,
or another contract if the contract or option is:
(A) traded on or subject to the rules of a board of trade that has
been designated as a contract market for such a contract
pursuant to federal commodities laws; or
(B) traded on a foreign commodity board of trade, exchange,
or market, and is carried on the books of a commodity
intermediary for a commodity customer.
(16) "Commodity customer" means a person for which a
commodity intermediary carries a commodity contract on its
books.
(17) "Commodity intermediary" means a person that:
(A) is registered as a futures commission merchant under
federal commodities law; or
(B) in the ordinary course of its business provides clearance or
settlement services for a board of trade that has been
designated as a contract market pursuant to federal
commodities law.
(18) "Communicate" means:
(A) to send a written or other tangible record;
(B) to transmit a record by any means agreed upon by the
persons sending and receiving the record; or
letter-of-credit rights, letters of credit, money, or oil, gas, or other
minerals before extraction.
(45) "Governmental unit" means a subdivision, agency,
department, county, parish, municipality, or other unit of the
government of the United States, a state, or a foreign country. The
term includes an organization having a separate corporate
existence if the organization is eligible to issue debt on which
interest is exempt from income taxation under the laws of the
United States.
(46) "Health-care-insurance receivable" means an interest in or
claim under a policy of insurance that is a right to payment of a
monetary obligation for health-care goods or services provided.
(47) "Instrument" means a negotiable instrument or any other
writing that evidences a right to the payment of a monetary
obligation, is not itself a security agreement or lease, and is of a
type that in the ordinary course of business is transferred by
delivery with any necessary endorsement or assignment. The term
does not include (i) investment property, (ii) letters of credit, or
(iii) writings that evidence a right to payment arising out of the
use of a credit or charge card or information contained on or for
use with the card.
(48) "Inventory" means goods, other than farm products, that:
(A) are leased by a person as lessor;
(B) are held by a person for sale or lease or to be furnished
under a contract of service;
(C) are furnished by a person under a contract of service; or
(D) consist of raw materials, work in process, or materials
used or consumed in a business.
(49) "Investment property" means a security, whether certificated
or uncertificated, security entitlement, securities account,
commodity contract, or commodity account.
(50) "Jurisdiction of organization", with respect to a registered
organization, means the jurisdiction under whose law the
organization is organized.
(51) "Letter-of-credit right" means a right to payment or
performance under a letter of credit, whether or not the
beneficiary has demanded or is at the time entitled to demand
payment or performance. The term does not include the right of
a beneficiary to demand payment or performance under a letter of
credit.
(52) "Lien creditor" means:
(A) a creditor that has acquired a lien on the property involved
by attachment, levy, or the like;
(B) an assignee for benefit of creditors from the time of
assignment;
(C) a trustee in bankruptcy from the date of the filing of the
petition; or
(D) a receiver in equity from the time of appointment.
(53) "Manufactured home" means a structure, transportable in one
(1) or more sections, which, in the traveling mode, is eight (8)
body feet or more in width or forty (40) body feet or more in
length, or, when erected on site, is three hundred twenty (320) or
more square feet, and which is built on a permanent chassis and
designed to be used as a dwelling with or without a permanent
foundation when connected to the required utilities, and includes
the plumbing, heating, air conditioning, and electrical systems
contained therein. The term includes any structure that meets all
of the requirements of this subdivision except the size
requirements, and with respect to which the manufacturer
voluntarily files a certification required by the United States
Secretary of Housing and Urban Development and complies with
the standards established under Title 42 of the United States
Code.
(54) "Manufactured-home transaction" means a secured
transaction:
(A) that creates a purchase-money security interest in a
manufactured home, other than a manufactured home held as
inventory; or
(B) in which a manufactured home, other than a manufactured
home held as inventory, is the primary collateral.
(55) "Mortgage" means a consensual interest in real property,
including fixtures, that secures payment or performance of an
obligation.
(56) "New debtor" means a person that becomes bound as debtor
under IC 26-1-9.1-203(d) by a security agreement previously
entered into by another person.
(57) "New value" means (i) money, (ii) money's worth in
property, services, or new credit, or (iii) release by a transferee of
an interest in property previously transferred to the transferee.
The term does not include an obligation substituted for another
obligation.
(58) "Noncash proceeds" means proceeds other than cash
proceeds.
(59) "Obligor" means a person that, with respect to an obligation
secured by a security interest in or an agricultural lien on the
collateral, (i) owes payment or other performance of the
obligation, (ii) has provided property other than the collateral to
secure payment or other performance of the obligation, or (iii) is
otherwise accountable in whole or in part for payment or other
performance of the obligation. The term does not include issuers
or nominated persons under a letter of credit.
(60) "Original debtor", except as used in IC 26-1-9.1-310(c),
means a person that, as debtor, entered into a security agreement
to which a new debtor has become bound under
IC 26-1-9.1-203(d).
(61) "Payment intangible" means a general intangible under
which the account debtor's principal obligation is a monetary
obligation.
(62) "Person related to", with respect to an individual, means:
(A) the spouse of the individual;
(B) a brother, brother-in-law, sister, or sister-in-law of the
individual;
(C) an ancestor or lineal descendant of the individual or the
individual's spouse; or
(D) any other relative, by blood or marriage, of the individual
or the individual's spouse who shares the same home with the
individual.
(63) "Person related to", with respect to an organization, means:
(A) a person directly or indirectly controlling, controlled by,
or under common control with the organization;
(B) an officer or director of, or a person performing similar
functions with respect to, the organization;
(C) an officer or director of, or a person performing similar
functions with respect to, a person described in clause (A);
(D) the spouse of an individual described in clause (A), (B), or
(C); or
(E) an individual who is related by blood or marriage to an
individual described in clause (A), (B), (C), or (D) and shares
the same home with the individual.
(64) "Proceeds", except as used in IC 26-1-9.1-609(b), means the
following property:
(A) Whatever is acquired upon the sale, lease, license,
exchange, or other disposition of collateral.
(B) Whatever is collected on, or distributed on account of,
collateral.
(C) Rights arising out of collateral.
obligation secured by collateral against the debtor, another
obligor, or property of either.
(72) "Secured party" means:
(A) a person in whose favor a security interest is created or
provided for under a security agreement, whether or not any
obligation to be secured is outstanding;
(B) a person that holds an agricultural lien;
(C) a consignor;
(D) a person to which accounts, chattel paper, payment
intangibles, or promissory notes have been sold;
(E) a trustee, indenture trustee, agent, collateral agent, or other
representative in whose favor a security interest or agricultural
lien is created or provided for; or
(F) a person that holds a security interest arising under
IC 26-1-2-401, IC 26-1-2-505, IC 26-1-2-711(3),
IC 26-1-2.1-508(5), IC 26-1-4-210, or IC 26-1-5.1-118.
(73) "Security agreement" means an agreement that creates or
provides for a security interest.
(74) "Send", in connection with a record or notification, means:
(A) to deposit in the mail, deliver for transmission, or transmit
by any other usual means of communication, with postage or
cost of transmission provided for, addressed to any address
reasonable under the circumstances; or
(B) to cause the record or notification to be received within the
time that it would have been received if properly sent under
clause (A).
(75) "Software" means a computer program and any supporting
information provided in connection with a transaction relating to
the program. The term does not include a computer program that
is included in the definition of goods.
(76) "State" means a state of the United States, the District of
Columbia, Puerto Rico, the United States Virgin Islands, or any
territory or insular possession subject to the jurisdiction of the
United States.
(77) "Supporting obligation" means a letter-of-credit right or
secondary obligation that supports the payment or performance of
an account, chattel paper, a document, a general intangible, an
instrument, or investment property.
(78) "Tangible chattel paper" means chattel paper evidenced by
a record or records consisting of information that is inscribed on
a tangible medium.
(79) "Termination statement" means an amendment of a financing
statement that:
(A) identifies, by its file number, the initial financing
statement to which it relates; and
(B) indicates either that it is a termination statement or that the
identified financing statement is no longer effective.
(80) "Transmitting utility" means a person primarily engaged in
the business of:
(A) operating a railroad, subway, street railway, or trolley bus;
(B) transmitting communications electrically,
electromagnetically, or by light;
(C) transmitting goods by pipeline or sewer; or
(D) transmitting or producing and transmitting electricity,
steam, gas, or water.
(b) "Control" as provided in IC 26-1-7-106 and the following
definitions outside IC 26-1-9.1 apply to IC 26-1-9.1:
"Applicant" IC 26-1-5.1-102.
"Beneficiary" IC 26-1-5.1-102.
"Broker" IC 26-1-8.1-102.
"Certificated security" IC 26-1-8.1-102.
"Check" IC 26-1-3.1-104.
"Clearing corporation" IC 26-1-8.1-102.
"Contract for sale" IC 26-1-2-106.
"Customer" IC 26-1-4-104.
"Entitlement holder" IC 26-1-8.1-102.
"Financial asset" IC 26-1-8.1-102.
"Holder in due course" IC 26-1-3.1-302.
"Issuer" (with respect to a letter of credit or letter-of-credit right)
IC 26-1-5.1-102.
"Issuer" (with respect to a security) IC 26-1-8.1-201.
"Issuer" (with respect to documents of title) IC 26-1-7-102.
"Lease" IC 26-1-2.1-103.
"Lease agreement" IC 26-1-2.1-103.
"Lease contract" IC 26-1-2.1-103.
"Leasehold interest" IC 26-1-2.1-103.
"Lessee" IC 26-1-2.1-103.
"Lessee in ordinary course of business" IC 26-1-2.1-103.
"Lessor" IC 26-1-2.1-103.
"Lessor's residual interest" IC 26-1-2.1-103.
"Letter of credit" IC 26-1-5.1-102.
"Merchant" IC 26-1-2-104.
"Negotiable instrument" IC 26-1-3.1-104.
"Nominated person" IC 26-1-5.1-102.
interest of a collecting bank, IC 26-1-5.1-118 on the security interest of
a letter-of-credit issuer or nominated person, IC 26-1-9.1-110 on a
security interest arising under IC 26-1-2 or IC 26-1-2.1, and
IC 26-1-9.1-206 on security interests in investment property.
(d) A person becomes bound as debtor by a security agreement
entered into by another person if, by operation of law other than
IC 26-1-9.1 or by contract:
(1) the security agreement becomes effective to create a security
interest in the person's property; or
(2) the person becomes generally obligated for the obligations of
the other person, including the obligation secured under the
security agreement, and acquires or succeeds to all or
substantially all of the assets of the other person.
(e) If a new debtor becomes bound as debtor by a security
agreement entered into by another person:
(1) the agreement satisfies subsection (b)(3) with respect to
existing or after-acquired property of the new debtor to the extent
the property is described in the agreement; and
(2) another agreement is not necessary to make a security interest
in the property enforceable.
(f) The attachment of a security interest in collateral gives the
secured party the rights to proceeds provided by IC 26-1-9-315 and is
also attachment of a security interest in a supporting obligation for the
collateral.
(g) The attachment of a security interest in a right to payment or
performance secured by a security interest or other lien on personal or
real property is also attachment of a security interest in the security
interest, mortgage, or other lien.
(h) The attachment of a security interest in a securities account is
also attachment of a security interest in the security entitlements
carried in the securities account.
(i) The attachment of a security interest in a commodity account is
also attachment of a security interest in the commodity contracts
carried in the commodity account.
party has possession of collateral:
(1) reasonable expenses, including the cost of insurance and
payment of taxes or other charges, incurred in the custody,
preservation, use, or operation of the collateral are chargeable to
the debtor and are secured by the collateral;
(2) the risk of accidental loss or damage is on the debtor to the
extent of a deficiency in any effective insurance coverage;
(3) the secured party shall keep the collateral identifiable, but
fungible collateral may be commingled; and
(4) the secured party may use or operate the collateral:
(A) for the purpose of preserving the collateral or its value;
(B) as permitted by an order of a court having competent
jurisdiction; or
(C) except in the case of consumer goods, in the manner and
to the extent agreed by the debtor.
(c) Except as otherwise provided in subsection (d), a secured party
having possession of collateral or control of collateral under
IC 26-1-7-106, IC 26-1-9.1-104, IC 26-1-9.1-105, IC 26-1-9.1-106, or
IC 26-1-9.1-107:
(1) may hold as additional security any proceeds, except money
or funds, received from the collateral;
(2) shall apply money or funds received from the collateral to
reduce the secured obligation, unless remitted to the debtor; and
(3) may create a security interest in the collateral.
(d) If the secured party is a buyer of accounts, chattel paper,
payment intangibles, or promissory notes or a consignor:
(1) subsection (a) does not apply unless the secured party is
entitled under an agreement:
(A) to charge back uncollected collateral; or
(B) otherwise to full or limited recourse against the debtor or
a secondary obligor based on the nonpayment or other default
of an account debtor or other obligor on the collateral; and
(2) subsections (b) and (c) do not apply.
deposit account is maintained an authenticated statement that
releases the bank from any further obligation to comply with
instructions originated by the secured party;
(2) a secured party having control of a deposit account under
IC 26-1-9.1-104(a)(3) shall:
(A) pay the debtor the balance on deposit in the deposit
account; or
(B) transfer the balance on deposit into a deposit account in
the debtor's name;
(3) a secured party, other than a buyer, having control of
electronic chattel paper under IC 26-1-9.1-105 shall:
(A) communicate the authoritative copy of the electronic
chattel paper to the debtor or its designated custodian;
(B) if the debtor designates a custodian that is the designated
custodian with which the authoritative copy of the electronic
chattel paper is maintained for the secured party, communicate
to the custodian an authenticated record releasing the
designated custodian from any further obligation to comply
with instructions originated by the secured party and
instructing the custodian to comply with instructions
originated by the debtor; and
(C) take appropriate action to enable the debtor or its
designated custodian to make copies of or revisions to the
authoritative copy that add or change an identified assignee of
the authoritative copy without the consent of the secured party;
(4) a secured party having control of investment property under
IC 26-1-8.1-106(d)(2) or IC 26-1-9.1-106(b) shall send to the
securities intermediary or commodity intermediary with which the
security entitlement or commodity contract is maintained an
authenticated record that releases the securities intermediary or
commodity intermediary from any further obligation to comply
with entitlement orders or directions originated by the secured
party; and
(5) a secured party having control of a letter-of-credit right under
IC 26-1-9.1-107 shall send to each person having an unfulfilled
obligation to pay or deliver proceeds of the letter of credit to the
secured party an authenticated release from any further obligation
to pay or deliver proceeds of the letter of credit to the secured
party; and
(6) a secured party having control of an electronic document
shall:
(A) give control of the electronic document to the debtor or
its designated custodian;
(B) if the debtor designates a custodian that is the
designated custodian with which the authoritative copy of
the electronic document is maintained for the secured
party, communicate to the custodian an authenticated
record releasing the designated custodian from any further
obligation to comply with instructions originated by the
secured party and instructing the custodian to comply with
instructions originated by the debtor; and
(C) take appropriate action to enable the debtor or its
designated custodian to make copies of or revisions to the
authoritative copy that add or change an identified
assignee of the authoritative copy without the consent of
the secured party.
FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 310. (a) Except as
otherwise provided in subsection (b) and IC 26-1-9.1-312(b), a
financing statement must be filed to perfect all security interests and
agricultural liens.
(b) The filing of a financing statement is not necessary to perfect a
security interest:
(1) that is perfected under IC 26-1-9.1-308(d),
IC 26-1-9.1-308(e), IC 26-1-9.1-308(f), or IC 26-1-9.1-308(g);
(2) that is perfected under IC 26-1-9.1-309 when it attaches;
(3) in property subject to a statute, regulation, or treaty described
in IC 26-1-9.1-311(a);
(4) in goods in possession of a bailee that are perfected under
IC 26-1-9.1-312(d)(1) or IC 26-1-9.1-312(d)(2);
(5) in certificated securities, documents, goods, or instruments
which is perfected without filing, control, or possession under
IC 26-1-9.1-312(e), IC 26-1-9.1-312(f), or IC 26-1-9.1-312(g);
(6) in collateral in the secured party's possession under
IC 26-1-9.1-313;
(7) in a certificated security which is perfected by delivery of the
security certificate to the secured party under IC 26-1-9.1-313;
(8) in deposit accounts, electronic chattel paper, electronic
documents, investment property, or letter-of-credit rights which
is perfected by control under IC 26-1-9.1-314;
(9) in proceeds which is perfected under IC 26-1-9.1-315; or
(10) that is perfected under IC 26-1-9.1-316.
(c) If a secured party assigns a perfected security interest or
agricultural lien, a filing under IC 26-1-9.1 is not required to continue
the perfected status of the security interest against creditors of and
transferees from the original debtor.
A secured party may perfect a security interest in certificated securities
by taking delivery of the certificated securities under IC 26-1-8.1-301.
(b) With respect to goods covered by a certificate of title issued by
this state, a secured party may perfect a security interest in the goods
by taking possession of the goods only in the circumstances described
in IC 26-1-9.1-316(e).
(c) With respect to collateral other than certificated securities and
goods covered by a document, a secured party takes possession of
collateral in the possession of a person other than the debtor, the
secured party, or a lessee of the collateral from the debtor in the
ordinary course of the debtor's business, when:
(1) the person in possession authenticates a record acknowledging
that it holds possession of the collateral for the secured party's
benefit; or
(2) the person takes possession of the collateral after having
authenticated a record acknowledging that it will hold possession
of collateral for the secured party's benefit.
(d) If perfection of a security interest depends upon possession of
the collateral by a secured party, perfection occurs not earlier than the
time the secured party takes possession and continues only while the
secured party retains possession.
(e) A security interest in a certificated security in registered form is
perfected by delivery when delivery of the certificated security occurs
under IC 26-1-8.1-301 and remains perfected by delivery until the
debtor obtains possession of the security certificate.
(f) A person in possession of collateral is not required to
acknowledge that it holds possession for a secured party's benefit.
(g) If a person acknowledges that it holds possession for the secured
party's benefit:
(1) the acknowledgment is effective under subsection (c) or
IC 26-1-8.1-301(a), even if the acknowledgment violates the
rights of a debtor; and
(2) unless the person otherwise agrees or a law other than
IC 26-1-9.1 otherwise provides, the person does not owe any duty
to the secured party and is not required to confirm the
acknowledgment to another person.
(h) A secured party having possession of collateral does not
relinquish possession by delivering the collateral to a person other than
the debtor or a lessee of the collateral from the debtor in the ordinary
course of the debtor's business if the person was instructed before the
delivery or is instructed contemporaneously with the delivery:
(1) to hold possession of the collateral for the secured party's
benefit; or
(2) to redeliver the collateral to the secured party.
(i) A secured party does not relinquish possession, even if a delivery
under subsection (h) violates the rights of a debtor. A person to which
collateral is delivered under subsection (h) does not owe any duty to
the secured party and is not required to confirm the delivery to another
person unless the person otherwise agrees or law other than IC 26-1-9.1
otherwise provides.
goods, instruments, or a security certificate takes free of a security
interest or agricultural lien if the buyer gives value and receives
delivery of the collateral without knowledge of the security interest or
agricultural lien and before it is perfected.
(c) Except as otherwise provided in subsection (e), a lessee of goods
takes free of a security interest or agricultural lien if the lessee gives
value and receives delivery of the collateral without knowledge of the
security interest or agricultural lien and before it is perfected.
(d) A licensee of a general intangible or a buyer, other than a
secured party, of accounts, electronic chattel paper, electronic
documents, general intangibles, or investment property other than a
certificated security takes free of a security interest if the licensee or
buyer gives value without knowledge of the security interest and before
it is perfected.
(e) Except as otherwise provided in IC 26-1-9.1-320 and
IC 26-1-9.1-321, if a person files a financing statement with respect to
a purchase-money security interest before or within twenty (20) days
after the debtor receives delivery of the collateral, the security interest
takes priority over the rights of a buyer, lessee, or lien creditor that
arise between the time the security interest attaches and the time of
filing.
enforce the claim, security interest, or agricultural lien by any
available judicial procedure; and
(2) if the collateral is documents, may proceed either as to the
documents or as to the goods they cover.
(b) A secured party in possession of collateral or control of
collateral under IC 26-1-7-106, IC 26-1-9.1-104, IC 26-1-9.1-105,
IC 26-1-9.1-106, or IC 26-1-9.1-107 has the rights and duties provided
in IC 26-1-9.1-207.
(c) The rights under subsections (a) and (b) are cumulative and may
be exercised simultaneously.
(d) Except as otherwise provided in subsection (g) and
IC 26-1-9.1-605, after default, a debtor and an obligor have the rights
provided in IC 26-1-9.1-601 through IC 26-1-9.1-628 and by agreement
of the parties.
(e) If a secured party has reduced its claim to judgment, the lien of
any levy that may be made upon the collateral by virtue of an execution
based upon the judgment relates back to the earliest of:
(1) the date of perfection of the security interest or agricultural
lien in the collateral;
(2) the date of filing a financing statement covering the collateral;
or
(3) any date specified in a statute under which the agricultural lien
was created.
(f) A sale pursuant to an execution is a foreclosure of the security
interest or agricultural lien by judicial procedure within the meaning of
this section. A secured party may purchase at the sale and thereafter
hold the collateral free of any other requirements of IC 26-1-9.1.
(g) Except as otherwise provided in IC 26-1-9.1-607(c),
IC 26-1-9.1-601 through IC 26-1-9.1-628 impose no duties upon a
secured party that is a consignor or is a buyer of accounts, chattel
paper, payment intangibles, or promissory notes.