SENATE BILL NO. 604

90TH GENERAL ASSEMBLY

INTRODUCED BY SENATOR WIGGINS.

Pre-filed December 1, 1999, and 1,000 copies ordered printed.

TERRY L. SPIELER, Secretary.

2320S.01I

AN ACT

To repeal sections 400.1-201, 400.2-103, 400.2-210, 400.2-326, 400.2-401, 400.2-502, 400.2-716, 400.2A-103, 400.2A-303, 400.2A-307, 400.2A-309, 400.4-210, 400.7-503, 400.9-101, 400.9-102, 400.9-107, 400.9-108, 400.9-109, 400.9-110, 400.9-111, 400.9-112, 400.9-113, 400.9-114, 400.9-201, 400.9-202, 400.9-204, 400.9-205, 400.9-206, 400.9-207, 400.9-208, 400.9-307, 400.9-308, 400.9-310, 400.9-311, 400.9-314, 400.9-315, 400.9-316, 400.9-317, 400.9-318, 400.9-401, 400.9-403, 400.9-404, 400.9-405, 400.9-406, 400.9-407, 400.9-408, 400.9-409, 400.9-501, 400.9-502, 400.9-503, 400.9-504, 400.9-505, 400.9-506, 400.9-507 and 400.9-508, RSMo 1994, and sections 400.1-105, 400.8-103, 400.8-106, 400.8-110, 400.8-301, 400.8-302, 400.8-510, 400.9-103, 400.9-104, 400.9-105, 400.9-106, 400.9-115, 400.9-116, 400.9-203, 400.9-301, 400.9-302, 400.9-303, 400.9-304, 400.9-305, 400.9-306, 400.9-309, 400.9-312, 400.9-313 and 400.9-402, RSMo Supp. 1999, relating to the uniform commercial code, and to enact in lieu thereof one hundred fifty-five new sections relating to the same subject, with an effective date.

Section A.  Sections 400.1-201, 400.2-103, 400.2-210, 400.2-326, 400.2-401, 400.2-502, 400.2-716, 400.2A-103, 400.2A-303, 400.2A-307, 400.2A-309, 400.4-210, 400.7-503, 400.9-101, 400.9-102, 400.9-107, 400.9-108, 400.9-109, 400.9-110, 400.9-111, 400.9-112, 400.9-113, 400.9-114, 400.9-201, 400.9-202, 400.9-204, 400.9-205, 400.9-206, 400.9-207, 400.9-208, 400.9-307, 400.9-308, 400.9-310, 400.9-311, 400.9-314, 400.9-315, 400.9-316, 400.9-317, 400.9-318, 400.9-401, 400.9-403, 400.9-404, 400.9-405, 400.9-406, 400.9-407, 400.9-408, 400.9-409, 400.9-501, 400.9-502, 400.9-503, 400.9-504, 400.9-505, 400.9-506, 400.9-507 and 400.9-508, RSMo 1994, and sections 400.1-105, 400.8-103, 400.8-106, 400.8-110, 400.8-301, 400.8-302, 400.8-510, 400.9-103, 400.9-104, 400.9-105, 400.9-106, 400.9-115, 400.9-116, 400.9-203, 400.9-301, 400.9-302, 400.9-303, 400.9-304, 400.9-305, 400.9-306, 400.9-309, 400.9-312, 400.9-313 and 400.9-402, RSMo Supp. 1999, are repealed and one hundred fifty-five new sections enacted in lieu thereof, to be known as sections 400.1-105, 400.1-201, 400.2-103, 400.2-210, 400.2-326, 400.2-401, 400.2-502, 400.2-716, 400.2A-103, 400.2A-303, 400.2A-307, 400.2A-309, 400.4-210, 400.5-118, 400.7-503, 400.8-103, 400.8-106, 400.8-110, 400.8-301, 400.8-302, 400.8-510, 400.9-101, 400.9-102, 400.9-103, 400.9-104, 400.9-105, 400.9-106, 400.9-107, 400.9-108, 400.9-109, 400.9-110, 400.9-201, 400.9-202, 400.9-203, 400.9-204, 400.9-205, 400.9-206, 400.9-207, 400.9-208, 400.9-209, 400.9-210, 400.9-301, 400.9-302, 400.9-303, 400.9-304, 400.9-305, 400.9-306, 400.9-307, 400.9-308, 400.9-309, 400.9-310, 400.9-311, 400.9-312, 400.9-313, 400.9-314, 400.9-315, 400.9-316, 400.9-317, 400.9-318, 400.9-319, 400.9-320, 400.9-321, 400.9-322, 400.9-323, 400.9-324, 400.9-325, 400.9-326, 400.9-327, 400.9-328, 400.9-329, 400.9-330, 400.9-331, 400.9-332, 400.9-333, 400.9-334, 400.9-335, 400.9-336, 400.9-337, 400.9-338, 400.9-339, 400.9-340, 400.9-341, 400.9-342, 400.9-401, 400.9-402, 400.9-403, 400.9-404, 400.9-405, 400.9-406, 400.9-407, 400.9-408, 400.9-409, 400.9-501, 400.9-502, 400.9-503, 400.9-504, 400.9-505, 400.9-506, 400.9-507, 400.9-508, 400.9-509, 400.9-510, 400.9-511, 400.9-512, 400.9-513, 400.9-514, 400.9-515, 400.9-516, 400.9-517, 400.9-518, 400.9-519, 400.9-520, 400.9-521, 400.9-522, 400.9-523, 400.9-524, 400.9-525, 400.9-526, 400.9-527, 400.9-601, 400.9-602, 400.9-603, 400.9-604, 400.9-605, 400.9-606, 400.9-607, 400.9-608, 400.9-609, 400.9-610, 400.9-611, 400.9-612, 400.9-613, 400.9-614, 400.9-615, 400.9-616, 400.9-617, 400.9-618, 400.9-619, 400.9-620, 400.9-621, 400.9-622, 400.9-623, 400.9-624, 400.9-625, 400.9-626, 400.9-627, 400.9-628, 400.9-701, 400.9-702, 400.9-703, 400.9-704, 400.9-705, 400.9-706, 400.9-707 and 400.9-708, to read as follows:

400.1-105.  (1)  Except as provided hereafter in this section, when a transaction bears a reasonable relation to this state and also to another state or nation the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties.  Failing such agreement this chapter applies to transactions bearing an appropriate relation to this state.

(2)  Where one of the following provisions of this chapter specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law (including the conflict of laws rules) so specified:

Rights of creditors against sold goods.  Section 400.2-402.

Applicability of the Article on Leases.  Sections 400.2A-105 and 400.2A-106.

Applicability of the Article on Bank Deposits and Collections.  Section 400.4-102.

Letter of credit.  Section 400.5-116.

Bulk transfers subject to the Article on Bulk Transfers.  Section 400.6-102.

Applicability of the Article on Investment Securities.  Section 400.8-110.

[Perfection provisions of the Article on Secured Transactions.  Section 400.9-103.]

Law governing perfection, the effect of perfection or nonperfection, and the priority of security interests.  Sections 400.9-301 through 400.9-307.

400.1-201.  Subject to additional definitions contained in the subsequent articles of this chapter which are applicable to specific articles or parts thereof, and unless the context otherwise requires, in this chapter:

(1)  "Action" in the sense of a judicial proceeding includes recoupment, counterclaim, set-off, 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 this chapter (sections 400.1-205 and 400.2-208).  Whether an agreement has legal consequences is determined by the provisions of this chapter, if applicable; otherwise by the law of contracts (section 400.1-103).  (Compare "Contract".)

(4)  "Bank" means any person engaged in the business of banking.

(5)  "Bearer" means the person in possession of an instrument, document of title, or certificated security payable to bearer or endorsed in blank.

(6)  "Bill of lading" means a document evidencing the receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods, and 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 [who] that buys goods in good faith and without knowledge that the sale [to him is in violation of the ownership rights or security interest of a third party] violates the rights of another person in the goods [buys], and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind [but does not include a pawnbroker].  [All persons who sell minerals or the like (including oil and gas) at wellhead or minehead shall be deemed to be persons] A person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices.  A person that sells oil, gas or other minerals at the wellhead or minehead is a person in the business of selling goods of that kind.  ["Buying" may be] A buyer in ordinary course of business may buy for cash [or], by exchange of other property or on secured or unsecured credit and [includes receiving] may acquire goods or documents of title under a preexisting contract for sale [but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt].  Only a buyer that takes possession of the goods or has a right to recover the goods from the seller under article 2 may be a buyer in ordinary course of business.  A person that acquires goods in a transfer in bulk or as security for, or in 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: NON-NEGOTIABLE 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 chapter 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" with respect to instruments, 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 in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers.  To be a document of title a document must purport to be issued by or addressed to a bailee and purport to cover goods in the bailee's possession which are either identified or are fungible portions of an identified mass.

(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 this chapter 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 a negotiable instrument, means the person in possession if the instrument is payable to bearer or, in the case of an instrument payable to an identified person, if the identified person is in possession.  "Holder" with respect to a document of title means the person in possession if the goods are deliverable to bearer or to the order of the person in possession.

(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 debts in the ordinary course of business or cannot pay his 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 or more nations.

(25)  A person has "notice" of a fact when

(a)  he has actual knowledge of it; or

(b)  he has received a notice or notification of it; or

(c)  from all the facts and circumstances known to him at the time in question he has reason to know that it exists.  A person "knows" or has "knowledge" of a fact when he 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 this chapter.

(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 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 as the place for receipt of such communications.

(27)  Notice, knowledge or a notice or notification received by an organization is effective for a particular transaction from the time when it is brought to the attention of the individual conducting that transaction, and in any event from the time when it would have been brought to his 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 regular duties or unless he 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 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 this chapter.

(30)  "Person" includes an individual or an organization (see section 400.1-102).

(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 re-issue, gift or any other voluntary transaction creating an interest in property.

(33)  "Purchaser" means a person who takes by purchase.

(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 retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer (section 400.2-401) is limited in effect to a reservation of a "security interest".]  The term also includes any interest of a consignor and a buyer of accounts [or], chattel paper [which], a payment intangible, or a promissory note in a transaction that is subject to article 9.  The special property interest of a buyer of goods on identification of those goods to a contract for sale under section 400.2-401 is not a "security interest", but a buyer may also acquire a "security interest" by complying with article 9.  [Unless a consignment is intended as security, reservation of title thereunder is not a "security interest", but a consignment in any event is subject to the provisions on consignment sales (section 400.2-326).] Except as otherwise provided in section 400.2-505, the right of a seller or lessor of goods under article 2 or 2A to retain or acquire possession of the goods is not a "security interest", but a seller or lessor may also acquire a "security interest" by complying with article 9.  The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer (section 400.2-401) 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 subsection (37):

(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; and

(z)  "Present value" means the amount as of a date certain of one 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 (sections 400.3-303, 400.4-208 and 400.4-209) a person gives "value" for rights if he 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 charge-back is provided for in the event of difficulties in collection; or

(b)  as security for or in total or partial satisfaction of a pre-existing claim; or

(c)  by accepting delivery pursuant to a pre-existing contract for purchase; or

(d)  generally, in return for any consideration sufficient to support a simple contract.

(45)  "Warehouse receipt" means a receipt 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.

400.2-103.  (1)  In this article unless the context otherwise requires

(a)  "Buyer" means a person who buys or contracts to buy goods.

(b)  "Good faith" in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.

(c)  "Receipt" of goods means taking physical possession of them.

(d)  "Seller" means a person who sells or contracts to sell goods.

(2)  Other definitions applying to this article or to specified parts thereof, and the sections in which they appear are:

"Acceptance".  Section 400.2-606.

"Banker's credit".  Section 400.2-325.

"Between merchants".  Section 400.2-104.

"Cancellation".  Section 400.2-106(4).

"Commercial unit".  Section 400.2-105.

"Confirmed credit".  Section 400.2-325.

"Conforming to contract".  Section 400.2-106.

"Contract for sale".  Section 400.2-106.

"Cover".  Section 400.2-712.

"Entrusting".  Section 400.2-403.

"Financing agency".  Section 400.2-104.

"Future goods".  Section 400.2-105.

"Goods".  Section 400.2-105.

"Identification".  Section 400.2-501.

"Installment contract".  Section 400.2-612.

"Letter of credit".  Section 400.2-325.

"Lot".  Section 400.2-105.

"Merchant".  Section 400.2-104.

"Overseas".  Section 400.2-323.

"Person in position of seller".  Section 400.2-707.

"Present sale".  Section 400.2-106.

"Sale".  Section 400.2-106.

"Sale on approval".  Section 400.2-326.

"Sale or return".  Section 400.2-326.

"Termination".  Section 400.2-106.

(3)  The following definitions in other articles apply to this article:

"Check".  Section 400.3-104.

"Consignee".  Section 400.7-102.

"Consignor".  Section 400.7-102.

"Consumer goods".  Section [400.9-109] 400.9-102.

"Dishonor".  Section [400.3-507] 400.3-502.

"Draft".  Section 400.3-104.

(4)  In addition article 1 contains general definitions and principles of construction and interpretation applicable throughout this article.

400.2-210.  (1)  A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract.  No delegation of performance relieves the party delegating of any duty to perform or any liability for breach.

(2)  Unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract, or impair materially his chance of obtaining return performance.  A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of his entire obligation can be assigned despite agreement otherwise.

(3)  The creation, attachment, perfection or enforcement of a security interest in the seller's interest under a contract is not a transfer that materially changes the duty of or increases materially the burden or risk imposed on the buyer or impairs materially the buyer's chance of obtaining return performance within the purview of subsection (2) unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the seller.  Even in that event, the creation, attachment, perfection and enforcement of the security interest remain effective, but (i) the seller is liable to the buyer for damages caused by the delegation to the extent that the damages could not reasonably be prevented by the buyer, and (ii) a court having jurisdiction may grant other appropriate relief, including cancellation of the contract for sale or an injunction against enforcement of the security interest or consummation of the enforcement.

(4)  Unless the circumstances indicate the contrary a prohibition of assignment of "the contract" is to be construed as barring only the delegation to the assignee of the assignor's performance.

[(4)]  (5)  An assignment of "the contract" or of "all my rights under the contract" or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances (as in an assignment for security) indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by him to perform those duties.  This promise is enforceable by either the assignor or the other party to the original contract.

[(5)]  (6)  The other party may treat any assignment which delegates performance as creating reasonable grounds for insecurity and may without prejudice to his rights against the assignor demand assurances from the assignee (section 400.2-609).

400.2-326.  (1)  Unless otherwise agreed, if delivered goods may be returned by the buyer even though they conform to the contract, the transaction is

(a)  a "sale on approval" if the goods are delivered primarily for use, and

(b)  a "sale or return" if the goods are delivered primarily for resale.

(2)  [Except as provided in subsection (3),] Goods held on approval are not subject to the claims of the buyer's creditors until acceptance; goods held on sale or return are subject to such claims while in the buyer's possession.

(3)  [Where goods are delivered to a person for sale and such person maintains a place of business at which he deals in goods of the kind involved, under a name other than the name of the person making delivery, then with respect to claims of creditors of the person conducting the business the goods are deemed to be on sale or return.  The provisions of this subsection are applicable even though an agreement purports to reserve title to the person making delivery until payment or resale or uses such words as "on consignment" or "on memorandum".  However, this subsection is not applicable if the person making delivery

(a)  complies with an applicable law providing for a consignor's interest or the like to be evidenced by a sign, or

(b)  establishes that the person conducting the business is generally known by his creditors to be substantially engaged in selling the goods of others, or

(c)  complies with the filing provisions of the article on secured transactions (article 9).

(4)]  Any "or return" term of a contract for sale is to be treated as a separate contract for sale within the statute of frauds section of this article (section 400.2-201) and as contradicting the sale aspect of the contract within the provisions of this article on parol or extrinsic evidence (section 400.2-202).

400.2-401.  Each provision of this article with regard to the rights, obligations and remedies of the seller, the buyer, purchasers or other third parties applies irrespective of title to the goods except where the provision refers to such title.  Insofar as situations are not covered by the other provisions of this article and matters concerning title become material the following rules apply:

(1)  Title to goods cannot pass under a contract for sale prior to their identification to the contract (section 400.2-501), and unless otherwise explicitly agreed the buyer acquires by their identification a special property as limited by this chapter.  Any retention or reservation by the seller of the title (property) in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest.  Subject to these provisions and to the provisions of the article on secured transactions (article 9), title and/or ownership to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties.

(2)  Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time or place; and in particular and despite any reservation of a security interest by the bill of lading

(a)  if the contract requires or authorizes the seller to send the goods to the buyer but does not require him to deliver them at destination, title passes to the buyer at the time and place of shipment; but

(b)  if the contract requires delivery at destination, title passes on tender there.

(3)  Unless otherwise explicitly agreed where delivery is to be made without moving the goods,

(a)  if the seller is to deliver a document of title, title passes at the time when and the place where he delivers such documents; or

(b)  if the goods are at the time of contracting already identified and no documents are to be delivered, title passes at the time and place of contracting.

(4)  A rejection or other refusal by the buyer to receive or retain the goods, whether or not justified, or a justified revocation of acceptance revests title to the goods in the seller.  Such revesting occurs by operation of law and is not a "sale".

400.2-502.  (1)  Subject to [subsection] subsections (2) and (3), and even though the goods have not been shipped, a buyer who has paid a part or all of the price of goods in which he has a special property under the provisions of section 400.2-501 may on making and keeping good a tender of any unpaid portion of their price recover them from the seller if:

(a)  in the case of goods bought for personal, family or household purposes, the seller repudiates or fails to deliver as required by the contract; or

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

(2)  The buyer's right to recover the goods under subdivision (a) vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.

(3)  If the identification creating his special property has been made by the buyer he acquires the right to recover the goods only if they conform to the contract for sale.

400.2-716.  (1)  Specific performance may be decreed where the goods are unique or in other proper circumstances.

(2)  The decree for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem just.

(3)  The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered.  In the case of goods bought for personal, family or household purposes, the buyer's right of replevin vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.

400.2A-103.  (1)  In this Article unless the context otherwise requires:

(a)  "Buyer in ordinary course of business" means a person who in good faith and without knowledge that the sale to him is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker.  "Buying" may be for cash or by exchange of other property or on secured or unsecured credit and includes receiving goods or documents of title under a pre-existing contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.

(b)  "Cancellation" occurs when either party puts an end to the lease contract for default by the other party.

(c)  "Commercial unit" means such a unit of goods as by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use.  A commercial unit may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit 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 option to renew or buy, do not exceed fifty thousand dollars.

(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 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 lessor (aa) informs the lessee in writing of the identity of the supplier, unless the lessee has selected the supplier and directed the lessor to purchase the goods from the supplier, (bb) informs the lessee in writing that the lessee may have rights under the contract evidencing the lessor's purchase of the goods, and (cc) advised the lessee in writing to contact the supplier for a description of any such rights, or

(D)  the lease contract discloses all warranties and other rights provided to the lessee by the lessor and supplier in connection with the lease contract and informs the lessee that there are no warranties or other rights provided to the lessee by the lessor and supplier other than those disclosed in the lease contract.

(h)  "Goods" means all things that are movable at the time of identification to the lease contract, or are fixtures (Section 400.2A-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 this Article.  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 this Article 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 him 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 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 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 this Article and the sections in which they appear are:

"Accessions".  Section 400.2A-310(1).

"Construction mortgage".  Section 400.2A-309(1)(d).

"Encumbrance".  Section 400.2A-309(1)(e).

"Fixtures".  Section 400.2A-309(1)(a).

"Fixture filing".  Section 400.2A-309(1)(b).

"Purchase money lease".  Section 400.2A-309(1)(c).

(3)  The following definitions in other articles apply to this Article:

"Account".  Section [400.9-106] 400.9-102(a)(2).

"Between merchants".  Section 400.2-104(3).

"Buyer".  Section 400.2-103(1)(a).

"Chattel paper".  Section [400.9-105(1)(b)] 400.9-102(a)(11).

"Consumer goods".  Section [400.9-109(1)] 400.9-102(a)(23).

"Document".  Section [400.9-105(1)(f)] 400.9-102(a)(30).

"Entrusting".  Section 400.2-403(3).

"General [intangibles] intangible".  Section [400.9-106] 400.9-102(a)(42).

"Good faith".  Section 400.2-103(1)(b).

"Instrument".  Section [400.9-105(1)(i)] 400.9-102(a)(47).

"Merchant".  Section 400.2-104(1).

"Mortgage".  Section [400.9-105(1)(j)] 400.9-102(a)(55).

"Pursuant to commitment".  Section [400.9-105(1)(k)] 400.9-102(a)(68).

"Receipt".  Section 400.2-103(1)(c).

"Sale".  Section 400.2-106(1).

"Sale on approval".  Section 400.2-326.

"Sale or return".  Section 400.2-326.

"Seller".  Section 400.2-103(1)(d).

(4)  In addition Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.

400.2A-303.  (1)  As used in this section, "creation of a security interest" includes the sale of a lease contract that is subject to Article 9, Secured Transactions, by reason of Section [400.9-102(1)(b)] 400.9-109(a)(3).

(2)  Except as provided in [subsections] subsection (3) and [(4)] section 400.9-407, a provision in a lease agreement which (i) prohibits the voluntary or involuntary transfer, including a transfer by sale, sublease, creation or enforcement of a security interest, or attachment, levy, or other judicial process, of an interest of a party under the lease contract or of the lessor's residual interest in the goods, or (ii) makes such a transfer an event of default, gives rise to the rights and remedies provided in subsection [(5)] (4), but a transfer that is prohibited or is an event of default under the lease agreement is otherwise effective.

(3)  [A provision in a lease agreement which (i) prohibits the creation or enforcement of a security interest in an interest of a party under the lease contract or in the lessor's residual interest in the goods, or (ii) makes such a transfer an event of default, is not enforceable unless, and then only to the extent that, there is an actual transfer by the lessee of the lessee's right of possession or use of the goods in violation of the provision or an actual delegation of a material performance of either party to the lease contract in violation of the provision.  Neither the granting nor the enforcement of a security interest in (i) the lessor's interest under the lease contract or (ii) the lessor's residual interest in the goods is a transfer that materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden or risk imposed on, the lessee within the purview of subsection (5) unless, and then only to the extent that, there is an actual delegation of a material performance of the lessor.

(4)]  A provision in a lease agreement which (i) prohibits a transfer of a right to damages for default with respect to the whole lease contract or of a right to payment arising out of the transferor's due performance of the transferor's entire obligation, or (ii) makes such a transfer an event of default, is not enforceable, and such a transfer is not a transfer that materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden or risk imposed on, the other party to the lease contract within the purview of subsection [(5)] (4).

[(5)]  (4)  Subject to [subsections] subsection (3) and [(4)] section 400.9-407:

(a)  if a transfer is made which is made an event of default under a lease agreement, the party to the lease contract not making the transfer, unless that party waives the default or otherwise agrees, has the rights and remedies described in Section 400.2A-501(2);

(b)  if paragraph (a) is not applicable and if a transfer is made that (i) is prohibited under a lease agreement or (ii) materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden or risk imposed on, the other party to the lease contract, unless the party not making the transfer agrees at any time to the transfer in the lease contract or otherwise, then, except as limited by contract, (i) the transferor is liable to the party not making the transfer for damages caused by the transfer to the extent that the damages could not reasonably be prevented by the party not making the transfer and (ii) a court having jurisdiction may grant other appropriate relief, including cancellation of the lease contract or an injunction against the transfer.

[(6)]  (5)  A transfer of "the lease" or of "all my rights under the lease", or a transfer in similar general terms, is a transfer of rights, and, unless the language or the circumstances, as in a transfer for security, indicate the contrary, the transfer is a delegation of duties by the transferor to the transferee.  Acceptance by the transferee constitutes a promise by the transferee to perform those duties.  The promise is enforceable by either the transferor or the other party to the lease contract.

[(7)]  (6)  Unless otherwise agreed by the lessor and the lessee, a delegation of performance does not relieve the transferor as against the other party of any duty to perform or of any liability for default.

400.2A-307.  (1)  Except as otherwise provided in section 400.2A-306, a creditor of a lessee takes subject to the lease contract.

(2)  Except as otherwise provided in [subsections] subsection (3) [and (4)] and in sections 400.2A-306 and 400.2A-308, a creditor of a lessor takes subject to the lease contract unless[:

(a)]  the creditor holds a lien that attached to the goods before the lease contract became enforceable[,

(b)  the creditor holds a security interest in the goods and the lessee did not give value and receive delivery of the goods without knowledge of the security interest; or

(c)  the creditor holds a security interest in the goods which was perfected (Section 400.9-303) before the lease contract became enforceable].

(3)  [A lessee in the ordinary course of business takes the leasehold interest free of a security interest in the goods created by the lessor even though the security interest is perfected (Section 400.9-303) and the lessee knows of its existence.] Except as otherwise provided in sections 400.9-317, 400.9-321 and 400.9-323, a lessee takes a leasehold interest subject to a security interest held by a creditor of the lessor.

[(4)  A lessee other than a lessee in the ordinary course of business takes the leasehold interest free of a security interest to the extent that it secures future advances made after the secured party acquires knowledge of the lease or more than forty-five days after the lease contract becomes enforceable, whichever first occurs, unless the future advances are made pursuant to a commitment entered into without knowledge of the lease and before the expiration of the forty-five-day period.]

400.2A-309.  (1)  In this section:

(a)  goods are "fixtures" when they become so related to particular real estate that an interest in them arises under real estate law;

(b)  a "fixture filing" is the filing, in the office where a record of a mortgage on the real estate would be filed or recorded, of a financing statement covering goods that are or are to become fixtures and conforming to the requirements of Section [400.9-402(5)] 400.9-502(a) and (b);

(c)  a lease is a "purchase money lease" unless the lessee has possession or use of the goods or the right to possession or use of the goods before the lease agreement is enforceable;

(d)  a mortgage is a "construction mortgage" to the extent it secures an obligation incurred for the construction of an improvement on land including the acquisition cost of the land, if the recorded writing so indicates; and

(e)  "encumbrance" includes real estate mortgages and other liens on real estate and all other rights in real estate that are not ownership interests.

(2)  Under this Article a lease may be of goods that are fixtures or may continue in goods that become fixtures, but no lease exists under this Article of ordinary building materials incorporated into an improvement on land.

(3)  This Article does not prevent creation of a lease of fixtures pursuant to real estate law.

(4)  The perfected interest of a lessor of fixtures has priority over a conflicting interest of an encumbrancer or owner of the real estate if:

(a)  the lease is a purchase money lease, the conflicting interest of the encumbrancer or owner arises before the goods become fixtures, the interest of the lessor is perfected by a fixture filing before the goods become fixtures or within ten days thereafter, and the lessee has an interest of record in the real estate or is in possession of the real estate; or

(b)  the interest of the lessor is perfected by a fixture filing before the interest of the encumbrancer or owner is of record, the lessor's interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner, and the lessee has an interest of record in the real estate or is in possession of the real estate.

(5)  The interest of a lessor of fixtures, whether or not perfected, has priority over the conflicting interest of an encumbrancer or owner of the real estate if:

(a)  the fixtures are readily removable factory or office machines, readily removable equipment that is not primarily used or leased for use in the operation of the real estate, or readily removable replacements of domestic appliances that are goods subject to a consumer lease, and before the goods become fixtures the lease contract is enforceable; or

(b)  the conflicting interest is a lien on the real estate obtained by legal or equitable proceedings after the lease contract is enforceable; or

(c)  the encumbrancer or owner has consented in writing to the lease or has disclaimed an interest in the goods as fixtures; or

(d)  the lessee has a right to remove the goods as against the encumbrancer or owner.  If the lessee's right to remove terminates, the priority of the interest of the lessor continues for a reasonable time.

(6)  Notwithstanding subsection (4)(a) but otherwise subject to subsections (4) and (5), the interest of a lessor of fixtures, including the lessor's residual interest, is subordinate to the conflicting interest of an encumbrancer of the real estate under a construction mortgage recorded before the goods become fixtures if the goods become fixtures before the completion of the construction.  To the extent given to refinance a construction mortgage, the conflicting interest of an encumbrancer of the real estate under a mortgage has this priority to the same extent as the encumbrancer of the real estate under the construction mortgage.

(7)  In cases not within the preceding subsections, priority between the interest of a lessor of fixtures, including the lessor's residual interest, and the conflicting interest of an encumbrancer or owner of the real estate who is not the lessee is determined by the priority rules governing conflicting interests in real estate.

(8)  If the interest of a lessor of fixtures, including the lessor's residual interest, has priority over all conflicting interests of all owners and encumbrancers of the real estate, the lessor or the lessee may (i) on default, expiration, termination, or cancellation of the lease agreement but subject to the lease agreement and this article, or (ii) if necessary to enforce other rights and remedies of the lessor or lessee under this Article, remove the goods from the real estate, free and clear of all conflicting interests of all owners and encumbrancers of the real estate, but the lessor or lessee must reimburse any encumbrancer or owner of the real estate who is not the lessee and who has not otherwise agreed for the cost of repair of any physical injury, but not for any diminution in value of the real estate caused by the absence of the goods removed or by any necessity of replacing them.  A person entitled to reimbursement may refuse permission to remove until the party seeking removal gives adequate security for the performance of this obligation.

(9)  Even though the lease agreement does not create a security interest, the interest of a lessor of fixtures, including the lessor's residual interest, is perfected by filing a financing statement as a fixture filing for leased goods that are or are to become fixtures in accordance with the relevant provisions of the Article on Secured Transactions (Article 9).

400.4-210.  (a)  A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either:

(1)  in case of an item deposited in an account, to the extent to which credit given for the item has been withdrawn or applied;

(2)  in case of an item for which it has given credit available for withdrawal as of right, to the extent of the credit given whether or not the credit is drawn upon or there is a right of charge-back; or

(3)  if it makes an advance on or against the item.

(b)  If credit given for several items received at one time or pursuant to a single agreement is withdrawn or applied in part, the security interest remains upon all the items, any accompanying documents or the proceeds of either.  For the purpose of this section, credits first given are first withdrawn.

(c)  Receipt by a collecting bank of a final settlement for an item is a realization on its security interest in the item, accompanying documents and proceeds.  So long as the bank does not receive final settlement for the item or give up possession of the item or accompanying documents for purposes other than collection, the security interest continues to that extent and is subject to Article 9, but:

(1)  no security agreement is necessary to make the security interest enforceable (Section [400.9-203(1)(a)] 400.9-203(b)(3)(A));

(2)  no filing is required to perfect the security interest; and

(3)  the security interest has priority over conflicting perfected security interests in the item, accompanying documents or proceeds.

400.5-118.  (a)  An issuer or nominated person has a security interest in a document presented under a letter of credit to the extent that the issuer or nominated person honors or gives value for the presentation.

(b)  So long as and to the extent that an issuer or nominated person has not been reimbursed or has not otherwise recovered the value given with respect to a security interest in a document under subsection (a), the security interest continues and is subject to article 9, but:

(1)  a security agreement is not necessary to make the security interest enforceable under section 400.9-203(b)(3);

(2)  if the document is presented in a medium other than a written or other tangible medium, the security interest is perfected; and

(3)  if the document is presented in a written or other tangible medium and is not a certificated security, chattel paper, a document of title, an instrument, or a letter of credit, the security interest is perfected and has priority over a conflicting security interest in the document so long as the debtor does not have possession of the document.

400.7-503.  (1)  A document of title confers no right in goods against a person who before issuance of the document had a legal interest or a perfected security interest in them and who neither

(a)  delivered or entrusted them or any document of title covering them to the bailor or his nominee with actual or apparent authority to ship, store or sell or with power to obtain delivery under this article (section 400.7-403) or with power of disposition under this chapter (sections 400.2-403 and [400.9-307] 400.9-320) or other statute or rule of law; nor

(b)  acquiesced in the procurement by the bailor or his nominee of any document of title.

(2)  Title to goods based upon an unaccepted delivery order is subject to the rights of anyone to whom a negotiable warehouse receipt or bill of lading covering the goods has been duly negotiated.  Such a title may be defeated under section 400.7-504 to the same extent as the rights of the issuer or a transferee from the issuer.

(3)  Title to goods based upon a bill of lading issued to a freight forwarder is subject to the rights of anyone to whom a bill issued by the freight forwarder is duly negotiated; but delivery by the carrier in accordance with part 4 of this article pursuant to its own bill of lading discharges the carrier's obligation to deliver.

400.8-103.  (a)  A share or similar equity interest issued by a corporation, business trust, joint stock company or similar entity is a security.

(b)  An "investment company security" is a security.  "Investment company security" means a share or similar equity interest issued by an entity that is registered as an investment company under the federal investment company laws, an interest in a unit investment trust that is so registered, or a face-amount certificate issued by a face-amount certificate company that is so registered.  Investment company security does not include an insurance policy or endowment policy or annuity contract issued by an insurance company.

(c)  An interest in a partnership or limited liability company is not a security unless it is dealt in or traded on securities exchanges or in securities markets, its terms expressly provide that it is a security governed by this article, or it is an investment company security.  However, an interest in a partnership or limited liability company is a financial asset if it is held in a securities account.

(d)  A writing that is a security certificate is governed by this article and not by article 3 of this chapter, even though it also meets the requirements of that article.  However, a negotiable instrument governed by article 3 of this chapter is a financial asset if it is held in a securities account.

(e)  An option or similar obligation issued by a clearing corporation to its participants is not a security, but is a financial asset.

(f)  A commodity contract, as defined in section [400.9-115] 400.9-102(a)(15), is not a security or a financial asset.

400.8-106.  (a)  A purchaser has "control" of a certificated security in bearer form if the certificated security is delivered to the purchaser.

(b)  A purchaser has "control" of a certificated security in registered form if the certificated security is delivered to the purchaser, and:

(1)  The certificate is indorsed to the purchaser or in blank by an effective indorsement; or

(2)  The certificate is registered in the name of the purchaser, upon original issue or registration of transfer by the issuer.

(c)  A purchaser has "control" of an uncertificated security if:

(1)  The uncertificated security is delivered to the purchaser; or

(2)  The issuer has agreed that it will comply with instructions originated by the purchaser without further consent by the registered owner.

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

(1)  The purchaser becomes the entitlement holder; [or]

(2)  The securities intermediary has agreed that it will comply with entitlement orders originated by the purchaser without further consent by the entitlement holder; or

(3)  Another person has control of the security entitlement on behalf of the purchaser or, having previously acquired control of the security entitlement, acknowledges that it has control on behalf of the purchaser.

(e)  If an interest in a security entitlement is granted by the entitlement holder to the entitlement holder's own securities intermediary, the securities intermediary has control.

(f)  A purchaser who has satisfied the requirements of subsection (c)[(2)] or (d)[(2)] has control even if the registered owner in the case of subsection (c)[(2)] or the entitlement holder in the case of subsection (d)[(2)] retains the right to make substitutions for the uncertificated security or security entitlement, to originate instructions or entitlement orders to the issuer or securities intermediary, or otherwise to deal with the uncertificated security or security entitlement.

(g)  An issuer or a securities intermediary may not enter into an agreement of the kind described in subsection (c)(2) or (d)(2) without the consent of the registered owner or entitlement holder, but an issuer or a securities intermediary is not required to enter into such an agreement even though the registered owner or entitlement holder so directs.  An issuer or securities intermediary that has entered into such an agreement is not required to confirm the existence of the agreement to another party unless requested to do so by the registered owner or entitlement holder.

400.8-110.  (a)  The local law of the issuer's jurisdiction, as specified in subsection (d), governs:

(1)  The validity of a security;

(2)  The rights and duties of the issuer with respect to registration of transfer;

(3)  The effectiveness of registration of transfer by the issuer;

(4)  Whether the issuer owes any duties to an adverse claimant to a security; and

(5)  Whether an adverse claim can be asserted against a person to whom transfer of a certificated or uncertificated security is registered or a person who obtains control of an uncertificated security.

(b)  The local law of the securities intermediary's jurisdiction, as specified in subsection (e), governs:

(1)  Acquisition of a security entitlement from the securities intermediary;

(2)  The rights and duties of the securities intermediary and entitlement holder arising out of a security entitlement;

(3)  Whether the securities intermediary owes any duties to an adverse claimant to a security entitlement; and

(4)  Whether an adverse claim can be asserted against a person who acquires a security entitlement from the securities intermediary or a person who purchases a security entitlement or interest therein from an entitlement holder.

(c)  The local law of the jurisdiction in which a security certificate is located at the time of delivery governs whether an adverse claim can be asserted against a person to whom the security certificate is delivered.

(d)  "Issuer's jurisdiction" means the jurisdiction under which the issuer of the security is organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified by the issuer.  An issuer organized under the law of this state may specify the law of another jurisdiction as the law governing the matters specified in subsection (a)(2) through (5).

(e)  The following rules determine a "securities intermediary's jurisdiction" for purposes of this section:

(1)  If an agreement between the securities intermediary and its entitlement holder [specifies that it is governed by the law of a particular jurisdiction] governing the securities account expressly provides that a particular jurisdiction is the securities intermediary's jurisdiction for purposes of this part, this article, or chapter 400, that jurisdiction is the securities intermediary's jurisdiction;

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

(3)  If neither paragraph (1) nor paragraph (2) applies, and an agreement between the securities intermediary and its entitlement holder [does not specify the governing law as provided in paragraph (1), but] governing the securities account expressly [specified] provides that the securities account is maintained at an office in a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction;

[(3)]  (4)  If [an agreement between the securities intermediary and its entitlement holder does not specify a jurisdiction as provided in paragraph (1) or (2)] none of the preceding paragraphs apply, the securities intermediary's jurisdiction is the jurisdiction in which [is located] the office identified in an account statement as the office serving the entitlement holder's account is located.

[(4)]  (5)  If [an agreement between the securities intermediary and its entitlement holder does not specify a jurisdiction as provided in paragraph (1) or (2) and an account statement does not identify an office serving the entitlement holder's account as provided in paragraph (3)] none of the preceding paragraphs apply, the securities intermediary's jurisdiction is the jurisdiction in which [is located] the chief executive office of the securities intermediary is located.

(f)  A securities intermediary's jurisdiction is not determined by the physical location of certificates representing financial assets, or by the jurisdiction in which is organized the issuer of the financial asset with respect to which an entitlement holder has a security entitlement, or by the location of facilities for data processing or other record keeping concerning the account.

400.8-301.  (a)  Delivery of a certificated security to a purchaser occurs when:

(1)  The purchaser acquires possession of the security certificate;

(2)  Another person, other than a securities intermediary, either acquires possession of the security certificate on behalf of the purchaser or, having previously acquired possession of the certificate, acknowledges that it holds for the purchaser; or

(3)  A securities intermediary acting on behalf of the purchaser acquires possession of the security certificate, only if the certificate is in registered form and [has been] is (i) registered in the name of the purchaser; (ii) payable to the order of the purchaser; or (iii) specially indorsed to the purchaser by an effective indorsement and has not been indorsed to the securities intermediary or in blank.

(b)  Delivery of an uncertificated security to a purchaser occurs when:

(1)  The issuer registers the purchaser as the registered owner, upon original issue or registration of transfer; or

(2)  Another person, other than a securities intermediary, either becomes the registered owner of the uncertificated security on behalf of the purchaser or, having previously become the registered owner, acknowledges that it holds for the purchaser.

400.8-302.  (a)  Except as otherwise provided in subsections (b) and (c), [upon delivery] a purchaser of a certificated or uncertificated security [to a purchaser, the purchaser] acquires all rights in the security that the transferor had or had power to transfer.

(b)  A purchaser of a limited interest acquires rights only to the extent of the interest purchased.

(c)  A purchaser of a certificated security who as a previous holder had notice of an adverse claim does not improve its position by taking from a protected purchaser.

400.8-510.  (a)  In a case not covered by the priority rules in article 9 or the rules stated in subsection (c), an action based on an adverse claim to a financial asset or security entitlement, whether framed in conversion, replevin, constructive trust, equitable lien or other theory, may not be asserted against a person who purchases a security entitlement, or an interest therein, from an entitlement holder if the purchaser gives value, does not have notice of the adverse claim, and obtains control.

(b)  If an adverse claim could not have been asserted against an entitlement holder under section 400.8-502, the adverse claim cannot be asserted against a person who purchases a security entitlement, or an interest therein, from the entitlement holder.

(c)  In a case not covered by the priority rules in article 9 of this chapter, a purchaser for value of a security entitlement, or an interest therein, who obtains control has priority over a purchaser of a security entitlement, or an interest therein, who does not obtain control.  Except as otherwise provided in subsection (d), purchasers who have control rank [equally, except that a] according to priority in time of:

(1)  the purchaser's becoming the person for whom the securities account, in which the security entitlement is carried, is maintained, if the purchaser obtained control under section 400.8-106(d)(1);

(2)  the securities intermediary's agreement to comply with the purchaser's entitlement orders with respect to security entitlements carried or to be carried in the securities account in which the security entitlement is carried, if the purchaser obtained control under section 400.8-106(d)(2); or

(3)  if the purchaser obtained control through another person under section 400.8-106(d)(3), the time on which priority would be based under this subsection if the other person were the secured party.

(d)  A securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed by the securities intermediary.

400.9-101.  This article may be cited as "Uniform Commercial Code-Secured Transactions".

400.9-102.  (a)  In this article:

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

(2)  "Account", except as used in "account for", means a right to payment of a monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge card or information contained on or for use with the card, or (viii) as winnings in a lottery or other game of chance operated or sponsored by a state, governmental unit of a state, or 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 35 days earlier or 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)  Which secures payment or performance of an obligation for:

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

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

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

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

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

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

(6)  "As-extracted collateral" means:

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

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

(ii)  Attaches to the minerals as extracted; or

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

(7)  "Authenticate" means:

(A)  To sign; or

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

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

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

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

(11)  "Chattel paper" means a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, or a lease of specific goods.  The term does not include charters or other contracts involving the use or hire of a vessel.  If a transaction is evidenced both by a security agreement or lease and by an instrument or series of instruments, the group of records taken together constitutes chattel paper;

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

(A)  Proceeds to which a security interest attaches;

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

(C)  Goods that are the subject of a consignment;

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

(A)  The claimant is an organization; or

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

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

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

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

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

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

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

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

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

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

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

(18)  "Communicate" means:

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

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

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

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

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

(A)  The merchant:

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

(ii)  Is not an auctioneer; and

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

(B)  With respect to each delivery, the aggregate value of the goods is one thousand dollars or more at the time of delivery;

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

(D)  The transaction does not create a security interest that secures an obligation;

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

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

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

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

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

(B)  A security interest in consumer goods secures the obligation;

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

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

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

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

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

(28)  "Debtor" means:

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

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

(C)  A consignee;

(29)  "Deposit account" means a demand, time, savings, passbook, or similar account maintained with a bank.  The term does not include investment property or accounts evidenced by an instrument;

(30)  "Document" means a document of title or a receipt of the type described in section 400.7-201(2);

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

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

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

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

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

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

(ii)  Aquatic goods produced in aquacultural operations;

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

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

(D)  Products of crops or livestock in their unmanufactured states;

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

(36)  "File number" means the number assigned to an initial financing statement pursuant to section 400.9-519(a);

(37)  "Filing office" means an office designated in section 400.9-501 as the place to file a financing statement;

(38)  "Filing-office rule" means a rule adopted pursuant to section 400.9-526;

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

(40)  "Fixture filing" means the filing of a financing statement covering goods that are or are to become fixtures and satisfying section 400.9-502(a) and (b).  The term includes the filing of a financing statement covering goods of a transmitting utility which are or are to become fixtures;

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

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

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

(44)  "Goods" means all things that are movable when a security interest attaches.  The term includes (i) fixtures, (ii) standing timber that is to be cut and removed under a conveyance or contract for sale, (iii) the unborn young of animals, (iv) crops grown, growing, or to be grown, even if the crops are produced on trees, vines, or bushes, and (v) manufactured homes.  The term also includes a computer program embedded in goods and any supporting information provided in connection with a transaction relating to the program if (i) the program is associated with the goods in such a manner that it customarily is considered part of the goods, or (ii) by becoming the owner of the goods, a person acquires a right to use the program in connection with the goods.  The term does not include a computer program embedded in goods that consist solely of the medium in which the program is embedded.  The term also does not include accounts, chattel paper, commercial tort claims, deposit accounts, documents, general intangibles, instruments, investment property, letter-of-credit rights, letters of credit, money, or oil, gas, or other minerals before extraction;

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

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

(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 ordinary course of business is transferred by delivery with any necessary indorsement 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, which:

(A)  Are leased by a person as lessor;

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

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

(D)  Consist of raw materials, work in process, or materials used or consumed in a business;

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

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

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

(52)  "Lien creditor" means:

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

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

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

(D)  A receiver in equity from the time of appointment;

(53)  "Manufactured home" means a structure, transportable in one or more sections, which, in the traveling mode, is eight body feet or more in width or forty body feet or more in length, or, when erected on site, is three hundred twenty 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 paragraph except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the United States Secretary of Housing and Urban Development and complies with the standards established under Title 42 of the United States Code;

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

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

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

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

(56)  "New debtor" means a person that becomes bound as debtor under section 400.9-203(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" means a person that, as debtor, entered into a security agreement to which a new debtor has become bound under section 400.9-203(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 subparagraph (A);

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

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

(64)  "Proceeds" means the following property:

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

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

(C)  Rights arising out of collateral;

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

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

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

(66)  "Proposal" means a record authenticated by a secured party which includes the terms on which the secured party is willing to accept collateral in full or partial satisfaction of the obligation it secures pursuant to sections 400.9-620, 400.9-621 and 400.9-622;

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

(A)  Debt securities are issued;

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

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

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

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

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

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

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

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

(72)  "Secured party" means:

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

(B)  A person that holds an agricultural lien;

(C)  A consignor;

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

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

(F)  A person that holds a security interest arising under sections 400.2-401, 400.2-505, 400.2-711(3), 400.2A-508(5), 400.4-210 or 400.5-118;

(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 subparagraph (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 which:

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

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

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

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

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

(C)  Transmitting goods by pipeline or sewer; or

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

(b)  The following definitions in other articles apply to this article:

"Applicant" Section 400.5-102.

"Beneficiary" Section 400.5-102.

"Broker" Section 400.8-102.

"Certificated security" Section 400.8-102.

"Check" Section 400.3-104.

"Clearing corporation" Section 400.8-102.

"Contract for sale" Section 400.2-106.

"Customer" Section 400.4-104.

"Entitlement holder" Section 400.8-102.

"Financial asset" Section 400.8-102.

"Holder in due course" Section 400.3-302.

"Issuer" (with respect to a

letter of credit or letter-of-credit right) Section 400.5-102.

"Issuer" (with respect to a security) Section 400.8-201.

"Lease" Section 400.2A-103.

"Lease agreement" Section 400.2A-103.

"Lease contract" Section 400.2A-103.

"Leasehold interest" Section 400.2A-103.

"Lessee" Section 400.2A-103.

"Lessee in ordinary course

of business" Section 400.2A-103.

"Lessor" Section 400.2A-103.

"Lessor's residual interest" Section 400.2A-103.

"Letter of credit" Section 400.5-102.

"Merchant" Section 400.2-104.

"Negotiable instrument" Section 400.3-104.

"Nominated person" Section 400.5-102.

"Note" Section 400.3-104.

"Proceeds of a letter of credit" Section 400.5-114.

"Prove" Section 400.3-103.

"Sale" Section 400.2-106.

"Securities account" Section 400.8-501.

"Securities intermediary" Section 400.8-102.

"Security" Section 400.8-102.

"Security certificate" Section 400.8-102.

"Security entitlement" Section 400.8-102.

"Uncertificated security" Section 400.8-102.

(c)  This section contains general definitions and principles of construction and interpretation applicable throughout sections 400.9-103 to 400.9-708.

400.9-103.  (a)  In this section:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(A)  To obligations that are not secured; and

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

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

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

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

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

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

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

400.9-104.  (a)  A secured party has control of a deposit account if:

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

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

(3)  The secured party becomes the bank's customer with respect to the deposit account.

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

400.9-105.  A secured party has control of electronic chattel paper if the record or records comprising the chattel paper are created, stored, and assigned in such a manner that:

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

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

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

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

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

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

400.9-106.  (a)  A person has control of a certificated security, uncertificated security, or security entitlement as provided in section 400.8-106.

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

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

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

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

400.9-107.  A secured party has control of a letter-of-credit right to the extent of any right to payment or performance by the issuer or any nominated person if the issuer or nominated person has consented to an assignment of proceeds of the letter of credit under section 400.5-114(c) or otherwise applicable law or practice.

400.9-108.  (a)  Except as otherwise provided in subsections (c), (d), and (e), a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described.

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

(1)  Specific listing;

(2)  Category;

(3)  Except as otherwise provided in subsection (e), a type of collateral defined in chapter 400;

(4)  Quantity;

(5)  Computational or allocational formula or procedure; or

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

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

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

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

(2)  The underlying financial asset or commodity contract.

(e)  A description only by type of collateral defined in chapter 400 is an insufficient description of:

(1)  A commercial tort claim; or

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

400.9-109.  (a)  Except as otherwise provided in subsections (c) and (d), this article applies to:

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

(2)  An agricultural lien;

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

(4)  A consignment;

(5)  A security interest arising under section 400.2-401, 400.2-505, 400.2-711(3) or 400.2A-508(5), as provided in section 400.9-110; and

(6)  A security interest arising under section 400.4-210 or 400.5-118.

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

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

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

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

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

(4)  The rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under section 400.5-114.

(d)  This article does not apply to:

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

(2)  A lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but section 400.9-333 applies with respect to priority of the lien;

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

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

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

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

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

(8)  A transfer of an interest in or an assignment of a claim under a policy of insurance, other than an assignment by or to a health-care provider of a health-care-insurance receivable and any subsequent assignment of the right to payment, but sections 400.9-315 and 400.9-322 apply with respect to proceeds and priorities in proceeds;

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

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

(A)  Section 400.9-340 applies with respect to the effectiveness of rights of recoupment or set-off against deposit accounts; and

(B)  Section 400.9-404 applies with respect to defenses or claims of an account debtor;

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

(A)  Liens on real property in sections 400.9-203 and 400.9-308;

(B)  Fixtures in section 400.9-334;

(C)  Fixture filings in sections 400.9-501, 400.9-502, 400.9-512, 400.9-516 and 400.9-519; and

(D)  Security agreements covering personal and real property in section 400.9-604;

(12)  An assignment of a claim arising in tort, other than a commercial tort claim, but sections 400.9-315 and 400.9-322 apply with respect to proceeds and priorities in proceeds; or

(13)  An assignment of a deposit account in a consumer transaction, but sections 400.9-315 and 400.9-322 apply with respect to proceeds and priorities in proceeds.

400.9-110.  A security interest arising under sections 400.2-401, 400.2-505, 400.2-711(3) or 400.2A-508(5) is subject to this article.  However, until the debtor obtains possession of the goods:

(1)  The security interest is enforceable, even if section 400.9-203(b)(3) has not been satisfied;

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

(3)  The rights of the secured party after default by the debtor are governed by article 2 or 2A; and

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

PART 2

EFFECTIVENESS OF SECURITY AGREEMENT;

ATTACHMENT OF SECURITY INTEREST;

RIGHTS OF PARTIES TO SECURITY AGREEMENT

400.9-201.  (a)  Except as otherwise provided in chapter 400, a security agreement is effective according to its terms between the parties, against purchasers of the collateral, and against creditors.

(b)  A transaction subject to this article is subject to any applicable rule of law which establishes a different rule for consumers.

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

(d)  This article does not:

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

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

400.9-202.  Except as otherwise provided with respect to consignments or sales of accounts, chattel paper, payment intangibles, or promissory notes, the provisions of this article with regard to rights and obligations apply whether title to collateral is in the secured party or the debtor.

400.9-203.  (a)  A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment.

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

(1)  Value has been given;

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

(3)  One of the following conditions is met:

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

(B)  The collateral is not a certificated security and is in the possession of the secured party under section 400.9-313 pursuant to the debtor's security agreement;

(C)  The collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under section 400.8-301 pursuant to the debtor's security agreement; or

(D)  The collateral is deposit accounts, electronic chattel paper, investment property, or letter-of-credit rights, and the secured party has control under section 400.9-104, 400.9-105, 400.9-106 or 400.9-107 pursuant to the debtor's security agreement.

(c)  Subsection (b) is subject to section 400.4-210 on the security interest of a collecting bank, section 400.5-118 on the security interest of a letter-of-credit issuer or nominated person, section 400.9-110 on a security interest arising under article 2 or 2A, and section 400.9-206 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 this article or by contract:

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

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

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

(1)  The agreement satisfies 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 section 400.9-315 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.

400.9-204.  (a)  Except as otherwise provided in subsection (b), a security agreement may create or provide for a security interest in after-acquired collateral.

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

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

(2)  A commercial tort claim.

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

400.9-205.  (a)  A security interest is not invalid or fraudulent against creditors solely because:

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

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

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

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

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

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

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

400.9-206.  (a)  A security interest in favor of a securities intermediary attaches to a person's security entitlement if:

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

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

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

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

(1)  The security or other financial asset:

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

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

(2)  The agreement calls for delivery against payment.

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

400.9-207.  (a)  Except as otherwise provided in subsection (d), a secured party shall use reasonable care in the custody and preservation of collateral in the secured party's possession.  In the case of chattel paper or an instrument, reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed.

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

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

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

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

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

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

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

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

(c)  Except as otherwise provided in subsection (d), a secured party having possession of collateral or control of collateral under section 400.9-104, 400.9-105, 400.9-106 or 400.9-107:

(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.

400.9-208.  (a)  This section applies to cases in which there is no outstanding secured obligation and the secured party is not committed to make advances, incur obligations, or otherwise give value.

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

(1)  A secured party having control of a deposit account under section 400.9-104(a)(2) shall send to the bank with which the deposit account is maintained an authenticated statement that releases the bank from any further obligation to comply with instructions originated by the secured party;

(2)  A secured party having control of a deposit account under section 400.9-104(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 section 400.9-105 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 which add or change an identified assignee of the authoritative copy without the consent of the secured party;

(4)  A secured party having control of investment property under section 400.8-106(d)(2) or 400.9-106(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 section 400.9-107 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.

400.9-209.  (a)  Except as otherwise provided in subsection (c), this section applies if:

(1)  There is no outstanding secured obligation; and

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

(b)  Within ten days after receiving an authenticated demand by the debtor, a secured party shall send to an account debtor that has received notification of an assignment to the secured party as assignee under section 400.9-406(a) an authenticated record that releases the account debtor from any further obligation to the secured party.

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

400.9-210.  (a)  In this section:

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

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

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

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

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

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

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

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

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

(1)  Disclaiming any interest in the collateral; and

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

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

(1)  Disclaiming any interest in the obligations; and

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

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

PART 3

PERFECTION AND PRIORITY

400.9-301.  Except as otherwise provided in sections 400.9-303 through 400.9-306, the following rules determine the law governing perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral:

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

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

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

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

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

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

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

400.9-302.  While farm products are located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of an agricultural lien on the farm products.

400.9-303.  (a)  This section applies to goods covered by a certificate of title, even if there is no other relationship between the jurisdiction under whose certificate of title the goods are covered and the goods or the debtor.

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

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

400.9-304.  (a)  The local law of a bank's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a deposit account maintained with that bank.

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

(1)  If an agreement between the bank and the debtor governing the deposit account expressly provides that a particular jurisdiction is the bank's jurisdiction for purposes of this part, this article, or chapter 400, that jurisdiction is the bank's jurisdiction;

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

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

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

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

400.9-305.  (a)  Except as otherwise provided in subsection (c), the following rules apply:

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

(2)  The local law of the issuer's jurisdiction as specified in section 400.8-110(d) governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in an uncertificated security;

(3)  The local law of the securities intermediary's jurisdiction as specified in section 400.8-110(e) governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a security entitlement or securities account;

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

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

(1)  If an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that a particular jurisdiction is the commodity intermediary's jurisdiction for purposes of this part, this article, or chapter 400, that jurisdiction is the commodity intermediary's jurisdiction;

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

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

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

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

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

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

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

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

400.9-306.  (a)  Subject to subsection (c), the local law of the issuer's jurisdiction or a nominated person's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a letter-of-credit right if the issuer's jurisdiction or nominated person's jurisdiction is a state.

(b)  For purposes of this part, an issuer's jurisdiction or nominated person's jurisdiction is the jurisdiction whose law governs the liability of the issuer or nominated person with respect to the letter-of-credit right as provided in section 400.5-116.

(c)  This section does not apply to a security interest that is perfected only under section 400.9-308(d).

400.9-307.  (a)  In this section, "place of business" means a place where a debtor conducts its affairs.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

400.9-308.  (a)  Except as otherwise provided in this section and section 400.9-309, a security interest is perfected if it has attached and all of the applicable requirements for perfection in sections 400.9-310 through 400.9-316 have been satisfied.  A security interest is perfected when it attaches if the applicable requirements are satisfied before the security interest attaches.

(b)  An agricultural lien is perfected if it has become effective and all of the applicable requirements for perfection in section 400.9-310 have been satisfied.  An agricultural lien is perfected when it becomes effective if the applicable requirements are satisfied before the agricultural lien becomes effective.

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

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

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

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

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

400.9-309.  The following security interests are perfected when they attach: (1)  A purchase-money security interest in consumer goods, except as otherwise provided in section 400.9-311(b) with respect to consumer goods that are subject to a statute or treaty described in section 400.9-311(a);

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

(3)  A sale of a payment intangible;

(4)  A sale of a promissory note;

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

(6)  A security interest arising under section 400.2-401, 400.2-505, 400.2-711(3) or 400.2A-508(5), until the debtor obtains possession of the collateral;

(7)  A security interest of a collecting bank arising under section 400.4-210;

(8)  A security interest of an issuer or nominated person arising under section 400.5-118;

(9)  A security interest arising in the delivery of a financial asset under section 400.9-206(c);

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

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

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

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

400.9-310.  (a)  Except as otherwise provided in subsection (b) and section 400.9-312(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 section 400.9-308(d), (e), (f), or (g);

(2)  That is perfected under section 400.9-309 when it attaches;

(3)  In property subject to a statute, regulation, or treaty described in section 400.9-311(a);

(4)  In goods in possession of a bailee which is perfected under section 400.9-312(d)(1) or (2);

(5)  In certificated securities, documents, goods, or instruments which is perfected without filing or possession under section 400.9-312(e), (f), or (g);

(6)  In collateral in the secured party's possession under section 400.9-313;

(7)  In a certificated security which is perfected by delivery of the security certificate to the secured party under section 400.9-313;

(8)  In deposit accounts, electronic chattel paper, investment property, or letter-of-credit rights which is perfected by control under section 400.9-314;

(9)  In proceeds which is perfected under section 400.9-315; or

(10)  That is perfected under section 400.9-316.

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

400.9-311.  (a)  Except as otherwise provided in subsection (d), the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to:

(1)  A statute, regulation, or treaty of the United States whose requirements for a security interest's obtaining priority over the rights of a lien creditor with respect to the property preempt section 400.9-310(a);

(2)  Sections 301.600 to 301.611 and section 400.2A-304; or

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

(b)  Compliance with the requirements of a statute, regulation, or treaty described in subsection (a) for obtaining priority over the rights of a lien creditor is equivalent to the filing of a financing statement under this article.  Except as otherwise provided in subsection (d) and sections 400.9-313 and 400.9-316(d) and (e) for goods covered by a certificate of title, a security interest in property subject to a statute, regulation, or treaty described in subsection (a) may be perfected only by compliance with those requirements, and a security interest so perfected remains perfected notwithstanding a change in the use or transfer of possession of the collateral.

(c)  Except as otherwise provided in subsection (d) and section 400.9-316(d) and (e), duration and renewal of perfection of a security interest perfected by compliance with the requirements prescribed by a statute, regulation, or treaty described in subsection (a) are governed by the statute, regulation, or treaty.  In other respects, the security interest is subject to this article.

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

400.9-312.  (a)  A security interest in chattel paper, negotiable documents, instruments, or investment property may be perfected by filing.

(b)  Except as otherwise provided in section 400.9-315(c)and (d) for proceeds:

(1)  A security interest in a deposit account may be perfected only by control under section 400.9-314;

(2)  And except as otherwise provided in section 400.9-308(d), a security interest in a letter-of-credit right may be perfected only by control under section 400.9-314; and

(3)  A security interest in money may be perfected only by the secured party's taking possession under section 400.9-313.

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

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

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

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

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

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

(3)  Filing as to the goods.

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

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

(1)  Ultimate sale or exchange; or

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

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

(1)  Ultimate sale or exchange; or

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

(h)  After the twenty-day period specified in subsection (e), (f), or (g) expires, perfection depends upon compliance with this article.

400.9-313.  (a)  Except as otherwise provided in subsection (b), a secured party may perfect a security interest in negotiable documents, goods, instruments, money, or tangible chattel paper by taking possession of the collateral.  A secured party may perfect a security interest in certificated securities by taking delivery of the certificated securities under section 400.8-301.

(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 section 400.9-316(d).

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

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

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

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

(e)  A security interest in a certificated security in registered form is perfected by delivery when delivery of the certificated security occurs under section 400.8-301 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 section 400.8-301(a), even if the acknowledgment violates the rights of a debtor; and

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

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

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

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

(i)  A secured party does not relinquish possession, even if a delivery under subsection (h) 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 this article otherwise provides.

400.9-314.  (a)  A security interest in investment property, deposit accounts, letter-of-credit rights, or electronic chattel paper may be perfected by control of the collateral under section 400.9-104, 400.9-105, 400.9-106 or 400.9-107.

(b)  A security interest in deposit accounts, electronic chattel paper, or letter-of-credit rights is perfected by control under section 400.9-104, 400.9-105 or 400.9-107 when the secured party obtains control and remains perfected by control only while the secured party retains control.

(c)  A security interest in investment property is perfected by control under section 400.9-106 from the time the secured party obtains control and remains perfected by control until:

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

(2)  One of the following occurs:

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

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

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

400.9-315.  (a)  Except as otherwise provided in this article and in section 400.2-403(2):

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

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

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

(1)  If the proceeds are goods, to the extent provided by section 400.9-336; and

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

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

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

(1)  The following conditions are satisfied:

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

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

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

(2)  The proceeds are identifiable cash proceeds; or

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

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

(1)  When the effectiveness of the filed financing statement lapses under section 400.9-515 or is terminated under section 400.9-513; or

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

400.9-316.  (a)  A security interest perfected pursuant to the law of the jurisdiction designated in section 400.9-301(1) or 400.9-305(c) remains perfected until the earliest of:

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

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

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

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

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

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

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

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

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

(e)  A security interest described in subsection (d) becomes unperfected as against a purchaser of the goods for value and is deemed never to have been perfected as against a purchaser of the goods for value if the applicable requirements for perfection under section 400.9-311(b) or 400.9-313 are not satisfied before the earlier of:

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

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

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

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

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

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

400.9-317.  (a)  An unperfected security interest or agricultural lien is subordinate to the rights of:

(1)  A person entitled to priority under section 400.9-322; and

(2)  A person that becomes a lien creditor before the earlier of the time the security interest or agricultural lien is perfected or a financing statement covering the collateral is filed.

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

(c)  Except as otherwise provided in subsection (e), 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, general intangibles, or investment property other than a certificated security takes free of a security interest if the licensee or buyer gives value without knowledge of the security interest and before it is perfected.

(e)  Except as otherwise provided in sections 400.9-320 and 400.9-321, if a person files a financing statement with respect to a purchase-money security interest before or within twenty days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee, or lien creditor which arise between the time the security interest attaches and the time of filing.

400.9-318.  (a)  A debtor that has sold an account, chattel paper, payment intangible, or promissory note does not retain a legal or equitable interest in the collateral sold.

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

400.9-319.  (a)  Except as otherwise provided in subsection (b), for purposes of determining the rights of creditors of, and purchasers for value of goods from, a consignee, while the goods are in the possession of the consignee, the consignee is deemed to have rights and title to the goods identical to those the consignor had or had power to transfer.

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

400.9-320.  (a)  Except as otherwise provided in subsection (e), a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.

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

(1)  Without knowledge of the security interest;

(2)  For value;

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

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

(c)  To the extent that it affects the priority of a security interest over a buyer of goods under subsection (b), the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by section 400.9-316(a) and (b).

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

(e)  Subsections (a) and (b) do not affect a security interest in goods in the possession of the secured party under section 400.9-313.

400.9-321.  (a)  In this section, "licensee in ordinary course of business" means a person that becomes a licensee of a general intangible in good faith, without knowledge that the license violates the rights of another person in the general intangible, and in the ordinary course from a person in the business of licensing general intangibles of that kind.  A person becomes a licensee in the ordinary course if the license to the person comports with the usual or customary practices in the kind of business in which the licensor is engaged or with the licensor's own usual or customary practices.

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

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

400.9-322.  (a)  Except as otherwise provided in this section, priority among conflicting security interests and agricultural liens in the same collateral is determined according to the following rules:

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

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

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

(b)  For the purposes of subsection (a)(1):

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

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

(c)  Except as otherwise provided in subsection (f), a security interest in collateral which qualifies for priority over a conflicting security interest under section 400.9-327, 400.9-328, 400.9-329, 400.9-330 or 400.9-331 also has priority over a conflicting security interest in:

(1)  Any supporting obligation for the collateral; and

(2)  Proceeds of the collateral if:

(A)  The security interest in proceeds is perfected;

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

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

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

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

(f)  Subsections (a) through (e) are subject to:

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

(2)  Section 400.4-210 with respect to a security interest of a collecting bank;

(3)  Section 400.5-118 with respect to a security interest of an issuer or nominated person; and

(4)  Section 400.9-110 with respect to a security interest arising under article 2 or 2A.

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

400.9-323.  (a)  Except as otherwise provided in subsection (c), for purposes of determining the priority of a perfected security interest under section 400.9-322(a)(1), perfection of the security interest dates from the time an advance is made to the extent that the security interest secures an advance that:

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

(A)  Under section 400.9-309 when it attaches; or

(B)  Temporarily under section 400.9-312(e), (f), or (g); and

(2)  Is not made pursuant to a commitment entered into before or while the security interest is perfected by a method other than under section 400.9-309 or 400.9-312(e), (f), or (g).

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

(1)  Without knowledge of the lien; or

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

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

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

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

(2)  Forty-five days after the purchase.

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

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

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

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

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

400.9-324.  (a)  Except as otherwise provided in subsection (g), a perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, and, except as otherwise provided in section 400.9-327, a perfected security interest in its identifiable proceeds also has priority, if the purchase-money security interest is perfected when the debtor receives possession of the collateral or within twenty days thereafter.

(b)  Subject to subsection (c) and except as otherwise provided in subsection (g), a perfected purchase-money security interest in inventory has priority over a conflicting security interest in the same inventory, has priority over a conflicting security interest in chattel paper or an instrument constituting proceeds of the inventory and in proceeds of the chattel paper, if so provided in section 400.9-330, and, except as otherwise provided in section 400.9-327, also has priority in identifiable cash proceeds of the inventory to the extent the identifiable cash proceeds are received on or before the delivery of the inventory to a buyer, if:

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

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

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

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

(c)  Subsections (b)(2) through (4) apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory:

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

(2)  If the purchase-money security interest is temporarily perfected without filing or possession under section 400.9-312(f), before the beginning of the twenty-day period thereunder.

(d)  Subject to subsection (e) and except as otherwise provided in subsection (g), a perfected purchase-money security interest in livestock that are farm products has priority over a conflicting security interest in the same livestock, and, except as otherwise provided in section 400.9-327, a perfected security interest in their identifiable proceeds and identifiable products in their unmanufactured states also has priority, if:

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

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

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

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

(e)  Subsections (d)(2) through (4) apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of livestock:

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

(2)  If the purchase-money security interest is temporarily perfected without filing or possession under section 400.9-312(f), before the beginning of the twenty-day period thereunder.

(f)  Except as otherwise provided in subsection (g), a perfected purchase-money security interest in software has priority over a conflicting security interest in the same collateral, and, except as otherwise provided in section 400.9-327, a perfected security interest in its identifiable proceeds also has priority, to the extent that the purchase-money security interest in the goods in which the software was acquired for use has priority in the goods and proceeds of the goods under this section.

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

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

(2)  In all other cases, section 400.9-322(a) applies to the qualifying security interests.

400.9-325.  (a)  Except as otherwise provided in subsection (b), a security interest created by a debtor is subordinate to a security interest in the same collateral created by another person if:

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

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

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

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

(1)  Otherwise would have priority solely under section 400.9-322(a) or 400.9-324; or

(2)  Arose solely under section 400.2-711(3) or 400.2A-508(5).

400.9-326.  (a)  Subject to subsection (b), a security interest created by a new debtor which is perfected by a filed financing statement that is effective solely under section 400.9-508 in collateral in which a new debtor has or acquires rights is subordinate to a security interest in the same collateral which is perfected other than by a filed financing statement that is effective solely under section 400.9-508.

(b)  The other provisions of this part determine the priority among conflicting security interests in the same collateral perfected by filed financing statements that are effective solely under section 400.9-508.  However, if the security agreements to which a new debtor became bound as debtor were not entered into by the same original debtor, the conflicting security interests rank according to priority in time of the new debtor's having become bound.

400.9-327.  The following rules govern priority among conflicting security interests in the same deposit account:

(1)  A security interest held by a secured party having control of the deposit account under section 400.9-104 has priority over a conflicting security interest held by a secured party that does not have control.

(2)  Except as otherwise provided in paragraphs (3) and (4), security interests perfected by control under section 400.9-314 rank according to priority in time of obtaining control.

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

(4)  A security interest perfected by control under section 400.9-104(a)(3) has priority over a security interest held by the bank with which the deposit account is maintained.

400.9-328.  The following rules govern priority among conflicting security interests in the same investment property:

(1)  A security interest held by a secured party having control of investment property under section 400.9-106 has priority over a security interest held by a secured party that does not have control of the investment property.

(2)  Except as otherwise provided in paragraphs (3) and (4), conflicting security interests held by secured parties each of which has control under section 400.9-106 rank according to priority in time of:

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

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

(i)  If the secured party obtained control under section 400.8-106(d)(1), the secured party's becoming the person for which the securities account is maintained;

(ii)  If the secured party obtained control under section 400.8-106(d)(2), the securities intermediary's agreement to comply with the secured party's entitlement orders with respect to security entitlements carried or to be carried in the securities account; or

(iii)  If the secured party obtained control through another person under section 400.8-106(d)(3), the time on which priority would be based under this paragraph if the other person were the secured party; or

(C)  If the collateral is a commodity contract carried with a commodity intermediary, the satisfaction of the requirement for control specified in section 400.9-106(b)(2) with respect to commodity contracts carried or to be carried with the commodity intermediary.

(3)  A security interest held by a securities intermediary in a security entitlement or a securities account maintained with the securities intermediary has priority over a conflicting security interest held by another secured party.

(4)  A security interest held by a commodity intermediary in a commodity contract or a commodity account maintained with the commodity intermediary has priority over a conflicting security interest held by another secured party.

(5)  A security interest in a certificated security in registered form which is perfected by taking delivery under section 400.9-313(a) and not by control under section 400.9-314 has priority over a conflicting security interest perfected by a method other than control.

(6)  Conflicting security interests created by a broker, securities intermediary, or commodity intermediary which are perfected without control under section 400.9-106 rank equally.

(7)  In all other cases, priority among conflicting security interests in investment property is governed by sections 400.9-322 and 400.9-323.

400.9-329.  The following rules govern priority among conflicting security interests in the same letter-of-credit right:

(1)  A security interest held by a secured party having control of the letter-of-credit right under section 400.9-107 has priority to the extent of its control over a conflicting security interest held by a secured party that does not have control.

(2)  Security interests perfected by control under section 400.9-314 rank according to priority in time of obtaining control.

400.9-330.  (a)  A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed merely as proceeds of inventory subject to a security interest if:

(1)  In good faith and in the ordinary course of the purchaser's business, the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under section 400.9-105; and

(2)  The chattel paper does not indicate that it has been assigned to an identified assignee other than the purchaser.

(b)  A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed other than merely as proceeds of inventory subject to a security interest if the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under section 400.9-105 in good faith, in the ordinary course of the purchaser's business, and without knowledge that the purchase violates the rights of the secured party.

(c)  Except as otherwise provided in section 400.9-327, a purchaser having priority in chattel paper under subsection (a) or (b) also has priority in proceeds of the chattel paper to the extent that:

(1)  Section 400.9-322 provides for priority in the proceeds; or

(2)  The proceeds consist of the specific goods covered by the chattel paper or cash proceeds of the specific goods, even if the purchaser's security interest in the proceeds is unperfected.

(d)  Except as otherwise provided in section 400.9-331(a), a purchaser of an instrument has priority over a security interest in the instrument perfected by a method other than possession if the purchaser gives value and takes possession of the instrument in good faith and without knowledge that the purchase violates the rights of the secured party.

(e)  For purposes of subsections (a) and (b), the holder of a purchase-money security interest in inventory gives new value for chattel paper constituting proceeds of the inventory.

(f)  For purposes of subsections (b) and (d), if chattel paper or an instrument indicates that it has been assigned to an identified secured party other than the purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase violates the rights of the secured party.

400.9-331.  (a)  This article does not limit the rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document of title has been duly negotiated, or a protected purchaser of a security.  These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in articles 3, 7, and 8.

(b)  This article does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of an adverse claim under article 8.

(c)  Filing under this article does not constitute notice of a claim or defense to the holders, or purchasers, or persons described in subsections (a) and (b).

400.9-332.  (a)  A transferee of money takes the money free of a security interest unless the transferee acts in collusion with the debtor in violating the rights of the secured party.

(b)  A transferee of funds from a deposit account takes the funds free of a security interest in the deposit account unless the transferee acts in collusion with the debtor in violating the rights of the secured party.

400.9-333.  (a)  In this section, "possessory lien" means an interest, other than a security interest or an agricultural lien:

(1)  Which secures payment or performance of an obligation for services or materials furnished with respect to goods by a person in the ordinary course of the person's business;

(2)  Which is created by statute or rule of law in favor of the person; and

(3)  Whose effectiveness depends on the person's possession of the goods.

(b)  A possessory lien on goods has priority over a security interest in the goods unless the lien is created by a statute that expressly provides otherwise.

400.9-334.  (a)  A security interest under this article may be created in goods that are fixtures or may continue in goods that become fixtures.  A security interest does not exist under this article in ordinary building materials incorporated into an improvement on land.

(b)  This article does not prevent creation of an encumbrance upon fixtures under real property law.

(c)  In cases not governed by subsections (d) through (h), a security interest in fixtures is subordinate to a conflicting interest of an encumbrancer or owner of the related real property other than the debtor.

(d)  Except as otherwise provided in subsection (h), a perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest of record in or is in possession of the real property and:

(1)  The security interest is a purchase-money security interest;

(2)  The interest of the encumbrancer or owner arises before the goods become fixtures; and

(3)  The security interest is perfected by a fixture filing before the goods become fixtures or within twenty days thereafter.

(e)  A perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if:

(1)  The debtor has an interest of record in the real property or is in possession of the real property and the security interest:

(A)  Is perfected by a fixture filing before the interest of the encumbrancer or owner is of record; and

(B)  Has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner;

(2)  Before the goods become fixtures, the security interest is perfected by any method permitted by this article and the fixtures are readily removable:

(A)  Factory or office machines;

(B)  Equipment that is not primarily used or leased for use in the operation of the real property; or

(C)  Replacements of domestic appliances that are consumer goods;

(3)  The conflicting interest is a lien on the real property obtained by legal or equitable proceedings after the security interest was perfected by any method permitted by this article; or

(4)  The security interest is:

(A)  Created in a manufactured home in a manufactured-home transaction; and

(B)  Perfected pursuant to a statute described in section 400.9-311(a)(2).

(f)  A security interest in fixtures, whether or not perfected, has priority over a conflicting interest of an encumbrancer or owner of the real property if:

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

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

(g)  The priority of the security interest under subsection (f) continues for a reasonable time if the debtor's right to remove the goods as against the encumbrancer or owner terminates.

(h)  A mortgage is a construction mortgage to the extent that it secures an obligation incurred for the construction of an improvement on land, including the acquisition cost of the land, if a recorded record of the mortgage so indicates.  Except as otherwise provided in subsections (e) and (f), a security interest in fixtures is subordinate to a construction mortgage if a record of the mortgage is recorded before the goods become fixtures and the goods become fixtures before the completion of the construction.  A mortgage has this priority to the same extent as a construction mortgage to the extent that it is given to refinance a construction mortgage.

(i)  A perfected security interest in crops growing on real property has priority over a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest of record in or is in possession of the real property.

(j)  Subsection (i) prevails over any inconsistent provisions of other statutes.

400.9-335.  (a)  A security interest may be created in an accession and continues in collateral that becomes an accession.

(b)  If a security interest is perfected when the collateral becomes an accession, the security interest remains perfected in the collateral.

(c)  Except as otherwise provided in subsection (d), the other provisions of this part determine the priority of a security interest in an accession.

(d)  A security interest in an accession is subordinate to a security interest in the whole which is perfected by compliance with the requirements of a certificate-of-title statute under section 400.9-311(b).

(e)  After default, a secured party may remove an accession from other goods if the security interest in the accession has priority over the claims of every person having an interest in the whole.

(f)  A secured party that removes an accession from other goods under subsection (e) shall promptly reimburse any holder of a security interest or other lien on, or owner of, the whole or of the other goods, other than the debtor, for the cost of repair of any physical injury to the whole or the other goods.  The secured party need not reimburse the holder or owner for any diminution in value of the whole or the other goods caused by the absence of the accession removed or by any necessity for replacing it.  A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse.

400.9-336.  (a)  In this section, "commingled goods" means goods that are physically united with other goods in such a manner that their identity is lost in a product or mass.

(b)  A security interest does not exist in commingled goods as such.  However, a security interest may attach to a product or mass that results when goods become commingled goods.

(c)  If collateral becomes commingled goods, a security interest attaches to the product or mass.

(d)  If a security interest in collateral is perfected before the collateral becomes commingled goods, the security interest that attaches to the product or mass under subsection (c) is perfected.

(e)  Except as otherwise provided in subsection (f), the other provisions of this part determine the priority of a security interest that attaches to the product or mass under subsection (c).

(f)  If more than one security interest attaches to the product or mass under subsection (c), the following rules determine priority:

(1)  A security interest that is perfected under subsection (d) has priority over a security interest that is unperfected at the time the collateral becomes commingled goods.

(2)  If more than one security interest is perfected under subsection (d), the security interests rank equally in proportion to value of the collateral at the time it became commingled goods.

400.9-337.  If, while a security interest in goods is perfected by any method under the law of another jurisdiction, this state issues a certificate of title that does not show that the goods are subject to the security interest or contain a statement that they may be subject to security interests not shown on the certificate:

(1)  A buyer of the goods, other than a person in the business of selling goods of that kind, takes free of the security interest if the buyer gives value and receives delivery of the goods after issuance of the certificate and without knowledge of the security interest; and

(2)  The security interest is subordinate to a conflicting security interest in the goods that attaches, and is perfected under section 400.9-311(b), after issuance of the certificate and without the conflicting secured party's knowledge of the security interest.

400.9-338.  If a security interest or agricultural lien is perfected by a filed financing statement providing information described in section 400.9-516(b)(5) which is incorrect at the time the financing statement is filed:

(1)  The security interest or agricultural lien is subordinate to a conflicting perfected security interest in the collateral to the extent that the holder of the conflicting security interest gives value in reasonable reliance upon the incorrect information; and

(2)  A purchaser, other than a secured party, of the collateral takes free of the security interest or agricultural lien to the extent that, in reasonable reliance upon the incorrect information, the purchaser gives value and, in the case of chattel paper, documents, goods, instruments, or a security certificate, receives delivery of the collateral.

400.9-339.  This article does not preclude subordination by agreement by a person entitled to priority.

400.9-340.  (a)  Except as otherwise provided in subsection (c), a bank with which a deposit account is maintained may exercise any right of recoupment or set-off against a secured party that holds a security interest in the deposit account.

(b)  Except as otherwise provided in subsection (c), the application of this article to a security interest in a deposit account does not affect a right of recoupment or set-off of the secured party as to a deposit account maintained with the secured party.

(c)  The exercise by a bank of a set-off against a deposit account is ineffective against a secured party that holds a security interest in the deposit account which is perfected by control under section 400.9-104(a)(3), if the set-off is based on a claim against the debtor.

400.9-341.  Except as otherwise provided in section 400.9-340(c), and unless the bank otherwise agrees in an authenticated record, a bank's rights and duties with respect to a deposit account maintained with the bank are not terminated, suspended, or modified by:

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

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

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

400.9-342.  This article does not require a bank to enter into an agreement of the kind described in section 400.9-104(a)(2), even if its customer so requests or directs.  A bank that has entered into such an agreement is not required to confirm the existence of the agreement to another person unless requested to do so by its customer.

PART 4

RIGHTS OF THIRD PARTIES

400.9-401.  (a)  Except as otherwise provided in subsection (b) and sections 400.9-406, 400.9-407, 400.9-408 and 400.9-409, whether a debtor's rights in collateral may be voluntarily or involuntarily transferred is governed by law other than this article.

(b)  An agreement between the debtor and secured party which prohibits a transfer of the debtor's rights in collateral or makes the transfer a default does not prevent the transfer from taking effect.

400.9-402.  The existence of a security interest, agricultural lien, or authority given to a debtor to dispose of or use collateral, without more, does not subject a secured party to liability in contract or tort for the debtor's acts or omissions.

400.9-403.  (a)  In this section, "value" has the meaning provided in section 400.3-303(a).

(b)  Except as otherwise provided in this section, an agreement between an account debtor and an assignor not to assert against an assignee any claim or defense that the account debtor may have against the assignor is enforceable by an assignee that takes an assignment:

(1)  For value;

(2)  In good faith;

(3)  Without notice of a claim of a property or possessory right to the property assigned; and

(4)  Without notice of a defense or claim in recoupment of the type that may be asserted against a person entitled to enforce a negotiable instrument under section 400.3-305(a).

(c)  Subsection (b) does not apply to defenses of a type that may be asserted against a holder in due course of a negotiable instrument under section 400.3-305(b).

(d)  In a consumer transaction, if a record evidences the account debtor's obligation, law other than this article requires that the record include a statement to the effect that the rights of an assignee are subject to claims or defenses that the account debtor could assert against the original obligee, and the record does not include such a statement:

(1)  The record has the same effect as if the record included such a statement; and

(2)  The account debtor may assert against an assignee those claims and defenses that would have been available if the record included such a statement.

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

(f)  Except as otherwise provided in subsection (d), this section does not displace law other than this article which gives effect to an agreement by an account debtor not to assert a claim or defense against an assignee.

400.9-404.  (a)  Unless an account debtor has made an enforceable agreement not to assert defenses or claims, and subject to subsections (b) through (e), the rights of an assignee are subject to:

(1)  All terms of the agreement between the account debtor and assignor and any defense or claim in recoupment arising from the transaction that gave rise to the contract; and

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

(b)  Subject to subsection (c) and except as otherwise provided in subsection (d), the claim of an account debtor against an assignor may be asserted against an assignee under subsection (a) only to reduce the amount the account debtor owes.

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

(d)  In a consumer transaction, if a record evidences the account debtor's obligation, law other than this article requires that the record include a statement to the effect that the account debtor's recovery against an assignee with respect to claims and defenses against the assignor may not exceed amounts paid by the account debtor under the record, and the record does not include such a statement, the extent to which a claim of an account debtor against the assignor may be asserted against an assignee is determined as if the record included such a statement.

(e)  This section does not apply to an assignment of a health-care-insurance receivable.

400.9-405.  (a)  A modification of or substitution for an assigned contract is effective against an assignee if made in good faith.  The assignee acquires corresponding rights under the modified or substituted contract.  The assignment may provide that the modification or substitution is a breach of contract by the assignor.  This subsection is subject to subsections (b) through (d).

(b)  Subsection (a) applies to the extent that:

(1)  The right to payment or a part thereof under an assigned contract has not been fully earned by performance; or

(2)  The right to payment or a part thereof has been fully earned by performance and the account debtor has not received notification of the assignment under section 400.9-406(a).

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

(d)  This section does not apply to an assignment of a health-care-insurance receivable.

400.9-406.  (a)  Subject to subsections (b) through (i), an account debtor on an account, chattel paper, or a payment intangible may discharge its obligation by paying the assignor until, but not after, the account debtor receives a notification, authenticated by the assignor or the assignee, that the amount due or to become due has been assigned and that payment is to be made to the assignee.  After receipt of the notification, the account debtor may discharge its obligation by paying the assignee and may not discharge the obligation by paying the assignor.

(b)  Subject to subsection (h), notification is ineffective under subsection (a):

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

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

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

(A)  Only a portion of the account, chattel paper, or general intangible has been assigned to that assignee;

(B)  A portion has been assigned to another assignee; or

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

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

(d)  Except as otherwise provided in subsection (e) and sections 400.2A-303 and 400.9-407, and subject to subsection (h), a term in an agreement between an account debtor and an assignor or in a promissory note is ineffective to the extent that it:

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

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

(e)  Subsection (d) does not apply to the sale of a payment intangible or promissory note.

(f)  Except as otherwise provided in sections 400.2A-303 and 400.9-407, and subject to subsections (h) and (i), a rule of law, statute, or regulation, that prohibits, restricts, or requires the consent of a government, governmental body or official, or account debtor to the assignment or transfer of, or creation of a security interest in, an account or chattel paper is ineffective to the extent that the rule of law, statute, or regulation:

(1)  Prohibits, restricts, or requires the consent of the government, governmental body or official, or account debtor to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, the account or chattel paper; or

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

(g)  Subject to subsection (h), an account debtor may not waive or vary its option under subsection (b)(3).

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

(i)  This section does not apply to an assignment of a health-care-insurance receivable.

(j)  This section prevails over any inconsistent provisions of any statutes, rules, and regulations.

400.9-407.  (a)  Except as otherwise provided in subsection (b), a term in a lease agreement is ineffective to the extent that it:

(1)  Prohibits, restricts, or requires the consent of a party to the lease to the creation, attachment, perfection, or enforcement of a security interest in an interest of a party under the lease contract or in the lessor's residual interest in the goods; or

(2)  Provides that the creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the lease.

(b)  Except as otherwise provided in section 400.2A-303(7), a term described in subsection (a)(2) is effective to the extent that there is:

(1)  A transfer by the lessee of the lessee's right of possession or use of the goods in violation of the term; or

(2)  A delegation of a material performance of either party to the lease contract in violation of the term.

(c)  The creation, attachment, perfection, or enforcement of a security interest in the lessor's interest under the lease contract or the lessor's residual interest in the goods is not a transfer that materially impairs the lessee's prospect of obtaining return performance or materially changes the duty of or materially increases the burden or risk imposed on the lessee within the purview of section 400.2A-303(4) unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the lessor.  Even in that event, the creation, attachment, perfection, and enforcement of the security interest remain effective.

400.9-408.  (a)  Except as otherwise provided in subsection (b), a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or a general intangible, including a contract, permit, license, or franchise, and which term prohibits, restricts, or requires the consent of the person obligated on the promissory note or the account debtor to, the assignment or transfer of, or creation, attachment, or perfection of a security interest in, the promissory note, health-care-insurance receivable, or general intangible, is ineffective to the extent that the term:

(1)  Would impair the creation, attachment, or perfection of a security interest; or

(2)  Provides that the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.

(b)  Subsection (a) applies to a security interest in a payment intangible or promissory note only if the security interest arises out of a sale of the payment intangible or promissory note.

(c)  A rule of law, statute, or regulation that prohibits, restricts, or requires the consent of a government, governmental body or official, person obligated on a promissory note, or account debtor to the assignment or transfer of, or creation of a security interest in, a promissory note, health-care-insurance receivable, or general intangible, including a contract, permit, license, or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law, statute, or regulation:

(1)  Would impair the creation, attachment, or perfection of a security interest; or

(2)  Provides that the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.

(d)  To the extent that a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or general intangible or a rule of law, statute, or regulation described in subsection (c) would be effective under law other than this article but is ineffective under subsection (a) or (c), the creation, attachment, or perfection of a security interest in the promissory note, health-care-insurance receivable, or general intangible:

(1)  Is not enforceable against the person obligated on the promissory note or the account debtor;

(2)  Does not impose a duty or obligation on the person obligated on the promissory note or the account debtor;

(3)  Does not require the person obligated on the promissory note or the account debtor to recognize the security interest, pay or render performance to the secured party, or accept payment or performance from the secured party;

(4)  Does not entitle the secured party to use or assign the debtor's rights under the promissory note, health-care-insurance receivable, or general intangible, including any related information or materials furnished to the debtor in the transaction giving rise to the promissory note, health-care-insurance receivable, or general intangible;

(5)  Does not entitle the secured party to use, assign, possess, or have access to any trade secrets or confidential information of the person obligated on the promissory note or the account debtor; and

(6)  Does not entitle the secured party to enforce the security interest in the promissory note, health-care-insurance receivable, or general intangible.

(e)  This section prevails over any inconsistent provisions of any statutes, rules, and regulations.

400.9-409. (a)  A term in a letter of credit or a rule of law, statute, regulation, custom, or practice applicable to the letter of credit which prohibits, restricts, or requires the consent of an applicant, issuer, or nominated person to a beneficiary's assignment of or creation of a security interest in a letter-of-credit right is ineffective to the extent that the term or rule of law, statute, regulation, custom, or practice:

(1)  Would impair the creation, attachment, or perfection of a security interest in the letter-of-credit right; or

(2)  Provides that the creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the letter-of-credit right.

(b)  To the extent that a term in a letter of credit is ineffective under subsection (a) but would be effective under law other than this article or a custom or practice applicable to the letter of credit, to the transfer of a right to draw or otherwise demand performance under the letter of credit, or to the assignment of a right to proceeds of the letter of credit, the creation, attachment, or perfection of a security interest in the letter-of-credit right:

(1)  Is not enforceable against the applicant, issuer, nominated person, or transferee beneficiary;

(2)  Imposes no duties or obligations on the applicant, issuer, nominated person, or transferee beneficiary; and

(3)  Does not require the applicant, issuer, nominated person, or transferee beneficiary to recognize the security interest, pay or render performance to the secured party, or accept payment or other performance from the secured party.

PART 5

FILING

400.9-501. (a)  Except as otherwise provided in subsection (b), if the local law of this state governs perfection of a security interest or agricultural lien, the office in which to file a financing statement to perfect the security interest or agricultural lien is:

(1)  The office designated for the filing or recording of a record of a mortgage on the related real property, if:

(A)  The collateral is as-extracted collateral or timber to be cut; or

(B)  The financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures; or

(2)  The office of the secretary of state in all other cases, including a case in which the collateral is goods that are or are to become fixtures and the financing statement is not filed as a fixture filing.

(b)  The office in which to file a financing statement to perfect a security interest in collateral, including fixtures, of a transmitting utility is the office of the secretary of state.  The financing statement also constitutes a fixture filing as to the collateral indicated in the financing statement which is or is to become fixtures.

400.9-502.  (a)  Subject to subsection (b), a financing statement is sufficient only if it:

(1)  Provides the name of the debtor;

(2)  Provides the name of the secured party or a representative of the secured party; and

(3)  Indicates the collateral covered by the financing statement.

(b)  Except as otherwise provided in section 400.9-501(b), to be sufficient, a financing statement that covers as-extracted collateral or timber to be cut, or which is filed as a fixture filing and covers goods that are or are to become fixtures, must satisfy subsection (a) and also:

(1)  Indicate that it covers this type of collateral;

(2)  Indicate that it is to be filed for record in the real property records;

(3)  Provide a description of the real property to which the collateral is related sufficient to give constructive notice of a mortgage under the law of this state if the description were contained in a record of the mortgage of the real property; and

(4)  If the debtor does not have an interest of record in the real property, provide the name of a record owner.

(c)  A record of a mortgage is effective, from the date of recording, as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut only if:

(1)  The record indicates the goods or accounts that it covers;

(2)  The goods are or are to become fixtures related to the real property described in the record or the collateral is related to the real property described in the record and is as-extracted collateral or timber to be cut;

(3)  The record satisfies the requirements for a financing statement in this section other than an indication that it is to be filed in the real property records; and

(4)  The record is duly recorded.

(d)  A financing statement may be filed before a security agreement is made or a security interest otherwise attaches.

400.9-503.  (a)  A financing statement sufficiently provides the name of the debtor:

(1)  If the debtor is a registered organization, only if the financing statement provides the name of the debtor indicated on the public record of the debtor's jurisdiction of organization which shows the debtor to have been organized;

(2)  If the debtor is a decedent's estate, only if the financing statement provides the name of the decedent and indicates that the debtor is an estate;

(3)  If the debtor is a trust or a trustee acting with respect to property held in trust, only if the financing statement:

(A)  Provides the name specified for the trust in its organic documents or, if no name is specified, provides the name of the settlor and additional information sufficient to distinguish the debtor from other trusts having one or more of the same settlors; and

(B)  Indicates, in the debtor's name or otherwise, that the debtor is a trust or is a trustee acting with respect to property held in trust; and

(4)  In other cases:

(A)  If the debtor has a name, only if it provides the individual or organizational name of the debtor; and

(B)  If the debtor does not have a name, only if it provides the names of the partners, members, associates, or other persons comprising the debtor.

(b)  A financing statement that provides the name of the debtor in accordance with subsection (a) is not rendered ineffective by the absence of:

(1)  A trade name or other name of the debtor; or

(2)  Unless required under subsection (a)(4)(B), names of partners, members, associates, or other persons comprising the debtor.

(c)  A financing statement that provides only the debtor's trade name does not sufficiently provide the name of the debtor.

(d)  Failure to indicate the representative capacity of a secured party or representative of a secured party does not affect the sufficiency of a financing statement.

(e)  A financing statement may provide the name of more than one debtor and the name of more than one secured party.

400.9-504.  A financing statement sufficiently indicates the collateral that it covers only if the financing statement provides:

(1)  A description of the collateral pursuant to section 400.9-108; or

(2)  An indication that the financing statement covers all assets or all personal property.

400.9-505.  (a)  A consignor, lessor, or other bailor of goods, a licensor, or a buyer of a payment intangible or promissory note may file a financing statement, or may comply with a statute or treaty described in section 400.9-311(a), using the terms "consignor", "consignee", "lessor", "lessee", "bailor", "bailee", "licensor", "licensee", "owner", "registered owner", "buyer", "seller", or words of similar import, instead of the terms "secured party" and "debtor".

(b)  This part applies to the filing of a financing statement under subsection (a) and, as appropriate, to compliance that is equivalent to filing a financing statement under section 400.9-311(b), but the filing or compliance is not of itself a factor in determining whether the collateral secures an obligation.  If it is determined for another reason that the collateral secures an obligation, a security interest held by the consignor, lessor, bailor, licensor, owner, or buyer which attaches to the collateral is perfected by the filing or compliance.

400.9-506.  (a)  A financing statement substantially satisfying the requirements of this part is effective, even if it has minor errors or omissions, unless the errors or omissions make the financing statement seriously misleading.

(b)  Except as otherwise provided in subsection (c), a financing statement that fails sufficiently to provide the name of the debtor in accordance with section 400.9-503(a) is seriously misleading.

(c)  If a search of the records of the filing office under the debtor's correct name, using the filing office's standard search logic, if any, would disclose a financing statement that fails sufficiently to provide the name of the debtor in accordance with section 400.9-503(a), the name provided does not make the financing statement seriously misleading.

(d)  For purposes of section 400.9-508(b), the "debtor's correct name" in subsection (c) means the correct name of the new debtor.

400.9-507.  (a)  A filed financing statement remains effective with respect to collateral that is sold, exchanged, leased, licensed, or otherwise disposed of and in which a security interest or agricultural lien continues, even if the secured party knows of or consents to the disposition.

(b)  Except as otherwise provided in subsection (c) and section 400.9-508, a financing statement is not rendered ineffective if, after the financing statement is filed, the information provided in the financing statement becomes seriously misleading under section 400.9-506.

(c)  If a debtor so changes its name that a filed financing statement becomes seriously misleading under section 400.9-506:

(1)  The financing statement is effective to perfect a security interest in collateral acquired by the debtor before, or within four months after, the change; and

(2)  The financing statement is not effective to perfect a security interest in collateral acquired by the debtor more than four months after the change, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within four months after the change.

400.9-508.  (a)  Except as otherwise provided in this section, a filed financing statement naming an original debtor is effective to perfect a security interest in collateral in which a new debtor has or acquires rights to the extent that the financing statement would have been effective had the original debtor acquired rights in the collateral.

(b)  If the difference between the name of the original debtor and that of the new debtor causes a filed financing statement that is effective under subsection (a) to be seriously misleading under section 400.9-506:

(1)  The financing statement is effective to perfect a security interest in collateral acquired by the new debtor before, and within four months after, the new debtor becomes bound under section 400.9-203(d); and

(2)  The financing statement is not effective to perfect a security interest in collateral acquired by the new debtor more than four months after the new debtor becomes bound under section 400.9-203(d) unless an initial financing statement providing the name of the new debtor is filed before the expiration of that time.

(c)  This section does not apply to collateral as to which a filed financing statement remains effective against the new debtor under section 400.9-507(a).

400.9-509.  (a)  A person may file an initial financing statement, amendment that adds collateral covered by a financing statement, or amendment that adds a debtor to a financing statement only if:

(1)  The debtor authorizes the filing in an authenticated record; or

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

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

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

(2)  Property that becomes collateral under section 400.9-315(a)(2), whether or not the security agreement expressly covers proceeds.

(c)  A person may file an amendment other than an amendment that adds collateral covered by a financing statement or an amendment that adds a debtor to a financing statement only if:

(1)  The secured party of record authorizes the filing; or

(2)  The amendment is a termination statement for a financing statement as to which the secured party of record has failed to file or send a termination statement as required by section 400.9-513(a) or (c), the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed.

(d)  If there is more than one secured party of record for a financing statement, each secured party of record may authorize the filing of an amendment under subsection (c).

400.9-510.  (a)  A filed record is effective only to the extent that it was filed by a person that may file it under section 400.9-509.

(b)  A record authorized by one secured party of record does not affect the financing statement with respect to another secured party of record.

(c)  A continuation statement that is not filed within the six-month period prescribed by section 400.9-515(d) is ineffective.

400.9-511.  (a)  A secured party of record with respect to a financing statement is a person whose name is provided as the name of the secured party or a representative of the secured party in an initial financing statement that has been filed.  If an initial financing statement is filed under section 400.9-514(a), the assignee named in the initial financing statement is the secured party of record with respect to the financing statement.

(b)  If an amendment of a financing statement which provides the name of a person as a secured party or a representative of a secured party is filed, the person named in the amendment is a secured party of record.  If an amendment is filed under section 400.9-514(b), the assignee named in the amendment is a secured party of record.

(c)  A person remains a secured party of record until the filing of an amendment of the financing statement which deletes the person.

400.9-512.  (a)  Subject to section 400.9-509, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or, subject to subsection (e), otherwise amend the information provided in, a financing statement by filing an amendment that:

(1)  Identifies, by its file number, the initial financing statement to which the amendment relates; and

(2)  If the amendment relates to an initial financing statement filed or recorded in a filing office described in section 400.9-501(a)(1), provides the information specified in section 400.9-502(b).

(b)  Except as otherwise provided in section 400.9-515, the filing of an amendment does not extend the period of effectiveness of the financing statement.

(c)  A financing statement that is amended by an amendment that adds collateral is effective as to the added collateral only from the date of the filing of the amendment.

(d)  A financing statement that is amended by an amendment that adds a debtor is effective as to the added debtor only from the date of the filing of the amendment.

(e)  An amendment is ineffective to the extent it:

(1)  Purports to delete all debtors and fails to provide the name of a debtor to be covered by the financing statement; or

(2)  Purports to delete all secured parties of record and fails to provide the name of a new secured party of record.

400.9-513.  (a)  A secured party shall cause the secured party of record for a financing statement to file a termination statement for the financing statement if the financing statement covers consumer goods and:

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

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

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

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

(2)  If earlier, within twenty days after the secured party receives an authenticated demand from a debtor.

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

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

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

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

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

(d)  Except as otherwise provided in section 400.9-510, upon the filing of a termination statement with the filing office, the financing statement to which the termination statement relates ceases to be effective.

400.9-514.  (a)  Except as otherwise provided in subsection (c), an initial financing statement may reflect an assignment of all of the secured party's power to authorize an amendment to the financing statement by providing the name and mailing address of the assignee as the name and address of the secured party.

(b)  Except as otherwise provided in subsection (c), a secured party of record may assign of record all or part of its power to authorize an amendment to a financing statement by filing in the filing office an amendment of the financing statement which:

(1)  Identifies, by its file number, the initial financing statement to which it relates;

(2)  Provides the name of the assignor; and

(3)  Provides the name and mailing address of the assignee.

(c)  An assignment of record of a security interest in a fixture covered by a record of a mortgage which is effective as a financing statement filed as a fixture filing under section 400.9-502(c) may be made only by an assignment of record of the mortgage in the manner provided by law of this state other than chapter 400.

400.9-515.  (a)  Except as otherwise provided in subsections (b), (e), (f), and (g), a filed financing statement is effective for a period of five years after the date of filing.

(b)  Except as otherwise provided in subsections (e), (f), and (g), an initial financing statement filed in connection with a public-finance transaction or manufactured-home transaction is effective for a period of thirty years after the date of filing if it indicates that it is filed in connection with a public-finance transaction or manufactured-home transaction.

(c)  The effectiveness of a filed financing statement lapses on the expiration of the period of its effectiveness unless before the lapse a continuation statement is filed pursuant to subsection (d).  Upon lapse, a financing statement ceases to be effective and any security interest or agricultural lien that was perfected by the financing statement becomes unperfected, unless the security interest is perfected otherwise.  If the security interest or agricultural lien becomes unperfected upon lapse, it is deemed never to have been perfected as against a purchaser of the collateral for value.

(d)  A continuation statement may be filed only within six months before the expiration of the five-year period specified in subsection (a) or the thirty-year period specified in subsection (b), whichever is applicable.

(e)  Except as otherwise provided in section 400.9-510, upon timely filing of a continuation statement, the effectiveness of the initial financing statement continues for a period of five years commencing on the day on which the financing statement would have become ineffective in the absence of the filing.  Upon the expiration of the five-year period, the financing statement lapses in the same manner as provided in subsection (c), unless, before the lapse, another continuation statement is filed pursuant to subsection (d).  Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the initial financing statement.

(f)  If a debtor is a transmitting utility and a filed financing statement so indicates, the financing statement is effective until a termination statement is filed.

(g)  A record of a mortgage that is effective as a financing statement filed as a fixture filing under section 400.9-502(c) remains effective as a financing statement filed as a fixture filing until the mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the real property.

400.9-516.  (a)  Except as otherwise provided in subsection (b), communication of a record to a filing office and tender of the filing fee or acceptance of the record by the filing office constitutes filing.

(b)  Filing does not occur with respect to a record that a filing office refuses to accept because:

(1)  The record is not communicated by a method or medium of communication authorized by the filing office;

(2)  An amount equal to or greater than the applicable filing fee is not tendered;

(3)  The filing office is unable to index the record because:

(A)  In the case of an initial financing statement, the record does not provide a name for the debtor;

(B)  In the case of an amendment or correction statement, the record:

(i)  Does not identify the initial financing statement as required by section 400.9-512 or 400.9-518, as applicable; or

(ii)  Identifies an initial financing statement whose effectiveness has lapsed under section 400.9-515;

(C)  In the case of an initial financing statement that provides the name of a debtor identified as an individual or an amendment that provides a name of a debtor identified as an individual which was not previously provided in the financing statement to which the record relates, the record does not identify the debtor's last name; or

(D)  In the case of a record filed or recorded in the filing office described in section 400.9-501(a)(1), the record does not provide a sufficient description of the real property to which it relates;

(4)  In the case of an initial financing statement or an amendment that adds a secured party of record, the record does not provide a name and mailing address for the secured party of record;

(5)  In the case of an initial financing statement or an amendment that provides a name of a debtor which was not previously provided in the financing statement to which the amendment relates, the record does not:

(A)  Provide a mailing address for the debtor;

(B)  Indicate whether the debtor is an individual or an organization; or

(C)  If the financing statement indicates that the debtor is an organization, provide:

(i)  A type of organization for the debtor;

(ii)  A jurisdiction of organization for the debtor; or

(iii)  An organizational identification number for the debtor or indicate that the debtor has none;

(6)  In the case of an assignment reflected in an initial financing statement under section 400.9-514(a) or an amendment filed under section 400.9-514(b), the record does not provide a name and mailing address for the assignee; or

(7)  In the case of a continuation statement, the record is not filed within the six-month period prescribed by section 400.9-515(d).

(c)  For purposes of subsection (b):

(1)  A record does not provide information if the filing office is unable to read or decipher the information; and

(2)  A record that does not indicate that it is an amendment or identify an initial financing statement to which it relates, as required by section 400.9-512, 400.9-514 or 400.9-518, is an initial financing statement.

(d)  A record that is communicated to the filing office with tender of the filing fee, but which the filing office refuses to accept for a reason other than one set forth in subsection (b), is effective as a filed record except as against a purchaser of the collateral which gives value in reasonable reliance upon the absence of the record from the files.

400.9-517.  The failure of the filing office to index a record correctly does not affect the effectiveness of the filed record.

400.9-518.  (a)  A person may file in the filing office a correction statement with respect to a record indexed there under the person's name if the person believes that the record is inaccurate or was wrongfully filed.

(b)  A correction statement must:

(1)  Identify the record to which it relates by the file number assigned to the initial financing statement to which the record relates;

(2)  Indicate that it is a correction statement; and

(3)  Provide the basis for the person's belief that the record is inaccurate and indicate the manner in which the person believes the record should be amended to cure any inaccuracy or provide the basis for the person's belief that the record was wrongfully filed.

(c)  The filing of a correction statement does not affect the effectiveness of an initial financing statement or other filed record.

400.9-519.  (a)  For each record filed in a filing office, the filing office shall:

(1)  Assign a unique number to the filed record;

(2)  Create a record that bears the number assigned to the filed record and the date and time of filing;

(3)  Maintain the filed record for public inspection; and

(4)  Index the filed record in accordance with subsections (c), (d), and (e).

(b)  A file number assigned after January 1, 2002, must include a digit that:

(1)  Is mathematically derived from or related to the other digits of the file number; and

(2)  Enables the filing office to detect whether a number communicated as the file number includes a single-digit or transpositional error.

(c)  Except as otherwise provided in subsections (d) and (e), the filing office shall:

(1)  Index an initial financing statement according to the name of the debtor and index all filed records relating to the initial financing statement in a manner that associates with one another an initial financing statement and all filed records relating to the initial financing statement; and

(2)  Index a record that provides a name of a debtor which was not previously provided in the financing statement to which the record relates also according to the name that was not previously provided.

(d)  If a financing statement is filed as a fixture filing or covers as-extracted collateral or timber to be cut, it must be filed for record and the filing office shall index it:

(1)  Under the names of the debtor and of each owner of record shown on the financing statement as if they were the mortgagors under a mortgage of the real property described; and

(2)  To the extent that the law of this state provides for indexing of records of mortgages under the name of the mortgagee, under the name of the secured party as if the secured party were the mortgagee thereunder, or, if indexing is by description, as if the financing statement were a record of a mortgage of the real property described.

(e)  If a financing statement is filed as a fixture filing or covers as-extracted collateral or timber to be cut, the filing office shall index an assignment filed under section 400.9-514(a) or an amendment filed under section 400.9-514(b):

(1)  Under the name of the assignor as grantor; and

(2)  To the extent that the law of this state provides for indexing a record of the assignment of a mortgage under the name of the assignee, under the name of the assignee.

(f)  The filing office shall maintain a capability:

(1)  To retrieve a record by the name of the debtor and by the file number assigned to the initial financing statement to which the record relates; and

(2)  To associate and retrieve with one another an initial financing statement and each filed record relating to the initial financing statement.

(g)  The filing office may not remove a debtor's name from the index until one year after the effectiveness of a financing statement naming the debtor lapses under section 400.9-515 with respect to all secured parties of record.

(h)  The filing office shall perform the acts required by subsections (a) through (e) at the time and in the manner prescribed by filing-office rule, but not later than two business days after the filing office receives the record in question.

400.9-520.  (a)  A filing office shall refuse to accept a record for filing for a reason set forth in section 400.9-516(b) and may refuse to accept a record for filing only for a reason set forth in section 400.9-516(b).

(b)  If a filing office refuses to accept a record for filing, it shall communicate to the person that presented the record the fact of and reason for the refusal and the date and time the record would have been filed had the filing office accepted it.  The communication must be made at the time and in the manner prescribed by filing-office rule in no event more than two business days after the filing office receives the record.

(c)  A filed financing statement satisfying section 400.9-502(a) and (b) is effective, even if the filing office is required to refuse to accept it for filing under subsection (a).  However, section 400.9-338 applies to a filed financing statement providing information described in section 400.9-516(b)(5) which is incorrect at the time the financing statement is filed.

(d)  If a record communicated to a filing office provides information that relates to more than one debtor, this part applies as to each debtor separately.

400.9-521.  (a)  A filing office that accepts written records may not refuse to accept a written initial financing statement in the following form and format except for a reason set forth in section 400.9-516(b):

(b)  A filing office that accepts written records may not refuse to accept a written record in the following form and format except for a reason set forth in section 400.9-516(b):

400.9-522.  (a)  The filing office shall maintain a record of the information provided in a filed financing statement for at least one year after the effectiveness of the financing statement has lapsed under section 400.9-515 with respect to all secured parties of record.  The record must be retrievable by using the name of the debtor and by using the file number assigned to the initial financing statement to which the record relates.

(b)  Except to the extent that a statute governing disposition of public records provides otherwise, the filing office immediately may destroy any written record evidencing a financing statement.  However, if the filing office destroys a written record, it shall maintain another record of the financing statement which complies with subsection (a).

400.9-523.  (a)  If a person that files a written record requests an acknowledgment of the filing, the filing office shall send to the person an image of the record showing the number assigned to the record pursuant to section 400.9-519(a)(1) and the date and time of the filing of the record.  However, if the person furnishes a copy of the record to the filing office, the filing office may instead:

(1)  Note upon the copy the number assigned to the record pursuant to section 400.9-519(a)(1) and the date and time of the filing of the record; and

(2)  Send the copy to the person.

(b)  If a person files a record other than a written record, the filing office shall communicate to the person an acknowledgment that provides:

(1)  The information in the record;

(2)  The number assigned to the record pursuant to section 400.9-519(a)(1); and

(3)  The date and time of the filing of the record.

(c)  The filing office shall communicate or otherwise make available in a record the following information to any person that requests it:

(1)  Whether there is on file on a date and time specified by the filing office, but not a date earlier than three business days before the filing office receives the request, any financing statement that:

(A)  Designates a particular debtor or, if the request so states, designates a particular debtor at the address specified in the request;

(B)  Has not lapsed under section 400.9-515 with respect to all secured parties of record; and

(C)  If the request so states, has lapsed under section 400.9-515 and a record of which is maintained by the filing office under section 400.9-522(a);

(2)  The date and time of filing of each financing statement; and

(3)  The information provided in each financing statement.

(d)  In complying with its duty under subsection (c), the filing office may communicate information in any medium.  However, if requested, the filing office shall communicate information by issuing a record that can be admitted into evidence in the courts of this state without extrinsic evidence of its authenticity.

(e)  The filing office shall perform the acts required by subsections (a) through (d) at the time and in the manner prescribed by filing-office rule, but not later than two business days after the filing office receives the request.

(f)  At least weekly, the filing office shall offer to sell or license to the public on a nonexclusive basis, in bulk, copies of all records filed in it under this part, in every medium from time to time available to the filing office.

400.9-524.  Delay by the filing office beyond a time limit prescribed by this part is excused if:

(1)  The delay is caused by interruption of communication or computer facilities, war, emergency conditions, failure of equipment, or other circumstances beyond control of the filing office; and

(2)  The filing office exercises reasonable diligence under the circumstances.

400.9-525.  (a)  Except as otherwise provided in subsection (e), the fee for filing and indexing a record under this part, other than an initial financing statement of the kind described in section 400.9-502(c), is the amount specified in subsection (c), if applicable, plus:

(1)  Ten dollars if the record is communicated in writing and consists of one or two pages;

(2)  Twenty dollars if the record is communicated in writing and consists of more than two pages; and

(3)  Five dollars if the record is communicated by another medium authorized by filing-office rule.

(b)  Except as otherwise provided in subsection (e), the fee for filing and indexing an initial financing statement of the kind described in section 400.9-502(c) is the amount specified in subsection (c), if applicable, plus:

(1)  Ten dollars if the financing statement indicates that it is filed in connection with a public-finance transaction;

(2)  Ten dollars if the financing statement indicates that it is filed in connection with a manufactured-home transaction.

(c)  The number of names required to be indexed does not affect the amount of the fee in subsections (a) and (b).

(d)  The fee for responding to a request for information from the filing office, including for communicating whether there is on file any financing statement naming a particular debtor, is:

(1)  Ten dollars if the request is communicated in writing; and

(2)  Ten dollars if the request is communicated by another medium authorized by filing-office rule.

(e)  This section does not require a fee with respect to a record of a mortgage which is effective as a financing statement filed as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut under section 400.9-502(c).  However, the recording and satisfaction fees that otherwise would be applicable to the record of the mortgage apply.

400.9-526.  (a)  The secretary of state shall adopt and publish rules to implement this article.  The filing-office rules must be:

(1)  Consistent with this article; and

(2)  Adopted and published in accordance with chapter 536, RSMo.

(b)  To keep the filing-office rules and practices of the filing office in harmony with the rules and practices of filing offices in other jurisdictions that enact substantially this part, and to keep the technology used by the filing office compatible with the technology used by filing offices in other jurisdictions that enact substantially this part, the secretary of state, so far as is consistent with the purposes, policies, and provisions of this article, in adopting, amending, and repealing filing-office rules, shall:

(1)  Consult with filing offices in other jurisdictions that enact substantially this part;

(2)  Consult the most recent version of the Model Rules promulgated by the International Association of Corporate Administrators or any successor organization; and

(3)  Take into consideration the rules and practices of, and the technology used by, filing offices in other jurisdictions that enact substantially this part.

400.9-527.  The secretary of state shall report annually on or before February 1 to the governor, the president pro tempore of the senate and the speaker of the house of representatives on the operation of the filing office.  The report must contain a statement of the extent to which:

(1)  The filing-office rules are not in harmony with the rules of filing offices in other jurisdictions that enact substantially this part and the reasons for these variations; and

(2)  The filing-office rules are not in harmony with the most recent version of the Model Rules promulgated by the International Association of Corporate Administrators, or any successor organization, and the reasons for these variations.

PART 6

DEFAULT

400.9-601.  (a)  After default, a secured party has the rights provided in this part and, except as otherwise provided in section 400.9-602, those provided by agreement of the parties.  A secured party:

(1)  May reduce a claim to judgment, foreclose, or otherwise enforce the claim, security interest, or agricultural lien by any available judicial procedure; and

(2)  If the collateral is documents, may proceed either as to the documents or as to the goods they cover.

(b)  A secured party in possession of collateral or control of collateral under section 400.9-104, 400.9-105, 400.9-106 or 400.9-107 has the rights and duties provided in section 400.9-207.

(c)  The rights under subsections (a) and (b) are cumulative and may be exercised simultaneously.

(d)  Except as otherwise provided in subsection (g) and section 400.9-605, after default, a debtor and an obligor have the rights provided in this part and by agreement of the parties.

(e)  If a secured party has reduced its claim to judgment, the lien of any levy that may be made upon the collateral by virtue of an execution based upon the judgment relates back to the earliest of:

(1)  The date of perfection of the security interest or agricultural lien in the collateral;

(2)  The date of filing a financing statement covering the collateral; or

(3)  Any date specified in a statute under which the agricultural lien was created.

(f)  A sale pursuant to an execution is a foreclosure of the security interest or agricultural lien by judicial procedure within the meaning of this section.  A secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of this article.

(g)  Except as otherwise provided in section 400.9-607(c), this part imposes no duties upon a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles, or promissory notes.

400.9-602.  Except as otherwise provided in section 400.9-624, to the extent that they give rights to a debtor or obligor and impose duties on a secured party, the debtor or obligor may not waive or vary the rules stated in the following listed sections:

(1)  Section 400.9-207(b)(4)(C), which deals with use and operation of the collateral by the secured party;

(2)  Section 400.9-210, which deals with requests for an accounting and requests concerning a list of collateral and statement of account;

(3)  Section 400.9-607(c), which deals with collection and enforcement of collateral;

(4)  Sections 400.9-608(a) and 400.9-615(c) to the extent that they deal with application or payment of noncash proceeds of collection, enforcement, or disposition;

(5)  Sections 400.9-608(a) and 400.9-615(d) to the extent that they require accounting for or payment of surplus proceeds of collateral;

(6)  Section 400.9-609 to the extent that it imposes upon a secured party that takes possession of collateral without judicial process the duty to do so without breach of the peace;

(7)  Sections 400.9-610(b), 400.9-611, 400.9-613 and 400.9-614, which deal with disposition of collateral;

(8)  Section 400.9-615(f), which deals with calculation of a deficiency or surplus when a disposition is made to the secured party, a person related to the secured party, or a secondary obligor;

(9)  Section 400.9-616, which deals with explanation of the calculation of a surplus or deficiency;

(10)  Section 400.9-620, 400.9-621 and 400.9-622, which deal with acceptance of collateral in satisfaction of obligation;

(11)  Section 400.9-623, which deals with redemption of collateral;

(12)  Section 400.9-624, which deals with permissible waivers; and

(13)  Sections 400.9-625 and 400.9-626, which deal with the secured party's liability for failure to comply with this article.

400.9-603.  (a)  The parties may determine by agreement the standards measuring the fulfillment of the rights of a debtor or obligor and the duties of a secured party under a rule stated in section 400.9-602 if the standards are not manifestly unreasonable.

(b)  Subsection (a) does not apply to the duty under section 400.9-609 to refrain from breaching the peace.

400.9-604.  (a)  If a security agreement covers both personal and real property, a secured party may proceed:

(1)  Under this part as to the personal property without prejudicing any rights with respect to the real property; or

(2)  As to both the personal property and the real property in accordance with the rights with respect to the real property, in which case the other provisions of this part do not apply.

(b)  Subject to subsection (c), if a security agreement covers goods that are or become fixtures, a secured party may proceed:

(1)  Under this part; or

(2)  In accordance with the rights with respect to real property, in which case the other provisions of this part do not apply.

(c)  Subject to the other provisions of this part, if a secured party holding a security interest in fixtures has priority over all owners and encumbrancers of the real property, the secured party, after default, may remove the collateral from the real property.

(d)  A secured party that removes collateral shall promptly reimburse any encumbrancer or owner of the real property, other than the debtor, for the cost of repair of any physical injury caused by the removal.  The secured party need not reimburse the encumbrancer or owner for any diminution in value of the real property caused by the absence of the goods removed or by any necessity of replacing them.  A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate assurance for the performance of the obligation to reimburse.

400.9-605.  A secured party does not owe a duty based on its status as secured party:

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

(A)  That the person is a debtor or obligor;

(B)  The identity of the person; and

(C)  How to communicate with the person; or

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

(A)  That the person is a debtor; and

(B)  The identity of the person.

400.9-606.  For purposes of this part, a default occurs in connection with an agricultural lien at the time the secured party becomes entitled to enforce the lien in accordance with the statute under which it was created.

400.9-607.  (a)  If so agreed, and in any event after default, a secured party:

(1)  May notify an account debtor or other person obligated on collateral to make payment or otherwise render performance to or for the benefit of the secured party;

(2)  May take any proceeds to which the secured party is entitled under section 400.9-315;

(3)  May enforce the obligations of an account debtor or other person obligated on collateral and exercise the rights of the debtor with respect to the obligation of the account debtor or other person obligated on collateral to make payment or otherwise render performance to the debtor, and with respect to any property that secures the obligations of the account debtor or other person obligated on the collateral;

(4)  If it holds a security interest in a deposit account perfected by control under section 400.9-104(a)(1), may apply the balance of the deposit account to the obligation secured by the deposit account; and

(5)  If it holds a security interest in a deposit account perfected by control under section 400.9-104(a)(2) or (3), may instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party.

(b)  If necessary to enable a secured party to exercise under subsection (a)(3) the right of a debtor to enforce a mortgage nonjudicially, the secured party may record in the office in which a record of the mortgage is recorded:

(1)  A copy of the security agreement that creates or provides for a security interest in the obligation secured by the mortgage; and

(2)  The secured party's sworn affidavit in recordable form stating that:

(A)  A default has occurred; and

(B)  The secured party is entitled to enforce the mortgage nonjudicially.

(c)  A secured party shall proceed in a commercially reasonable manner if the secured party:

(1)  Undertakes to collect from or enforce an obligation of an account debtor or other person obligated on collateral; and

(2)  Is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor or a secondary obligor.

(d)  A secured party may deduct from the collections made pursuant to subsection (c) reasonable expenses of collection and enforcement, including reasonable attorney's fees and legal expenses incurred by the secured party.

(e)  This section does not determine whether an account debtor, bank, or other person obligated on collateral owes a duty to a secured party.

400.9-608.  (a)  If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply:

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

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

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

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

(2)  If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time.  Unless the holder complies, the secured party need not comply with the holder's demand under paragraph (1)(C);

(3)  A secured party need not apply or pay over for application noncash proceeds of collection and enforcement under this section unless the failure to do so would be commercially unreasonable.  A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner;

(4)  A secured party shall account to and pay a debtor for any surplus, and the obligor is liable for any deficiency.

(b)  If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes, the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency.

400.9-609.  (a)  After default, a secured party:

(1)  May take possession of the collateral; and

(2)  Without removal, may render equipment unusable and dispose of collateral on a debtor's premises under section 400.9-610.

(b)  A secured party may proceed under subsection (a):

(1)  Pursuant to judicial process; or

(2)  Without judicial process, if it proceeds without breach of the peace.

(c)  If so agreed, and in any event after default, a secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties.

400.9-610.  (a)  After default, a secured party may sell, lease, license, or otherwise dispose of any or all of the collateral in its present condition or following any commercially reasonable preparation or processing.

(b)  Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable.  If commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms.

(c)  A secured party may purchase collateral:

(1)  At a public disposition; or

(2)  At a private disposition only if the collateral is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations.

(d)  A contract for sale, lease, license, or other disposition includes the warranties relating to title, possession, quiet enjoyment, and the like which by operation of law accompany a voluntary disposition of property of the kind subject to the contract.

(e)  A secured party may disclaim or modify warranties under subsection (d):

(1)  In a manner that would be effective to disclaim or modify the warranties in a voluntary disposition of property of the kind subject to the contract of disposition; or

(2)  By communicating to the purchaser a record evidencing the contract for disposition and including an express disclaimer or modification of the warranties.

(f)  A record is sufficient to disclaim warranties under subsection (e) if it indicates "There is no warranty relating to title, possession, quiet enjoyment, or the like in this disposition" or uses words of similar import.

400.9-611.  (a)  In this section, "notification date" means the earlier of the date on which:

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

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

(b)  Except as otherwise provided in subsection (d), a secured party that disposes of collateral under section 400.9-610 shall send to the persons specified in subsection (c) a reasonable authenticated notification of disposition.

(c)  To comply with subsection (b), the secured party shall send an authenticated notification of disposition to:

(1)  The debtor;

(2)  Any secondary obligor; and

(3)  If the collateral is other than consumer goods:

(A)  Any other person from which the secured party has received, before the notification date, an authenticated notification of a claim of an interest in the collateral;

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

(i)  Identified the collateral;

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

(iii)  Was filed in the office in which to file a financing statement against the debtor covering the collateral as of that date; and

(C)  Any other secured party that, ten days before the notification date, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in section 400.9-311(a).

(d)  Subsection (b) does not apply if the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market.

(e)  A secured party complies with the requirement for notification prescribed by subsection (c)(3)(B) if:

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

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

(A)  Did not receive a response to the request for information; or

(B)  Received a response to the request for information and sent an authenticated notification of disposition to each secured party named in that response whose financing statement covered the collateral.

400.9-612.  (a)  Except as otherwise provided in subsection (b), whether a notification is sent within a reasonable time is a question of fact.

(b)  In a transaction other than a consumer transaction, a notification of disposition sent after default and ten days or more before the earliest time of disposition set forth in the notification is sent within a reasonable time before the disposition.

400.9-613.  Except in a consumer-goods transaction, the following rules apply:

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

(A)  Describes the debtor and the secured party;

(B)  Describes the collateral that is the subject of the intended disposition;

(C)  States the method of intended disposition;

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

(E)  States the time and place of a public sale or the time after which any other disposition is to be made;

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

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

(A)  Information not specified by that paragraph; or

(B)  Minor errors that are not seriously misleading;

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

(5)  The following form of notification and the form appearing in section 400.9-614(3), when completed, each provides sufficient information:

NOTIFICATION OF DISPOSITION OF COLLATERAL

To:    (Name of debtor, obligor, or other person to which

the notification is sent)

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

party)    

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

(For a public disposition:)

We will sell (or lease or license, as applicable) the      (describe collateral)     (to the highest qualified bidder) in public as follows:

Day and Date:                               

Time:                               

Place:                               

(For a private disposition:)

We will sell (or lease or license, as applicable) the     (describe collateral)     privately sometime after     (day and date)    .

You are entitled to an accounting of the unpaid indebtedness secured by the property that we intend to sell (or lease or license, as applicable) (for a charge of $              ).  You may request an accounting by calling us at     (telephone number)    

(End of Form)

400.9-614.  In a consumer-goods transaction, the following rules apply:

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

(A)  The information specified in section 400.9-613(1);

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

(C)  A telephone number from which the amount that must be paid to the secured party to redeem the collateral under section 400.9-623 is available; and

(D)  A telephone number or mailing address from which additional information concerning the disposition and the obligation secured is available;

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

(3)  The following form of notification, when completed, provides sufficient information:

     (Name and address of secured party)     

     (Date)     

NOTICE OF OUR PLAN TO SELL PROPERTY

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

Subject:       (Identification of Transaction)     

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

(For a public disposition:)

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

Date:                               

Time:                               

Place:                               

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

(For a private disposition:)

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

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

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

If you want us to explain to you in writing how we have figured the amount that you owe us, you may call us at      (telephone number)      (or write us at      (secured party's address)     ) and request a written explanation.  (We will charge you $            for the explanation if we sent you another written explanation of the amount you owe us within the last six months.)

If you need more information about the sale call us at      (telephone number)      (or write us at      (secured party's address)     ).

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

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

(End of Form)

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

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

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

400.9-615.  (a)  A secured party shall apply or pay over for application the cash proceeds of disposition in the following order to:

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

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

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

(A)  The secured party receives from the holder of the subordinate security interest or other lien an authenticated demand for proceeds before distribution of the proceeds is completed; and

(B)  In a case in which a consignor has an interest in the collateral, the subordinate security interest or other lien is senior to the interest of the consignor; and

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

(b)  If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time.  Unless the holder does so, the secured party need not comply with the holder's demand under subsection (a)(3).

(c)  A secured party need not apply or pay over for application noncash proceeds of disposition under this section unless the failure to do so would be commercially unreasonable.  A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.

(d)  If the security interest under which a disposition is made secures payment or performance of an obligation, after making the payments and applications required by subsection (a) and permitted by subsection (c):

(1)  Unless subsection (a)(4) requires the secured party to apply or pay over cash proceeds to a consignor, the secured party shall account to and pay a debtor for any surplus; and

(2)  The obligor is liable for any deficiency.

(e)  If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes:

(1)  The debtor is not entitled to any surplus; and

(2)  The obligor is not liable for any deficiency.

(f)  The surplus or deficiency following a disposition is calculated based on the amount of proceeds that would have been realized in a disposition complying with this part to a transferee other than the secured party, a person related to the secured party, or a secondary obligor if:

(1)  The transferee in the disposition is the secured party, a person related to the secured party, or a secondary obligor; and

(2)  The amount of proceeds of the disposition is significantly below the range of proceeds that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.

(g)  A secured party that receives cash proceeds of a disposition in good faith and without knowledge that the receipt violates the rights of the holder of a security interest or other lien that is not subordinate to the security interest or agricultural lien under which the disposition is made:

(1)  Takes the cash proceeds free of the security interest or other lien;

(2)  Is not obligated to apply the proceeds of the disposition to the satisfaction of obligations secured by the security interest or other lien; and

(3)  Is not obligated to account to or pay the holder of the security interest or other lien for any surplus.

400.9-616.  (a)  In this section:

(1)  "Explanation" means a writing that:

(A)  States the amount of the surplus or deficiency;

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

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

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

(2)  "Request" means a record:

(A)  Authenticated by a debtor or consumer obligor;

(B)  Requesting that the recipient provide an explanation; and

(C)  Sent after disposition of the collateral under section 400.9-610.

(b)  In a consumer-goods transaction in which the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under section 400.9-615, the secured party shall:

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

(A)  Before or when the secured party accounts to the debtor and pays any surplus or first makes written demand on the consumer obligor after the disposition for payment of the deficiency; and

(B)  Within fourteen days after receipt of a request; or

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

(c)  To comply with subsection (a)(1)(B), a writing must provide the following information in the following order:

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

(A)  If the secured party takes or receives possession of the collateral after default, not more than thirty-five days before the secured party takes or receives possession; or

(B)  If the secured party takes or receives possession of the collateral before default or does not take possession of the collateral, not more than thirty-five days before the disposition;

(2)  The amount of proceeds of the disposition;

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

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

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

(6)  The amount of the surplus or deficiency.

(d)  A particular phrasing of the explanation is not required.  An explanation complying substantially with the requirements of subsection (a) is sufficient, even if it includes minor errors that are not seriously misleading.

(e)  A debtor or consumer obligor is entitled without charge to one response to a request under this section during any six-month period in which the secured party did not send to the debtor or consumer obligor an explanation pursuant to subsection (b)(1).  The secured party may require payment of a charge not exceeding twenty-five dollars for each additional response.

400.9-617.  (a)  A secured party's disposition of collateral after default:

(1)  Transfers to a transferee for value all of the debtor's rights in the collateral;

(2)  Discharges the security interest under which the disposition is made; and

(3)  Discharges any subordinate security interest or other subordinate lien.

(b)  A transferee that acts in good faith takes free of the rights and interests described in subsection (a), even if the secured party fails to comply with this article or the requirements of any judicial proceeding.

(c)  If a transferee does not take free of the rights and interests described in subsection (a), the transferee takes the collateral subject to:

(1)  The debtor's rights in the collateral;

(2)  The security interest or agricultural lien under which the disposition is made; and

(3)  Any other security interest or other lien.

400.9-618.  (a)  A secondary obligor acquires the rights and becomes obligated to perform the duties of the secured party after the secondary obligor:

(1)  Receives an assignment of a secured obligation from the secured party;

(2)  Receives a transfer of collateral from the secured party and agrees to accept the rights and assume the duties of the secured party; or

(3)  Is subrogated to the rights of a secured party with respect to collateral.

(b)  An assignment, transfer, or subrogation described in subsection (a):

(1)  Is not a disposition of collateral under section 400.9-610; and

(2)  Relieves the secured party of further duties under this article.

400.9-619.  (a)  In this section, "transfer statement" means a record authenticated by a secured party stating:

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

(2)  That the secured party has exercised its post-default remedies with respect to the collateral;

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

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

(b)  A transfer statement entitles the transferee to the transfer of record of all rights of the debtor in the collateral specified in the statement in any official filing, recording, registration, or certificate-of-title system covering the collateral.  If a transfer statement is presented with the applicable fee and request form to the official or office responsible for maintaining the system, the official or office shall:

(1)  Accept the transfer statement;

(2)  Promptly amend its records to reflect the transfer; and

(3)  If applicable, issue a new appropriate certificate of title in the name of the transferee.

(c)  A transfer of the record or legal title to collateral to a secured party under subsection (b) or otherwise is not of itself a disposition of collateral under this article and does not of itself relieve the secured party of its duties under this article.

400.9-620.  (a)  Except as otherwise provided in subsection (g), a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:

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

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

(A)  A person to which the secured party was required to send a proposal under section 400.9-621; or

(B)  Any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest that is the subject of the proposal;

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

(4)  Subsection (e) does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to section 400.9-624.

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

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

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

(c)  For purposes of this section:

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

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

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

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

(C)  Does not receive a notification of objection authenticated by the debtor within twenty days after the proposal is sent.

(d)  To be effective under subsection (a)(2), a notification of objection must be received by the secured party:

(1)  In the case of a person to which the proposal was sent pursuant to section 400.9-621, within twenty days after notification was sent to that person; and

(2)  In other cases:

(A)  Within twenty days after the last notification was sent pursuant to section 400.9-621; or

(B)  If a notification was not sent, before the debtor consents to the acceptance under subsection (c).

(e)  A secured party that has taken possession of collateral shall dispose of the collateral pursuant to section 400.9-610 within the time specified in subsection (f) if:

(1)  Sixty percent of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or

(2)  Sixty percent of the principal amount of the obligation secured has been paid in the case of a non-purchase-money security interest in consumer goods.

(f)  To comply with subsection (e), the secured party shall dispose of the collateral:

(1)  Within ninety days after taking possession; or

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

(g)  In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.

400.9-621.  (a)  A secured party that desires to accept collateral in full or partial satisfaction of the obligation it secures shall send its proposal to:

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

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

(A)  Identified the collateral;

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

(C)  Was filed in the office or offices in which to file a financing statement against the debtor covering the collateral as of that date; and

(3)  Any other secured party that, ten days before the debtor consented to the acceptance, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in section 400.9-311(a).

(b)  A secured party that desires to accept collateral in partial satisfaction of the obligation it secures shall send its proposal to any secondary obligor in addition to the persons described in subsection (a).

400.9-622.  (a)  A secured party's acceptance of collateral in full or partial satisfaction of the obligation it secures:

(1)  Discharges the obligation to the extent consented to by the debtor;

(2)  Transfers to the secured party all of a debtor's rights in the collateral;

(3)  Discharges the security interest or agricultural lien that is the subject of the debtor's consent and any subordinate security interest or other subordinate lien; and

(4)  Terminates any other subordinate interest.

(b)  A subordinate interest is discharged or terminated under subsection (a), even if the secured party fails to comply with this article.

400.9-623.  (a)  A debtor, any secondary obligor, or any other secured party or lienholder may redeem collateral.

(b)  To redeem collateral, a person shall tender:

(1)  Fulfillment of all obligations secured by the collateral; and

(2)  The reasonable expenses and attorney's fees described in section 400.9-615(a)(1).

(c)  A redemption may occur at any time before a secured party:

(1)  Has collected collateral under section 400.9-607;

(2)  Has disposed of collateral or entered into a contract for its disposition under section 400.9-610; or

(3)  Has accepted collateral in full or partial satisfaction of the obligation it secures under section 400.9-622.

400.9-624.  (a)  A debtor or secondary obligor may waive the right to notification of disposition of collateral under section 400.9-611 only by an agreement to that effect entered into and authenticated after default.

(b)  A debtor may waive the right to require disposition of collateral under section 400.9-620(e) only by an agreement to that effect entered into and authenticated after default.

(c)  Except in a consumer-goods transaction, a debtor or secondary obligor may waive the right to redeem collateral under section 400.9-623 only by an agreement to that effect entered into and authenticated after default.

400.9-625.  (a)  If it is established that a secured party is not proceeding in accordance with this article, a court may order or restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions.

(b)  Subject to subsections (c), (d), and (f), a person is liable for damages in the amount of any loss caused by a failure to comply with this article.  Loss caused by a failure to comply with a request under section 400.9-210 may include loss resulting from the debtor's inability to obtain, or increased costs of, alternative financing.

(c)  Except as otherwise provided in section 400.9-628:

(1)  A person that, at the time of the failure, was a debtor, was an obligor, or held a security interest in or other lien on the collateral may recover damages under subsection (b) for its loss; and

(2)  If the collateral is consumer goods, a person that was a debtor or a secondary obligor at the time a secured party failed to comply with this part may recover for that failure in any event an amount not less than the credit service charge plus ten percent of the principal amount of the obligation or the time-price differential plus ten percent of the cash price.

(d)  A debtor whose deficiency is eliminated under section 400.9-626 may recover damages for the loss of any surplus.  However, a debtor or secondary obligor whose deficiency is eliminated or reduced under section 400.9-626 may not otherwise recover under subsection (b) for noncompliance with the provisions of this part relating to collection, enforcement, disposition, or acceptance.

(e)  In addition to any damages recoverable under subsection (b), the debtor, consumer obligor, or person named as a debtor in a filed record, as applicable, may recover five hundred dollars in each case from a person that:

(1)  Fails to comply with section 400.9-208;

(2)  Fails to comply with section 400.9-209;

(3)  Files a record that the person is not entitled to file under section 400.9-509(a);

(4)  Fails to cause the secured party of record to file or send a termination statement as required by section 400.9-513(a) or (c);

(5)  Fails to comply with section 400.9-616(b)(1) and whose failure is part of a pattern, or consistent with a practice, of noncompliance; or

(6)  Fails to comply with section 400.9-616(b)(2).

(f)  A debtor or consumer obligor may recover damages under subsection (b) and, in addition, five hundred dollars in each case from a person that, without reasonable cause, fails to comply with a request under section 400.9-210.  A recipient of a request under section 400.9-210 which never claimed an interest in the collateral or obligations that are the subject of a request under that section has a reasonable excuse for failure to comply with the request within the meaning of this subsection.

(g)  If a secured party fails to comply with a request regarding a list of collateral or a statement of account under section 400.9-210, the secured party may claim a security interest only as shown in the statement included in the request as against a person that is reasonably misled by the failure.

400.9-626.  (a)  In an action arising from a transaction, other than a consumer transaction, in which the amount of a deficiency or surplus is in issue, the following rules apply:

(1)  A secured party need not prove compliance with the provisions of this part relating to collection, enforcement, disposition, or acceptance unless the debtor or a secondary obligor places the secured party's compliance in issue.

(2)  If the secured party's compliance is placed in issue, the secured party has the burden of establishing that the collection, enforcement, disposition, or acceptance was conducted in accordance with this part.

(3)  Except as otherwise provided in section 400.9-628, if a secured party fails to prove that the collection, enforcement, disposition, or acceptance was conducted in accordance with the provisions of this part relating to collection, enforcement, disposition, or acceptance, the liability of a debtor or a secondary obligor for a deficiency is limited to an amount by which the sum of the secured obligation, expenses, and attorney's fees exceeds the greater of:

(A)  The proceeds of the collection, enforcement, disposition, or acceptance; or

(B)  The amount of proceeds that would have been realized had the noncomplying secured party proceeded in accordance with the provisions of this part relating to collection, enforcement, disposition, or acceptance.

(4)  For purposes of paragraph (3)(B), the amount of proceeds that would have been realized is equal to the sum of the secured obligation, expenses, and attorney's fees unless the secured party proves that the amount is less than that sum.

(5)  If a deficiency or surplus is calculated under section 400.9-615(f), the debtor or obligor has the burden of establishing that the amount of proceeds of the disposition is significantly below the range of prices that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.

(b)  The limitation of the rules in subsection (a) to transactions other than consumer transactions is intended to leave to the court the determination of the proper rules in consumer transactions.  The court may not infer from that limitation the nature of the proper rule in consumer transactions and may continue to apply established approaches.

400.9-627.  (a)  The fact that a greater amount could have been obtained by a collection, enforcement, disposition, or acceptance at a different time or in a different method from that selected by the secured party is not of itself sufficient to preclude the secured party from establishing that the collection, enforcement, disposition, or acceptance was made in a commercially reasonable manner.

(b)  A disposition of collateral is made in a commercially reasonable manner if the disposition is made:

(1)  In the usual manner on any recognized market;

(2)  At the price current in any recognized market at the time of the disposition; or

(3)  Otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition.

(c)  A collection, enforcement, disposition, or acceptance is commercially reasonable if it has been approved:

(1)  In a judicial proceeding;

(2)  By a bona fide creditors' committee;

(3)  By a representative of creditors; or

(4)  By an assignee for the benefit of creditors.

(d)  Approval under subsection (c) need not be obtained, and lack of approval does not mean that the collection, enforcement, disposition, or acceptance is not commercially reasonable.

400.9-628.  (a)  Unless a secured party knows that a person is a debtor or obligor, knows the identity of the person, and knows how to communicate with the person:

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

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

(b)  A secured party is not liable because of its status as secured party:

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

(A)  That the person is a debtor or obligor;

(B)  The identity of the person; and

(C)  How to communicate with the person; or

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

(A)  That the person is a debtor; and

(B)  The identity of the person.

(c)  A secured party is not liable to any person, and a person's liability for a deficiency is not affected, because of any act or omission arising out of the secured party's reasonable belief that a transaction is not a consumer-goods transaction or a consumer transaction or that goods are not consumer goods, if the secured party's belief is based on its reasonable reliance on:

(1)  A debtor's representation concerning the purpose for which collateral was to be used, acquired, or held; or

(2)  An obligor's representation concerning the purpose for which a secured obligation was incurred.

(d)  A secured party is not liable to any person under section 400.9-625(c)(2) for its failure to comply with section 400.9-616.

(e)  A secured party is not liable under section 400.9-625(c)(2) more than once with respect to any one secured obligation.

PART 7

TRANSITION

400.9-701.  For the purposes of this section and sections 400.9-702 to 400.9-708, "this act" shall refer to sections 400.9-101 to 400.9-628.

400.9-702.  (a)  Except as otherwise provided in this part, this act applies to a transaction or lien within its scope, even if the transaction or lien was entered into or created before July 1, 2001.

(b)  Except as otherwise provided in subsection (c) and sections 400.9-703 through 400.9-708:

(1)  Transactions and liens that were not governed by former article 9, were validly entered into or created before this act takes effect, and would be subject to this act if they had been entered into or created after this act takes effect, and the rights, duties, and interests flowing from those transactions and liens remain valid after this act takes effect; and

(2)  The transactions and liens may be terminated, completed, consummated, and enforced as required or permitted by this act or by the law that otherwise would apply if this act had not taken effect.

(c)  This act does not affect an action, case, or proceeding commenced before this act takes effect.

400.9-703.  (a)  A security interest that is enforceable immediately before this act takes effect and would have priority over the rights of a person that becomes a lien creditor at that time is a perfected security interest under this act if, when this act takes effect, the applicable requirements for enforceability and perfection under this act are satisfied without further action.

(b)  Except as otherwise provided in section 400.9-705, if, immediately before this act takes effect, a security interest is enforceable and would have priority over the rights of a person that becomes a lien creditor at that time, but the applicable requirements for enforceability or perfection under this act are not satisfied when this act takes effect, the security interest:

(1)  Is a perfected security interest for one year after this act takes effect;

(2)  Remains enforceable thereafter only if the security interest becomes enforceable under section 400.9-203 before the year expires; and

(3)  Remains perfected thereafter only if the applicable requirements for perfection under this act are satisfied before the year expires.

400.9-704.  A security interest that is enforceable immediately before this act takes effect but which would be subordinate to the rights of a person that becomes a lien creditor at that time:

(1)  Remains an enforceable security interest for one year after this act takes effect;

(2)  Remains enforceable thereafter if the security interest becomes enforceable under section 400.9-203 when this act takes effect or within one year thereafter; and

(3)  Becomes perfected:

(A)  Without further action, when this act takes effect if the applicable requirements for perfection under this act are satisfied before or at that time; or

(B)  When the applicable requirements for perfection are satisfied if the requirements are satisfied after that time.

400.9-705.  (a)  If action, other than the filing of a financing statement, is taken before this act takes effect and the action would have resulted in priority of a security interest over the rights of a person that becomes a lien creditor had the security interest become enforceable before this act takes effect, the action is effective to perfect a security interest that attaches under this act within one year after this act takes effect.  An attached security interest becomes unperfected one year after this act takes effect unless the security interest becomes a perfected security interest under this act before the expiration of that period.

(b)  The filing of a financing statement before this act takes effect is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under this act.

(c)  This act does not render ineffective an effective financing statement that, before this act takes effect, is filed and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in former section 400.9-103.  However, except as otherwise provided in subsections (d) and (e) and section 400.9-706, the financing statement ceases to be effective at the earlier of:

(1)  The time the financing statement would have ceased to be effective under the law of the jurisdiction in which it is filed; or

(2)  June 30, 2006.

(d)  The filing of a continuation statement after this act takes effect does not continue the effectiveness of the financing statement filed before this act takes effect.  However, upon the timely filing of a continuation statement after this act takes effect and in accordance with the law of the jurisdiction governing perfection as provided in Part 3, the effectiveness of a financing statement filed in the same office in that jurisdiction before this act takes effect continues for the period provided by the law of that jurisdiction.

(e)  Subsection (c)(2) applies to a financing statement that, before this act takes effect, is filed against a transmitting utility and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in former section 400.9-103 only to the extent that Part 3 provides that the law of a jurisdiction other than jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement.

(f)  A financing statement that includes a financing statement filed before this act takes effect and a continuation statement filed after this act takes effect is effective only to the extent that it satisfies the requirements of Part 5 for an initial financing statement.

400.9-706.  (a)  The filing of an initial financing statement in the office specified in section 400.9-501 continues the effectiveness of a financing statement filed before this act takes effect if:

(1)  The filing of an initial financing statement in that office would be effective to perfect a security interest under this act;

(2)  The pre-effective-date financing statement was filed in an office in another state or another office in this state; and

(3)  The initial financing statement satisfies subsection (c).

(b)  The filing of an initial financing statement under subsection (a) continues the effectiveness of the pre-effective-date financing statement:

(1)  If the initial financing statement is filed before this act takes effect, for the period provided in former section 400.9-403 with respect to a financing statement; and

(2)  If the initial financing statement is filed after this act takes effect, for the period provided in section 400.9-515 with respect to an initial financing statement.

(c)  To be effective for purposes of subsection (a), an initial financing statement must:

(1)  Satisfy the requirements of Part 5 for an initial financing statement;

(2)  Identify the pre-effective-date financing statement by indicating the office in which the financing statement was filed and providing the dates of filing and file numbers, if any, of the financing statement and of the most recent continuation statement filed with respect to the financing statement; and

(3)  Indicate that the pre-effective-date financing statement remains effective.

400.9-707.  A person may file an initial financing statement or a continuation statement under this part if:

(1)  The secured party of record authorizes the filing; and

(2)  The filing is necessary under this part:

(A)  To continue the effectiveness of a financing statement filed before this act takes effect; or

(B)  To perfect or continue the perfection of a security interest.

400.9-708.  (a)  This act determines the priority of conflicting claims to collateral.  However, if the relative priorities of the claims were established before this act takes effect, former article 9 determines priority.

(b)  For purposes of section 400.9-322(a), the priority of a security interest that becomes enforceable under section 400.9-203 of this act dates from the time this act takes effect if the security interest is perfected under this act by the filing of a financing statement before this act takes effect which would not have been effective to perfect the security interest under former article 9.  This subsection does not apply to conflicting security interests each of which is perfected by the filing of such a financing statement.

[400.9-101.  This article shall be known and may be cited as "Uniform Commercial Code--Secured Transactions".][400.9-102.  (1)  Except as otherwise provided in section 400.9-104 on excluded transactions, this article applies

(a)  to any transaction (regardless of its form) which is intended to create a security interest in personal property or fixtures including goods, documents, instruments, general intangibles, chattel papers, or accounts; and also

(b)  to any sale of accounts or chattel paper.

(2)  This article applies to security interests created by contract including pledge, assignment, chattel mortgage, chattel trust, trust deed, factor's lien, equipment trust, conditional sale, trust receipt, other lien or title retention contract and lease or consignment intended as security.  This article does not apply to statutory liens except as provided in section 400.9-310.

(3)  The application of this article to a security interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this article does not apply.][400.9-103.  (1)  Documents, instruments, letters of credit, and ordinary goods.

(a)  This subsection applies to documents and instruments, rights to proceeds of written letters of credit, and to goods other than those covered by a certificate of title described in subsection (2), mobile goods described in subsection (3), and minerals described in subsection (5).

(b)  Except as otherwise provided in this subsection, perfection and the effect of perfection or non-perfection of a security interest in collateral are governed by the law of the jurisdiction where the collateral is when the last event occurs on which is based the assertion that the security interest is perfected or unperfected.

(c)  If the parties to a transaction creating a purchase money security interest in goods in one jurisdiction understand at the time that the security interest attaches that the goods will be kept in another jurisdiction, then the law of the other jurisdiction governs the perfection and the effect of perfection or non-perfection of the security interest from the time it attaches until thirty days after the debtor receives possession of the goods and thereafter if the goods are taken to the other jurisdiction before the end of the thirty-day period.

(d)  When collateral is brought into and kept in this state while subject to a security interest perfected under the law of the jurisdiction from which the collateral was removed, the security interest remains perfected, but if action is required by Part 3 of this article to perfect the security interest,

(i)  if the action is not taken before the expiration of the period of perfection in the other jurisdiction or the end of four months after the collateral is brought into this state, whichever period first expires, the security interest becomes unperfected at the end of that period and is thereafter deemed to have been unperfected as against a person who became a purchaser after removal;

(ii)  if the action is taken before the expiration of the period specified in subparagraph (i), the security interest continues perfected thereafter;

(iii)  for the purpose of priority over a buyer of consumer goods (subsection (2) of section 400.9-307), the period of the effectiveness of a filing in the jurisdiction from which the collateral is removed is governed by the rules with respect to perfection in subparagraphs (i) and (ii).

(2)  Certificate of title.

(a)  This subsection applies to goods covered by a certificate of title issued under a statute of this state or of another jurisdiction under the law of which indication of a security interest on the certificate is required as a condition of perfection.

(b)  Except as otherwise provided in this subsection, perfection and the effect of perfection or non-perfection of the security interest are governed by the law (including the conflict of laws rules) of the jurisdiction issuing the certificate until four months after the goods are removed from that jurisdiction and thereafter until the goods are registered in another jurisdiction, but in any event not beyond surrender of the certificate.  After the expiration of that period, the goods are not covered by the certificate of title within the meaning of this section.

(c)  Except with respect to the rights of a buyer described in the next paragraph, a security interest, perfected in another jurisdiction otherwise than by notation on a certificate of title, in goods brought into this state and thereafter covered by a certificate of title issued by this state is subject to the rules stated in paragraph (d) of subsection (1).

(d)  If goods are brought into this state while a security interest therein is perfected in any manner under the law of the jurisdiction from which the goods are removed and a certificate of title is issued by this state and the certificate does not show that the goods are subject to the security interest or that they may be subject to security interests not shown on the certificate, the security interest is subordinate to the rights of a buyer of the goods who is not in the business of selling goods of that kind to the extent that he gives value and receives delivery of the goods after issuance of the certificate and without knowledge of the security interest.

(3)  Accounts, general intangibles and mobile goods.

(a)  This subsection applies to accounts (other than an account described in subsection (5) on minerals) and general intangibles (other than uncertificated securities) and to goods which are mobile and which are of a type normally used in more than one jurisdiction, such as motor vehicles, trailers, rolling stock, airplanes, shipping containers, road building and construction machinery and commercial harvesting machinery and the like, if the goods are equipment or are inventory leased or held for lease by the debtor to others, and are not covered by a certificate of title described in subsection (2).

(b)  The law (including the conflict of laws rules) of the jurisdiction in which the debtor is located governs the perfection and the effect of perfection or non-perfection of the security interest.

(c)  If, however, the debtor is located in a jurisdiction which is not a part of the United States, and which does not provide for perfection of the security interest by filing or recording in that jurisdiction, the law of the jurisdiction in the United States in which the debtor has its major executive office in the United States governs the perfection and the effect of perfection or non-perfection of the security interest through filing.  In the alternative, if the debtor is located in a jurisdiction which is not a part of the United States or Canada and the collateral is accounts or general intangibles for money due or to become due, the security interest may be perfected by notification to the account debtor.  As used in this paragraph, "United States" includes its territories and possessions and the Commonwealth of Puerto Rico.

(d)  A debtor shall be deemed located at his place of business if he has one, at his chief executive office if he has more than one place of business, otherwise at his residence.  If, however, the debtor is a foreign air carrier under the Federal Aviation Act of 1958, as amended, it shall be deemed located at the designated office of the agent upon whom service of process may be made on behalf of the foreign air carrier.

(e)  A security interest perfected under the law of the jurisdiction of the location of the debtor is perfected until the expiration of four months after a change of the debtor's location to another jurisdiction, or until perfection would have ceased by the law of the first jurisdiction, whichever period first expires.  Unless perfected in the new jurisdiction before the end of that period, it becomes unperfected thereafter and is deemed to have been unperfected as against a person who became a purchaser after the change.

(4)  Chattel paper.

The rules stated for goods in subsection (1) apply to a possessory security interest in chattel paper.  The rules stated for accounts in subsection (3) apply to a non-possessory security interest in chattel paper, but the security interest may not be perfected by notification to the account debtor.

(5)  Minerals.

Perfection and the effect of perfection or non-perfection of a security interest which is created by a debtor who has an interest in minerals or the like (including oil and gas) before extraction and which attaches thereto as extracted, or which attaches to an account resulting from the sale thereof at the wellhead or minehead or governed by the law (including the conflict of laws rules) of the jurisdiction wherein the wellhead or minehead is located.

(6)  Investment property.

(a)  This subsection applies to investment property.

(b)  Except as otherwise provided in paragraph (f), during the time that a security certificate is located in a jurisdiction, perfection of a security interest, the effect of perfection or non-perfection, and the priority of a security interest in the certificated security represented thereby are governed by the local law of that jurisdiction.

(c)  Except as otherwise provided in paragraph (f), perfection of a security interest, the effect of perfection or non-perfection, and the priority of a security interest in an uncertificated security are governed by the local law of the issuer's jurisdiction as specified in section 400.8-110(d).

(d)  Except as otherwise provided in paragraph (f), perfection of a security interest, the effect of perfection or non-perfection, and the priority of a security interest in a security entitlement or securities account are governed by the local law of the securities intermediary's jurisdiction as specified in section 400.8-110(e).

(e)  Except as otherwise provided in paragraph (f), perfection of a security interest, the effect of perfection or non-perfection, and the priority of a security interest in a commodity contract or commodity account are governed by the local law of the commodity intermediary's jurisdiction.  The following rules determine a "commodity intermediary's jurisdiction" for purposes of this paragraph:

(i)  If an agreement between the commodity intermediary and commodity customer specifies that it is governed by the law of a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.

(ii)  If an agreement between the commodity intermediary and commodity customer does not specify the governing law as provided in subparagraph (i), but expressly specifies that the commodity account is maintained at an office in a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.

(iii)  If an agreement between the commodity intermediary and commodity customer does not specify a jurisdiction as provided in subparagraphs (i) or (ii), the commodity intermediary's jurisdiction is the jurisdiction in which is located the office identified in an account statement as the office serving the commodity customer's account.

(iv)  If an agreement between the commodity intermediary and commodity customer does not specify a jurisdiction as provided in subparagraphs (i) or (ii) and an account statement does not identify an office serving the commodity customer's account as provided in subparagraph (iii), the commodity intermediary's jurisdiction is the jurisdiction in which is located the chief executive office of the commodity intermediary.

(f)  Perfection of a security interest by filing, automatic perfection of a security interest in investment property granted by a broker or securities intermediary, and automatic perfection of a security interest in a commodity contract or commodity account granted by a commodity intermediary are governed by the local law of the jurisdiction in which the debtor is located.][400.9-104.  This article does not apply

(a)  to a security interest subject to any statute of the United States to the extent that such statute governs the rights of parties to and third parties affected by transactions in particular types of property; or

(b)  to a landlord's lien; or

(c)  to a lien given by statute or other rule of law for services or materials except as provided in section 400.9-310 on priority of such liens; or

(d)  to a transfer of a claim for wages, salary or other compensation of an employee; or

(e)  to a transfer by a government or governmental subdivision or agency; or

(f)  to a sale of accounts or chattel paper as part of a sale of the business out of which they arose, or an assignment of accounts or chattel paper which is for the purpose of collection only, or a transfer of a right to payment under a contract to an assignee who is also to do the performance under the contract or a transfer of a single account to an assignee in whole or partial satisfaction of a preexisting indebtedness; or

(g)  to a transfer of an interest or claim in or under any policy of insurance, except as provided with respect to proceeds (section 400.9-306) and priorities and proceeds (section 400.9-312); or

(h)  to a right represented by a judgment (other than a judgment taken on a right to payment which was collateral); or

(i)  to any right of setoff; or

(j)  except to the extent that provision is made for fixtures in section 400.9-313, to the creation or transfer of an interest in or lien on real estate, including a lease or rents thereunder; or

(k)  to a transfer in whole or in part of any claim arising out of tort; or

(l)  to a transfer of an interest in any deposit account (subsection (1) of section 400.9-105), except as provided with respect to proceeds (section 400.9-306) and priorities and proceeds (section 400.9-312); or

(m)  to a transfer of an interest in a letter of credit other than the rights to proceeds of a written letter of credit.][400.9-105.  (1)  In this Article unless the context otherwise requires:

(a)  "Account debtor" means the person who is obligated on an account, chattel paper or general intangible;

(b)  "Chattel paper" means a writing or writings which evidence both a monetary obligation and a security interest in or a lease of specific goods, but a charter or other contract involving the use or hire of a vessel is not chattel paper.  When a transaction is evidenced both by such a security agreement or a lease and by an instrument or a series of instruments, the group of writings taken together constitutes chattel paper;

(c)  "Collateral" means the property subject to a security interest, and includes accounts and chattel paper which have been sold;

(d)  "Debtor" means the person who owes payment or other performance of the obligation secured, whether or not he owns or has rights in the collateral, and includes the seller of accounts or chattel paper.  Where the debtor and the owner of the collateral are not the same person, the term "debtor" means the owner of the collateral in any provision of the article dealing with the collateral, the obligor in any provision dealing with the obligation, and may include both where the context so requires;

(e)  "Deposit account" means a demand, time, savings, passbook or like account maintained with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a certificate of deposit;

(f)  "Document" means document of title as defined in the general definitions of article 1 (section 400.1-201), and a receipt of the kind described in subsection (2) of section 400.7-201;

(g)  "Encumbrance" includes real estate mortgages and other liens on real estate and all other rights in real estate that are not ownership interests;

(h)  "Goods" includes all things which are movable at the time the security interest attaches or which are fixtures (section 400.9-313), but does not include money, documents, instruments, investment property, accounts, chattel paper, general intangibles, or minerals or the like (including oil and gas) before extraction.  "Goods" also includes standing timber which is to be cut and removed under a conveyance or contract for sale, the unborn young of animals and growing crops;

(i)  "Instrument" means a negotiable instrument (defined in section 400.3-104), or any other writing which evidences a right to the payment of money and is not itself a security agreement or lease and is of a type which is in ordinary course of business transferred by delivery with any necessary endorsement or assignment.  The term does not include investment property;

(j)  "Mortgage" means a consensual interest created by a real estate mortgage, a deed of trust on real estate, or the like;

(k)  An advance is made "pursuant to commitment" if the secured party has bound himself to make it, whether or not a subsequent event of default or other event not within his control has relieved or may relieve him from his obligation;

(l)  "Security agreement" means an agreement which creates or provides for a security interest;

(m)  "Secured party" means a lender, seller or other person in whose favor there is a security interest including a person to whom accounts or chattel paper have been sold.  When the holders of obligations issued under an indenture of trust, equipment trust agreement or the like are represented by a trustee or other person, the representative is the secured party;

(n)  "Transmitting utility" means any person primarily engaged in the railroad, street railway or trolly bus business, the electric or electronics communications transmission business, the transmission of goods by pipeline, or the transmission or the production and transmission of electricity, steam, gas or water, or the provision of sewer service;

(2)  Other definitions applying to this Article and the sections in which they appear are:

"Account".  Section 400.9-106.

"Attach".  Section 400.9-203.

"Commodity contract".  Section 400.9-115.

"Commodity customer".  Section 400.9-115.

"Commodity intermediary".  Section 400.9-115.

"Construction mortgage".  Section 400.9-313(1).

"Consumer goods".  Section 400.9-109(1).

"Control".  Section 400.9-115.

"Equipment".  Section 400.9-109(2).

"Farm products".  Section 400.9-109(3).

"Fixture".  Section 400.9-313.

"Fixture filing".  Section 400.9-313.

"General intangibles".  Section 400.9-106.

"Inventory".  Section 400.9-109(4).

"Investment property".  Section 400.9-115.

"Letter of credit".  Section 400.5-102.

"Lien creditor".  Section 400.9-301(3).

"Proceeds".  Section 400.9-306(1).

"Purchase money security interest".  Section 400.9-107.

"Rights to proceeds of a written letter of credit".  Section 400.5- 114(a).

"United States".  Section 400.9-103.

(3)  The following definitions in other articles apply to this article:

"Broker".  Section 400.8-102.

"Certificated security".  Section 400.8-102.

"Check".  Section 400.3-104.

"Clearing corporation".  Section 400.8-102.

"Contract for sale".  Section 400.2-106.

"Control".  Section 400.8-106.

"Delivery".  Section 400.8-301.

"Entitlement holder".  Section 400.8-102.

"Financial asset".  Section 400.8-102.

"Holder in due course".  Section 400.3-302.

"Note".  Section 400.3-104.

"Sale".  Section 400.2-106.

"Securities intermediary".  Section 400.8-102.

"Security".  Section 400.8-102.

"Security certificate".  Section 400.8-102.

"Security entitlement".  Section 400.8-102.

"Uncertificated security".  Section 400.8-102.

(4)  In addition article 1 contains general definitions and principles of construction and interpretation applicable throughout this article.][400.9-106.  "Account" means any right to payment for goods sold or leased or for services rendered which is not evidenced by an instrument or chattel paper, whether or not it has been earned by performance.  "General intangibles" means any personal property (including things in action) other than goods, accounts, chattel paper, documents, investment property, instruments, rights to proceeds of written letters of credit, and money.  All rights to payment earned or unearned under a charter or other contract involving the use or hire of a vessel and all rights incident to the charter or contract are accounts.][400.9-107.  A security interest is a "purchase money security interest" to the extent that it is

(a)  taken or retained by the seller of the collateral to secure all or part of its price; or

(b)  taken by a person who by making advances or incurring an obligation gives value to enable the debtor to acquire rights in or the use of collateral if such value is in fact so used.][400.9-108.  Where a secured party makes an advance, incurs an obligation, releases a perfected security interest, or otherwise gives new value which is to be secured in whole or in part by after-acquired property his security interest in the after-acquired collateral shall be deemed to be taken for new value and not as security for an antecedent debt if the debtor acquires his rights in such collateral either in the ordinary course of his business or under a contract of purchase made pursuant to the security agreement within a reasonable time after new value is given.][400.9-109.  Goods are

(1)  "Consumer goods" if they are used or bought for use primarily for personal, family or household purposes;

(2)  "Equipment" if they are used or bought for use primarily in business (including farming or a profession) or by a debtor who is a nonprofit organization or a governmental subdivision or agency or if the goods are not included in the definitions of inventory, farm products or consumer goods;

(3)  "Farm products" if they are crops or livestock or supplies used or produced in farming operations or if they are products of crops or livestock in their unmanufactured states (such as ginned cotton, woolclip, maple syrup, milk and eggs), and if they are in the possession of a debtor engaged in raising, fattening, grazing or other farming operations.  If goods are farm products they are neither equipment nor inventory;

(4)  "Inventory" if they are held by a person who holds them for sale or lease or to be furnished under contracts of service or if he has so furnished them, or if they are raw materials, work in process or materials used or consumed in a business.  Inventory of a person is not to be classified as his equipment.][400.9-110.  For the purposes of this article any description of personal property or real estate is sufficient whether or not it is specific if it reasonably identifies what is described.][400.9-111.  The creation of a security interest is not a bulk transfer under article 6 (see section 400.6-103).][400.9-112.  Unless otherwise agreed, when a secured party knows that collateral is owned by a person who is not the debtor, the owner of the collateral is entitled to receive from the secured party any surplus under section 400.9-502(2) or under section 400.9-504(1), and is not liable for the debt or for any deficiency after resale, and he has the same right as the debtor

(a)  to receive statements under section 400.9-208;

(b)  to receive notice of and to object to a secured party's proposal to retain the collateral in satisfaction of the indebtedness under section 400.9-505;

(c)  to redeem the collateral under section 400.9-506;

(d)  to obtain injunctive or other relief under section 400.9-507(1); and

(e)  to recover losses caused to him under section 400.9-208(2).][400.9-113.  A security interest arising solely under the Article on Sales (Article 2) or the Article on Leases (Article 2A) is subject to the provisions of this Article except that to the extent that and so long as the debtor does not have or does not lawfully obtain possession of the goods

(a)  no security agreement is necessary to make the security interest enforceable; and

(b)  no filing is required to perfect the security interest; and

(c)  the rights of the secured party on default by the debtor are governed (i) by the Article on Sales (Article 2) in the case of a security interest arising solely under such Article or (ii) by the Article on Leases (Article 2A) in the case of a security interest arising solely under such Article.][400.9-114.  (1)  A person who delivers goods under a consignment which is not a security interest and who would be required to file under this article by paragraph (3)(c) of section 400.2-326 has priority over a secured party who is or becomes a creditor of the consignee and who would have a perfected security interest in the goods if they were the property of the consignee, and also has priority with respect to identifiable cash proceeds received on or before delivery of the goods to a buyer, if

(a)  the consignor complies with the filing provision of the article on sales with respect to consignments (paragraph (3)(c) of section 400.2-326) before the consignee receives possession of the goods; and

(b)  the consignor gives notification in writing to the holder of the security interest if the holder has filed a financing statement covering the same types of goods before the date of the filing made by the consignor; and

(c)  the holder of the security interest receives the notification within five years before the consignee receives possession of the goods; and

(d)  the notification states that the consignor expects to deliver goods on consignment to the consignee, describing the goods by item or type.

(2)  In the case of a consignment which is not a security interest and in which the requirements of the preceding subsection have not been met, a person who delivers goods to another is subordinate to a person who would have a perfected security interest in the goods if they were the property of the debtor.

(3)  A person who consigns consumer goods, except for motor vehicles, trailers, manufactured or mobile homes not for highway use, and any type of watercraft, as defined in chapter 306, RSMo, to a consignee to sell shall have the sole obligation to notify the lienholder of the goods to be sold, that such goods will be offered for sale on a certain date.  At no time shall the consignee be held liable to the lienholder, providing the consignee sells in good faith and is acting only as the agent for the consignor.][400.9-115.  (1)  In this article:

(a)  "Commodity account" means an account maintained by a commodity intermediary in which a commodity contract is carried for commodity customers;

(b)  "Commodity contract" means a commodity futures contract, an option on a commodity futures contract, a commodity option, or other contract that, in each case, is:

(i)  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 the federal commodities laws; or

(ii)  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;

(c)  "Commodity customer" means a person for whom a commodity intermediary carries a commodity contract on its books;

(d)  "Commodity intermediary" means:

(i)  A person who is registered as a futures commission merchant under the federal commodities laws; or

(ii)  A person who 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 the federal commodities laws;

(e)  "Control" with respect to a certificated security, uncertificated security, or security entitlement has the meaning specified in section 400.8-106.  A secured party has control over a commodity contract if by agreement among the commodity customer, the commodity intermediary, and the secured party, the commodity intermediary has agreed that it will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer.  If a commodity customer grants a security interest in a commodity contract to its own commodity intermediary, the commodity intermediary as secured party has control.  A secured party has control over a securities account or commodity account if the secured party has control over all security entitlements or commodity contracts carried in the securities account or commodity account;

(f)  "Investment property" means:

(i)  A security, whether certificated or uncertificated;

(ii)  A security entitlement;

(iii)  A securities account;

(iv)  A commodity contract; or

(v)  A commodity account.

(2)  Attachment or perfection of a security interest in a securities account is also attachment or perfection of a security interest in all security entitlements carried in the securities account.  Attachment or perfection of a security interest in a commodity account is also attachment or perfection of a security interest in all commodity contracts carried in the commodity account.

(3)  A description of collateral in a security agreement or financing statement is sufficient to create or perfect a security interest in a certificated security, uncertificated security, security entitlement, securities account, commodity contract, or commodity account whether it describes the collateral by those terms, or as investment property, or by description of the underlying security, financial asset, or commodity contract.  A description of investment property collateral in a security agreement or financing statement is sufficient if it identifies the collateral by specific listing, by category, by quantity, by a computational or allocational formula or procedure, or by any other method, if the identity of the collateral is objectively determinable.

(4)  Perfection of a security interest in investment property is governed by the following rules:

(a)  A security interest in investment property may be perfected by control;

(b)  Except as otherwise provided in paragraphs (c) and (d), a security interest in investment property may be perfected by filing;

(c)  If the debtor is a broker or securities intermediary, a security interest in investment property is perfected when it attaches.  The filing of a financing statement with respect to a security interest in investment property granted by a broker or securities intermediary has no effect for purposes of perfection or priority with respect to that security interest;

(d)  If a debtor is a commodity intermediary, a security interest in a commodity contract or a commodity account is perfected when it attaches.  The filing of a financing statement with respect to a security interest in a commodity contract or a commodity account granted by a commodity intermediary has no effect for purposes of perfection or priority with respect to that security interest.

(5)  Priority between conflicting security interests in the same investment property is governed by the following rules:

(a)  A security interest of a secured party who has control over investment property has priority over a security interest of a secured party who does not have control over the investment property;

(b)  Except as otherwise provided in paragraphs (c) and (d), conflicting security interest of secured parties each of whom has control rank equally;

(c)  Except as otherwise agreed by the securities intermediary, a security interest in a security entitlement or a securities account granted to the debtor's own securities intermediary has priority over any security interest granted by the debtor to another secured party;

(d)  Except as otherwise agreed by the commodity intermediary, a security interest in a commodity contract or a commodity account granted to the debtor's own commodity intermediary has priority over any security interest granted by the debtor to another secured party;

(e)  Conflicting security interests granted by a broker, a securities intermediary, or a commodity intermediary which are perfected without control rank equally;

(f)  In all other cases, priority between conflicting security interest in investment property is governed by section 400.9-312(5), (6), and (7).  Section 400.9-312(4) does not apply to investment property.

(6)  If a security certificate in registered form is delivered to a secured party pursuant to agreement, a written security agreement is not required for attachment or enforceability of the security interest, delivery suffices for perfection of the security interest, and the security interest has priority over a conflicting security interest perfected by means other than control, even if a necessary indorsement is lacking.][400.9-116.  (1)  If a person buys a financial asset through a securities intermediary in a transaction in which the buyer is obligated to pay the purchase price to the securities intermediary at the time of the purchase, and the securities intermediary credits the financial asset to the buyer's securities account before the buyer pays the securities intermediary, the securities intermediary has a security interest in the buyer's security entitlement securing the buyer's obligation to pay.  A security agreement is not required for attachment or enforceability of the security interest, and the security interest is automatically perfected.

(2)  If a certificated security, or other financial asset represented by a writing which in the ordinary course of business is transferred by delivery with any necessary indorsement or assignment is delivered pursuant to an agreement between persons in the business of dealing with such securities or financial assets and the agreement calls for delivery versus payment, the person delivering the certificate or other financial asset has a security interest in the certificated security or other financial asset securing the seller's right to receive payment.  A security agreement is not required for attachment or enforceability of the security interest, and the security interest is automatically perfected.][400.9-201.  Except as otherwise provided by this chapter a security agreement is effective according to its terms between the parties, against purchasers of the collateral and against creditors.  Nothing in this article validates any charge or practice illegal under any statute or regulation thereunder governing usury, small loans, retail installment sales, or the like, or extends the application of any such statute or regulation to any transaction not otherwise subject thereto.][400.9-202.  Each provision of this article with regard to rights, obligations and remedies applies whether title to collateral is in the secured party or in the debtor.][400.9-203.  (1)  Subject to the provisions of section 400.4-208 on the security interest of a collecting bank, sections 400.9-115 and 400.9- 116 on security interests in investment property, and section 400.9-113 on a security interest arising under the article on sales, a security interest is not enforceable against the debtor or third parties with respect to the collateral and does not attach unless:

(a)  the collateral is in the possession of the secured party pursuant to agreement, the collateral is investment property and the secured party has control pursuant to agreement, or the debtor has signed a security agreement which contains a description of the collateral and in addition, when the security interest covers timber to be cut, a description of the land concerned;

(b)  value has been given; and

(c)  the debtor has rights in the collateral.

(2)  A security interest attaches when it becomes enforceable against the debtor with respect to the collateral.  Attachment occurs as soon as all of the events specified in subsection (1) have taken place unless explicit agreement postpones the time of attaching.

(3)  Unless otherwise agreed a security agreement gives the secured party the rights to proceeds provided by section 400.9-306.

(4)  A transaction, although subject to this article, is also subject to sections 365.010 to 365.160, RSMo, and sections 408.100 to 408.562, RSMo, and in the case of conflict between the provisions of this article and any such statute, the provisions of such statute control.  Failure to comply with any applicable statute has only the effect which is specified therein.][400.9-204.  (1)  Except as provided in subsection (2), a security agreement may provide that any or all obligations covered by the security agreement are to be secured by after-acquired collateral.

(2)  No security interest attaches under an after-acquired property clause to consumer goods other than accessions (section 400.9-314) when given as additional security unless the debtor acquires rights in them within ten days after the secured party gives value.

(3)  Obligations covered by a security agreement may include future advances or other value whether or not the advances or value are given pursuant to commitment (subsection (1) of section 400.9-105).][400.9-205.  A security interest is not invalid or fraudulent against creditors by reason of liberty in the debtor to use, commingle or dispose of all or part of the collateral (including returned or repossessed goods) or to collect or compromise accounts or chattel paper, or to accept the return of goods or make repossessions or to use, commingle or dispose of proceeds, or by reason of the failure of the secured party to require the debtor to account for proceeds or replace collateral.  This section does not relax the requirements of possession where perfection of a security interest depends upon possession of the collateral by the secured party or by a bailee.][400.9-206.  (1)  Subject to any statute or decision which establishes a different rule for buyers or lessees of consumer goods, an agreement by a buyer or lessee that he will not assert against an assignee any claim or defense which he may have against the seller or lessor is enforceable by an assignee who takes his assignment for value, in good faith and without notice of a claim or defense, except as to defenses of a type which may be asserted against a holder in due course of a negotiable instrument under the article on commercial paper (article 3).  A buyer who as part of one transaction signs both a negotiable instrument and a security agreement makes such an agreement.

(2)  When a seller retains a purchase money security interest in goods the article on sales (article 2) governs the sale and any disclaimer, limitation or modification of the seller's warranties.][400.9-207.  (1)  A secured party must use reasonable care in the custody and preservation of collateral in his possession.  In the case of an instrument or chattel paper reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed.

(2)  Unless otherwise agreed, when collateral is in the secured party's possession

(a)  reasonable expenses (including the cost of any 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;

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

(c)  the secured party may hold as additional security any increase or profits (except money) received from the collateral, but money so received, unless remitted to the debtor, shall be applied in reduction of the secured obligation;

(d)  the secured party must keep the collateral identifiable but fungible collateral may be commingled;

(e)  the secured party may repledge the collateral upon terms which do not impair the debtor's right to redeem it.

(3)  A secured party is liable for any loss caused by his failure to meet any obligation imposed by the preceding subsections but does not lose his security interest.

(4)  A secured party may use or operate the collateral for the purpose of preserving the collateral or its value or pursuant to the order of a court of appropriate jurisdiction or, except in the case of consumer goods, in the manner and to the extent provided in the security agreement.][400.9-208.  (1)  A debtor may sign a statement indicating what he believes to be the aggregate amount of unpaid indebtedness as of a specified date and may send it to the secured party with a request that the statement be approved or corrected and returned to the debtor.  When the security agreement or any other record kept by the secured party identifies the collateral a debtor may similarly request the secured party to approve or correct a list of the collateral.

(2)  The secured party must comply with such a request within two weeks after receipt by sending a written correction or approval.  If the secured party claims a security interest in all of a particular type of collateral owned by the debtor he may indicate that fact in his reply and need not approve or correct an itemized list of such collateral.  If the secured party without reasonable excuse fails to comply he is liable for any loss caused to the debtor thereby; and if the debtor has properly included in his request a good faith statement of the obligation or a list of the collateral or both the secured party may claim a security interest only as shown in the statement against persons misled by his failure to comply.  If he no longer has an interest in the obligation or collateral at the time the request is received he must disclose the name and address of any successor in interest known to him and he is liable for any loss caused to the debtor as a result of failure to disclose.  A successor in interest is not subject to this section until a request is received by him.

(3)  A debtor is entitled to such a statement once every six months without charge.  The secured party may require payment of a charge not exceeding ten dollars for each additional statement furnished.][400.9-301.  (1)  Except as otherwise provided in subsection (2), an unperfected security interest is subordinate to the rights of

(a)  persons entitled to priority under section 400.9-312;

(b)  a person who becomes a lien creditor before the security interest is perfected;

(c)  in the case of goods, instruments, documents, and chattel paper, a person who is not a secured party and who is a transferee in bulk or other buyer not in ordinary course of business to the extent that he gives value and receives delivery of the collateral without knowledge of the security interest and before it is perfected;

(d)  in the case of accounts, general intangibles, and investment property, a person who is not a secured party and who is a transferee to the extent that he gives value without knowledge of the security interest and before it is perfected.

(2)  If the secured party files with respect to a purchase money security interest before or within twenty days after the debtor receives possession of the collateral, he takes priority over the rights of a transferee in bulk or of a lien creditor which arise between the time the security interest attaches and the time of filing.

(3)  A "lien creditor" means a creditor who has acquired a lien on the property involved by attachment, levy or the like and includes an assignee for benefit of creditors from the time of assignment, and a trustee in bankruptcy from the date of the filing of the petition or a receiver in equity from the time of appointment.

(4)  A person who becomes a lien creditor while a security interest is perfected takes subject to the security interest only to the extent that it secures advances made before he becomes a lien creditor or within forty-five days thereafter or made without knowledge of the lien or pursuant to a commitment entered into without knowledge of the lien.][400.9-302.  (1)  A financing statement must be filed to perfect all security interests except the following:

(a)  a security interest in collateral in possession of the secured party under section 400.9-305;

(b)  a security interest temporarily perfected in instruments, certificated securities, or documents without delivery under section 400.9-304 or in proceeds for a ten-day period under section 400.9-306;

(c)  a security interest created by an assignment of a beneficial interest in a trust or a decedent's estate;

(d)  a purchase money security interest in consumer goods; but filing is required for a motor vehicle required to be registered; and fixture filing is required for priority over conflicting interests in fixtures to the extent provided in section 400.9-313;

(e)  an assignment of accounts which does not alone or in conjunction with other assignments to the same assignee transfer a significant part of the outstanding accounts of the assignor;

(f)  a security interest of a collecting bank (section 400.4-208) or in securities (section 400.8-321) or arising under the article on sales (see section 400.9-113) or covered in subsection (3) of this section;

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

(h)  a security interest in investment property which is perfected without filing under section 400.9-115 or section 400.9-116.

(2)  If a secured party assigns a perfected security interest, no filing under this article is required in order to continue the perfected status of the security interest against creditors of and transferees from the original debtor.

(3)  The filing of a financing statement otherwise required by this article is not necessary or effective to perfect a security interest in property subject to

(a)  a statute or treaty of the United States which provides for a national or international registration or a national or international certificate of title or which specifies a place of filing different from that specified in this article for filing of the security interests; or

(b)  section 301.190, RSMo, or section 306.400, RSMo; but during any period in which collateral is inventory held for sale by a person who is in the business of selling goods of that kind, the filing provisions of this article (part 4) apply to a security interest in that collateral created by him as debtor; or

(c)  a certificate of title statute of another jurisdiction under the law of which indication of a security interest on the certificate is required as a condition of perfection (subsection (2) of section 400.9-103).

(4)  Compliance with a statute or treaty described in subsection (3) is equivalent to the filing of a financing statement under this article, and a security interest in property subject to the statute or treaty can be perfected only by compliance therewith, except as provided in section 400.9-103 on multiple state transactions.  Duration and renewal of perfection of a security interest perfected by compliance with the statute or treaty or governed by the provisions of the statute or treaty; in other respects the security interest is subject to this article.][400.9-303.  (1)  A security interest is perfected when it has attached and when all of the applicable steps required for perfection have been taken.  Such steps are specified in sections 400.9-115, 400.9-302, 400.9-304, 400.9-305 and 400.9-306.  If such steps are taken before the security interest attaches, it is perfected at the time when it attaches.

(2)  If a security interest is originally perfected in any way permitted under this article and is subsequently perfected in some other way under this article, without an intermediate period when it was unperfected, the security interest shall be deemed to be perfected continuously for the purposes of this article.][400.9-304.  (1)  A security interest in chattel paper or negotiable documents may be perfected by filing.  A security interest in the rights to proceeds of a written letter of credit can be perfected only by the secured party's taking possession of the letter of credit.  A security interest in money or instruments (other than instruments which constitute part of chattel paper) can be perfected only by the secured party's taking possession, except as provided in subsections (4) and (5) of this section and subsections (2) and (3) of section 400.9-306 on proceeds.

(2)  During the period that goods are in the possession of the issuer of a negotiable document therefor, a security interest in the goods is perfected by perfecting a security interest in the document, and any security interest in the goods otherwise perfected during such period is subject thereto.

(3)  A security interest in goods in the possession of a bailee other than one who has issued a negotiable document therefor is perfected by issuance of a document in the name of the secured party or by the bailee's receipt of notification of the secured party's interest or by filing as to the goods.

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

(5)  A security interest remains perfected for a period of twenty-one days without filing where a secured party having a perfected security interest in an instrument, a certificated security, a negotiable document or goods in possession of a bailee other than one who has issued a negotiable document therefor:

(a)  makes available to the debtor the goods or documents representing the goods for the purpose of ultimate sale or exchange or for the purpose of loading, unloading, storing, shipping, transshipping, manufacturing, processing or otherwise dealing with them in a manner preliminary to their sale or exchange, but priority between conflicting security interests in the goods is subject to subsection (3) of section 400.9-312; or

(b)  delivers the instrument or certificated security to the debtor for the purpose of ultimate sale or exchange or of presentation, collection, renewal, or registration of transfer.

(6)  After the twenty-one day period in subsections (4) and (5) perfection depends upon compliance with applicable provisions of this article.][400.9-305.  A security interest in letters of credit and advices of credit (subsection (2)(a) of section 400.5-116), goods, instruments, money, negotiable documents, or chattel paper may be perfected by the secured party's taking possession of the collateral.  A security interest in the right to proceeds of a written letter of credit may be perfected by the secured party's taking possession of the letter of credit.  If such collateral other than goods covered by a negotiable document is held by a bailee, the secured party is deemed to have possession from the time the bailee receives notification of the secured party's interest.  A security interest is perfected by possession from the time possession is taken without relation back and continues only so long as possession is retained, unless otherwise specified in this article.  The security interest may be otherwise perfected as provided in this article before or after the period of possession by the secured party.][400.9-306.  (1)  "Proceeds" includes whatever is received upon the sale, exchange, collection or other disposition of collateral or proceeds.  Insurance payable by reason of loss or damage to the collateral is proceeds, except to the extent that it is payable to a person other than a party to the security agreement.  Any payments or distributions made with respect to investment property collateral are proceeds.  Money, checks, deposit accounts and the like are "cash proceeds".  All other proceeds are "non-cash proceeds".

(2)  Except where this article otherwise provides, a security interest continues in collateral notwithstanding sale, exchange or other disposition thereof unless the disposition was authorized by the secured party in the security agreement or otherwise provided the creditor agrees in writing, and also continues in any identifiable proceeds including collections received by the debtor.

(3)  The security interest in proceeds is a continuously perfected security interest if the interest in the original collateral was perfected but it ceases to be a perfected security interest and becomes unperfected ten days after receipt of the proceeds by the debtor unless

(a)  a filed financing statement covers the original collateral and the proceeds are collateral in which a security interest may be perfected by filing in the office or offices where the financing statement has been filed and, if the proceeds are acquired with cash proceeds, the description of collateral in the financing statement indicates the types of property constituting the proceeds;

(b)  a filed financing statement covers the original collateral and the proceeds are identifiable cash proceeds;

(c)  the original collateral was investment property and the proceeds are identifiable cash proceeds; or

(d)  the security interest in the proceeds is perfected before the expiration of the ten-day period.  Except as provided in this section, a security interest in proceeds can be perfected only by the methods or under the circumstances permitted in this article for original collateral of the same type.

(4)  In the event of insolvency proceedings instituted by or against a debtor, a secured party with a perfected security interest in proceeds has a perfected security interest only in the following proceeds:

(a)  in identifiable non-cash proceeds and in separate deposit accounts containing only proceeds;

(b)  in identifiable cash proceeds in the form of money which is neither commingled with other money nor deposited in a deposit account prior to the insolvency proceedings;

(c)  in identifiable cash proceeds in the form of checks and the like which are not deposited in a deposit account prior to the insolvency proceedings; and

(d)  in all cash and deposit accounts of the debtor in which proceeds have been commingled with other funds, but the perfected security interest under this paragraph (d) is

(i)  subject to any right of setoff; and

(ii)  limited to an amount not greater than the amount of any cash proceeds received by the debtor within ten days before the institution of the insolvency proceedings less the sum of (I) the payments to the secured party on account of cash proceeds received by the debtor during such period and (II) the cash proceeds received by the debtor during such period to which the secured party is entitled under paragraphs (a) through (c) of this subsection (4).

(5)  If a sale of goods results in an account or chattel paper which is transferred by the seller to a secured party, and if the goods are returned to or are repossessed by the seller or the secured party, the following rules determine priorities:

(a)  If the goods were collateral at the time of sale, for an indebtedness of the seller which is still unpaid, the original security interest attaches again to the goods and continues as a perfected security interest if it was perfected at the time when the goods were sold.  If the security interest was originally perfected by a filing which is still effective, nothing further is required to continue the perfected status; in any other case, the secured party must take possession of the returned or repossessed goods or must file.

(b)  An unpaid transferee of the chattel paper has a security interest in the goods against the transferor.  Such security interest is prior to a security interest asserted under paragraph (a) to the extent that the transferee of the chattel paper was entitled to priority under section 400.9-308.

(c)  An unpaid transferee of the account has a security interest in the goods against the transferor.  Such security interest is subordinate to a security interest asserted under paragraph (a).

(d)  A security interest of an unpaid transferee asserted under paragraph (b) or (c) must be perfected for protection against creditors of the transferor and purchasers of the returned or repossessed goods.][400.9-307.  (1)  A buyer in ordinary course of business (subsection (9) of section 400.1-201) other than a person buying farm products from a person engaged in farming operations takes free of a security interest created by his seller even though the security interest is perfected and even though the buyer knows of its existence.

(2)  In the case of consumer goods and in the case of farm equipment having an original purchase price not in excess of five hundred dollars (other than fixtures, see section 400.9-313), a buyer takes free of a security interest even though perfected if he buys without knowledge of the security interest, for value and for his own personal, family or household purposes or his own farming operations unless prior to the purchase the secured party has filed a financing statement covering such goods.][400.9-308.  A purchaser of chattel paper or an instrument who gives new value and takes possession of it in the ordinary course of his business has priority over a security interest in the chattel paper or instrument

(a)  which is perfected under section 400.9-304 (permissive filing and temporary perfection) or under section 400.9-306 (perfection as to proceeds) if he acts without knowledge that the specific paper or instrument is subject to a security interest; or

(b)  which is claimed merely as proceeds of inventory subject to a security interest (section 400.9-306) even though he knows that the specific paper or instrument is subject to the security interest.][400.9-309.  Nothing in this article limits the rights of a holder in due course of a negotiable instrument (section 400.3-302) or a holder to whom a negotiable document of title has been duly negotiated (section 400.7-501) or a protected purchaser of a security (section 400.8-303) and such holders or purchasers take priority over an earlier security interest even though perfected.  Filing under this article does not constitute notice of the security interest to such holders or purchasers.][400.9-310.  When a person in the ordinary course of his business furnishes services or materials with respect to goods subject to a security interest, a lien upon goods in the possession of such person given by statute or rule of law for such materials or services takes priority over a perfected security interest unless the lien is statutory and the statute expressly provides otherwise.][400.9-311.  The debtor's rights in collateral may be voluntarily or involuntarily transferred (by way of sale, creation of a security interest, attachment, levy, garnishment or other judicial process) notwithstanding a provision in the security agreement prohibiting any transfer or making the transfer constitute a default.][400.9-312.  (1)  The rules of priority stated in other sections of this part and in the following sections shall govern when applicable: section 400.4-210, with respect to the security interests of collecting banks in items being collected, accompanying documents and proceeds; section 400.9-103 on security interests related to other jurisdictions; section 400.9-114 on consignments; section 400.9-115 on security interests in investment property.

(2)  A perfected security interest in crops for new value given to enable the debtor to produce the crops during the production season and given not more than three months before the crops become growing crops by planting or otherwise takes priority over an earlier perfected security interest to the extent that such earlier interest secures obligations due more than six months before the crops become growing crops by planting or otherwise, even though the person giving new value had knowledge of the earlier security interest.

(3)  A perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory and also has priority in identifiable cash proceeds received on or before the delivery of the inventory to a buyer if

(a)  the purchase money security interest is perfected at the time the debtor receives possession of the inventory; and

(b)  the purchase money secured party gives notification in writing to the holder of the conflicting security interest if the holder had filed a financing statement covering the same types of inventory (i) before the date of the filing made by the purchase money secured party, or (ii) before the beginning of the twenty-one-day period where the purchase money security interest is temporarily perfected without filing or possession (subsection (5) of section 400.9-304); and

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

(d)  the notification states that the person giving the notice has or expects to acquire a purchase money security interest in inventory of the debtor, describing such inventory by item or type.

(4)  A purchase money security interest in collateral other than inventory has priority over a conflicting security interest in the same collateral or its proceeds if the purchase money security interest is perfected at the time the debtor receives possession of the collateral or within twenty days thereafter.

(5)  In all cases not governed by other rules stated in this section (including cases of purchase money security interests which do not qualify for the special priorities set forth in subsections (3) and (4) of this section), priority between conflicting security interests in the same collateral shall be determined according to the following rules:

(a)  Conflicting security interests rank according to priority in time of filing or perfection.  Priority dates from the time a filing is first made covering the collateral or the time the security interest is first perfected, whichever is earlier, provided that there is no period thereafter when there is neither filing nor perfection.

(b)  So long as conflicting security interests are unperfected, the first to attach has priority.

(6)  For the purposes of subsection (5) a date of filing or perfection as to collateral is also a date of filing or perfection as to proceeds.

(7)  If future advances are made while a security interest is perfected by filing, the taking of possession, or under section 400.9-115 or section 400.9-116 on investment property, the security interest has the same priority for the purposes of subsection (5) or section 400.9-115(5) with respect to the future advances as it does with respect to the first advance.  If a commitment is made before or while the security interest is so perfected, the security interest has the same priority with respect to advances made pursuant thereto.  In other cases a perfected security interest has priority from the date the advance is made.][400.9-313.  (1)  In this section and in the provisions of part 4 of this article referring to fixture filing, unless the context otherwise requires

(a)  goods are "fixtures" when they become so related to particular real estate that an interest in them arises under real estate law;

(b)  a "fixture filing" is the filing in the office where a mortgage on the real estate would be filed or recorded of a financing statement covering goods which are or are to become fixtures and conforming to the requirements of subsection (5) of section 400.9-402;

(c)  a mortgage is a "construction mortgage" to the extent that it secures an obligation incurred for the construction of an improvement on land including the acquisition cost of the land, if the recorded writing so indicates.

(2)  A security interest under this article may be created in goods which are fixtures or may continue in goods which become fixtures, but no security interest exists under this article in ordinary building materials incorporated into an improvement on land.

(3)  This article does not prevent creation of an encumbrance upon fixtures pursuant to real estate law.

(4)  A perfected security interest in fixtures has priority over the conflicting interest of an encumbrancer or owner of the real estate where

(a)  the security interest is a purchase money security interest, the interest of the encumbrancer or owner arises before the goods become fixtures, the security interest is perfected by a fixture filing before the goods become fixtures or within ten days thereafter, and the debtor has an interest of record in the real estate or is in possession of the real estate; or

(b)  the security interest is perfected by a fixture filing before the interest of the encumbrancer or owner is of record, the security interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner, and the debtor has an interest of record in the real estate or is in possession of the real estate; or

(c)  the fixtures are readily removable factory or office machines or readily removable replacements of domestic appliances which are consumer goods, and before the goods become fixtures the security interest is perfected by any method permitted by this article; or

(d)  the conflicting interest is a lien on the real estate obtained by legal or equitable proceedings after the security interest was perfected by any method permitted by this article.

(5)  A security interest in a manufactured home as defined in section 700.010, RSMo, which has been perfected pursuant to sections 700.350 to 700.390, RSMo, has priority over the conflicting interest of an encumbrancer or owner of the real estate if the security agreement was made before the manufactured home was placed upon the real estate.  This subdivision shall apply only to security interests in manufactured homes which are placed on real property after August 28, 1998.  This subdivision shall not prevent the use of fixture filings for manufactured homes.

(6)  A security interest in fixtures, whether or not perfected, has priority over the conflicting interest of an encumbrancer or owner of the real estate where

(a)  the encumbrancer or owner has consented in writing to the security interest or has disclaimed an interest in the goods as fixtures; or

(b)  the debtor has a right to remove the goods as against the encumbrancer or owner.  If the debtor's right terminates, the priority of the security interest continues for a reasonable time.

(7)  Notwithstanding paragraph (a) of subsection (4) but otherwise subject to subsections (4), (5) and (6), a security interest in fixtures is subordinate to a construction mortgage recorded before the goods become fixtures if the goods become fixtures before the completion of the construction.  To the extent that it is given to refinance a construction mortgage, a mortgage has this priority to the same extent as the construction mortgage.

(8)  In cases not within the preceding subsections, a security interest in fixtures is subordinate to the conflicting interest of an encumbrancer or owner of the related real estate who is not the debtor.

(9)  When the secured party has priority over all owners and encumbrancers of the real estate, he may, on default, subject to the provisions of part 5, remove his collateral from the real estate, but he must reimburse any encumbrancer or owner of the real estate who is not the debtor and who has not otherwise agreed for the cost of repair of any physical injury, but not for any diminution in value of the real estate caused by the absence of the goods removed or by any necessity of replacing them.  A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate security for the performance of this obligation.][400.9-314.  (1)  A security interest in goods which attaches before they are installed in or affixed to other goods takes priority as to the goods installed or affixed (called in this section "accessions") over the claims of all persons to the whole except as stated in subsection (3) and subject to section 400.9-315(1).

(2)  A security interest which attaches to goods after they become part of a whole is valid against all persons subsequently acquiring interests in the whole except as stated in subsection (3) but is invalid against any person with an interest in the whole at the time the security interest attaches to the goods who has not in writing consented to the security interest or disclaimed an interest in the goods as part of the whole.

(3)  The security interests described in subsections (1) and (2) do not take priority over

(a)  a subsequent purchaser for value of any interest in the whole; or

(b)  a creditor with a lien on the whole subsequently obtained by judicial proceedings; or

(c)  a creditor with a prior perfected security interest in the whole to the extent that he makes subsequent advances if the subsequent purchase is made, the lien by judicial proceedings obtained or the subsequent advance under the prior perfected security interest is made or contracted for without knowledge of the security interest and before it is perfected.  A purchaser of the whole at a foreclosure sale other than the holder of a perfected security interest purchasing at his own foreclosure sale is a subsequent purchaser within this section.

(4)  When under subsections (1) or (2) and (3) a secured party has an interest in accessions which has priority over the claims of all persons who have interests in the whole, he may on default subject to the provisions of part 5 remove his collateral from the whole but he must reimburse any encumbrancer or owner of the whole who is not the debtor and who has not otherwise agreed for the cost of repair of any physical injury but not for any diminution in value of the whole caused by the absence of the goods removed or by any necessity for replacing them.  A person entitled to reimbursement may refuse permission to remove until the secured party gives adequate security for the performance of this obligation.][400.9-315.  (1)  If a security interest in goods was perfected and subsequently the goods or a part thereof have become part of a product or mass, the security interest continues in the product or mass if

(a)  the goods are so manufactured, processed, assembled or commingled that their identity is lost in the product or mass; or

(b)  a financing statement covering the original goods also covers the product into which the goods have been manufactured, processed or assembled.  In a case to which paragraph (b) applies, no separate security interest in that part of the original goods which has been manufactured, processed or assembled into the product may be claimed under section 400.9-314.

(2)  When under subsection (1) more than one security interest attaches to the product or mass, they rank equally according to the ratio that the cost of the goods to which each interest originally attached bears to the cost of the total product or mass.][400.9-316.  Nothing in this article prevents subordination by agreement by any person entitled to priority.][400.9-317.  The mere existence of a security interest or authority given to the debtor to dispose of or use collateral does not impose contract or tort liability upon the secured party for the debtor's acts or omissions.][400.9-318.  (1)  Unless an account debtor has made an enforceable agreement not to assert defenses or claims arising out of a sale as provided in section 400.9-206 the rights of an assignee are subject to

(a)  all the terms of the contract between the account debtor and assignor and any defense or claim arising therefrom; and

(b)  any other defense or claim of the account debtor against the assignor which accrues before the account debtor receives notification of the assignment.

(2)  So far as the right to payment or a part thereof under an assigned contract has not been fully earned by performance, and notwithstanding notification of the assignment, any modification of or substitution for the contract made in good faith and in accordance with reasonable commercial standards is effective against an assignee unless the account debtor has otherwise agreed but the assignee acquires corresponding rights under the modified or substituted contract.  The assignment may provide that such modification or substitution is a breach by the assignor.

(3)  The account debtor is authorized to pay the assignor until the account debtor receives notification that the amount due or to become due has been assigned and that payment is to be made to the assignee.  A notification which does not reasonably identify the rights assigned is ineffective.  If requested by the account debtor, the assignee must seasonably furnish reasonable proof that the assignment has been made and unless he does so the account debtor may pay the assignor.

(4)  A term in any contract between an account debtor and an assignor is ineffective if it prohibits assignment of an account or prohibits creation of a security interest in a general intangible for money due or to become due, or requires the account debtor's consent to such assignment or security interest.][400.9-401.  (1)  The proper place to file in order to perfect a security interest is as follows:

(a)  when the collateral is equipment used in farming operations, or farm products, or accounts, or general intangibles arising from or relating to the sale of farm products by a farmer, or consumer goods, then in the office of the recorder of deeds in the county of the debtor's residence or if the debtor is not a resident of this state then in the office of the recorder of deeds in the county where the goods are kept, and in addition when the collateral is crops growing or to be grown in the office of the recorder of deeds in the county where the land is located;

(b)  when the collateral is timber to be cut, minerals or the like (including oil and gas) or accounts subject to subsection (5) of section 400.9-103, or when the financing statement is filed as a fixture filing (section 400.9-313) and the collateral is goods which are or are to become fixtures, then in the office where a mortgage on the real estate concerned would be filed for record, and any such filing shall be for record;

(c)  in all other cases, in the office of the secretary of state and in addition, if the debtor has a place of business in only one county of this state, also in the office of the recorder of deeds of such county, or, if the debtor has no place of business in this state, but resides in the state, also in the office of the recorder of deeds of the county in which he resides.

(2)  A filing which is made in good faith in an improper place or not in all of the places required by this section is nevertheless effective with regard to any collateral as to which the filing complied with the requirements of this article and is also effective with regard to collateral covered by the financing statement against any person who has knowledge of the contents of such financing statement.

(3)  A filing which is made in the proper place in this state continues effective even though the debtor's residence or place of business or the location of the collateral or its use, whichever controlled the original filing, is thereafter changed.

(4)  The rules stated in section 400.9-103 determine whether filing is necessary in this state.

(5)  Notwithstanding the preceding subsections, and subject to subsection (3) of section 400.9-302, the proper place to file in order to perfect a security interest in collateral, including fixtures, of a transmitting utility is the office of the secretary of state.  This filing constitutes a fixture filing (section 400.9-313) as to the collateral described therein which is or is to become a fixture.

(6)  For the purposes of this section, the residence of an organization is its place of business, if it has one, or its chief executive office if it has more than one place of business.][400.9-402.  (1)  A financing statement is sufficient if it gives the names of the debtor and the secured party, is signed by the debtor, gives an address of the secured party from which information concerning the security interest may be obtained, gives a mailing address of the debtor and contains a statement indicating the types, or describing the items, of collateral.  A financing statement may be filed before a security agreement is made or a security interest otherwise attaches.  When the financing statement covers timber to be cut or covers minerals or the like (including oil and gas) or accounts subject to subsection (5) of section 400.9-103, or when the financing statement is filed as a fixture filing (section 400.9-313) and the collateral is goods which are or are to become fixtures, the statement must also comply with subsection (5).  A copy of the security agreement is sufficient as a financing statement if it contains the above information and is signed by the debtor.  A carbon, photographic or other reproduction of a security agreement or a financing statement is sufficient as a financing statement if the security agreement so provides or if the original has been filed in this state.

(2)  A financing statement which otherwise complies with subsection (1) is sufficient when it is signed by the secured party instead of the debtor if it is filed to perfect a security interest in:

(a)  collateral already subject to a security interest in another jurisdiction when it is brought into this state, or when the debtor's location is changed to this state.  Such a financing statement must state that the collateral was brought into this state or that the debtor's location was changed to this state under such circumstances; or

(b)  proceeds under section 400.9-306 if the security interest in the original collateral was perfected.  Such a financing statement must describe the original collateral; or

(c)  collateral as to which the filing has lapsed; or

(d)  collateral acquired after a change of name, identity or corporate structure of the debtor (subsection (7)).

(3)  A form substantially as follows is sufficient to comply with subsection (1):

Name of debtor (or assignor)......................

Address ..........................................

Name of secured party (or assignee)...............

Address...........................................

1.  This financing statement covers the following types (or items) of property:

(Describe)............................................

2.  (If applicable) The above goods are to become fixtures on

Where appropriate substitute either "The above timber is standing on ................." or "The above minerals or the like (including oil and gas) or accounts will be financed at the wellhead or minehead of the well or mine located on ............. (Describe Real Estate) .............. and this financing statement is to be filed in the real estate records.  (If the debtor does not have an interest of record) The name of a record owner is .............................

3.  (If products of collateral are claimed) Products of the collateral are also covered.

(use ................................

whichever Signature of Debtor (or Assignee)

is .........................

applicable)   Signature of Secured Party (or Assignee)

(4)  A financing statement may be amended by filing a writing signed by both the debtor and the secured party.  An amendment does not extend the period of effectiveness of a financing statement.  If any amendment adds collateral, it is effective as to the added collateral only from the filing date of the amendment.  In this article, unless the context otherwise requires, the term "financing statement" means the original financing statement and any amendments.

(5)  A financing statement covering timber to be cut or covering minerals or the like (including oil and gas) or accounts subject to subsection (5) of section 400.9-103, or a financing statement filed as a fixture filing (section 400.9-313) where the debtor is not a transmitting utility, must show that it covers this type of collateral, must recite that it is to be filed in the real estate records, and the financing statement must contain a description of the real estate sufficient if it were contained in a mortgage of the real estate to give constructive notice of the mortgage under the law of this state.  If the debtor does not have an interest of record in the real estate, the financing statement must show the name of a record owner.

(6)  A mortgage is effective as a financing statement filed as a fixture filing from the date of its recording if (a) the goods are described in the mortgage by item or type, (b) the goods are or are to become fixtures related to the real estate described in the mortgage, (c) the mortgage complies with the requirements for a financing statement in this section other than a recital that it is to be filed in the real estate records, and (d) the mortgage is duly recorded.  No fee with reference to the financing statement is required other than the regular recording and satisfaction fees with respect to the mortgage.

(7)  A financing statement sufficiently shows the name of the debtor if it gives the individual, limited liability company, partnership or corporate name of the debtor, whether or not it adds other trade names or the names of partners.  Where the debtor so changes such debtor's name or in the case of an organization its name, identity or organizational structure that a filed financing statement becomes seriously misleading, the filing is not effective to perfect a security interest in collateral acquired by the debtor more than four months after the change, unless a new appropriate financing statement is filed before the expiration of that time.  A financing statement shall not be deemed seriously misleading for purposes of this section by the merger, consolidation, share exchange or conversion of a debtor from one type of entity (e.g. corporation, partnership, limited partnership, limited liability company) into another and a corresponding change in the debtor's name, providing the debtor's name changes only to the extent of adding or changing the designation of the debtor's form of organization, and by way of example and not of limitation, the change from "incorporation" or "inc." to "limited liability company" or "LLC" is not seriously misleading, provided it follows the debtor's name.  A filed financing statement remains effective with respect to collateral transferred by the debtor even though the secured party knows of or consents to the transfer.

(8)  A financing statement substantially complying with the requirements of this section is effective even though it contains minor errors which are not seriously misleading.][400.9-403.  (1)  Presentation for filing of a financing statement and tender of the filing fee or acceptance of the statement by the filing officer constitutes filing under this article.

(2)  Except as provided in subsection (7) of this section, a filed financing statement is effective for a period of five years from the date of filing.  The effectiveness of a filed financing statement lapses on the expiration of the five-year period, unless a continuation statement is filed prior to the lapse.  If a security interest perfected by filing exists at the time insolvency proceedings are commenced by or against a debtor, the security interest remains perfected until termination of the insolvency proceedings and thereafter for a period of sixty days or until expiration of the five-year period, whichever occurs later.  If a security interest perfected by filing exists at the time insolvency proceedings are commenced by or against the debtor, the secured party shall give the filing officer written notice of insolvency proceedings, and failing such notice, the filing officer may act as though insolvency proceedings have not been commenced.  Without regard to the secured party's compliance with this notice requirement, the security interest remains perfected until the termination of the insolvency proceedings and thereafter for a period of sixty days, or until the financing statement would otherwise have expired, whichever occurs later.  Upon lapse, the security interest becomes unperfected, unless it is perfected without filing.  If the security interest becomes unperfected upon lapse, it is deemed to have been unperfected as against a person who became a purchaser or lien creditor before lapse.

(3)  The uniform fee for filing, indexing and furnishing filing data for a financing statement on officially approved forms shall be six dollars.  The uniform fee for filing forms of a size other than officially approved by the secretary of state shall be six dollars, plus one dollar per page for attachments.  The uniform fee for filing, indexing and furnishing filing data for an amendment on officially approved forms shall be four dollars.  The uniform fee for filing forms of a size other than officially approved by the secretary of state shall be six dollars, plus one dollar per page for attachments.

(4)  A continuation statement may be filed by the secured party within six months prior to the expiration of the five-year period specified in subsection (2).  Any such continuation statement must be signed by the secured party, identify the original statement by file number and state that the original statement is still effective.  A continuation statement signed by a person other than the secured party of record must be accompanied by a separate written statement of assignment signed by the secured party of record and complying with subsection (2) of section 400.9-405, including payment of the required fee.  Upon timely filing of the continuation statement, the effectiveness of the original statement is continued for five years after the last date to which the filing was effective whereupon it lapses in the same manner as provided in subsection (2) unless another continuation statement is filed prior to such lapse.  Succeeding continuation statements may be filed in the same manner to continue the effectiveness of the original statement.  Unless a statute on disposition of public records provides otherwise, the filing officer may remove a lapsed statement from the files and destroy it.

(5)  Except as provided in subsection (8), a filing officer shall mark each statement with a file number and with the date and hour of filing and shall hold the statement, or a microfilm or other photographic copy thereof, for public inspection.  In addition the filing officer shall index the statements according to the name of the debtor and shall note in the index the file number and the address of the debtor given in the statement.

(6)  The uniform fee for filing and indexing and for stamping a copy furnished by the secured party to show the date and place of filing for a continuation statement shall be four dollars if the statement is of the standard size prescribed by the secretary of state.  The uniform fee for filing forms of a size other than that officially approved by the secretary of state shall be six dollars, plus one dollar per page for attachments.

(7)  If the debtor is a transmitting utility (subsection (5) of section 400.9-401) and a filed financing statement so states, it is effective until a termination statement is filed.  A real estate mortgage which is effective as a fixture filing under subsection (6) of section 400.9-402 remains effective as a fixture filing until the mortgage is released or satisfied of record or its effectiveness otherwise terminates as to the real estate.

(8)  When a financing statement covers timber to be cut or covers minerals or the like (including oil and gas) or accounts subject to subsection (5) of section 400.9-103, or is filed as a fixture filing, the filing officer shall index it under the names of the debtor and any owner of record shown on the financing statement in the same fashion as if they were the mortgagors in a mortgage of the real estate described, and, to the extent that the law of this state provides for indexing of mortgages under the name of the mortgagee, under the name of the secured party as if he were the mortgagee thereunder, or where indexing is by description in the same fashion as if the financing statement were a mortgage of the real estate described.][400.9-404.  (1)  Whenever there is no outstanding secured obligation and no commitment to make advances, incur obligations or otherwise give value, the secured party must on written demand by the debtor send the debtor a statement that he no longer claims a security interest under the financing statement, which shall be identified by file number.  A termination statement signed by a person other than the secured party of record must include or be accompanied by the assignment or a statement by the secured party of record that he has assigned the security interest to the signer of the termination statement.  The uniform fee for filing and indexing such an assignment or statement thereof on officially approved forms shall be four dollars.  The uniform fee for filing and indexing such an assignment or statement thereof made on forms of a size other than that officially approved by the secretary of state shall be six dollars, plus one dollar per page for attachments.  If the affected secured party fails to send such a termination statement within ten days after proper demand therefor he shall be liable to the debtor for one hundred dollars, and in addition for any loss caused to the debtor by such failure.

(2)  On presentation to the filing officer of such a termination statement he must note it in the index.  The filing officer shall remove from the files, mark "terminated" and send or deliver to the secured party the financing statement and any continuation statement, statement of assignment or statement of release pertaining thereto.

(3)  No fee shall be charged for filing, indexing, sending or delivering a termination statement.][400.9-405.  (1)  A financing statement may disclose an assignment of a security interest in the collateral described in the financing statement by indication in the financing statement of the name and address of the assignee or by an assignment itself or a copy thereof on the face or back of the statement.  On presentation to the filing officer of such a financing statement the filing officer shall mark the same as provided in section 400.9-403(5).  The uniform fee for filing, indexing and furnishing filing data for a financing statement so indicating an assignment on officially approved forms shall be six dollars.  The uniform fee for filing forms of a size other than that officially approved by the secretary of state shall be six dollars, plus one dollar per page for attachments.

(2)  A secured party may assign of record all or a part of his rights under a financing statement by the filing in the place where the original financing statement was filed of a separate written statement of assignment signed by the secured party of record and setting forth the name of the secured party of record and the debtor, the file number and the date of filing of the financing statement and the name and address of the assignee and containing a description of the collateral assigned.  A copy of the assignment is sufficient as a separate statement if it complies with the preceding sentence.  On presentation to the filing officer of such a separate statement, the filing officer shall mark such separate statement with the date and hour of the filing.  He shall note the assignment on the index of the financing statement, or in the case of a fixture filing, or a filing covering timber to be cut, or covering minerals or the like (including oil and gas) or accounts subject to subsection (5) of section 400.9-103, he shall index the assignment under the name of the assignor as grantor and, to the extent that the law of this state provides for indexing the assignment of a mortgage under the name of the assignee, he shall index the assignment of the financing statement under the name of the assignee.  The uniform fee for filing, indexing and furnishing filing data about such a separate statement of assignment shall be four dollars if the statement is of the standard size prescribed by the secretary of state and otherwise shall be six dollars, plus one dollar per page for attachments.  Notwithstanding the provisions of this subsection, an assignment of record of a security interest in a fixture contained in a mortgage effective as a fixture filing (subsection (6) of section 400.9-402) may be made only by an assignment of the mortgage in the manner provided by the law of this state other than this chapter.

(3)  After the disclosure or filing of an assignment under this section, the assignee is the secured party of record.][400.9-406.  A secured party of record may by his signed statement release all or a part of any collateral described in a filed financing statement.  The statement of release is sufficient if it contains a description of the collateral being released, the name and address of the debtor, the name and address of the secured party, and the file number of the financing statement.  A statement of release signed by a person other than the secured party of record must be accompanied by a separate written statement of assignment signed by the secured party of record and complying with subsection (2) of section 400.9-405, including payment of the required fee.  Upon presentation of such a statement of release to the filing officer he shall mark the statement with the hour and date of filing and shall note the same upon the margin of the index of the filing of the financing statement.  The uniform fee for filing and noting such a statement of release shall be four dollars if the statement is of the standard size prescribed by the secretary of state and otherwise shall be six dollars, plus one dollar per page for attachments.][400.9-407.  (1)  If the person filing any financing statement, termination statement, statement of assignment, or statement of release, furnishes the filing officer a copy thereof, the filing officer shall upon request note upon the copy the file number and date and hour of the filing of the original and deliver or send the copy to such person.

(2)  Upon request of any person, the filing officer shall issue his certificate showing whether there is on file on the date and hour stated therein, any presently effective financing statement naming a particular debtor and any statement of assignment thereof and if there is, giving the date and hour of filing of each such statement and the names and addresses of each secured party therein.  The uniform fee for such a certificate shall be eight dollars.  Upon request the filing officer shall issue his certificate showing a copy of all filed financing statements and statements of assignment naming a particular debtor.  The uniform fee for such a certificate shall be eight dollars, plus fifty cents per page copied after ten pages.][400.9-408.  Notwithstanding any other provisions of this chapter, the following special provisions apply where a financing statement is required to be filed for record in the office where a mortgage on the real estate concerned would be filed for record.

(1)  Any amendment, continuation statement, termination statement, statement of assignment, or statement of release incidental to such a financing statement shall be filed for record in the same office where the original financing statement is recorded.

(2)  In addition to other requirements of this part of this chapter, every such statement incidental to such a financing statement shall refer to the original financing statement by book and page of the record thereof.

(3)  Such financing statements and such other statements incidental thereto shall be recorded in the real estate mortgage records, and shall be indexed as real estate mortgages.  If any statement shows the name of a record owner of the real estate which is other than the name of the debtor or the secured party, the statement also shall be indexed in the mortgagor index according to the name of such record owner.  Such financing statements and such other statements incidental thereto are entitled to be recorded even though not proved or acknowledged and certified.  Fees for recording and related services shall be the same as the fees authorized by law in the case of real estate mortgages.

(4)  The recorder of deeds shall not be liable for any loss resulting from failure of the recorder to record and index a financing statement or other statement incidental thereto as a mortgage on real estate unless it is clearly evident that such recording is desired, either by written instructions endorsed on the financing statement or other statement incidental thereto directing that it be recorded and indexed as a mortgage on real estate, by payment of the recording fee, or otherwise.][400.9-409.  A consignor or lessor of goods may file a financing statement using the terms "consignor", "consignee", "lessor", "lessee" or the like instead of the terms specified in section 400.9-402.  The provisions of this part shall apply as appropriate to such a financing statement but its filing shall not of itself be a factor in determining whether or not the consignment or lease is intended as security (section 400.1-201(37)).  However, if it is determined for other reasons that the consignment or lease is so intended, a security interest of the consignor or lessor which attaches to the consigned or leased goods is perfected by such filing.][400.9-501.  (1)  When a debtor is in default under a security agreement, a secured party has the rights and remedies provided in this part and except as limited by subsection (3) those provided in the security agreement.  He may reduce his claim to judgment, foreclose or otherwise enforce the security interest by any available judicial procedure.  If the collateral is documents the secured party may proceed either as to the documents or as to the goods covered thereby.  A secured party in possession has the rights, remedies and duties provided in section 400.9-207.  The rights and remedies referred to in this subsection are cumulative.

(2)  After default, the debtor has the rights and remedies provided in this part, those provided in the security agreement and those provided in section 400.9-207.

(3)  To the extent that they give rights to the debtor and impose duties on the secured party, the rules stated in the subsections referred to below may not be waived or varied except as provided with respect to compulsory disposition of collateral (subsection (3) of section 400.9-504 and section 400.9-505) and with respect to redemption of collateral (section 400.9-506) but the parties may by agreement determine the standards by which the fulfillment of these rights and duties is to be measured if such standards are not manifestly unreasonable:

(a)  subsection (2) of section 400.9-502 and subsection (2) of section 400.9-504 insofar as they require accounting for surplus proceeds of collateral;

(b)  subsection (3) of section 400.9-504 and subsection (1) of section 400.9-505 which deal with disposition of collateral;

(c)  subsection (2) of section 400.9-505 which deals with acceptance of collateral as discharge of obligation;

(d)  section 400.9-506 which deals with redemption of collateral; and

(e)  subsection (1) of section 400.9-507 which deals with the secured party's liability for failure to comply with this part.

(4)  If the security agreement covers both real and personal property, the secured party may proceed under this part as to the personal property or he may proceed as to both the real and the personal property in accordance with his rights and remedies in respect of the real property in which case the provisions of this part do not apply.

(5)  When a secured party has reduced his claim to judgment the lien of any levy which may be made upon his collateral by virtue of any execution based upon the judgment shall relate back to the date of the perfection of the security interest in such collateral.  A judicial sale, pursuant to such execution, is a foreclosure of the security interest by judicial procedure within the meaning of this section, and the secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of this article.][400.9-502.  (1)  When so agreed and in any event on default the secured party is entitled to notify an account debtor or the obligor on an instrument to make payment to him whether or not the assignor was theretofore making collections on the collateral, and also to take control of any proceeds to which he is entitled under section 400.9-306.

(2)  A secured party who by agreement is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor and who undertakes to collect from the account debtors or obligors must proceed in a commercially reasonable manner and may deduct his reasonable expenses of realization from the collections.  If the security agreement secures an indebtedness, the secured party must account to the debtor for any surplus, and unless otherwise agreed, the debtor is liable for any deficiency.  But, if the underlying transaction was a sale of accounts or chattel paper, the debtor is entitled to any surplus or is liable for any deficiency only if the security agreement so provides.][400.9-503.  Unless otherwise agreed a secured party has on default the right to take possession of the collateral.  In taking possession a secured party may proceed without judicial process if this can be done without breach of the peace or may proceed by action.  If the security agreement so provides the secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties.  Without removal a secured party may render equipment unusable, and may dispose of collateral on the debtor's premises under section 400.9-504.][400.9-504.  (1)  A secured party after default may sell, lease or otherwise dispose of any or all of the collateral in its then condition or following any commercially reasonable preparation or processing.  Any sale of goods is subject to the article on sales (article 2).  The proceeds of disposition shall be applied in the order following to

(a)  the reasonable expenses of retaking, holding, preparing for sale or lease, selling or leasing and the like and, to the extent provided for in the agreement and not prohibited by law, the reasonable attorney fees and legal expenses incurred by the secured party;

(b)  the satisfaction of indebtedness secured by the security interest under which the disposition is made;

(c)  the satisfaction of indebtedness secured by any subordinate security interest in the collateral if written notification of demand therefor is received before distribution of the proceeds is completed.  If requested by the secured party, the holder of a subordinate security interest must seasonably furnish reasonable proof of his interest, and unless he does so, the secured party need not comply with his demand.

(2)  If the security interest secures an indebtedness, the secured party must account to the debtor for any surplus, and, unless otherwise agreed, the debtor is liable for any deficiency.  But if the underlying transaction was a sale of accounts or chattel paper, the debtor is entitled to any surplus or is liable for any deficiency only if the security agreement so provides.

(3)  Disposition of the collateral may be by public or private proceedings and may be made by way of one or more contracts.  Sale or other disposition may be as a unit or in parcels and at any time and place and on any terms but every aspect of the disposition including the method, manner, time, place and terms must be commercially reasonable.  Unless collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made shall be sent by the secured party to the debtor.  If he has not signed after default a statement renouncing or modifying his right to notification of sale, but no such statement shall be effective in the case of consumer goods.  In the case of consumer goods, no other notification need be sent.  In other cases, notification shall be sent to any other secured party from whom the secured party has received (before sending his notification to the debtor) written notice of a claim of an interest in the collateral.  The secured party may buy at any public sale and if the collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations he may buy at private sale.

(4)  When collateral is disposed of by a secured party after default, the disposition transfers to a purchaser for value all of the debtor's rights therein, discharges the security interest under which it is made and any security interest or lien subordinate thereto.  The purchaser takes free of all such rights and interests even though the secured party fails to comply with the requirements of this part or of any judicial proceedings

(a)  in the case of a public sale, if the purchaser has no knowledge of any defects in the sale and if he does not buy in collusion with the secured party, other bidders or the person conducting the sale; or

(b)  in any other case, if the purchaser acts in good faith.

(5)  A person who is liable to a secured party under a guaranty, endorsement, repurchase agreement or the like and who receives a transfer of collateral from the secured party or is subrogated to his rights has thereafter the rights and duties of the secured party.  Such a transfer of collateral is not a sale or disposition of the collateral under this article.][400.9-505.  (1)  If the debtor has paid sixty percent of the cash price in the case of a purchase money security interest in consumer goods or sixty percent of the loan in the case of another security interest in consumer goods, and has not signed after default a statement renouncing or modifying his rights under this part a secured party who has taken possession of collateral must dispose of it under section 400.9-504 and if he fails to do so within ninety days after he takes possession the debtor at his option may recover in conversion or under section 400.9-507(1) on secured party's liability.

(2)  In any other case involving consumer goods or any other collateral a secured party in possession may, after default, propose to retain the collateral in satisfaction of the obligation.  Written notice of such proposal shall be sent to the debtor.  Except in cases of consumer goods, notice shall be sent to any other secured party from whom the secured party has received (before sending his notice to the debtor) written notice of a claim of an interest in the collateral.  If the secured party receives objection in writing from a person entitled to receive notification within twenty-one days after the notice was sent, the secured party must dispose of the collateral under section 400.9-504.  In the absence of such written objection the secured party may retain the collateral in satisfaction of the debtor's obligation.][400.9-506.  At any time before the secured party has disposed of collateral or entered into a contract for its disposition under section 400.9-504 or before the obligation has been discharged under section 400.9-505(2) the debtor or any other secured party may unless otherwise agreed in writing after default redeem the collateral by tendering fulfillment of all obligations secured by the collateral as well as the expenses reasonably incurred by the secured party in retaking, holding and preparing the collateral for disposition, in arranging for the sale, and to the extent provided in the agreement and not prohibited by law, his reasonable attorney fees and legal expenses.][400.9-507.  (1)  If it is established that the secured party is not proceeding in accordance with the provisions of this part disposition may be ordered or restrained on appropriate terms and conditions.  If the disposition has occurred the debtor or any person entitled to notification or whose security interest has been made known to the secured party prior to the disposition has a right to recover from the secured party any loss caused by a failure to comply with the provisions of this part.  If the collateral is consumer goods, the debtor has a right to recover in any event an amount not less than the credit service charge plus ten percent of the principal amount of the debt or the time price differential plus ten percent of the cash price.

(2)  The fact that a better price could have been obtained by a sale at a different time or in a different method from that selected by the secured party is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner.  If the secured party either sells the collateral in the usual manner in any recognized market therefor or if he sells at the price current in such market at the time of his sale or if he has otherwise sold in conformity with reasonable commercial practices among dealers in the type of property sold he has sold in a commercially reasonable manner.  The principles stated in the two preceding sentences with respect to sales also apply as may be appropriate to other types of disposition.  A disposition which has been approved in any judicial proceeding or by any bona fide creditors' committee or representative of creditors shall conclusively be deemed to be commercially reasonable, but this sentence does not indicate that any such approval must be obtained in any case nor does it indicate that any disposition not so approved is not commercially reasonable.][400.9-508.  The secretary of state may collect an additional fee of five dollars on each and every fee paid to the secretary of state as required in chapter 400.9.  All fees collected as provided in this section shall be deposited in the state treasury and credited to the secretary of state's technology trust fund account.]Section B.  The repeal and reenactment of sections 400.1-201, 400.2-103, 400.2-210, 400.2-326, 400.2-502, 400.2-716, 400.2A-103, 400.2A-303, 400.2A-307, 400.2A-309, 400.4-210 and 400.7-503, RSMo 1994, and sections 400.1-105, 400.8-103, 400.8-106, 400.8-110, 400.8-301, 400.8-302 and 400.8-510, RSMo Supp. 1999, the repeal of sections 400.9-101, 400.9-102, 400.9-107, 400.9-108, 400.9-109, 400.9-110, 400.9-111, 400.9-112, 400.9-113, 400.9-114, 400.9-201, 400.9-202, 400.9-204, 400.9-205, 400.9-206, 400.9-207, 400.9-208, 400.9-307, 400.9-308, 400.9-310, 400.9-311, 400.9-314, 400.9-315, 400.9-316, 400.9-317, 400.9-318, 400.9-401, 400.9-403, 400.9-404, 400.9-405, 400.9-406, 400.9-407, 400.9-408, 400.9-409, 400.9-501, 400.9-502, 400.9-503, 400.9-504, 400.9-505, 400.9-506, 400.9-507 and 400.9-508, RSMo 1994, and sections 400.9-103, 400.9-104, 400.9-105, 400.9-106, 400.9-115, 400.9-116, 400.9-203, 400.9-301, 400.9-302, 400.9-303, 400.9-304, 400.9-305, 400.9-306, 400.9-309, 400.9-312, 400.9-313 and 400.9-402, RSMo Supp. 1999, and the enactment of sections 400.5-118 and 400.9-101 to 400.9-708 shall take effect on July 1, 2002.

Return to Senate Home Page