2004 Legislation
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SENATE BILL NO. 1227 – UCC, documents of title

SENATE BILL NO. 1227

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S1227................................................by JUDICIARY AND RULES
UNIFORM COMMERCIAL CODE - DOCUMENTS OF TITLE - Repeals, adds to and amends
existing law to repeal and reenact Article 7 of the Uniform Commercial Code
relating to documents of title; to revise definitions; to specify when
payment is due for authorized deliveries; to state that title passes when
the seller delivers the document if the seller is to deliver an electronic
document of title; to provide that a document of title is a financial asset
only if certain conditions apply; to set forth requirements applicable to
secured parties having control of electronic documents; and to provide for
the perfection of security interests in electronic documents.
                                                                        
01/26    Senate intro - 1st rdg - to printing
01/27    Rpt prt - to Jud
02/09    Rpt out - rec d/p - to 2nd rdg
02/10    2nd rdg - to 3rd rdg
02/17    3rd rdg - PASSED - 31-0-4
      AYES -- Bailey, Bunderson, Burkett, Calabretta, Cameron, Compton,
      Darrington, Davis, Gannon, Geddes, Goedde, Hill, Ingram, Kennedy,
      Keough, Little, Lodge, Malepeai, Marley, McKenzie, McWilliams, Noble,
      Noh, Pearce, Richardson, Schroeder, Stegner, Stennett, Sweet, Werk,
      Williams
      NAYS -- None
      Absent and excused -- Andreason, Brandt, Burtenshaw, Sorensen
    Floor Sponsor - Davis
    Title apvd - to House
02/18    House intro - 1st rdg - to Bus
02/26    Rpt out - rec d/p - to 2nd rdg
02/27    2nd rdg - to 3rd rdg
03/02    3rd rdg - PASSED - 63-0-7
      AYES -- Andersen, Barrett, Bauer, Bayer, Bedke, Bell, Black, Block,
      Boe, Bolz, Bradford, Cannon, Clark, Collins, Cuddy, Deal, Denney,
      Douglas, Eberle, Edmunson, Ellsworth, Eskridge, Field(18), Gagner,
      Garrett, Harwood, Henbest, Jaquet, Jones, Kellogg, Kulczyk, Lake,
      Langford, Langhorst, Martinez, McGeachin, McKague, Meyer, Miller,
      Mitchell, Naccarato, Pasley-Stuart, Raybould, Ridinger, Ring, Ringo,
      Roberts, Robison, Rydalch, Sali, Sayler, Schaefer, Shepherd, Shirley,
      Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson,
      Trail(Bennett), Wills, Wood
      NAYS -- None
      Absent and excused -- Barraclough, Campbell, Crow, Field(23), Moyle,
      Nielsen, Mr. Speaker
    Floor Sponsor - Kellogg
    Title apvd - to Senate
03/03    To enrol
03/04    Rpt enrol - Pres signed
03/05    Sp signed
03/08    To Governor
03/10    Governor signed
         Session Law Chapter 42
         Effective: 07/01/04

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-seventh Legislature                 Second Regular Session - 2004
                                                                        
                                                                        
                                       IN THE SENATE
                                                                        
                                    SENATE BILL NO. 1227
                                                                        
                              BY JUDICIARY AND RULES COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE UNIFORM COMMERCIAL CODE; REPEALING CHAPTER 7, TITLE 28,  IDAHO
  3        CODE,  RELATING  TO  DOCUMENTS OF TITLE; AMENDING TITLE 28, IDAHO CODE, BY
  4        THE ADDITION OF A NEW CHAPTER 7, TITLE 28, IDAHO CODE, TO PROVIDE A  SHORT
  5        TITLE, TO DEFINE TERMS, TO PROVIDE FOR RELATION OF THE CHAPTER TO TREATIES
  6        AND  STATUTES,  TO DEFINE NEGOTIABLE AND NONNEGOTIABLE DOCUMENTS OF TITLE,
  7        TO PROVIDE FOR REISSUANCE OF DOCUMENTS OF TITLE IN AN ALTERNATIVE  MEDIUM,
  8        TO  PROVIDE  FOR  THE CONTROL OF ELECTRONIC DOCUMENTS OF TITLE, TO SPECIFY
  9        WHICH PERSONS MAY ISSUE WAREHOUSE RECEIPTS, TO PROVIDE FOR  STORAGE  UNDER
 10        BOND,  TO  SET  FORTH  REQUIREMENTS FOR WAREHOUSE RECEIPTS, TO PROVIDE FOR
 11        LIABILITY FOR NONRECEIPT OR MISDESCRIPTION, TO SET FORTH A DUTY  OF  CARE,
 12        TO  PROVIDE FOR CONTRACTUAL LIMITATION OF A WAREHOUSE'S LIABILITY, TO PRO-
 13        VIDE THAT TITLE UNDER A WAREHOUSE RECEIPT IS DEFEATED IN CERTAIN CASES, TO
 14        PROVIDE FOR TERMINATION OF STORAGE AT A WAREHOUSE'S OPTION, TO PROVIDE FOR
 15        THE SEPARATION OF GOODS, TO SET FORTH PROVISIONS FOR  THE  COMMINGLING  OF
 16        CERTAIN  GOODS, TO PROVIDE FOR OVERISSUE OF FUNGIBLE GOODS, TO PROVIDE FOR
 17        THE ENFORCEABILITY OR NONENFORCEABILITY OF WAREHOUSE RECEIPTS  BASED  UPON
 18        UNAUTHORIZED INSERTIONS OR ALTERATIONS, TO PROVIDE FOR WAREHOUSE LIENS, TO
 19        PROVIDE  FOR  ENFORCEMENT OF WAREHOUSE LIENS, TO PROVIDE FOR LIABILITY FOR
 20        NONRECEIPT OR MISDESCRIPTION, TO SET FORTH PROVISIONS APPLICABLE TO  GOODS
 21        LOADED  BY  ISSUERS  OF  BILLS  OF LADING AND CERTAIN BULK GOODS LOADED BY
 22        SHIPPERS, TO REMOVE LIABILITY FOR ISSUERS UNDER CERTAIN CIRCUMSTANCES,  TO
 23        PROVIDE  FOR CERTAIN SHIPPER GUARANTEES, TO PROVIDE FOR LIMITED INDEMNIFI-
 24        CATION OF ISSUERS, TO SET FORTH PROVISIONS APPLICABLE TO THROUGH BILLS  OF
 25        LADING AND SIMILAR DOCUMENTS OF TITLE, TO PROVIDE FOR DIVERSION AND RECON-
 26        SIGNMENT  OF GOODS BASED UPON INSTRUCTIONS, TO SET FORTH PROVISIONS APPLI-
 27        CABLE TO TANGIBLE BILLS OF LADING, TO PROVIDE FOR  DESTINATION  BILLS,  TO
 28        PROVIDE  THAT  BILLS  OF  LADING  WITH UNAUTHORIZED ALTERATIONS OR INSERTS
 29        SHALL BE ENFORCEABLE ACCORDING TO THE ORIGINAL TENOR, TO PROVIDE FOR  CAR-
 30        RIER  LIENS, TO PROVIDE FOR THE ENFORCEMENT OF CARRIER LIENS, TO SET FORTH
 31        A DUTY OF CARE, TO PROVIDE FOR THE CONTRACTUAL LIMITATION OF  A  CARRIER'S
 32        LIABILITY, TO PROVIDE FOR THE IMPOSITION OF OBLIGATIONS APPLICABLE TO CER-
 33        TAIN  DOCUMENTS  OF TITLE, TO SET FORTH PROVISIONS APPLICABLE TO DUPLICATE
 34        DOCUMENTS OF TITLE, TO PROVIDE FOR ISSUER LIABILITY, TO SET FORTH AN OBLI-
 35        GATION OF A BAILEE TO DELIVER EXCEPT UNDER CERTAIN CONDITIONS, TO  PROVIDE
 36        FOR  THE  SATISFACTION  OF  BAILEE  LIENS, TO PROVIDE THAT CERTAIN PERSONS
 37        SHALL SURRENDER POSSESSION OR CONTROL OF OUTSTANDING NEGOTIABLE DOCUMENTS,
 38        TO PROVIDE THAT BAILEES SHALL CANCEL A DOCUMENT OR INDICATE PARTIAL DELIV-
 39        ERY, TO PROVIDE THAT THERE IS NO LIABILITY FOR GOOD FAITH DELIVERY  PURSU-
 40        ANT  TO  A  DOCUMENT  OF TITLE, TO SET FORTH RULES APPLICABLE TO SPECIFIED
 41        DOCUMENTS OF TITLE, TO PROVIDE FOR RIGHTS ACQUIRED BY DUE NEGOTIATION,  TO
 42        PROVIDE THAT A DOCUMENT OF TITLE TO GOODS IS DEFEATED IN CERTAIN CASES, TO
 43        PROVIDE  THAT  CERTAIN  RIGHTS ARE ACQUIRED IN THE ABSENCE OF DUE NEGOTIA-
 44        TION, TO PROVIDE THAT CERTAIN RIGHTS MAY BE DEFEATED, TO PROVIDE THAT  THE
 45        DELIVERY  OF  GOODS MAY BE STOPPED SUBJECT TO DUE NOTIFICATION, TO PROVIDE
 46        FOR BAILEE INDEMNIFICATION, TO STATE THAT THE INDORSER IS NOT A  GUARANTOR
                                                                        
                                           2
                                                                        
  1        FOR OTHER PARTIES, TO PROVIDE THAT A TRANSFEREE HAS A RIGHT TO AN INDORSE-
  2        MENT,  TO PROVIDE THAT A TRANSFER BECOMES A NEGOTIATION ONLY UPON THE SUP-
  3        PLYING OF THE INDORSEMENT, TO PROVIDE FOR  WARRANTIES  ON  NEGOTIATION  OR
  4        DELIVERY  OF DOCUMENTS OF TITLE, TO PROVIDE FOR WARRANTIES OF A COLLECTING
  5        BANK, TO CITE PROVISIONS APPLICABLE TO DETERMINE ADEQUATE COMPLIANCE  WITH
  6        COMMERCIAL  CONTRACTS,  TO PROVIDE FOR LOST, STOLEN OR DESTROYED DOCUMENTS
  7        OF TITLE, TO PROVIDE FOR THE ATTACHMENT OF LIENS BY  JUDICIAL  PROCESS  IN
  8        CERTAIN CASES, TO PROVIDE THAT A BAILEE IS COMPELLED TO DELIVER GOODS ONLY
  9        UNDER  CERTAIN CONDITIONS, TO PROVIDE THAT A PURCHASER TAKES A DOCUMENT OF
 10        VALUE FREE OF A LIEN IF THE PURCHASER DOES NOT HAVE NOTICE OF THE  PROCESS
 11        OR  INJUNCTION,    TO  PROVIDE FOR CONFLICTING CLAIMS, TO PROVIDE THAT THE
 12        BAILEE MAY ASSERT AN INTERPLEADER, TO PROVIDE AN EFFECTIVE DATE, TO REPEAL
 13        SPECIFIED SECTIONS OF CODE, TO PROVIDE FOR APPLICABILITY AND TO SET  FORTH
 14        A SAVINGS CLAUSE; AMENDING SECTION 28-1-201, IDAHO CODE, TO REVISE DEFINI-
 15        TIONS;  AMENDING SECTION 28-2-103, IDAHO CODE, TO PROVIDE A CODE REFERENCE
 16        FOR "CONTROL"; AMENDING SECTION 28-2-104, IDAHO CODE, TO PROVIDE A  REFER-
 17        ENCE TO DOCUMENTS OF TITLE ACCOMPANYING OR ASSOCIATED WITH A DRAFT; AMEND-
 18        ING  SECTION  28-2-310,  IDAHO  CODE,  TO  SPECIFY WHEN PAYMENT IS DUE FOR
 19        AUTHORIZED DELIVERIES; AMENDING SECTION 28-2-323, IDAHO CODE, TO PROVIDE A
 20        REFERENCE TO TANGIBLE BILLS OF LADING AND TO MAKE A TECHNICAL  CORRECTION;
 21        AMENDING  SECTION 28-2-401, IDAHO CODE, TO PROVIDE A REFERENCE TO TANGIBLE
 22        DOCUMENTS OF TITLE, TO STATE THAT TITLE PASSES WHEN  THE  SELLER  DELIVERS
 23        THE  DOCUMENT IF THE SELLER IS TO DELIVER AN ELECTRONIC DOCUMENT OF TITLE,
 24        TO PROVIDE CLARIFYING LANGUAGE AND TO MAKE A TECHNICAL CORRECTION;  AMEND-
 25        ING  SECTION  28-2-503,  IDAHO  CODE, TO REVISE TERMINOLOGY, TO CITE AS AN
 26        EXCEPTION PROCEDURES SET FORTH IN CHAPTER 9, TITLE 28, IDAHO CODE, AND  TO
 27        STATE  THAT  DISHONOR OF A DRAFT ACCOMPANYING OR ASSOCIATED WITH DOCUMENTS
 28        CONSTITUTES NONACCEPTANCE OR REJECTION; AMENDING SECTION  28-2-505,  IDAHO
 29        CODE,  TO  REFERENCE  A SELLER'S POSSESSION OR CONTROL OF A BILL OF LADING
 30        AND TO PROVIDE CLARIFYING LANGUAGE; AMENDING SECTION 28-2-506, IDAHO CODE,
 31        TO REMOVE TERMINOLOGY RELATING TO A DOCUMENT THAT APPEARS REGULAR  ON  ITS
 32        FACE;  AMENDING  SECTION 28-2-509, IDAHO CODE, TO REFERENCE A BUYER'S POS-
 33        SESSION OR CONTROL OF DOCUMENTS OF TITLE AND TO  REFERENCE  DIRECTIONS  TO
 34        DELIVER  AS  SET FORTH IN A RECORD; AMENDING SECTION 28-2-605, IDAHO CODE,
 35        TO MAKE A GRAMMATICAL CHANGE; AMENDING SECTION 28-2-705,  IDAHO  CODE,  TO
 36        REVISE TERMINOLOGY AND TO REFERENCE THE SURRENDER OF POSSESSION OR CONTROL
 37        OF  A  NEGOTIABLE  DOCUMENT;  AMENDING  SECTION  28-12-103, IDAHO CODE, TO
 38        REVISE DEFINITIONS AND TO MAKE A TECHNICAL  CORRECTION;  AMENDING  SECTION
 39        28-12-514,  IDAHO  CODE,  TO  MAKE  A GRAMMATICAL CHANGE; AMENDING SECTION
 40        28-12-526, IDAHO CODE, TO REVISE TERMINOLOGY; AMENDING  SECTION  28-4-104,
 41        IDAHO  CODE, TO PROVIDE A CODE REFERENCE FOR "CONTROL" AND TO MAKE A TECH-
 42        NICAL CORRECTION; AMENDING SECTION 28-4-210, IDAHO CODE, TO REFERENCE  THE
 43        POSSESSION   OR   CONTROL  OF  ACCOMPANYING  DOCUMENTS;  AMENDING  SECTION
 44        28-8-103, IDAHO CODE, TO PROVIDE THAT A DOCUMENT OF TITLE IS  A  FINANCIAL
 45        ASSET  ONLY  IF CERTAIN CONDITIONS APPLY; AMENDING SECTION 28-9-102, IDAHO
 46        CODE, TO CORRECT A CODE  CITATION  AND  TO  PROVIDE  CODE  REFERENCES  FOR
 47        "CONTROL"  AND  "ISSUER WITH RESPECT TO DOCUMENTS OF TITLE"; AMENDING SEC-
 48        TION 28-9-203, IDAHO CODE, TO PROVIDE A REFERENCE TO ELECTRONIC  DOCUMENTS
 49        AND  TO PROVIDE A CODE CITATION; AMENDING SECTION 28-9-207, IDAHO CODE, TO
 50        PROVIDE A CODE CITATION; AMENDING SECTION 28-9-208,  IDAHO  CODE,  TO  SET
 51        FORTH  REQUIREMENTS  APPLICABLE TO SECURED PARTIES HAVING CONTROL OF ELEC-
 52        TRONIC DOCUMENTS; AMENDING SECTION 28-9-301, IDAHO CODE, TO PROVIDE A REF-
 53        ERENCE TO TANGIBLE NEGOTIABLE DOCUMENTS; AMENDING SECTION 28-9-310,  IDAHO
 54        CODE,  TO  PROVIDE  REFERENCE  TO CERTAIN SECURITY INTERESTS THAT ARE PER-
 55        FECTED WITHOUT FILING, CONTROL OR POSSESSION AND TO PROVIDE A REFERENCE TO
                                                                        
                                           3
                                                                        
  1        SECURITY INTERESTS IN ELECTRONIC  DOCUMENTS;  AMENDING  SECTION  28-9-312,
  2        IDAHO  CODE,  TO  PROVIDE FOR THE PERFECTION OF CERTAIN SECURITY INTERESTS
  3        WITHOUT THE TAKING OF POSSESSION OR CONTROL FOR A STATED PERIOD  OF  TIME;
  4        AMENDING  SECTION 28-9-313, IDAHO CODE, TO PROVIDE A REFERENCE TO TANGIBLE
  5        NEGOTIABLE INSTRUMENTS; AMENDING SECTION 28-9-314, IDAHO CODE, TO  PROVIDE
  6        FOR  THE  PERFECTION  OF SECURITY INTERESTS IN ELECTRONIC DOCUMENTS AND TO
  7        PROVIDE A CODE CITATION; AMENDING SECTION 28-9-317, IDAHO CODE, TO PROVIDE
  8        REFERENCES  TO  TANGIBLE  AND  ELECTRONIC  DOCUMENTS;   AMENDING   SECTION
  9        28-9-338,  IDAHO CODE, TO PROVIDE REFERENCES TO TANGIBLE CHATTEL PAPER AND
 10        TANGIBLE DOCUMENTS; AMENDING SECTION 28-9-601, IDAHO CODE,  TO  PROVIDE  A
 11        CODE  CITATION;  REPEALING SECTION 28-10-104, IDAHO CODE; AMENDING SECTION
 12        22-5111, IDAHO CODE, TO  DELETE  CODE  REFERENCES;  AND  AMENDING  SECTION
 13        28-50-116, IDAHO CODE, TO DELETE REFERENCE TO WAREHOUSE RECEIPTS AND BILLS
 14        OF LADING.
                                                                        
 15    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 16        SECTION  1.  That  Chapter  7,  Title  28, Idaho Code, be, and the same is
 17    hereby repealed.
                                                                        
 18        SECTION 2.  That Title 28, Idaho Code, be, and the same is hereby  amended
 19    by  the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
 20    ter 7, Title 28, Idaho Code, and to read as follows:
                                                                        
 21                                      CHAPTER 7
 22                                  DOCUMENTS OF TITLE
                                                                        
 23                                       PART 1.
 24                                       GENERAL
                                                                        
 25        28-7-101.  SHORT TITLE. This chapter shall be known and may  be  cited  as
 26    "Uniform Commercial Code - Documents of Title."
                                                                        
 27        28-7-102.  DEFINITIONS  AND  INDEX  OF  DEFINITIONS.  (a) In this chapter,
 28    unless the context otherwise requires:
 29        (1)  "Bailee" means a person that by a warehouse receipt, bill of  lading,
 30        or  other document of title acknowledges possession of goods and contracts
 31        to deliver them.
 32        (2)  "Carrier" means a person that issues a bill of lading.
 33        (3)  "Consignee" means a person named in a bill of lading to which  or  to
 34        whose order the bill promises delivery.
 35        (4)  "Consignor"  means  a  person named in a bill of lading as the person
 36        from which the goods have been received for shipment.
 37        (5)  "Delivery order" means a record that contains  an  order  to  deliver
 38        goods  directed to a warehouse, carrier, or other person that in the ordi-
 39        nary course of business issues warehouse receipts or bills of lading.
 40        (6)  "Good faith" means honesty in fact and the observance  of  reasonable
 41        commercial standards of fair dealing.
 42        (7)  "Goods" means all things that are treated as movable for the purposes
 43        of a contract for storage or transportation.
 44        (8)  "Issuer"  means  a  bailee that issues a document of title or, in the
 45        case of an unaccepted delivery order, the person that orders the possessor
 46        of goods to deliver. The term includes a person  for  which  an  agent  or
 47        employee  purports  to  act in issuing a document if the agent or employee
 48        has real or apparent authority to issue documents, even if the issuer  did
                                                                        
                                           4
                                                                        
  1        not  receive  any  goods,  the  goods  were  misdescribed, or in any other
  2        respect the agent or employee violated the issuer's instructions.
  3        (9)  "Person entitled under the document" means the holder, in the case of
  4        a negotiable document of title, or the person to  which  delivery  of  the
  5        goods  is  to  be  made  by the terms of, or pursuant to instructions in a
  6        record under, a nonnegotiable document of title.
  7        (10) "Record" means information that is inscribed on a tangible medium  or
  8        that  is  stored  in  an  electronic or other medium and is retrievable in
  9        perceivable form.
 10        (11) "Sign" means, with present intent to authenticate or adopt a record:
 11             (A)  To execute or adopt a tangible symbol; or
 12             (B)  To attach to or logically associate with  the  record  an  elec-
 13             tronic sound, symbol, or process.
 14        (12) "Shipper"  means  a person that enters into a contract of transporta-
 15        tion with a carrier.
 16        (13) "Warehouse" means a person engaged in the business of  storing  goods
 17        for hire.
 18        (b)  Definitions  in  other chapters applying to this chapter and the sec-
 19    tions in which they appear are:
 20        (1)  "Contract for sale," section 28-2-106.
 21        (2)  "Lessee in ordinary course," section 28-12-103.
 22        (3)  "Receipt" of goods, section 28-2-103.
 23        (c)  In addition, chapter 1, title 28, Idaho Code, contains general  defi-
 24    nitions  and principles of construction and interpretation applicable through-
 25    out this chapter.
                                                                        
 26        28-7-103.  RELATION OF CHAPTER TO TREATY OR STATUTE. (a) This  chapter  is
 27    subject to any treaty or statute of the United States or regulatory statute of
 28    this  state to the extent the treaty, statute, or regulatory statute is appli-
 29    cable.
 30        (b)  This chapter does not modify or repeal any law prescribing  the  form
 31    or content of a document of title or the services or facilities to be afforded
 32    by  a bailee, or otherwise regulating a bailee's business in respects not spe-
 33    cifically treated in this chapter. However, violation of such a law  does  not
 34    affect  the status of a document of title that otherwise is within the defini-
 35    tion of a document of title.
 36        (c)  This chapter modifies, limits, and supersedes the federal  electronic
 37    signatures  in  global and national commerce act (15 U.S.C. 7001, et seq.) but
 38    does not modify, limit, or supersede section 101(c) of  that  act  (15  U.S.C.
 39    7001(c))  or  authorize electronic delivery of any of the notices described in
 40    section 103(b) of that act (15 U.S.C. 7003(b)).
 41        (d)  To the extent there is a  conflict  between  the  uniform  electronic
 42    transactions  act,  chapter  50,  title 28, Idaho Code, and this chapter, this
 43    chapter governs.
                                                                        
 44        28-7-104.  NEGOTIABLE AND NONNEGOTIABLE DOCUMENT OF TITLE. (a)  Except  as
 45    otherwise  provided  in subsection (c) of this section, a document of title is
 46    negotiable if by its terms the goods are to be delivered to bearer or  to  the
 47    order of a named person.
 48        (b)  A  document  of  title  other than one described in subsection (a) of
 49    this section is nonnegotiable. A bill of lading that states that the goods are
 50    consigned to a named person is not made negotiable by  a  provision  that  the
 51    goods are to be delivered only against an order in a record signed by the same
 52    or another named person.
 53        (c)  A  document  of  title is nonnegotiable if, at the time it is issued,
                                                                        
                                           5
                                                                        
  1    the document has a conspicuous legend, however expressed, that it is  nonnego-
  2    tiable.
                                                                        
  3        28-7-105.  REISSUANCE  IN ALTERNATIVE MEDIUM. (a) Upon request of a person
  4    entitled under an electronic document of title, the issuer of  the  electronic
  5    document  may issue a tangible document of title as a substitute for the elec-
  6    tronic document if:
  7        (1)  The person entitled under the electronic document surrenders  control
  8        of the document to the issuer; and
  9        (2)  The  tangible  document  when  issued contains a statement that it is
 10        issued in substitution for the electronic document.
 11        (b)  Upon issuance of a tangible document of title in substitution for an
 12    electronic document of title in accordance with subsection (a)  of  this  sec-
 13    tion:
 14        (1)  The electronic document ceases to have any effect or validity; and
 15        (2)  The  person  that procured issuance of the tangible document warrants
 16        to all subsequent persons entitled under the tangible  document  that  the
 17        warrantor  was  a  person  entitled under the electronic document when the
 18        warrantor surrendered control of the electronic document to the issuer.
 19        (c)  Upon request of a person entitled under a tangible document of title,
 20    the issuer of the tangible document may issue an electronic document of  title
 21    as a substitute for the tangible document if:
 22        (1)  The person entitled under the tangible document surrenders possession
 23        of the document to the issuer; and
 24        (2)  The  electronic  document when issued contains a statement that it is
 25        issued in substitution for the tangible document.
 26        (d)  Upon issuance of an electronic document of title in substitution  for
 27    a  tangible  document  of title in accordance with subsection (c) of this sec-
 28    tion:
 29        (1)  The tangible document ceases to have any effect or validity; and
 30        (2)  The person that procured issuance of the electronic document warrants
 31        to all subsequent persons entitled under the electronic document that  the
 32        warrantor  was  a  person  entitled  under  the tangible document when the
 33        warrantor surrendered possession of the tangible document to the issuer.
                                                                        
 34        28-7-106.  CONTROL OF ELECTRONIC DOCUMENT OF TITLE. (a) A person has  con-
 35    trol  of  an  electronic document of title if a system employed for evidencing
 36    the transfer of interests in the electronic document reliably establishes that
 37    person as the person to which the electronic document  was  issued  or  trans-
 38    ferred.
 39        (b)  A  system  satisfies  subsection (a) of this section, and a person is
 40    deemed to have control of an electronic document of title, if the document  is
 41    created, stored, and assigned in such a manner that:
 42        (1)  A  single  authoritative copy of the document exists which is unique,
 43        identifiable, and, except as otherwise  provided  in  subsections  (b)(4),
 44        (5), and (6) of this section, unalterable;
 45        (2)  The authoritative copy identifies the person asserting control as:
 46             (A)  The person to which the document was issued; or
 47             (B)  If  the  authoritative copy indicates that the document has been
 48             transferred, the person to  which  the  document  was  most  recently
 49             transferred;
 50        (3)  The  authoritative copy is communicated to and maintained by the per-
 51        son asserting control or its designated custodian;
 52        (4)  Copies or amendments that add or change an identified assignee of the
 53        authoritative copy can be made only with the consent of the person assert-
                                                                        
                                           6
                                                                        
  1        ing control;
  2        (5)  Each copy of the authoritative copy and any copy of a copy is readily
  3        identifiable as a copy that is not the authoritative copy; and
  4        (6)  Any amendment of the authoritative copy is  readily  identifiable  as
  5        authorized or unauthorized.
                                                                        
  6                                       PART 2.
  7                       WAREHOUSE RECEIPTS -- SPECIAL PROVISIONS
                                                                        
  8        28-7-201.  PERSON  THAT  MAY  ISSUE  A  WAREHOUSE RECEIPT -- STORAGE UNDER
  9    BOND. (a) A warehouse receipt may be issued by any warehouse.
 10        (b)  If goods, including distilled spirits and  agricultural  commodities,
 11    are  stored  under  a statute requiring a bond against withdrawal or a license
 12    for the issuance of receipts in the nature of warehouse  receipts,  a  receipt
 13    issued  for  the goods is deemed to be a warehouse receipt even if issued by a
 14    person that is the owner of the goods and is not a warehouse.
                                                                        
 15        28-7-202.  FORM OF WAREHOUSE RECEIPT -- EFFECT OF OMISSION.  (a)  A  ware-
 16    house receipt need not be in any particular form.
 17        (b)  Unless  a  warehouse  receipt provides for each of the following, the
 18    warehouse is liable for damages caused to a person injured by its omission:
 19        (1)  A statement of the location of the warehouse facility where the goods
 20        are stored;
 21        (2)  The date of issue of the receipt;
 22        (3)  The unique identification code of the receipt;
 23        (4)  A statement whether the goods  received  will  be  delivered  to  the
 24        bearer, to a named person, or to a named person or its order;
 25        (5)  The  rate  of  storage  and handling charges, unless goods are stored
 26        under a field warehousing arrangement, in which case a statement  of  that
 27        fact is sufficient on a nonnegotiable receipt;
 28        (6)  A description of the goods or the packages containing them;
 29        (7)  The signature of the warehouse or its agent;
 30        (8)  If  the  receipt  is issued for goods that the warehouse owns, either
 31        solely, jointly, or in common with others, a statement of the fact of that
 32        ownership;  and
 33        (9)  A statement of the amount of advances made and of liabilities  incur-
 34        red for which the warehouse claims a lien or security interest, unless the
 35        precise  amount  of  advances made or liabilities incurred, at the time of
 36        the issue of the receipt, is unknown to the warehouse or to its agent that
 37        issued the receipt, in which case a statement of the  fact  that  advances
 38        have  been made or liabilities incurred and the purpose of the advances or
 39        liabilities is sufficient.
 40        (c)  A warehouse may insert in its receipt any terms that are not contrary
 41    to the uniform commercial code and do not impair its  obligation  of  delivery
 42    under  section  28-7-403  or its duty of care under section 28-7-204. Any con-
 43    trary provision is ineffective.
                                                                        
 44        28-7-203.  LIABILITY FOR NONRECEIPT OR MISDESCRIPTION. A party to or  pur-
 45    chaser  for  value  in good faith of a document of title, other than a bill of
 46    lading, that relies upon the description of the  goods  in  the  document  may
 47    recover  from the issuer damages caused by the nonreceipt or misdescription of
 48    the goods, except to the extent that:
 49        (1)  The document conspicuously indicates that the issuer  does  not  know
 50    whether  all  or  part  of  the  goods in fact were received or conform to the
 51    description, such as a case in which the description is in terms of  marks  or
                                                                        
                                           7
                                                                        
  1    labels or kind, quantity, or condition, or the receipt or description is qual-
  2    ified  by  "contents,  condition,  and quality unknown," "said to contain," or
  3    words of similar import, if the indication is true; or
  4        (2)  The party or purchaser otherwise has notice of the nonreceipt or mis-
  5    description.
                                                                        
  6        28-7-204.  DUTY OF CARE -- CONTRACTUAL LIMITATION OF  WAREHOUSE'S  LIABIL-
  7    ITY.  (a) A warehouse is liable for damages for loss of or injury to the goods
  8    caused by its failure to exercise care with regard to the goods that a reason-
  9    ably careful person would exercise under similar circumstances. Unless  other-
 10    wise  agreed, the warehouse is not liable for damages that could not have been
 11    avoided by the exercise of that care.
 12        (b)  Damages may be limited by a term in the warehouse receipt or  storage
 13    agreement  limiting  the  amount of liability in case of loss or damage beyond
 14    which the warehouse is not liable. Such a limitation  is  not  effective  with
 15    respect to the warehouse's liability for conversion to its own use. On request
 16    of  the  bailor  in  a  record at the time of signing the storage agreement or
 17    within  a  reasonable  time  after  receipt  of  the  warehouse  receipt,  the
 18    warehouse's liability may be increased on part or all of the goods covered  by
 19    the storage agreement or the warehouse receipt. In this event, increased rates
 20    may be charged based on an increased valuation of the goods.
 21        (c)  Reasonable  provisions as to the time and manner of presenting claims
 22    and commencing actions based on the bailment may be included in the  warehouse
 23    receipt or storage agreement.
                                                                        
 24        28-7-205.  TITLE  UNDER  WAREHOUSE  RECEIPT  DEFEATED  IN CERTAIN CASES. A
 25    buyer in ordinary course of business of fungible goods sold and delivered by a
 26    warehouse that is also in the business of buying and selling such goods  takes
 27    the  goods  free of any claim under a warehouse receipt even if the receipt is
 28    negotiable and has been duly negotiated.
                                                                        
 29        28-7-206.  TERMINATION OF STORAGE AT WAREHOUSE'S OPTION. (a) A  warehouse,
 30    by  giving  notice  to  the person on whose account the goods are held and any
 31    other person known to claim an interest in the goods, may require  payment  of
 32    any  charges and removal of the goods from the warehouse at the termination of
 33    the period of storage fixed by the document of title or, if a  period  is  not
 34    fixed,  within  a stated period not less than thirty (30) days after the ware-
 35    house gives notice. If the goods are not removed before the date specified  in
 36    the notice, the warehouse may sell them pursuant to section 28-7-210.
 37        (b)  If a warehouse in good faith believes that goods are about to deteri-
 38    orate  or decline in value to less than the amount of its lien within the time
 39    provided in subsection (a) of this section and section 28-7-210, the warehouse
 40    may specify in the notice given under subsection (a) of this section any  rea-
 41    sonable  shorter  time  for  removal  of  the  goods and, if the goods are not
 42    removed, may sell them at public sale held not less than one (1) week after  a
 43    single advertisement or posting.
 44        (c)  If,  as  a result of a quality or condition of the goods of which the
 45    warehouse did not have notice at the time of deposit, the goods are  a  hazard
 46    to  other  property, the warehouse facilities, or other persons, the warehouse
 47    may sell the goods at public or private sale without advertisement or  posting
 48    on  reasonable  notification  to all persons known to claim an interest in the
 49    goods. If the warehouse, after a reasonable effort,  is  unable  to  sell  the
 50    goods,  it may dispose of them in any lawful manner and does not incur liabil-
 51    ity by reason of that disposition.
 52        (d)  A warehouse shall deliver the goods to any person  entitled  to  them
                                                                        
                                           8
                                                                        
  1    under  this chapter upon due demand made at any time before sale or other dis-
  2    position under this section.
  3        (e)  A warehouse may satisfy its lien from the proceeds  of  any  sale  or
  4    disposition  under this section but shall hold the balance for delivery on the
  5    demand of any person to which the warehouse would have been bound  to  deliver
  6    the goods.
                                                                        
  7        28-7-207.  GOODS  MUST  BE KEPT SEPARATE -- FUNGIBLE GOODS. (a) Unless the
  8    warehouse receipt provides otherwise, a  warehouse  shall  keep  separate  the
  9    goods  covered by each receipt so as to permit at all times identification and
 10    delivery of those goods. However, different lots of fungible goods may be com-
 11    mingled.
 12        (b)  If different lots of fungible goods are  commingled,  the  goods  are
 13    owned in common by the persons entitled thereto and the warehouse is severally
 14    liable  to each owner for that owner's share. If, because of overissue, a mass
 15    of fungible goods is insufficient to meet all the receipts the  warehouse  has
 16    issued  against  it, the persons entitled include all holders to which overis-
 17    sued receipts have been duly negotiated.
                                                                        
 18        28-7-208.  ALTERED WAREHOUSE RECEIPTS. If a blank in a negotiable tangible
 19    warehouse receipt has been filled in without authority, a good-faith purchaser
 20    for value and without notice of the lack of authority may treat the  insertion
 21    as  authorized. Any other unauthorized alteration leaves any tangible or elec-
 22    tronic warehouse receipt enforceable against the issuer according to its orig-
 23    inal tenor.
                                                                        
 24        28-7-209.  LIEN OF WAREHOUSE. (a) A  warehouse  has  a  lien  against  the
 25    bailor  on the goods covered by a warehouse receipt or storage agreement or on
 26    the proceeds thereof in its possession for charges for storage or  transporta-
 27    tion,  including  demurrage  and  terminal charges, insurance, labor, or other
 28    charges, present or future, in relation to the goods, and for expenses  neces-
 29    sary for preservation of the goods or reasonably incurred in their sale pursu-
 30    ant  to  law.  If the person on whose account the goods are held is liable for
 31    similar charges or expenses in relation to other goods whenever deposited  and
 32    it  is  stated  in  the  warehouse receipt or storage agreement that a lien is
 33    claimed for charges and expenses in relation to  other  goods,  the  warehouse
 34    also  has a lien against the goods covered by the warehouse receipt or storage
 35    agreement or on the proceeds thereof in its possession for those  charges  and
 36    expenses, whether or not the other goods have been delivered by the warehouse.
 37    However,  as  against a person to which a negotiable warehouse receipt is duly
 38    negotiated, a warehouse's lien is limited to charges in an amount or at a rate
 39    specified in the warehouse receipt or, if no charges are so  specified,  to  a
 40    reasonable  charge  for  storage  of the specific goods covered by the receipt
 41    subsequent to the date of the receipt.
 42        (b)  A warehouse may also reserve a security interest against  the  bailor
 43    for  the  maximum amount specified on the receipt for charges other than those
 44    specified in subsection (a) of this section, such as for  money  advanced  and
 45    interest.  The  security  interest  is  governed by chapter 9, title 28, Idaho
 46    Code.
 47        (c)  A warehouse's lien for charges and expenses under subsection  (a)  of
 48    this  section  or  a security interest under subsection (b) of this section is
 49    also effective against any person that so entrusted the bailor with possession
 50    of the goods that a pledge of them by the bailor to a good-faith purchaser for
 51    value would have been valid. However, the lien or  security  interest  is  not
 52    effective  against  a person that before issuance of a document of title had a
                                                                        
                                           9
                                                                        
  1    legal interest or a perfected security interest in the goods and that did not:
  2        (1)  Deliver or entrust the goods or any document of  title  covering  the
  3        goods to the bailor or the bailor's nominee with:
  4             (A)  Actual or apparent authority to ship, store, or sell;
  5             (B)  Power to obtain delivery under section 28-7-403; or
  6             (C)  Power  of  disposition  under  section  28-2-403,  28-12-304(2),
  7             28-12-305(2),  28-9-320  or  28-9-321(c), or other statute or rule of
  8             law; or
  9        (2)  Acquiesce in the procurement by the bailor or its nominee of any doc-
 10        ument.
 11        (d)  A warehouse's lien on household goods for  charges  and  expenses  in
 12    relation  to  the goods under subsection (a) of this section is also effective
 13    against all persons if the depositor was the legal possessor of the  goods  at
 14    the  time  of  deposit. In this subsection, "household goods" means furniture,
 15    furnishings, or personal effects used by the depositor in a dwelling.
 16        (e)  A warehouse loses its lien on any goods that it voluntarily  delivers
 17    or unjustifiably refuses to deliver.
                                                                        
 18        28-7-210.  ENFORCEMENT  OF  WAREHOUSE'S LIEN. (a) Except as otherwise pro-
 19    vided in subsection (b) of this section, a warehouse's lien may be enforced by
 20    public or private sale of the goods, in bulk or in packages, at  any  time  or
 21    place  and  on any terms that are commercially reasonable, after notifying all
 22    persons known to claim an interest in the goods. The notification must include
 23    a statement of the amount due, the nature of the proposed sale, and  the  time
 24    and  place  of  any  public sale. The fact that a better price could have been
 25    obtained by a sale at a different time or in  a  method  different  from  that
 26    selected  by  the  warehouse is not of itself sufficient to establish that the
 27    sale was not made in a commercially reasonable manner. The warehouse sells  in
 28    a commercially reasonable manner if the warehouse sells the goods in the usual
 29    manner  in any recognized market therefor,  sells at the price current in that
 30    market at the time of the sale, or otherwise sells in conformity with  commer-
 31    cially reasonable practices among dealers in the type of goods sold. A sale of
 32    more  goods  than apparently necessary to be offered to ensure satisfaction of
 33    the obligation is not commercially reasonable, except in cases covered by  the
 34    preceding sentence.
 35        (b)  A warehouse may enforce its lien on goods, other than goods stored by
 36    a  merchant  in the course of its business, only if the following requirements
 37    are satisfied:
 38        (1)  All persons known to claim an interest in the goods must be notified.
 39        (2)  The notification must include an itemized statement of the  claim,  a
 40        description  of the goods subject to the lien, a demand for payment within
 41        a specified time not less than ten (10) days after receipt of the  notifi-
 42        cation,  and  a conspicuous statement that unless the claim is paid within
 43        that time the goods will be advertised for sale and sold by auction  at  a
 44        specified time and place.
 45        (3)  The sale must conform to the terms of the notification.
 46        (4)  The  sale  must  be  held  at the nearest suitable place to where the
 47        goods are held or stored.
 48        (5)  After the expiration of the time given in the notification, an adver-
 49        tisement of the sale must be published once a week for two (2) weeks  con-
 50        secutively  in  a newspaper of general circulation where the sale is to be
 51        held. The advertisement must include a description of the goods, the  name
 52        of  the person on whose account the goods are being held, and the time and
 53        place of the sale. The sale must take place at  least  fifteen  (15)  days
 54        after  the first publication. If there is no newspaper of general circula-
                                                                        
                                           10
                                                                        
  1        tion where the sale is to be held, the advertisement  must  be  posted  at
  2        least  ten (10) days before the sale in not fewer than six (6) conspicuous
  3        places in the neighborhood of the proposed sale.
  4        (c)  Before any sale pursuant to this section, any person claiming a right
  5    in the goods may pay the amount necessary to satisfy the lien and the  reason-
  6    able  expenses  incurred  in  complying  with this section. In that event, the
  7    goods may not be sold but must be retained by the  warehouse  subject  to  the
  8    terms of the receipt and this chapter.
  9        (d)  A warehouse may buy at any public sale held pursuant to this section.
 10        (e)  A purchaser in good faith of goods sold to enforce a warehouse's lien
 11    takes  the  goods  free  of  any  rights of persons against which the lien was
 12    valid, despite the warehouse's noncompliance with this section.
 13        (f)  A warehouse may satisfy its lien from the proceeds of any sale pursu-
 14    ant to this section but shall hold the balance, if any, for delivery on demand
 15    to any person to which the warehouse would have  been  bound  to  deliver  the
 16    goods.
 17        (g)  The  rights  provided  by  this  section are in addition to all other
 18    rights allowed by law to a creditor against a debtor.
 19        (h)  If a lien is on goods stored by a merchant in the course of its busi-
 20    ness, the lien may be enforced in accordance with subsection  (a)  or  (b)  of
 21    this section.
 22        (i)  A  warehouse  is  liable for damages caused by failure to comply with
 23    the requirements for sale under this section and, in case  of  willful  viola-
 24    tion, is liable for conversion.
                                                                        
 25                                       PART 3.
 26                        BILLS OF LADING -- SPECIAL PROVISIONS
                                                                        
 27        28-7-301.  LIABILITY FOR NONRECEIPT OR MISDESCRIPTION -- "SAID TO CONTAIN"
 28    --  "SHIPPER'S  WEIGHT, LOAD, AND COUNT" -- IMPROPER HANDLING. (a) A consignee
 29    of a nonnegotiable bill of lading which has given value in good  faith,  or  a
 30    holder  to  which a negotiable bill has been duly negotiated, relying upon the
 31    description of the goods in the bill or upon the date shown in the  bill,  may
 32    recover  from  the  issuer  damages caused by the misdating of the bill or the
 33    nonreceipt or misdescription of the goods, except to the extent that the  bill
 34    indicates  that  the issuer does not know whether any part or all of the goods
 35    in fact were received or conform to the description, such  as  in  a  case  in
 36    which  the  description  is  in terms of marks or labels or kind, quantity, or
 37    condition or the receipt or description is qualified by "contents or condition
 38    of contents of packages unknown," "said to contain," "shipper's weight,  load,
 39    and count," or words of similar import, if that indication is true.
 40        (b)  If goods are loaded by the issuer of a bill of lading:
 41        (1)  The  issuer  shall count the packages of goods if shipped in packages
 42        and ascertain the kind and quantity if shipped in bulk; and
 43        (2)  Words such as "shipper's weight, load, and count," or words of  simi-
 44        lar  import  indicating  that  the description was made by the shipper are
 45        ineffective except as to goods concealed in packages.
 46        (c)  If bulk goods are loaded by a shipper that  makes  available  to  the
 47    issuer  of  a bill of lading adequate facilities for weighing those goods, the
 48    issuer shall ascertain the kind and quantity within a  reasonable  time  after
 49    receiving the shipper's request in a record to do so. In that case, "shipper's
 50    weight" or words of similar import are ineffective.
 51        (d)  The  issuer  of  a bill of lading, by including in the bill the words
 52    "shipper's weight, load, and count," or words of similar import, may  indicate
 53    that the goods were loaded by the shipper, and, if that statement is true, the
                                                                        
                                           11
                                                                        
  1    issuer  is  not  liable  for  damages caused by the improper loading. However,
  2    omission of such words does not imply liability for damages caused by improper
  3    loading.
  4        (e)  A shipper guarantees to an issuer the accuracy at the time  of  ship-
  5    ment    of  the description, marks, labels, number, kind, quantity, condition,
  6    and weight, as furnished by the shipper, and the shipper shall  indemnify  the
  7    issuer  against damage caused by inaccuracies in those particulars. This right
  8    of  indemnity does not limit the issuer's  responsibility or  liability  under
  9    the contract of carriage to any person other than the shipper.
                                                                        
 10        28-7-302.  THROUGH BILLS OF LADING AND SIMILAR DOCUMENTS OF TITLE. (a) The
 11    issuer  of  a  through bill of lading, or other document of title embodying an
 12    undertaking to be performed in part by a person acting as its agent  or  by  a
 13    performing carrier, is liable to any person entitled to recover on the bill or
 14    other document for any breach by the other person or the performing carrier of
 15    its  obligation  under the bill or other document. However, to the extent that
 16    the bill or other document covers an undertaking to be performed  overseas  or
 17    in territory not contiguous to the continental United States or an undertaking
 18    including  matters other than transportation, this liability for breach by the
 19    other person or the performing carrier may be varied by agreement of the  par-
 20    ties.
 21        (b)  If  goods  covered  by  a through bill of lading or other document of
 22    title embodying an undertaking to be performed in part by a person other  than
 23    the issuer are received by that person, the person is subject, with respect to
 24    its  own  performance while the goods are in its possession, to the obligation
 25    of the issuer. The person's obligation is discharged by delivery of the  goods
 26    to  another person pursuant to the bill or other document and does not include
 27    liability for breach by any other person or by the issuer.
 28        (c)  The issuer of a through bill of lading or  other  document  of  title
 29    described  in  subsection  (a) of this section is entitled to recover from the
 30    performing carrier, or other person in possession of the goods when the breach
 31    of the obligation under the bill or other document occurred:
 32        (1)  The amount it may be required  to  pay  to  any  person  entitled  to
 33        recover  on the bill or other document for the breach, as may be evidenced
 34        by any receipt, judgment, or transcript of judgment; and
 35        (2)  The amount of any  expense  reasonably  incurred  by  the  issuer  in
 36        defending  any  action  commenced by any person entitled to recover on the
 37        bill or other document for the breach.
                                                                        
 38        28-7-303.  DIVERSION --  RECONSIGNMENT  --  CHANGE  OF  INSTRUCTIONS.  (a)
 39    Unless  the bill of lading otherwise provides, a carrier may deliver the goods
 40    to a person or destination other than that stated in the bill or may otherwise
 41    dispose of the goods, without liability for misdelivery, on instructions from:
 42        (1)  The holder of a negotiable bill;
 43        (2)  The consignor on a nonnegotiable bill,  even  if  the  consignee  has
 44        given contrary instructions;
 45        (3)  The  consignee  on  a  nonnegotiable  bill in the absence of contrary
 46        instructions from the consignor, if the goods have arrived at  the  billed
 47        destination  or  if the consignee is in possession of the tangible bill or
 48        in control of the electronic bill; or
 49        (4)  The consignee on a nonnegotiable bill, if the consignee  is  entitled
 50        as against the consignor to dispose of the goods.
 51        (b)  Unless  instructions  described in subsection (a) of this section are
 52    included in a negotiable bill of lading, a person to which the  bill  is  duly
 53    negotiated may  hold the bailee according to the original terms.
                                                                        
                                           12
                                                                        
  1        28-7-304.  TANGIBLE  BILLS  OF LADING IN A SET. (a) Except as customary in
  2    international transportation, a tangible bill of lading may not be issued in a
  3    set of parts. The issuer is liable for damages caused  by  violation  of  this
  4    subsection.
  5        (b)  If  a  tangible  bill of lading is lawfully issued in a set of parts,
  6    each of which contains an identification code and is  expressed  to  be  valid
  7    only if the goods have not been delivered against any other part, the whole of
  8    the parts constitutes one (1) bill.
  9        (c)  If  a  tangible negotiable bill of lading is lawfully issued in a set
 10    of parts and different parts are negotiated to different persons, the title of
 11    the holder to which the first due negotiation is made prevails as to both  the
 12    document of title and the goods even if any later holder may have received the
 13    goods  from  the carrier in good faith and discharged the carrier's obligation
 14    by surrendering its part.
 15        (d)  A person that negotiates or transfers a single  part  of  a  tangible
 16    bill of lading issued in a set is liable to holders of that part as if it were
 17    the whole set.
 18        (e)  The  bailee  shall  deliver in accordance with part 4 of this chapter
 19    against the first presented part of a tangible bill of lading lawfully  issued
 20    in  a  set.  Delivery in this manner discharges the bailee's obligation on the
 21    whole bill.
                                                                        
 22        28-7-305.  DESTINATION BILLS. (a) Instead of issuing a bill of  lading  to
 23    the  consignor at the place of shipment, a carrier, at the request of the con-
 24    signor, may procure the bill to be issued at destination or at any other place
 25    designated in the request.
 26        (b)  Upon request of any person entitled as against a carrier  to  control
 27    the  goods  while  in transit and on surrender of possession or control of any
 28    outstanding bill of lading or other receipt covering the  goods,  the  issuer,
 29    subject to section 28-7-105, may procure a substitute bill to be issued at any
 30    place designated in the request.
                                                                        
 31        28-7-306.  ALTERED  BILLS OF LADING. An unauthorized alteration or filling
 32    in of a blank in a bill of lading leaves the bill enforceable according to its
 33    original tenor.
                                                                        
 34        28-7-307.  LIEN OF CARRIER. (a) A carrier has a lien on the goods  covered
 35    by  a  bill of lading or on the proceeds thereof in its possession for charges
 36    after the date of the carrier's receipt of the goods for storage or  transpor-
 37    tation,  including  demurrage and terminal charges, and for expenses necessary
 38    for preservation of the goods incident to their transportation  or  reasonably
 39    incurred in their sale pursuant to law. However, against a purchaser for value
 40    of  a negotiable bill of lading, a carrier's lien is limited to charges stated
 41    in the bill or the applicable tariffs or, if no charges are stated, a  reason-
 42    able charge.
 43        (b)  A  lien for charges and expenses under subsection (a) of this section
 44    on goods that the carrier was required by law to receive for transportation is
 45    effective against the consignor or any person entitled to the goods unless the
 46    carrier had notice that the consignor lacked authority to subject the goods to
 47    those charges and expenses. Any other lien under subsection (a) of  this  sec-
 48    tion  is  effective  against  the  consignor and any person that permitted the
 49    bailor to have control or possession of  the  goods  unless  the  carrier  had
 50    notice that the bailor lacked authority.
 51        (c)  A carrier loses its lien on any goods that it voluntarily delivers or
 52    unjustifiably refuses to deliver.
                                                                        
                                           13
                                                                        
  1        28-7-308.  ENFORCEMENT  OF  CARRIER'S  LIEN. (a) A carrier's lien on goods
  2    may be enforced by public or private sale of the goods, in bulk  or  in  pack-
  3    ages,  at any time or place and on any terms that are commercially reasonable,
  4    after notifying all persons known to claim an interest in the goods. The noti-
  5    fication must include a statement of the amount due, the nature  of  the  pro-
  6    posed  sale, and the time and place of any public sale. The fact that a better
  7    price could have been obtained by a sale at a different time or  in  a  method
  8    different  from  that  selected  by the carrier is not of itself sufficient to
  9    establish that the sale was not made in a commercially reasonable manner.  The
 10    carrier  sells  goods in a commercially reasonable manner if the carrier sells
 11    the goods in the usual manner in any recognized market therefor, sells at  the
 12    price  current  in  that market at the time of the sale, or otherwise sells in
 13    conformity with commercially reasonable practices among dealers in the type of
 14    goods sold. A sale of more goods than apparently necessary to  be  offered  to
 15    ensure  satisfaction  of the obligation is not commercially reasonable, except
 16    in cases covered by the preceding sentence.
 17        (b)  Before any sale pursuant to this section, any person claiming a right
 18    in the goods may pay the amount necessary to satisfy the lien and the  reason-
 19    able  expenses  incurred  in  complying  with this section. In that event, the
 20    goods may not be sold but must be retained by  the  carrier,  subject  to  the
 21    terms of the bill of lading and this chapter.
 22        (c)  A carrier may buy at any public sale pursuant to this section.
 23        (d)  A  purchaser  in good faith of goods sold to enforce a carrier's lien
 24    takes the goods free of any rights of  persons  against  which  the  lien  was
 25    valid, despite the carrier's noncompliance with this section.
 26        (e)  A carrier may satisfy its lien from the proceeds of any sale pursuant
 27    to  this section but shall hold the balance, if any, for delivery on demand to
 28    any person to which the carrier would have been bound to deliver the goods.
 29        (f)  The rights provided by this section are  in  addition  to  all  other
 30    rights allowed by law to a creditor against a debtor.
 31        (g)  A carrier's lien may be enforced pursuant to either subsection (a) of
 32    this section or the procedure set forth in section 28-7-210(b).
 33        (h)  A  carrier is liable for damages caused by failure to comply with the
 34    requirements for sale under this section and, in case of willful violation, is
 35    liable for conversion.
                                                                        
 36        28-7-309.  DUTY OF CARE -- CONTRACTUAL LIMITATION OF CARRIER'S  LIABILITY.
 37    (a)  A  carrier  that  issues a bill of lading, whether negotiable or nonnego-
 38    tiable, shall exercise the degree of care in relation to  the  goods  which  a
 39    reasonably  careful  person  would  exercise under similar circumstances. This
 40    subsection does not affect any  statute,  regulation,  or  rule  of  law  that
 41    imposes  liability  upon a common carrier for damages not caused by its negli-
 42    gence.
 43        (b)  Damages may be limited by a term in the bill of lading or in a trans-
 44    portation agreement that the carrier's liability may not exceed a value stated
 45    in the bill or transportation agreement if the carrier's rates  are  dependent
 46    upon  value  and  the consignor is afforded an opportunity to declare a higher
 47    value and the consignor is advised of the opportunity. However, such a limita-
 48    tion is not effective with respect to the carrier's liability  for  conversion
 49    to its own use.
 50        (c)  Reasonable  provisions as to the time and manner of presenting claims
 51    and commencing actions based on the shipment may be included in a bill of lad-
 52    ing or a transportation agreement.
                                                                        
                                           14
                                                                        
  1                                       PART 4.
  2            WAREHOUSE RECEIPTS AND BILLS OF LADING -- GENERAL OBLIGATIONS
                                                                        
  3        28-7-401.  IRREGULARITIES IN ISSUE  OF  RECEIPT  OR  BILL  OR  CONDUCT  OF
  4    ISSUER.  The obligations imposed by this chapter on an issuer apply to a docu-
  5    ment of title even if:
  6        (1)  The document does not comply with the requirements of this chapter or
  7    of any other statute, rule, or regulation regarding  its  issuance,  form,  or
  8    content;
  9        (2)  The issuer violated laws regulating the conduct of its business;
 10        (3)  The  goods  covered by the document were owned by the bailee when the
 11    document was issued; or
 12        (4)  The person issuing the document is not a warehouse but  the  document
 13    purports to be a warehouse receipt.
                                                                        
 14        28-7-402.  DUPLICATE  DOCUMENT  OF  TITLE -- OVERISSUE. A duplicate or any
 15    other document of title purporting to cover goods already  represented  by  an
 16    outstanding  document  of  the  same  issuer  does not confer any right in the
 17    goods, except as provided in the case of tangible bills of lading in a set  of
 18    parts,  overissue  of  documents  for  fungible  goods,  substitutes for lost,
 19    stolen, or destroyed documents, or substitute  documents  issued  pursuant  to
 20    section  28-7-105. The issuer is liable for damages caused by its overissue or
 21    failure to identify a duplicate document by a conspicuous notation.
                                                                        
 22        28-7-403.  OBLIGATION OF BAILEE TO DELIVER -- EXCUSE. (a) A  bailee  shall
 23    deliver the goods to a person entitled under a document of title if the person
 24    complies  with  subsections  (b)  and  (c)  of this section, unless and to the
 25    extent that the bailee establishes any of the following:
 26        (1)  Delivery of the goods to a  person  whose  receipt  was  rightful  as
 27        against the claimant;
 28        (2)  Damage  to  or delay, loss, or destruction of the goods for which the
 29        bailee is not liable;
 30        (3)  Previous sale or other disposition of the goods in lawful enforcement
 31        of a lien or on a warehouse's lawful termination of storage;
 32        (4)  The exercise by a seller of its right to stop  delivery  pursuant  to
 33        section  28-2-705 or by a lessor of its right to stop delivery pursuant to
 34        section 28-12-526;
 35        (5)  A diversion, reconsignment, or other disposition pursuant to  section
 36        28-7-303;
 37        (6)  Release,  satisfaction,  or  any  other  personal defense against the
 38        claimant; or
 39        (7)  Any other lawful excuse.
 40        (b)  A person claiming goods covered by a document of title shall  satisfy
 41    the  bailee's lien if the bailee so requests or if the bailee is prohibited by
 42    law from delivering the goods until the charges are paid.
 43        (c)  Unless a person claiming the goods is a person against which the doc-
 44    ument of title does not confer a right under section 28-7-503(a):
 45        (1)  The person claiming under a document shall  surrender  possession  or
 46        control of any outstanding negotiable document covering the goods for can-
 47        cellation or indication of partial deliveries; and
 48        (2)  The bailee shall cancel the document or conspicuously indicate in the
 49        document  the  partial  delivery  or the bailee is liable to any person to
 50        which the document is duly negotiated.
                                                                        
 51        28-7-404.  NO LIABILITY FOR GOOD-FAITH DELIVERY PURSUANT  TO  DOCUMENT  OF
                                                                        
                                           15
                                                                        
  1    TITLE.  A bailee that in good faith has received goods and delivered or other-
  2    wise disposed of the goods according to the terms of a document  of  title  or
  3    pursuant to this chapter is not liable for the goods even if:
  4        (1)  The  person  from  which  the  bailee received the goods did not have
  5    authority to procure the document or to dispose of the goods; or
  6        (2)  The person to which the bailee  delivered  the  goods  did  not  have
  7    authority to receive the goods.
                                                                        
  8                                       PART 5.
  9          WAREHOUSE RECEIPTS AND BILLS OF LADING -- NEGOTIATION AND TRANSFER
                                                                        
 10        28-7-501.  FORM  OF  NEGOTIATION  AND REQUIREMENTS OF DUE NEGOTIATION. (a)
 11    The following rules apply to a negotiable tangible document of title:
 12        (1)  If the document's original terms run to the order of a named  person,
 13        the document is negotiated by the named person's indorsement and delivery.
 14        After the named person's indorsement in blank or to bearer, any person may
 15        negotiate the document by delivery alone.
 16        (2)  If  the  document's original terms run to bearer, it is negotiated by
 17        delivery alone.
 18        (3)  If the document's original terms run to the order of a  named  person
 19        and  it is delivered to the named person, the effect is the same as if the
 20        document had been negotiated.
 21        (4)  Negotiation of the document after it has been  indorsed  to  a  named
 22        person requires indorsement by the named person and delivery.
 23        (5)  A  document  is  duly  negotiated  if  it is negotiated in the manner
 24        stated in this subsection to a holder that purchases  it  in  good  faith,
 25        without  notice  of  any defense against or claim to it on the part of any
 26        person, and for value, unless it is established that  the  negotiation  is
 27        not  in  the regular course of business or financing or involves receiving
 28        the document in settlement or payment of a monetary obligation.
 29        (b)  The following rules apply to  a  negotiable  electronic  document  of
 30    title:
 31        (1)  If  the  document's original terms run to the order of a named person
 32        or to bearer, the document is negotiated by delivery of  the  document  to
 33        another person. Indorsement by the named person is not required to negoti-
 34        ate the document.
 35        (2)  If  the  document's original terms run to the order of a named person
 36        and the named person has control of the document, the effect is  the  same
 37        as if the document had been negotiated.
 38        (3)  A  document  is  duly  negotiated  if  it is negotiated in the manner
 39        stated in this subsection to a holder that purchases  it  in  good  faith,
 40        without  notice  of  any defense against or claim to it on the part of any
 41        person, and for value, unless it is established that  the  negotiation  is
 42        not  in  the  regular  course  of business or financing or involves taking
 43        delivery of the document in settlement or payment of  a  monetary  obliga-
 44        tion.
 45        (c)  Indorsement  of  a  nonnegotiable  document of title neither makes it
 46    negotiable nor adds to the transferee's rights.
 47        (d)  The naming in a negotiable bill of lading of a person to be  notified
 48    of  the  arrival  of the goods does not limit the negotiability of the bill or
 49    constitute notice to a purchaser of the bill of any interest of that person in
 50    the goods.
                                                                        
 51        28-7-502.  RIGHTS ACQUIRED BY DUE NEGOTIATION.  (a)  Subject  to  sections
 52    28-7-205  and  28-7-503,  a holder to which a negotiable document of title has
                                                                        
                                           16
                                                                        
  1    been duly negotiated acquires thereby:
  2        (1)  Title to the document;
  3        (2)  Title to the goods;
  4        (3)  All rights accruing under the law of agency  or  estoppel,  including
  5        rights  to  goods  delivered  to the bailee after the document was issued;
  6        and
  7        (4)  The direct obligation of the issuer to  hold  or  deliver  the  goods
  8        according to the terms of the document free of any defense or claim by the
  9        issuer  except those arising under the terms of the document or under this
 10        chapter, but in the case of a  delivery  order,  the  bailee's  obligation
 11        accrues  only  upon  the bailee's acceptance of the delivery order and the
 12        obligation acquired by the holder is that the issuer and any indorser will
 13        procure the acceptance of the bailee.
 14        (b)  Subject to section 28-7-503, title and rights acquired by due negoti-
 15    ation are not defeated by any stoppage of the goods represented by  the  docu-
 16    ment  of title or by surrender of the goods by the bailee and are not impaired
 17    even if:
 18        (1)  The due negotiation or any prior due negotiation constituted a breach
 19        of duty;
 20        (2)  Any person has been deprived of possession of a  negotiable  tangible
 21        document  or control of a negotiable electronic document by misrepresenta-
 22        tion, fraud, accident, mistake, duress, loss, theft, or conversion; or
 23        (3)  A previous sale or other transfer of the goods or document  has  been
 24        made to a third person.
                                                                        
 25        28-7-503.  DOCUMENT  OF  TITLE  TO  GOODS DEFEATED IN CERTAIN CASES. (a) A
 26    document of title confers no right in goods against a person that before issu-
 27    ance of the document had a legal interest or a perfected security interest  in
 28    the goods and that did not:
 29        (1)  Deliver  or  entrust  the goods or any document of title covering the
 30        goods to the bailor or the bailor's nominee with:
 31             (A)  Actual or apparent authority to ship, store, or sell;
 32             (B)  Power to obtain delivery under section 28-7-403; or
 33             (C)  Power  of  disposition  under  section  28-2-403,  28-12-304(2),
 34             28-12-305(2), 28-9-320 or 28-9-321(c), or other statute  or  rule  of
 35             law;  or
 36        (2)  Acquiesce in the procurement by the bailor or its nominee of any doc-
 37        ument.
 38        (b)  Title  to goods based upon an unaccepted delivery order is subject to
 39    the rights of any person to which a negotiable warehouse receipt  or  bill  of
 40    lading covering the goods has been duly negotiated. That title may be defeated
 41    under  section  28-7-504  to  the same extent as the rights of the issuer or a
 42    transferee from the issuer.
 43        (c)  Title to goods based upon a bill of lading issued to a  freight  for-
 44    warder  is  subject  to the rights of any person to which a bill issued by the
 45    freight forwarder is duly negotiated. However,  delivery  by  the  carrier  in
 46    accordance with part 4 of this chapter pursuant to its own bill of lading dis-
 47    charges the carrier's obligation to deliver.
                                                                        
 48        28-7-504.  RIGHTS  ACQUIRED  IN  ABSENCE  OF  DUE NEGOTIATION -- EFFECT OF
 49    DIVERSION -- STOPPAGE OF DELIVERY. (a) A transferee of a  document  of  title,
 50    whether  negotiable or nonnegotiable, to which the document has been delivered
 51    but not duly negotiated,  acquires the title and rights  that  its  transferor
 52    had or had actual authority to convey.
 53        (b)  In the case of a transfer of a nonnegotiable document of title, until
                                                                        
                                           17
                                                                        
  1    but  not  after  the bailee receives notice of the transfer, the rights of the
  2    transferee may be defeated:
  3        (1)  By those creditors of the transferor which could treat  the  transfer
  4        as void under section 28-2-402 or 28-12-308;
  5        (2)  By  a buyer from the transferor in ordinary course of business if the
  6        bailee has delivered the goods to the buyer or  received  notification  of
  7        the buyer's rights;
  8        (3)  By a lessee from the transferor in ordinary course of business if the
  9        bailee  has  delivered the goods to the lessee or received notification of
 10        the lessee's rights; or
 11        (4)  As against the bailee, by good-faith dealings of the bailee with  the
 12        transferor.
 13        (c)  A diversion or other change of shipping instructions by the consignor
 14    in  a  nonnegotiable bill of lading which causes the bailee not to deliver the
 15    goods to the consignee defeats the consignee's title to the goods if the goods
 16    have been delivered to a buyer in ordinary course of business or a  lessee  in
 17    ordinary  course of business and, in any event, defeats the consignee's rights
 18    against the bailee.
 19        (d)  Delivery of the goods pursuant to a nonnegotiable document  of  title
 20    may  be  stopped  by a seller under section 28-2-705 or a lessor under section
 21    28-12-526, subject to the requirements of due notification in those  sections.
 22    A  bailee  that honors the seller's or lessor's instructions is entitled to be
 23    indemnified by the seller or lessor against any resulting loss or expense.
                                                                        
 24        28-7-505.  INDORSER NOT GUARANTOR FOR OTHER PARTIES. The indorsement of  a
 25    tangible  document of title issued by a bailee does not make the indorser lia-
 26    ble for any default by the bailee or previous indorsers.
                                                                        
 27        28-7-506.  DELIVERY WITHOUT INDORSEMENT -- RIGHT  TO  COMPEL  INDORSEMENT.
 28    The  transferee  of a negotiable tangible document of title has a specifically
 29    enforceable right to have its transferor supply any necessary indorsement, but
 30    the transfer becomes a negotiation only as of the time the indorsement is sup-
 31    plied.
                                                                        
 32        28-7-507.  WARRANTIES ON NEGOTIATION OR DELIVERY OF DOCUMENT OF TITLE.  If
 33    a  person negotiates or delivers a document of title for value, otherwise than
 34    as a mere intermediary under section 28-7-508, unless  otherwise  agreed,  the
 35    transferor,  in addition to any warranty made in selling or leasing the goods,
 36    warrants to its immediate purchaser only that:
 37        (1)  The document is genuine;
 38        (2)  The transferor does not have knowledge of any fact that would  impair
 39    the document's validity or worth; and
 40        (3)  The  negotiation  or  delivery  is  rightful and fully effective with
 41    respect to the title to the document and the goods it represents.
                                                                        
 42        28-7-508.  WARRANTIES OF COLLECTING BANK AS TO DOCUMENTS OF TITLE. A  col-
 43    lecting  bank  or  other  intermediary known to be entrusted with documents of
 44    title on behalf of another or with  collection  of  a  draft  or  other  claim
 45    against  delivery  of documents warrants by the delivery of the documents only
 46    its own good faith and authority even if the collecting bank or other interme-
 47    diary has purchased or made advances against the claim or  draft  to  be  col-
 48    lected.
                                                                        
 49        28-7-509.  ADEQUATE  COMPLIANCE  WITH COMMERCIAL CONTRACT. Whether a docu-
 50    ment of title is adequate to fulfill the obligations of a contract for sale, a
                                                                        
                                           18
                                                                        
  1    contract for lease, or the conditions of a letter of credit is  determined  by
  2    chapter 2, 5 or 12, title 28, Idaho Code.
                                                                        
  3                                       PART 6.
  4          WAREHOUSE RECEIPTS AND BILLS OF LADING -- MISCELLANEOUS PROVISIONS
                                                                        
  5        28-7-601.  LOST,  STOLEN,  OR DESTROYED DOCUMENTS OF TITLE. (a) If a docu-
  6    ment of title is lost, stolen, or destroyed, a court may order delivery of the
  7    goods or issuance of a substitute document and the bailee may without  liabil-
  8    ity  to  any  person  comply with the order. If the document was negotiable, a
  9    court may not order delivery of the goods or issuance of a substitute document
 10    without the claimant's posting security unless it finds that any  person  that
 11    may  suffer  loss  as a result of nonsurrender of possession or control of the
 12    document is adequately protected against the loss. If the  document  was  non-
 13    negotiable,  the  court may require security. The court may also order payment
 14    of the bailee's reasonable costs and attorney's fees in any action under  this
 15    subsection.
 16        (b)  A  bailee  that,  without  a  court order, delivers goods to a person
 17    claiming under a missing negotiable document of title is liable to any  person
 18    injured  thereby.  If  the delivery is not in good faith, the bailee is liable
 19    for conversion. Delivery in good faith is not conversion if the claimant posts
 20    security with the bailee in an amount at least double the value of  the  goods
 21    at  the  time of posting to indemnify any person injured by the delivery which
 22    files a notice of claim within one (1) year after the delivery.
                                                                        
 23        28-7-602.  JUDICIAL PROCESS AGAINST GOODS COVERED BY NEGOTIABLE  DOCUMENTS
 24    OF  TITLE.  Unless  a document of title was originally issued upon delivery of
 25    the goods by a person that did not have power to dispose of them, a lien  does
 26    not  attach  by virtue of any judicial process to goods in the possession of a
 27    bailee for which a negotiable document of title is outstanding unless  posses-
 28    sion  or  control  of  the  document is first surrendered to the bailee or the
 29    document's negotiation is enjoined. The bailee may not be compelled to deliver
 30    the goods pursuant to process until possession or control of  the document  is
 31    surrendered  to  the  bailee  or to the court. A purchaser of the document for
 32    value without notice of the process or  injunction  takes  free  of  the  lien
 33    imposed by judicial process.
                                                                        
 34        28-7-603.  CONFLICTING CLAIMS -- INTERPLEADER. If more than one (1) person
 35    claims  title to or possession of the goods, the bailee is excused from deliv-
 36    ery until the bailee has a reasonable time to ascertain the  validity  of  the
 37    adverse  claims  or  to  commence  an  action for interpleader. The bailee may
 38    assert an interpleader either in defending an action for  nondelivery  of  the
 39    goods or by original action.
                                                                        
 40                                       PART 7.
 41                               MISCELLANEOUS PROVISIONS
                                                                        
 42        28-7-701.  EFFECTIVE DATE. This act takes effect on July 1, 2004.
                                                                        
 43        28-7-702.  REPEALS.  Existing chapter 7, title 28, Idaho Code, and section
 44    28-10-104, Idaho Code, are repealed.
                                                                        
 45        28-7-703.  APPLICABILITY. This act applies to a document of title that  is
 46    issued  or  a bailment that arises on or after July 1, 2004. This act does not
 47    apply to a document of title that is issued or a bailment that  arises  before
                                                                        
                                           19
                                                                        
  1    July  1,  2004,  even if the document of title or bailment would be subject to
  2    this act if the document of title had been issued or bailment had arisen on or
  3    after July 1, 2004.  This act does not apply to a right  of  action  that  has
  4    accrued before July 1, 2004.
                                                                        
  5        28-7-704.  SAVINGS  CLAUSE.  A document of title issued or a bailment that
  6    arises before July 1, 2004, and the rights, obligations, and interests flowing
  7    from that document or bailment are governed  by  any  statute  or  other  rule
  8    amended or repealed by this act as if amendment or repeal had not occurred and
  9    may  be  terminated, completed, consummated, or enforced under that statute or
 10    other rule.
                                                                        
 11        SECTION 3.  That Section 28-1-201, Idaho Code, be, and the same is  hereby
 12    amended to read as follows:
                                                                        
 13        28-1-201.  GENERAL  DEFINITIONS.  Subject  to  additional definitions con-
 14    tained in the subsequent chapters of this act which are applicable to specific
 15    chapters or parts thereof, and unless the context otherwise requires, in  this
 16    act:
 17        (1)  "Action"  in  the sense of a judicial proceeding includes recoupment,
 18    counterclaim, set-off, suit in equity  and  any  other  proceedings  in  which
 19    rights are determined.
 20        (2)  "Aggrieved party" means a party entitled to resort to a remedy.
 21        (3)  "Agreement"  means  the  bargain  of  the parties in fact as found in
 22    their language or by implication from other circumstances including course  of
 23    dealing  or  usage  of  trade or course of performance as provided in this act
 24    (sections 28-1-205 and 28-2-208). Whether an agreement has legal  consequences
 25    is  determined  by the provisions of this act, if applicable; otherwise by the
 26    law of contracts (section 28-1-103). (Compare "contract.")
 27        (4)  "Bank" means any person engaged in the business of banking, including
 28    any insured bank, whether chartered by federal or state law, any insured  sav-
 29    ings  and  loan  association, whether insured by federal or state law, and any
 30    insured credit union, whether chartered by  federal  or  state  law,  offering
 31    deposit  or other accounts on which the depositor or account holder is permit-
 32    ted to make withdrawals by  negotiable  or  transferable  instrument,  payment
 33    orders of withdrawal, telephone transfers, or other similar items for the pur-
 34    pose  of  making  payments  or transfers to third persons or others, including
 35    demand deposits, negotiable order of  withdrawal  accounts,  savings  deposits
 36    subject to automatic transfers, and share draft accounts.
 37        (5)  "Bearer"  means  the  a  person in control of a negotiable electronic
 38    document of title or a person in possession of  an  instrument,  a  negotiable
 39    tangible  document  of  title, or a certificated security payable to bearer or
 40    indorsed in blank.
 41        (6)  "Bill of lading" means a document of title evidencing the receipt  of
 42    goods  for  shipment issued by a person engaged in the business of directly or
 43    indirectly  transporting  or  forwarding  goods,  and  includes  an   airbill.
 44    "Airbill"  means a document serving for air transportation as a bill of lading
 45    does for marine or rail transportation, and includes an air  consignment  note
 46    or air waybill. The term does not include a warehouse receipt.
 47        (7)  "Branch" includes a separately incorporated foreign branch of a bank.
 48        (8)  "Burden  of  establishing"  a fact means the burden of persuading the
 49    triers of fact that the existence of the fact is more probable than its nonex-
 50    istence.
 51        (9)  "Buyer in ordinary course of business" means a person that buys goods
 52    in good faith, without knowledge that the sale violates the rights of  another
                                                                        
                                           20
                                                                        
  1    person  in  the  goods, and in the ordinary course from a person, other than a
  2    pawnbroker, in the business of selling goods of that kind. A person buys goods
  3    in the ordinary course if the sale to the person comports with  the  usual  or
  4    customary  practices in the kind of business in which the seller is engaged or
  5    with the seller's own usual or customary practices. A person that  sells  oil,
  6    gas  or other minerals at the wellhead or minehead is a person in the business
  7    of selling goods of that kind. A buyer in ordinary course of business may  buy
  8    for  cash,  by  exchange of other property, or on secured or unsecured credit,
  9    and may acquire goods or documents of title under a preexisting  contract  for
 10    sale.  Only  a  buyer  that  takes  possession  of the goods or has a right to
 11    recover the goods from the seller under chapter 2, title 28, Idaho  Code,  may
 12    be  a  buyer in ordinary course of business. A person that acquires goods in a
 13    transfer in bulk or as security for or in total or partial satisfaction  of  a
 14    money debt is not a buyer in ordinary course of business.
 15        (10) "Conspicuous.,"  with  reference to aA term, or clause is conspicuous
 16    when it is means so written, displayed, or presented that a reasonable  person
 17    against  whom  which it is to operate ought to have noticed it. Whether a term
 18    is "conspicuous" or not is a decision for the court. Conspicuous terms include
 19    the following:
 20        (A)  A printed heading in capitals (as: NON-NEGOTIABLE BILL OF LADING)  is
 21        conspicuous.  Language  in the body of a form is "conspicuous" if it is in
 22        larger or other equal to or greater in size than the surrounding test,  or
 23        in  contrasting type, font, or color. But in a telegram any stated term is
 24        "conspicuous." Whether a term or clause is "conspicuous"  or  not  is  for
 25        decision by the court. to the surrounding text of the same or lesser size;
 26        and
 27        (B)  Language  in  the body of a record or display in larger type than the
 28        surrounding text, or in contrasting type, font, or color to the  surround-
 29        ing  text  of  the same size, or set off from surrounding text of the same
 30        size by symbols or other marks that call attention to the language.
 31        (11) "Contract" means the total legal obligation which  results  from  the
 32    parties'  agreement  as affected by this act and any other applicable rules of
 33    law. (Compare "agreement.")
 34        (12) "Creditor" includes a general creditor, a secured  creditor,  a  lien
 35    creditor  and  any  representative of creditors, including an assignee for the
 36    benefit of creditors, a trustee in bankruptcy, a receiver  in  equity  and  an
 37    executor or administrator of an insolvent debtor's or assignor's estate.
 38        (13) "Defendant"  includes  a  person  in  the  position of defendant in a
 39    cross-action or counterclaim.
 40        (14) "Delivery" with respect to an electronic document of title means vol-
 41    untary transfer of control and with respect to instruments, tangible documents
 42    of title, chattel paper or certificated securities means voluntary transfer of
 43    possession.
 44        (15) "Document of title" includes  bill  of  lading,  dock  warrant,  dock
 45    receipt,  warehouse  receipt  or order for the delivery of goods, and also any
 46    other document which means a record (i) that in the regular course of business
 47    or financing is treated as adequately  evidencing that the person  in  posses-
 48    sion  or  control  of  it the record is entitled to receive, control, hold and
 49    dispose of the document record and the goods it the record  covers.  To  be  a
 50    document  of  title  a document must purport to be issued by or addressed to a
 51    bailee and purport to cover goods in the bailee's possession which are  either
 52    identified  or  are fungible portions of an identified mass and (ii) that pur-
 53    ports to be issued by or addressed to a bailee  and  to  cover  goods  in  the
 54    bailee's possession which are either identified or are fungible portions of an
 55    identified  mass. The term includes a bill of lading, transport document, dock
                                                                        
                                           21
                                                                        
  1    warrant, dock receipt, warehouse receipt, and order for delivery of goods.  An
  2    electronic  document  of title means a document of title evidenced by a record
  3    consisting of information stored in an electronic medium. A tangible  document
  4    of  title means a document of title evidenced by a record consisting of infor-
  5    mation that is inscribed on a tangible medium.
  6        (16) "Fault" means wrongful act, omission or breach.
  7        (17) "Fungible" with respect to goods or securities means goods or securi-
  8    ties of which any unit is, by nature or usage of trade, the equivalent of  any
  9    other like unit. Goods which are not fungible shall be deemed fungible for the
 10    purposes  of this act to the extent that under a particular agreement or docu-
 11    ment unlike units are treated as equivalents.
 12        (18) "Genuine" means free of forgery or counterfeiting.
 13        (19) "Good faith" means honesty in fact in the conduct or transaction con-
 14    cerned.
 15        (20) "Holder" with respect to a negotiable instrument, means:
 16        (A)  Tthe person in possession if the of a negotiable instrument  that  is
 17        payable  either  to  bearer or, in the case of an instrument payable to an
 18        identified person, if the to an identified person that is  the  person  in
 19        possession.;
 20        (B)  "Holder"  with  respect  to a document of title, means tThe person in
 21        possession of a negotiable tangible document of title  if  the  goods  are
 22        deliverable  either to bearer or to the order of the person in possession;
 23        or
 24        (C)  The person in control of a negotiable electronic document of title.
 25        (21) To "honor" is to pay or to accept and  pay,  or  where  a  credit  so
 26    engages  to  purchase  or  discount  a  draft  complying with the terms of the
 27    credit.
 28        (22) "Insolvency proceedings" includes any assignment for the  benefit  of
 29    creditors  or  other  proceedings  intended  to  liquidate or rehabilitate the
 30    estate of the person involved.
 31        (23) A person is "insolvent" who either has ceased to pay his debts in the
 32    ordinary course of business or cannot pay his debts as they become due  or  is
 33    insolvent within the meaning of the federal bankruptcy law.
 34        (24) "Money"  means a medium of exchange authorized or adopted by a domes-
 35    tic or foreign government and includes a monetary unit of account  established
 36    by  an  intergovernmental organization or by agreement between two (2) or more
 37    nations.
 38        (25) Subject to subsection (27) of this section, aA person has "notice" of
 39    a fact when if the person:
 40        (a)  He hHas actual knowledge of it; or
 41        (b)  He hHas received a notice or notification of it; or
 42        (c)  From all the facts and circumstances known to him the person  at  the
 43        time in question, he has reason to know that it exists.
 44        A  person  "knows"  or  has  "knowledge"  of a fact when he the person has
 45    actual knowledge of it. "Discover" or "learn" or a word or phrase  of  similar
 46    import refers to knowledge rather than to reason to know. The time and circum-
 47    stances under which a notice or notification may cease to be effective are not
 48    determined by this act.
 49        (26) A  person  "notifies"  or "gives" a notice or notification to another
 50    person by taking such steps as may be reasonably required to inform the  other
 51    person in ordinary course, whether or not such the other person actually comes
 52    to  know  of  it.  Subject  to  subsection  (27)  of  this  section, aA person
 53    "receives" a notice or notification when:
 54        (a)  It comes to his that person's attention; or
 55        (b)  It is duly delivered in a form reasonable under the circumstances  at
                                                                        
                                           22
                                                                        
  1        the  place of business through which the contract was made or at any other
  2        place another location held out by  him  that  person  as  the  place  for
  3        receipt of such communications.
  4        (27) Notice, knowledge, or a notice or notification received by an organi-
  5    zation  is  effective  for  a  particular transaction from the time when it is
  6    brought to the attention of the individual conducting that transaction, and in
  7    any event, from  the  time  when  it  would  have  been  brought  to  his  the
  8    individual's  attention  if  the  organization had exercised due diligence. An
  9    organization exercises due diligence if it maintains reasonable  routines  for
 10    communicating significant information to the person conducting the transaction
 11    and  there  is reasonable compliance with the routines. Due diligence does not
 12    require an individual acting for the organization to  communicate  information
 13    unless  such  communication  is part of his the individual's regular duties or
 14    unless he the individual has reason to know of the transaction  and  that  the
 15    transaction would be materially affected by the information.
 16        (28) "Organization"  includes  a  corporation,  government or governmental
 17    subdivision or agency, business trust, estate, trust, partnership or  associa-
 18    tion,  two (2) or more persons having a joint or common interest, or any other
 19    legal or commercial entity.
 20        (29) "Party," as distinct from "third  party,"  means  a  person  who  has
 21    engaged in a transaction or made an agreement within this act.
 22        (30) "Person"  includes  an  individual  or  an  organization (See section
 23    28-1-102).
 24        (31) "Presumption" or "presumed" means that the trier of  fact  must  find
 25    the  existence  of  the  fact presumed unless and until evidence is introduced
 26    which would support a finding of its nonexistence.
 27        (32) "Purchase" includes taking by sale, discount, negotiation,  mortgage,
 28    pledge, lien, security interest, issue or reissue, gift or any other voluntary
 29    transaction creating an interest in property.
 30        (33) "Purchaser" means a person who takes by purchase.
 31        (34) "Remedy"  means  any  remedial  right  to which an aggrieved party is
 32    entitled with or without resort to a tribunal.
 33        (35) "Representative" includes an agent, an officer of  a  corporation  or
 34    association,  and  a  trustee,  executor or administrator of an estate, or any
 35    other person empowered to act for another.
 36        (36) "Rights" includes remedies.
 37        (37) "Security interest" means an interest in personal  property  or  fix-
 38    tures  which  secures  payment  or performance of an obligation. The term also
 39    includes any interest of a consignor and a buyer of accounts, chattel paper, a
 40    payment intangible, or a promissory note in a transaction that is  subject  to
 41    chapter  9,  title 28, Idaho Code. The special property interest of a buyer of
 42    goods on identification of those goods to a contract for  sale  under  section
 43    28-2-401  is  not  a  "security  interest,"  but  a  buyer  may also acquire a
 44    "security interest" by complying with chapter 9, title 28, Idaho Code.  Except
 45    as  otherwise provided in section 28-2-205, the right of a seller or lessor of
 46    goods under chapter 2 or chapter 12,  title  28,  Idaho  Code,  to  retain  or
 47    acquire  possession of the goods is not a "security interest," but a seller or
 48    lessor may also acquire  a "security interest" by complying  with  chapter  9,
 49    title  28,  Idaho  Code.  The retention or reservation of title by a seller of
 50    goods notwithstanding shipment or delivery to the buyer (section 28-2-401)  is
 51    limited in effect to a reservation of a "security interest."
 52        Whether  a  transaction creates a lease or security interest is determined
 53    by the facts of each case; however, a transaction creates a security  interest
 54    if  the consideration the lessee is to pay the lessor for the right to posses-
 55    sion and use of the goods is an obligation for the term of the lease not  sub-
                                                                        
                                           23
                                                                        
  1    ject to termination by the lessee, and:
  2        (a)  The  original  term  of  the  lease  is  equal to or greater than the
  3        remaining economic life of the goods; or
  4        (b)  The lessee is bound to renew the lease  for  the  remaining  economic
  5        life of the goods or is bound to become the owner of the goods; or
  6        (c)  The  lessee  has  an option to renew the lease for the remaining eco-
  7        nomic life of the goods for no additional consideration or  nominal  addi-
  8        tional consideration upon compliance with the lease agreement; or
  9        (d)  The  lessee  has  an  option  to become the owner of the goods for no
 10        additional consideration or nominal additional consideration upon  compli-
 11        ance with the lease agreement.
 12        A  transaction  does not create a security interest merely because it pro-
 13    vides that:
 14        (a)  The present value of the consideration the lessee is obligated to pay
 15        the lessor for the right to possession and use of the  goods  is  substan-
 16        tially  equal  to or is greater than the fair market value of the goods at
 17        the time the lease is entered into; or
 18        (b)  The lessee assumes risk of loss of the goods, or agrees to pay taxes,
 19        insurance, filing, recording, or registration fees, or service or  mainte-
 20        nance costs with respect to the goods; or
 21        (c)  The lessee has an option to renew the lease or to become the owner of
 22        the goods; or
 23        (d)  The  lessee has an option to renew the lease for a fixed rent that is
 24        equal to or greater than the reasonably predictable fair market  rent  for
 25        the use of the goods for the term of the renewal at the time the option is
 26        to be performed; or
 27        (e)  The lessee has an option to become the owner of the goods for a fixed
 28        price  that  is  equal  to or greater than the reasonably predictable fair
 29        market value of the goods at the time the option is to be performed.
 30        For purposes of this subsection (37):
 31        Additional consideration is not nominal if (i) when the  option  to  renew
 32    the  lease  is  granted to the lessee the rent is stated to be the fair market
 33    rent for the use of the goods for the term of the renewal  determined  at  the
 34    time  the  option  is  to  be performed, or (ii) when the option to become the
 35    owner of the goods is granted to the lessee the price is stated to be the fair
 36    market value of the goods determined at the time the  option  is  to  be  per-
 37    formed.
 38        Additional  consideration  is nominal if it is less than the lessee's rea-
 39    sonably predictable cost of performing under the lease agreement if the option
 40    is not exercised.
 41        "Reasonably predictable" and "remaining economic life of the goods" are to
 42    be determined with reference to the facts and circumstances at  the  time  the
 43    transaction is entered into.
 44        "Present  value"  means the amount as of a date certain of one (1) or more
 45    sums payable in the future, discounted to the date certain.  The  discount  is
 46    determined  by  the  interest rate specified by the parties if the rate is not
 47    manifestly unreasonable at the time the transaction is  entered  into;  other-
 48    wise,  the discount is determined by a commercially reasonable rate that takes
 49    into account the facts and circumstances of each case at the time the transac-
 50    tion was entered into.
 51        (38) "Send" in connection with any a writing, record, or notice means:
 52        (A)  Tto deposit in the mail or deliver  for  transmission  by  any  other
 53        usual means of communication with postage or cost of transmission provided
 54        for  and  properly  addressed  and,  in  the  case of an instrument, to an
 55        address specified thereon or otherwise agreed, or if there be none to  any
                                                                        
                                           24
                                                                        
  1        address reasonable under the circumstances.; or
  2        (B)  The  receipt  of any writing In any other way to cause to be received
  3        any record or notice within the time at which it  would  have  arrived  if
  4        properly sent. has the effect of a proper sending.
  5        (39) "Signed"  includes  any  symbol  executed  or adopted by a party with
  6    present intention to authenticate a writing.
  7        (40) "Surety" includes guarantor.
  8        (41) "Telegram" includes a message transmitted by radio, teletype,  cable,
  9    any mechanical method of transmission, or the like.
 10        (42) "Term" means that portion of an agreement which relates to a particu-
 11    lar matter.
 12        (43) "Unauthorized"  signature  means  one made without actual, implied or
 13    apparent authority and includes a forgery.
 14        (44) "Value." Except as otherwise  provided  with  respect  to  negotiable
 15    instruments  and bank collections (sections 28-3-303, 28-4-208 and 28-4-209) a
 16    person gives "value" for rights if he acquires them:
 17        (a)  In return for a binding commitment to extend credit or for the exten-
 18        sion of immediately available credit whether or not drawn upon and whether
 19        or not a chargeback is provided for in the event of difficulties  in  col-
 20        lection; or
 21        (b)  As  security for or in total or partial satisfaction of a preexisting
 22        claim; or
 23        (c)  By accepting delivery pursuant to a  preexisting  contract  for  pur-
 24        chase; or
 25        (d)  Generally,  in  return  for any consideration sufficient to support a
 26        simple contract.
 27        (45) "Warehouse receipt" means a receipt document of  title  issued  by  a
 28    person engaged in the business of storing goods for hire.
 29        (46) "Written"  or  "writing"  includes printing, typewriting or any other
 30    intentional reduction to tangible form.
                                                                        
 31        SECTION 4.  That Section 28-2-103, Idaho Code, be, and the same is  hereby
 32    amended to read as follows:
                                                                        
 33        28-2-103.  DEFINITIONS  AND  INDEX  OF  DEFINITIONS.  (1)  In this chapter
 34    unless the context otherwise requires:
 35        (a)  "Buyer" means a person who buys or contracts to buy goods.
 36        (b)  "Good faith" in the case of a merchant means honesty in fact and  the
 37        observance  of  reasonable  commercial  standards  of  fair dealing in the
 38        trade.
 39        (c)  "Receipt" of goods means taking physical possession of them.
 40        (d)  "Seller" means a person who sells or contracts to sell goods.
 41        (2)  Other definitions applying to this  chapter  or  to  specified  parts
 42    thereof, and the sections in which they appear are:
 43        "Acceptance." Section 28-2-606.
 44        "Banker's credit." Section 28-2-325.
 45        "Between merchants." Section 28-2-104.
 46        "Cancellation." Section 28-2-106.
 47        "Commercial unit." Section 28-2-105.
 48        "Confirmed credit." Section 28-2-325.
 49        "Conforming to contract." Section 28-2-106.
 50        "Contract for sale." Section 28-2-106.
 51        "Cover." Section 28-2-712.
 52        "Entrusting." Section 28-2-403.
 53        "Financing agency." Section 28-2-104.
                                                                        
                                           25
                                                                        
  1        "Future goods." Section 28-2-105.
  2        "Goods." Section 28-2-105.
  3        "Identification." Section 28-2-501.
  4        "Installment contract." Section 28-2-612.
  5        "Letter of credit." Section 28-2-325.
  6        "Lot." Section 28-2-105.
  7        "Merchant." Section 28-2-104.
  8        "Overseas." Section 28-2-323.
  9        "Person in position of seller." Section 28-2-707.
 10        "Present sale." Section 28-2-106.
 11        "Sale." Section 28-2-106.
 12        "Sale on approval." Section 28-2-326.
 13        "Sale or return." Section 28-2-326.
 14        "Termination." Section 28-2-106.
 15        (3)  "Control"  as provided in section 28-7-106 and tThe following defini-
 16    tions in other chapters apply to this chapter:
 17        "Check." Section 28-3-104.
 18        "Consignee." Section 28-7-102.
 19        "Consignor." Section 28-7-102.
 20        "Consumer goods." Section 28-9-102.
 21        "Dishonor." Section 28-3-502.
 22        "Draft." Section 28-3-104.
 23        (4)  In addition, chapter 1, title 28, Idaho Code, contains general  defi-
 24    nitions  and principles of construction and interpretation applicable through-
 25    out this chapter.
                                                                        
 26        SECTION 5.  That Section 28-2-104, Idaho Code, be, and the same is  hereby
 27    amended to read as follows:
                                                                        
 28        28-2-104.  DEFINITIONS  -- "MERCHANT" -- "BETWEEN MERCHANTS" -- "FINANCING
 29    AGENCY." (1) "Merchant" means a person who deals  in  goods  of  the  kind  or
 30    otherwise  by  his  occupation  holds himself out as having knowledge or skill
 31    peculiar to the practices or goods involved in the transaction or to whom such
 32    knowledge or skill may be attributed by his employment of an agent  or  broker
 33    or  other  intermediary who by his occupation holds himself out as having such
 34    knowledge or skill.
 35        (2)  "Financing agency" means a bank, finance company or other person who
 36    in the ordinary course of business makes advances against goods  or  documents
 37    of  title or who by arrangement with either the seller or the buyer intervenes
 38    in ordinary course to make or collect payment due or claimed  under  the  con-
 39    tract  for  sale,  as  by  purchasing  or  paying the seller's draft or making
 40    advances against it or by merely taking it for collection whether or not docu-
 41    ments of title accompany or are associated with the draft. "Financing  agency"
 42    includes  also a bank or other person who similarly intervenes between persons
 43    who are in the position of seller and buyer in respect to the  goods  (section
 44    28-2-707).
 45        (3)  "Between  merchants"  means  in any transaction with respect to which
 46    both parties are chargeable with the knowledge or skill of merchants.
                                                                        
 47        SECTION 6.  That Section 28-2-310, Idaho Code, be, and the same is  hereby
 48    amended to read as follows:
                                                                        
 49        28-2-310.  OPEN TIME FOR PAYMENT OR RUNNING OF CREDIT -- AUTHORITY TO SHIP
 50    UNDER RESERVATION. Unless otherwise agreed
 51        (a)  Payment is due at the time and place at which the buyer is to receive
                                                                        
                                           26
                                                                        
  1    the goods even though the place of shipment is the place of delivery; and
  2        (b)  If  the seller is authorized to send the goods he may ship them under
  3    reservation, and may tender the documents of title, but the buyer may  inspect
  4    the  goods after their arrival before payment is due unless such inspection is
  5    inconsistent with the terms of the contract (section 28-2-513); and
  6        (c)  If delivery is authorized and made  by  way  of  documents  of  title
  7    otherwise  than  by subsection (b) then payment is due regardless of where the
  8    goods are to be received (i) at the time and place at which the  buyer  is  to
  9    receive  delivery  of the tangible documents regardless of where the goods are
 10    to be received or (ii) at the time the buyer is to  receive  delivery  of  the
 11    electronic  documents  and  at  the seller's place of business or if none, the
 12    seller's residence; and
 13        (d)  Where the seller is required or  authorized  to  ship  the  goods  on
 14    credit  the  credit  period runs from the time of shipment but post-dating the
 15    invoice or delaying its dispatch will correspondingly delay  the  starting  of
 16    the credit period.
                                                                        
 17        SECTION  7.  That Section 28-2-323, Idaho Code, be, and the same is hereby
 18    amended to read as follows:
                                                                        
 19        28-2-323.  FORM OF  BILL  OF  LADING  REQUIRED  IN  OVERSEAS  SHIPMENT  --
 20    "OVERSEAS." (1) Where the contract contemplates overseas shipment and contains
 21    a  term C.I.F. or C. & F. or F.O.B. vessel, the seller unless otherwise agreed
 22    must obtain a negotiable bill of lading  stating  that  the  goods  have  been
 23    loaded  on  board  or,  in  the case of a term C.I.F. or C. & F., received for
 24    shipment.
 25        (2)  Where in a case within subsection (1) of this section a tangible bill
 26    of lading has been issued in a set of parts, unless otherwise  agreed  if  the
 27    documents  are  not  to be sent from abroad the buyer may demand tender of the
 28    full set; otherwise only one (1) part of the bill of lading need be  tendered.
 29    Even if the agreement expressly requires a full set
 30        (a)  due  tender  of  a single part is acceptable within the provisions of
 31        this chapter on cure of  improper  delivery  (subsection  (1)  of  section
 32        28-2-508); and
 33        (b)  even  though the full set is demanded, if the documents are sent from
 34        abroad the person tendering an incomplete  set  may  nevertheless  require
 35        payment  upon  furnishing an indemnity which the buyer in good faith deems
 36        adequate.
 37        (3)  A shipment by water or by air or a contract contemplating such  ship-
 38    ment  is "overseas" insofar as by usage of trade or agreement it is subject to
 39    the commercial, financing or shipping  practices  characteristic  of  interna-
 40    tional deep water commerce.
                                                                        
 41        SECTION  8.  That Section 28-2-401, Idaho Code, be, and the same is hereby
 42    amended to read as follows:
                                                                        
 43        28-2-401.  PASSING OF TITLE -- RESERVATION FOR SECURITY -- LIMITED  APPLI-
 44    CATION  OF  THIS  SECTION.  Each  provision of this chapter with regard to the
 45    rights, obligations and remedies of the seller, the buyer, purchasers or other
 46    third parties applies irrespective of title to the goods except where the pro-
 47    vision refers to such title. Insofar as situations  are  not  covered  by  the
 48    other  provisions of this chapter and matters concerning title become material
 49    the following rules apply:
 50        (1)  Title to goods cannot pass under a contract for sale prior  to  their
 51    identification  to  the  contract  (section  28-2-501),  and  unless otherwise
                                                                        
                                           27
                                                                        
  1    explicitly agreed the buyer acquires by their identification a  special  prop-
  2    erty as limited by this act. Any retention or reservation by the seller of the
  3    title  (property)  in  goods  shipped  or delivered to the buyer is limited in
  4    effect to a reservation of a security interest. Subject  to  these  provisions
  5    and  to  the  provisions of the chapter on Ssecured Ttransactions (chapter 9),
  6    title to goods passes from the seller to the buyer in any manner  and  on  any
  7    conditions explicitly agreed on by the parties.
  8        (2)  Unless  otherwise  explicitly agreed title passes to the buyer at the
  9    time and place at which the seller completes his performance with reference to
 10    the physical delivery of the goods, despite  any  reservation  of  a  security
 11    interest and even though a document of title is to be delivered at a different
 12    time  or  place;  and  in particular and despite any reservation of a security
 13    interest by the bill of lading
 14        (a)  if the contract requires or authorizes the seller to send  the  goods
 15        to  the  buyer  but  does  not require him to deliver them at destination,
 16        title passes to the buyer at the time and place of shipment; but
 17        (b)  if the contract requires delivery at  destination,  title  passes  on
 18        tender there.
 19        (3)  Unless otherwise explicitly agreed where delivery is to be made with-
 20    out moving the goods,
 21        (a)  if  the  seller  is  to  deliver  a tangible document of title, title
 22        passes at the time when and the place where he delivers such documents and
 23        if the seller is to deliver an electronic document of title, title  passes
 24        when the seller delivers the document; or
 25        (b)  if the goods are at the time of contracting already identified and no
 26        documents of title are to be delivered, title passes at the time and place
 27        of contracting.
 28        (4)  A  rejection  or  other refusal by the buyer to receive or retain the
 29    goods, whether or not justified,  or  a  justified  revocation  of  acceptance
 30    revests  title  to the goods in the seller. Such revesting occurs by operation
 31    of law and is not a "sale."
                                                                        
 32        SECTION 9.  That Section 28-2-503, Idaho Code, be, and the same is  hereby
 33    amended to read as follows:
                                                                        
 34        28-2-503.  MANNER  OF  SELLER'S TENDER OF DELIVERY. (1) Tender of delivery
 35    requires that the seller put and hold conforming goods at the buyer's disposi-
 36    tion and give the buyer any notification reasonably necessary to enable him to
 37    take delivery. The manner, time and place for tender  are  determined  by  the
 38    agreement and this chapter, and in particular
 39        (a)  tender  must be at a reasonable hour, and if it is of goods they must
 40        be kept available for the period reasonably necessary to enable the  buyer
 41        to take possession; but
 42        (b)  unless  otherwise agreed the buyer must furnish facilities reasonably
 43        suited to the receipt of the goods.
 44        (2)  Where the case is within the next section respecting shipment  tender
 45    requires that the seller comply with its provisions.
 46        (3)  Where  the  seller is required to deliver at a particular destination
 47    tender requires that he comply with subsection (1) and also in any appropriate
 48    case tender documents as described in subsections (4) and (5) of this section.
 49        (4)  Where goods are in the possession of a bailee and are to be delivered
 50    without being moved
 51        (a)  tender requires that the seller either tender a  negotiable  document
 52        of  title  covering  such goods or procure acknowledgment by the bailee of
 53        the buyer's right to possession of the goods; but
                                                                        
                                           28
                                                                        
  1        (b)  tender to the buyer of a nonnegotiable document  of  title  or  of  a
  2        written  direction record directing to the bailee to deliver is sufficient
  3        tender unless the buyer seasonably objects, and except as  otherwise  pro-
  4        vided in chapter 9, title 28, Idaho Code, receipt by the bailee of notifi-
  5        cation  of the buyer's rights fixes those rights as against the bailee and
  6        all third persons; but risk of loss of the goods and of any failure by the
  7        bailee to honor the nonnegotiable document of title or to obey the  direc-
  8        tion  remains  on  the seller until the buyer has had a reasonable time to
  9        present the document or direction, and a refusal by the  bailee  to  honor
 10        the document or to obey the direction defeats the tender.
 11        (5)  Where the contract requires the seller to deliver documents
 12        (a)  he must tender all such documents in correct form, except as provided
 13        in  this  chapter with respect to bills of lading in a set (subsection (2)
 14        of section 28-2-323); and
 15        (b)  tender through customary banking channels is sufficient and  dishonor
 16        of  a draft accompanying or associated with the documents constitutes non-
 17        acceptance or rejection.
                                                                        
 18        SECTION 10.  That Section 28-2-505, Idaho Code, be, and the same is hereby
 19    amended to read as follows:
                                                                        
 20        28-2-505.  SELLER'S SHIPMENT UNDER RESERVATION. (1) Where the  seller  has
 21    identified goods to the contract by or before shipment:
 22        (a)  his  procurement  of  a negotiable bill of lading to his own order or
 23        otherwise reserves in him a security interest in the goods.  His  procure-
 24        ment  of the bill to the order of a financing agency or of the buyer indi-
 25        cates in addition only  the  seller's  expectation  of  transferring  that
 26        interest to the person named.
 27        (b)  a  nonnegotiable  bill  of  lading to himself or his nominee reserves
 28        possession of the goods as security but except in a  case  of  conditional
 29        delivery (subsection (2) of section 28-2-507) a nonnegotiable bill of lad-
 30        ing  naming  the  buyer  as  consignee  reserves no security interest even
 31        though the seller retains possession or control of the bill of lading.
 32        (2)  When shipment by the seller with reservation of a  security  interest
 33    is  in  violation of the contract for sale it constitutes an improper contract
 34    for transportation within the preceding section but impairs neither the rights
 35    given to the buyer by shipment and identification of the goods to the contract
 36    nor the seller's powers as a holder of a negotiable document of title.
                                                                        
 37        SECTION 11.  That Section 28-2-506, Idaho Code, be, and the same is hereby
 38    amended to read as follows:
                                                                        
 39        28-2-506.  RIGHTS OF FINANCING AGENCY. (1) A financing agency by paying or
 40    purchasing for value a draft which relates to a shipment of goods acquires  to
 41    the  extent of the payment or purchase and in addition to its own rights under
 42    the draft and any document of title securing it any rights of the  shipper  in
 43    the goods including the right to stop delivery and the shipper's right to have
 44    the draft honored by the buyer.
 45        (2)  The  right  to  reimbursement of a financing agency which has in good
 46    faith honored or purchased the draft under commitment to or authority from the
 47    buyer is not impaired by subsequent discovery of defects with reference to any
 48    relevant document which was apparently regular. on its face.
                                                                        
 49        SECTION 12.  That Section 28-2-509, Idaho Code, be, and the same is hereby
 50    amended to read as follows:
                                                                        
                                           29
                                                                        
  1        28-2-509.  RISK OF LOSS IN THE ABSENCE OF BREACH. (1) Where  the  contract
  2    requires or authorizes the seller to ship the goods by carrier
  3        (a)  if  it  does not require him to deliver them at a particular destina-
  4        tion, the risk of loss passes to the buyer when the goods are duly  deliv-
  5        ered to the carrier even though the shipment is under reservation (section
  6        28-2-505); but
  7        (b)  if  it  does  require him to deliver them at a particular destination
  8        and the goods are there duly tendered while in the possession of the  car-
  9        rier,  the  risk of loss passes to the buyer when the goods are there duly
 10        so tendered as to enable the buyer to take delivery.
 11        (2)  Where the goods are held by a bailee to be  delivered  without  being
 12    moved, the risk of loss passes to the buyer
 13        (a)  on  his  receipt of possession or control of a negotiable document of
 14        title covering the goods; or
 15        (b)  on acknowledgment by the bailee of the buyer's right to possession of
 16        the goods; or
 17        (c)  after his receipt of possession or control of a  nonnegotiable  docu-
 18        ment  of  title or other written direction to deliver in a record, as pro-
 19        vided in subsection (4)(b) of section 28-2-503.
 20        (3)  In any case not within subsection (1) or (2), the risk of loss passes
 21    to the buyer on his receipt of the goods if the seller is a  merchant;  other-
 22    wise the risk passes to the buyer on tender of delivery.
 23        (4)  The  provisions  of this section are subject to contrary agreement of
 24    the parties and to the provisions of this chapter on sale on approval (section
 25    28-2-327) and on effect of breach on risk of loss (section 28-2-510).
                                                                        
 26        SECTION 13.  That Section 28-2-605, Idaho Code, be, and the same is hereby
 27    amended to read as follows:
                                                                        
 28        28-2-605.  WAIVER OF BUYER'S OBJECTIONS BY FAILURE TO  PARTICULARIZE.  (1)
 29    The  buyer's failure to state in connection with rejection a particular defect
 30    which is ascertainable by reasonable inspection precludes him from relying  on
 31    the unstated defect to justify rejection or to establish breach
 32        (a)  where the seller could have cured it if stated seasonably; or
 33        (b)  between  merchants when the seller has after rejection made a request
 34        in writing for a full and final written statement of all defects on  which
 35        the buyer proposes to rely.
 36        (2)  Payment  against  documents  made  without reservation of rights pre-
 37    cludes recovery of the payment for defects apparent on the face of in the doc-
 38    uments.
                                                                        
 39        SECTION 14.  That Section 28-2-705, Idaho Code, be, and the same is hereby
 40    amended to read as follows:
                                                                        
 41        28-2-705.  SELLER'S STOPPAGE OF DELIVERY IN TRANSIT OR OTHERWISE.  (1) The
 42    seller may stop delivery of goods in the possession  of  a  carrier  or  other
 43    bailee  when he discovers the buyer to be insolvent (section 28-2-702) and may
 44    stop delivery of carload, truckload, plane load or larger shipments of express
 45    or freight when the buyer repudiates or fails to make  a  payment  due  before
 46    delivery  or  if  for  any  other reason the seller has a right to withhold or
 47    reclaim the goods.
 48        (2)  As against such buyer the seller may stop delivery until
 49        (a)  receipt of the goods by the buyer; or
 50        (b)  acknowledgment to the buyer by any bailee of the goods except a  car-
 51        rier that the bailee holds the goods for the buyer; or
                                                                        
                                           30
                                                                        
  1        (c)  such  acknowledgment  to the buyer by a carrier by reshipment or as a
  2        warehouseman; or
  3        (d)  negotiation to the buyer of any negotiable document of title covering
  4        the goods.
  5        (3) (a)  To stop delivery the seller must  so  notify  as  to  enable  the
  6        bailee by reasonable diligence to prevent delivery of the goods.
  7        (b)  After  such  notification  the bailee must hold and deliver the goods
  8        according to the directions of the seller but the seller is liable to  the
  9        bailee for any ensuing charges or damages.
 10        (c)  If  a  negotiable  document  of  title  has been issued for goods the
 11        bailee is not obliged to obey a notification to stop  until  surrender  of
 12        possession or control of the document.
 13        (d)  A  carrier  who  has  issued  a  nonnegotiable  bill of lading is not
 14        obliged to obey a notification to stop received from a person  other  than
 15        the consignor.
                                                                        
 16        SECTION  15.  That  Section  28-12-103,  Idaho  Code,  be, and the same is
 17    hereby amended to read as follows:
                                                                        
 18        28-12-103.  DEFINITIONS AND INDEX OF  DEFINITIONS.  (1)  In  this  chapter
 19    unless the context otherwise requires:
 20        (a)  "Buyer  in  ordinary  course  of business" means a person who in good
 21        faith and without knowledge that the sale to him is in  violation  of  the
 22        ownership  rights  or  security  interest or leasehold interest of a third
 23        party in the goods, buys in ordinary course from a person in the  business
 24        of  selling goods of that kind but does not include a pawnbroker. "Buying"
 25        may be for cash or by exchange of other property or on  secured  or  unse-
 26        cured  credit and includes receiving acquiring goods or documents of title
 27        under a preexisting contract for sale but does not include a  transfer  in
 28        bulk  or  as  security  for or in total or partial satisfaction of a money
 29        debt.
 30        (b)  "Cancellation" occurs when either party puts an end to the lease con-
 31        tract for default by the other party.
 32        (c)  "Commercial unit" means such a unit of goods as by  commercial  usage
 33        is  a  single whole for purposes of lease and division of which materially
 34        impairs its character or value on the market or in use. A commercial  unit
 35        may be a single article, as a machine, or a set of articles, as a suite of
 36        furniture or a line of machinery, or a quantity, as a gross or carload, or
 37        any other unit treated in use or in the relevant market as a single whole.
 38        (d)  "Conforming"  goods or performance under a lease contract means goods
 39        or performance that are is in accordance with the  obligations  under  the
 40        lease contract.
 41        (e)  "Consumer lease" means a lease that a lessor regularly engaged in the
 42        business  of leasing or selling makes to a lessee who is an individual and
 43        who takes under the lease primarily for a personal,  family  or  household
 44        purpose,  if  the  total  payments  to  be  made under the lease contract,
 45        excluding payments for options to renew or buy, do not exceed  twenty-five
 46        thousand dollars ($25,000).
 47        (f)  "Fault" means wrongful act, omission, breach or default.
 48        (g)  "Finance lease" means a lease with respect to which:
 49             (i)   The lessor does not select, manufacture, or supply the goods;
 50             (ii)  The  lessor  acquires  the goods or the right to possession and
 51             use of the goods in connection with the lease; and
 52             (iii) One of the following occurs:
 53                  (A)  The lessee receives a copy of the  contract  by  which  the
                                                                        
                                           31
                                                                        
  1                  lessor  acquired the goods or the right to possession and use of
  2                  the goods before signing the lease contract;
  3                  (B)  The lessee's approval of the contract by which  the  lessor
  4                  acquired  the  goods  or  the right to possession and use of the
  5                  goods is a condition to effectiveness of the lease contract;
  6                  (C)  The lessee, before signing the lease contract, receives  an
  7                  accurate  and  complete  statement  designating the promises and
  8                  warranties, and any disclaimers of  warranties,  limitations  or
  9                  modifications  of  remedies,  or  liquidated  damages, including
 10                  those of a third party, such as the manufacturer of  the  goods,
 11                  provided to the lessor by the person supplying the goods in con-
 12                  nection  with  or  as  part  of the contract by which the lessor
 13                  acquired the goods or the right to possession  and  use  of  the
 14                  goods; or
 15                  (D)  If  the  lease  is not a consumer lease, the lessor, before
 16                  the lessee signs the lease contract, informs the lessee in writ-
 17                  ing:
 18                       a.  Of the identity of the person supplying  the  goods  to
 19                       the  lessor, unless the lessee has selected that person and
 20                       directed the lessor to acquire the goods or  the  right  to
 21                       possession and use of the goods from that person;
 22                       b.  That  the  lessee is entitled under this chapter to the
 23                       promises and  warranties,  including  those  of  any  third
 24                       party,  provided  to the lessor by the person supplying the
 25                       goods in connection with or as  part  of  the  contract  by
 26                       which the lessor acquired the goods or the right to posses-
 27                       sion and use of the goods; and
 28                       c.  That the lessee may communicate with the person supply-
 29                       ing  the  goods  to  the lessor and receive an accurate and
 30                       complete  statement  of  those  promises  and   warranties,
 31                       including  any  disclaimers  and  limitations of them or of
 32                       remedies.
 33        (h)  "Goods" means all things that are movable at the time of  identifica-
 34        tion  to  the lease contract, or are fixtures (section 28-12-309), but the
 35        term does not include money,  documents,  instruments,  accounts,  chattel
 36        paper,  general  intangibles,  or  minerals or the like, including oil and
 37        gas, before extraction. The term also includes the unborn  young  of  ani-
 38        mals.
 39        (i)  "Installment  lease  contract" means a lease contract that authorizes
 40        or requires the delivery of  goods  in  separate  lots  to  be  separately
 41        accepted,  even though the lease contract contains a clause "each delivery
 42        is a separate lease" or its equivalent.
 43        (j)  "Lease" means a transfer of the right to possession and use of  goods
 44        for  a  term  in return for consideration, but a sale, including a sale on
 45        approval or a sale or return, or  retention  or  creation  of  a  security
 46        interest  is  not a lease. Unless the context clearly indicates otherwise,
 47        the term includes a sublease.
 48        (k)  "Lease agreement" means the bargain, with respect to  the  lease,  of
 49        the  lessor and the lessee in fact as found in their language or by impli-
 50        cation from other circumstances including course of dealing  or  usage  of
 51        trade  or  course  of  performance as provided in this chapter. Unless the
 52        context clearly indicates otherwise, the term includes a  sublease  agree-
 53        ment.
 54        (l)  "Lease  contract"  means the total legal obligation that results from
 55        the lease agreement as affected by this chapter and any  other  applicable
                                                                        
                                           32
                                                                        
  1        rules  of  law.  Unless  the context clearly indicates otherwise, the term
  2        includes a sublease contract.
  3        (m)  "Leasehold interest" means the interest of the lessor or  the  lessee
  4        under a lease contract.
  5        (n)  "Lessee"  means a person who acquires the right to possession and use
  6        of goods under a lease. Unless the context  clearly  indicates  otherwise,
  7        the term includes a sublessee.
  8        (o)  "Lessee  in  ordinary  course of business" means a person who in good
  9        faith and without knowledge that the lease to him is in violation  of  the
 10        ownership  rights  or  security  interest or leasehold interest of a third
 11        party in the goods leases in ordinary course from a person in the business
 12        of selling or leasing goods of that kind but does not include  a  pawnbro-
 13        ker.  "Leasing"  may  be  for  cash or by exchange of other property or on
 14        secured or unsecured credit and includes receiving acquiring goods or doc-
 15        uments of title under a preexisting lease contract but does not include  a
 16        transfer in bulk or as security for or in total or partial satisfaction of
 17        a money debt.
 18        (p)  "Lessor" means a person who transfers the right to possession and use
 19        of  goods  under  a lease. Unless the context clearly indicates otherwise,
 20        the term includes a sublessor.
 21        (q)  "Lessor's residual interest" means the lessor's interest in the goods
 22        after expiration, termination or cancellation of the lease contract.
 23        (r)  "Lien" means a charge against or interest in goods to secure  payment
 24        of a debt or performance of an obligation, but the term does not include a
 25        security interest.
 26        (s)  "Lot"  means  a parcel or a single article that is the subject matter
 27        of a separate lease or delivery, whether or not it is sufficient  to  per-
 28        form the lease contract.
 29        (t)  "Merchant  lessee"  means a lessee that is a merchant with respect to
 30        goods of the kind subject to the lease.
 31        (u)  "Present value" means the amount as of a date certain of one  (1)  or
 32        more  sums payable in the future, discounted to the date certain. The dis-
 33        count is determined  by the interest rate specified by the parties if  the
 34        rate  was  not  manifestly  unreasonable  at  the time the transaction was
 35        entered into; otherwise, the discount is determined by a commercially rea-
 36        sonable rate that takes into account the facts and circumstances  of  each
 37        case at the time the transaction was entered into.
 38        (v)  "Purchase"  includes taking by sale, lease, mortgage, security inter-
 39        est, pledge, gift or any other voluntary transaction creating an  interest
 40        in goods.
 41        (w)  "Sublease"  means a lease of goods the right to possession and use of
 42        which was acquired by the lessor as a lessee under an existing lease.
 43        (x)  "Supplier" means a person from whom a lessor buys or leases goods  to
 44        be leased under a finance lease.
 45        (y)  "Supply  contract"  means  a  contract  under  which a lessor buys or
 46        leases goods to be leased.
 47        (z)  "Termination" occurs when either party pursuant to a power created by
 48        agreement or law puts an end to the  lease  contract  otherwise  than  for
 49        default.
 50        (2)  Other  definitions applying to this chapter and the sections in which
 51    they appear are:
 52        "Accessions."  Section 28-12-310(1).
 53        "Construction mortgage."  Section 28-12-309(1)(d).
 54        "Encumbrance."  Section 28-12-309(1)(e).
 55        "Fixtures."  Section 28-12-309(1)(a).
                                                                        
                                           33
                                                                        
  1        "Fixture filing."  Section 28-12-309(1)(b).
  2        "Purchase money lease."  Section 28-12-309(1)(c).
  3        (3)  The following definitions in other chapters apply to this chapter:
  4        "Account."  Section 28-9-102(a)(2).
  5        "Between merchants."  Section 28-2-104(3).
  6        "Buyer."  Section 28-2-103(1)(a).
  7        "Chattel paper."  Section 28-9-102(a)(11).
  8        "Consumer goods."  Section 28-9-102(a)(23).
  9        "Document."  Section 28-9-102(a)(30).
 10        "Entrusting."  Section 28-2-403(3).
 11        "General intangible."  Section 28-9-102(a)(42).
 12        "Good faith."  Section 28-1-201(19).
 13        "Instrument."  Section 28-9-102(a)(47).
 14        "Merchant."  Section 28-2-104(1).
 15        "Mortgage."  Section 28-9-102(a)(55).
 16        "Pursuant to commitment."  Section 28-9-102(a)(68).
 17        "Receipt."  Section 28-2-103(1)(c).
 18        "Sale."  Section 28-2-106(1).
 19        "Sale on approval."  Section 28-2-326.
 20        "Sale or return."  Section 28-2-326.
 21        "Seller."  Section 28-2-103(1)(d).
 22        (4)  In addition, chapter 1, title 28, contains  general  definitions  and
 23    principles of construction and interpretation applicable throughout this chap-
 24    ter.
                                                                        
 25        SECTION  16.  That  Section  28-12-514,  Idaho  Code,  be, and the same is
 26    hereby amended to read as follows:
                                                                        
 27        28-12-514.  WAIVER OF LESSEE'S  OBJECTIONS.  (1)  In  rejecting  goods,  a
 28    lessee's failure to state a particular defect that is ascertainable by reason-
 29    able  inspection  precludes  the  lessee from relying on the defect to justify
 30    rejection or to establish default:
 31        (a)  If, stated seasonably, the lessor or the supplier could have cured it
 32        (section 28-12-513); or
 33        (b)  Between merchants if the lessor or the supplier after  rejection  has
 34        made  a  request  in writing for a full and final written statement of all
 35        defects on which the lessee proposes to rely.
 36        (2)  A lessee's failure to reserve rights when paying rent or  other  con-
 37    sideration  against  documents  precludes  recovery of the payment for defects
 38    apparent on the face of in the documents.
                                                                        
 39        SECTION 17.  That Section 28-12-526, Idaho  Code,  be,  and  the  same  is
 40    hereby amended to read as follows:
                                                                        
 41        28-12-526.  LESSOR'S  STOPPAGE  OF DELIVERY IN TRANSIT OR OTHERWISE. (1) A
 42    lessor may stop delivery of goods in the possession  of  a  carrier  or  other
 43    bailee  if the lessor discovers the lessee to be insolvent and may stop deliv-
 44    ery of carload, truckload, planeload or larger shipments of express or freight
 45    if the lessee repudiates or fails to  make  a  payment  due  before  delivery,
 46    whether  for  rent, security or otherwise under the lease contract, or for any
 47    other reason the lessor has a right to withhold  or  take  possession  of  the
 48    goods.
 49        (2)  In  pursuing  its  remedies under the provisions of subsection (1) of
 50    this section, the lessor may stop delivery until:
 51        (a)  Receipt of the goods by the lessee;
                                                                        
                                           34
                                                                        
  1        (b)  Acknowledgment to the lessee by any bailee of  the  goods,  except  a
  2        carrier, that the bailee holds the goods for the lessee; or
  3        (c)  Such  an  acknowledgment to the lessee by a carrier via reshipment or
  4        as a warehouseman.
  5        (3)  (a) To stop delivery, a lessor shall  so  notify  as  to  enable  the
  6        bailee by reasonable diligence to prevent delivery of the goods.
  7        (b)  After  notification,  the  bailee  shall  hold  and deliver the goods
  8        according to the directions of the lessor, but the lessor is liable to the
  9        bailee for any ensuing charges or damages.
 10        (c)  A carrier who has issued  a  nonnegotiable  bill  of  lading  is  not
 11        obliged  to  obey a notification to stop received from a person other than
 12        the consignor.
                                                                        
 13        SECTION 18.  That Section 28-4-104, Idaho Code, be, and the same is hereby
 14    amended to read as follows:
                                                                        
 15        28-4-104.  DEFINITIONS AND INDEX OF  DEFINITIONS.  (1)  In  this  chapter,
 16    unless the context otherwise requires:
 17        (a)  "Account"  means any deposit or credit account with a bank, including
 18        a demand, time, savings, passbook, share draft,  or  like  account,  other
 19        than an account evidenced by a certificate of deposit;
 20        (b)  "Afternoon" means the period of a day between noon and midnight;
 21        (c)  "Banking  day" means the part of a day on which a bank is open to the
 22        public for carrying on substantially all of its banking functions;
 23        (d)  "Clearing house" means an association of banks or other payors  regu-
 24        larly clearing items;
 25        (e)  "Customer" means any person having an account with a bank or for whom
 26        a  bank  has  agreed  to collect items, including a bank that maintains an
 27        account at another bank;
 28        (f)  "Documentary draft" means a draft to be presented for  acceptance  or
 29        payment if specified documents, certificated securities (section 28-8-102)
 30        or instructions for uncertificated securities (section 28-8-102), or other
 31        certificates,  statements, or the like are to be received by the drawee or
 32        other payor before acceptance or payment of the draft;
 33        (g)  "Draft" means a draft as defined in  section  28-3-104  or  an  item,
 34        other than an instrument, that is an order;
 35        (h)  "Drawee" means a person ordered in a draft to make payment;
 36        (i)  "Item" means an instrument or a promise or order to pay money handled
 37        by  a  bank for collection or payment. The term does not include a payment
 38        order governed by part 6 of chapter 4 or a credit or debit card slip;
 39        (j)  "Midnight deadline" with respect to a bank is midnight  on  its  next
 40        banking  day  following  the banking day on which it receives the relevant
 41        item or notice or from which the time for taking action commences to  run,
 42        whichever is later;
 43        (k)  "Settle"  means  to  pay  in cash, by clearing-house settlement, in a
 44        charge or credit or by remittance, or otherwise as  agreed.  A  settlement
 45        may be either provisional or final;
 46        (l)  "Suspends  payments"  with  respect  to a bank means that it has been
 47        closed by order of the supervisory authorities, that a public officer  has
 48        been  appointed  to take it over or that it ceases or refuses to make pay-
 49        ments in the ordinary course of business.
 50        (2)  Other definitions applying to this chapter and the sections in  which
 51    they appear are:
 52        "Agreement for electronic presentment"               Section 28-4-110.
 53        "Bank"                                               Section 28-4-105.
                                                                        
                                           35
                                                                        
  1        "Collecting bank"                                    Section 28-4-105.
  2        "Depositary bank"                                    Section 28-4-105.
  3        "Intermediary bank"                                  Section 28-4-105.
  4        "Payor bank"                                         Section 28-4-105.
  5        "Presenting bank"                                    Section 28-4-105.
  6        "Presentment notice"                                 Section 28-4-110.
  7        (3)  "Control"  as provided in section 28-7-106 and tThe following defini-
  8    tions in other chapters apply to this chapter:
  9        "Acceptance"                                         Section 28-3-409.
 10        "Alteration"                                         Section 28-3-407.
 11        "Cashier's check"                                    Section 28-3-104.
 12        "Certificate of deposit"                             Section 28-3-104.
 13        "Certified check"                                    Section 28-3-409.
 14        "Check"                                              Section 28-3-104.
 15        "Draft"                                              Section 28-3-104.
 16        "Good faith"                                         Section 28-3-103.
 17        "Holder in due course"                               Section 28-3-302.
 18        "Instrument"                                         Section 28-3-104.
 19        "Notice of dishonor"                                 Section 28-3-503.
 20        "Order"                                              Section 28-3-103.
 21        "Ordinary care"                                      Section 28-3-103.
 22        "Person entitled to enforce"                         Section 28-3-301.
 23        "Presentment"                                        Section 28-3-501.
 24        "Promise"                                            Section 28-3-103.
 25        "Prove"                                              Section 28-3-103.
 26        "Teller's check"                                     Section 28-3-104.
 27        "Unauthorized signature"                             Section 28-3-403.
 28        (4)  In addition chapter 1 of this title contains general definitions  and
 29    principles of construction and interpretation applicable throughout this chap-
 30    ter.
                                                                        
 31        SECTION 19.  That Section 28-4-210, Idaho Code, be, and the same is hereby
 32    amended to read as follows:
                                                                        
 33        28-4-210.  SECURITY  INTEREST  OF  COLLECTING  BANK IN ITEMS, ACCOMPANYING
 34    DOCUMENTS AND PROCEEDS. (1) A collecting bank has a security  interest  in  an
 35    item and any accompanying documents or the proceeds of either:
 36        (a)  In  case  of  an item deposited in an account, to the extent to which
 37        credit given for the item has been withdrawn or applied;
 38        (b)  In case of an item for which it has given credit available for  with-
 39        drawal  as of right, to the extent of the credit given, whether or not the
 40        credit is drawn upon or there is a right of charge-back; or
 41        (c)  If it makes an advance on or against the item.
 42        (2)  If credit given for several items received at one (1) time or  pursu-
 43    ant to a single agreement is withdrawn or applied in part, the security inter-
 44    est  remains upon all the items, any accompanying documents or the proceeds of
 45    either. For the purpose of this section, credits first given are  first  with-
 46    drawn.
 47        (3)  Receipt  by  a collecting bank of a final settlement for an item is a
 48    realization on its security interest in the item, accompanying  documents  and
 49    proceeds.  So  long as the bank does not receive final settlement for the item
 50    or give up possession of the item or possession or control of the accompanying
 51    documents for purposes other than collection, the security interest  continues
 52    to  that extent and is subject to the provisions of chapter 9, title 28, Idaho
 53    Code, but:
                                                                        
                                           36
                                                                        
  1        (a)  No security agreement is necessary  to  make  the  security  interest
  2        enforceable (section 28-9-203(b)(3)(A));
  3        (b)  No filing is required to perfect the security interest; and
  4        (c)  The  security  interest has priority over conflicting perfected secu-
  5        rity interests in the item, accompanying documents or proceeds.
                                                                        
  6        SECTION 20.  That Section 28-8-103, Idaho Code, be, and the same is hereby
  7    amended to read as follows:
                                                                        
  8        28-8-103.  RULES FOR DETERMINING WHETHER CERTAIN OBLIGATIONS AND INTERESTS
  9    ARE SECURITIES OR FINANCIAL ASSETS. (1) A share  or  similar  equity  interest
 10    issued by a corporation, business trust, joint stock company or similar entity
 11    is a security.
 12        (2)  An  "investment  company security" is a security. "Investment company
 13    security" means a share or similar equity interest issued by an entity that is
 14    registered as an investment company under the federal investment company laws,
 15    an interest in a unit investment trust that is so registered, or a face-amount
 16    certificate issued by a face-amount certificate company that is so registered.
 17    Investment company security does not include an insurance policy or  endowment
 18    policy or annuity contract issued by an insurance company.
 19        (3)  An  interest  in  a partnership or limited liability company is not a
 20    security unless it is dealt in or traded on securities exchanges or in securi-
 21    ties markets, its terms expressly provide that it is a  security  governed  by
 22    this  chapter,  or it is an investment company security.  However, an interest
 23    in a partnership or limited liability company is a financial asset  if  it  is
 24    held in a securities account.
 25        (4)  A  writing that is a security certificate is governed by this chapter
 26    and not by chapter 3, title 28, even though it also meets the requirements  of
 27    chapter  3,  title 28. However, a negotiable instrument governed by chapter 3,
 28    title 28, is a financial asset if it is held in a securities account.
 29        (5)  An option or similar obligation issued by a clearing  corporation  to
 30    its participants is not a security, but is a financial asset.
 31        (6)  A commodity contract, as defined in section 28-9-102(a)(15), is not a
 32    security or a financial asset.
 33        (7)  A  document  of  title  is  not  a  financial  asset  unless  section
 34    28-8-102(1)(i)(iii) applies.
                                                                        
 35        SECTION 21.  That Section 28-9-102, Idaho Code, be, and the same is hereby
 36    amended to read as follows:
                                                                        
 37        28-9-102.  DEFINITIONS AND INDEX OF DEFINITIONS. (a) In this chapter:
 38        (1)  "Accession"  means  goods that are physically united with other goods
 39        in such a manner that the identity of the original goods is not lost.
 40        (2)  "Account," except as used in "account for," means a right to  payment
 41        of  a  monetary  obligation, whether or not earned by performance: (i) for
 42        property that has been or is to be sold, leased,  licensed,  assigned,  or
 43        otherwise disposed of; (ii) for services rendered or to be rendered; (iii)
 44        for  a  policy  of  insurance issued or to be issued; (iv) for a secondary
 45        obligation incurred or to be incurred; (v) for energy provided  or  to  be
 46        provided;  (vi)  for  the use or hire of a vessel under a charter or other
 47        contract; (vii) arising out of the use of  a  credit  or  charge  card  or
 48        information  contained  on or for use with the card; or (viii) as winnings
 49        in a lottery or other game of chance operated or  sponsored  by  a  state,
 50        governmental  unit of a state, or a person licensed or authorized to oper-
 51        ate the game by a state or governmental unit of a state. The term includes
                                                                        
                                           37
                                                                        
  1        health care insurance receivables. The term does not include:  (i)  rights
  2        to  payment  evidenced  by chattel paper or an instrument; (ii) commercial
  3        tort claims; (iii) deposit accounts; (iv) investment property; (v)  letter
  4        of credit rights or letters of credit; or (vi) rights to payment for money
  5        or  funds  advanced or sold, other than rights arising out of the use of a
  6        credit or charge card or information contained on  or  for  use  with  the
  7        card.
  8        (3)  "Account  debtor"  means  a  person  obligated on an account, chattel
  9        paper, or general intangible. The term does not include persons  obligated
 10        to pay a negotiable instrument, even if the instrument constitutes part of
 11        chattel paper.
 12        (4)  "Accounting," except as used in "accounting for," means a record:
 13             (A)  authenticated by a secured party;
 14             (B)  indicating the aggregate unpaid secured obligations as of a date
 15             not  more than thirty-five (35) days earlier or thirty-five (35) days
 16             later than the date of the record; and
 17             (C)  identifying the components  of  the  obligations  in  reasonable
 18             detail.
 19        (5)  "Agricultural  lien"  means an interest, other than a security inter-
 20        est, in farm products:
 21             (A)  which secures payment or performance of an obligation for:
 22                  (i)   goods or services furnished in connection with a  debtor's
 23                  farming operation; or
 24                  (ii)  rent  on  real  property  leased by a debtor in connection
 25                  with its farming operation;
 26             (B)  which is created by statute in favor of a person that:
 27                  (i)   in the ordinary course of its business furnished goods  or
 28                  services to a debtor in connection with a debtor's farming oper-
 29                  ation; or
 30                  (ii)  leased  real  property  to a debtor in connection with the
 31                  debtor's farming operation; and
 32             (C)  whose effectiveness does not depend on the  person's  possession
 33             of the personal property.
 34        (6)  "As-extracted collateral" means:
 35             (A)  oil,  gas,  or  other  minerals  that  are subject to a security
 36             interest that:
 37                  (i)   is created by a debtor having an interest in the  minerals
 38                  before extraction; and
 39                  (ii)  attaches to the minerals as extracted; or
 40             (B)  accounts  arising out of the sale at the wellhead or minehead of
 41             oil, gas, or other minerals in  which  the  debtor  had  an  interest
 42             before extraction.
 43        (7)  "Authenticate" means:
 44             (A)  to sign; or
 45             (B)  to  execute or otherwise adopt a symbol, or encrypt or similarly
 46             process a record in whole or in part, with the present intent of  the
 47             authenticating  person  to  identify the person and adopt or accept a
 48             record.
 49        (8)  "Bank" means an organization that is engaged in the business of bank-
 50        ing. The term includes  savings  banks,  savings  and  loan  associations,
 51        credit unions and trust companies.
 52        (9)  "Cash  proceeds"  means  proceeds  that  are  money,  checks, deposit
 53        accounts, or the like.
 54        (10) "Certificate of title" means a certificate of title with  respect  to
 55        which a statute provides for the security interest in question to be indi-
                                                                        
                                           38
                                                                        
  1        cated  on  the  certificate  as  a  condition  or  result  of the security
  2        interest's obtaining priority over the rights  of  a  lien  creditor  with
  3        respect to the collateral.
  4        (11) "Chattel  paper" means a record or records that evidence both a mone-
  5        tary obligation and a security interest  in  specific  goods,  a  security
  6        interest  in  specific  goods  and  software used in the goods, a security
  7        interest in specific goods and license of software used in  the  goods,  a
  8        lease of specific goods, or a lease of specific goods and license of soft-
  9        ware  used  in the goods. In this paragraph, "monetary obligation" means a
 10        monetary obligation secured by the goods or owed  under  a  lease  of  the
 11        goods  and includes a monetary obligation with respect to software used in
 12        the goods. The term does not include:  (i)  charters  or  other  contracts
 13        involving  the  use  or  hire of a vessel; or (ii) records that evidence a
 14        right to payment arising out of the use of a  credit  or  charge  card  or
 15        information  contained  on  or  for use with the card. If a transaction is
 16        evidenced by records that include an instrument or series of  instruments,
 17        the group of records taken together constitutes chattel paper.
 18        (12) "Collateral"  means  the  property  subject to a security interest or
 19        agricultural lien. The term includes:
 20             (A)  proceeds to which a security interest attaches;
 21             (B)  accounts, chattel paper,  payment  intangibles,  and  promissory
 22             notes that have been sold; and
 23             (C)  goods that are the subject of a consignment.
 24        (13) "Commercial tort claim" means a claim arising in tort with respect to
 25        which:
 26             (A)  the claimant is an organization; or
 27             (B)  the claimant is an individual and the claim:
 28                  (i)   arose  in the course of the claimant's business or profes-
 29                  sion; and
 30                  (ii)  does not include damages arising out of personal injury to
 31                  or the death of an individual.
 32        (14) "Commodity account" means an account maintained by a commodity inter-
 33        mediary in which a commodity contract is carried for a commodity customer.
 34        (15) "Commodity contract" means a commodity futures contract, an option on
 35        a commodity futures contract, a commodity option, or another  contract  if
 36        the contract or option is:
 37             (A)  traded  on  or subject to the rules of a board of trade that has
 38             been designated as a contract market for such a contract pursuant  to
 39             federal commodities laws; or
 40             (B)  traded  on a foreign commodity board of trade, exchange, or mar-
 41             ket, and is carried on the books of a commodity  intermediary  for  a
 42             commodity customer.
 43        (16) "Commodity  customer" means a person for which a commodity intermedi-
 44        ary carries a commodity contract on its books.
 45        (17) "Commodity intermediary" means a person that:
 46             (A)  is registered as a futures  commission  merchant  under  federal
 47             commodities law; or
 48             (B)  in  the  ordinary  course  of its business provides clearance or
 49             settlement services for a board of trade that has been designated  as
 50             a contract market pursuant to federal commodities law.
 51        (18) "Communicate" means:
 52             (A)  to send a written or other tangible record;
 53             (B)  to  transmit  a  record  by any means agreed upon by the persons
 54             sending and receiving the record; or
 55             (C)  in the case of transmission of  a  record  to  or  by  a  filing
                                                                        
                                           39
                                                                        
  1             office, to transmit a record by any means prescribed by filing office
  2             rule.
  3        (19) "Consignee"  means  a merchant to which goods are delivered in a con-
  4        signment.
  5        (20) "Consignment" means a transaction, regardless of its form, in which a
  6        person delivers goods to a merchant for the purpose of sale and:
  7             (A)  the merchant:
  8                  (i)   deals in goods of that kind under a name  other  than  the
  9                  name of the person making delivery;
 10                  (ii)  is not an auctioneer; and
 11                  (iii) is  not  generally  known  by its creditors to be substan-
 12                  tially engaged in selling the goods of others;
 13             (B)  with respect to each delivery, the aggregate value of the  goods
 14             is one  thousand dollars ($1,000) or more at the time of delivery;
 15             (C)  the  goods  are  not consumer goods immediately before delivery;
 16             and
 17             (D)  the transaction does not create a security interest that secures
 18             an obligation.
 19        (21) "Consignor" means a person that delivers goods to a  consignee  in  a
 20        consignment.
 21        (22) "Consumer debtor" means a debtor in a consumer transaction.
 22        (23) "Consumer  goods" means goods that are used or bought for use primar-
 23        ily for personal, family or household purposes.
 24        (24) "Consumer goods transaction" means a consumer transaction in which:
 25             (A)  an individual incurs an obligation primarily for personal,  fam-
 26             ily or household purposes; and
 27             (B)  a security interest in consumer goods secures the obligation.
 28        (25) "Consumer  obligor"  means  an  obligor  who is an individual and who
 29        incurred the obligation as part of a transaction  entered  into  primarily
 30        for personal, family or household purposes.
 31        (26) "Consumer  transaction" means a transaction in which: (i) an individ-
 32        ual incurs an obligation primarily for personal, family or household  pur-
 33        poses; (ii) a security interest secures the obligation; and (iii) the col-
 34        lateral  is  held  or acquired primarily for personal, family or household
 35        purposes. The term includes consumer goods transactions.
 36        (27) "Continuation statement" means an amendment of a financing  statement
 37        which:
 38             (A)  identifies,  by its file number, the initial financing statement
 39             to which it relates; and
 40             (B)  indicates that it is a continuation statement for, or that it is
 41             filed to continue the  effectiveness  of,  the  identified  financing
 42             statement.
 43        (28) "Debtor" means:
 44             (A)  a  person  having an interest, other than a security interest or
 45             other lien, in the collateral, whether or not the person is an  obli-
 46             gor;
 47             (B)  a  seller  of  accounts,  chattel  paper, payment intangibles or
 48             promissory notes; or
 49             (C)  a consignee.
 50        (29) "Deposit account" means a demand, time, savings, passbook, or similar
 51        account maintained with a bank.  The  term  does  not  include  investment
 52        property or accounts evidenced by an instrument.
 53        (30) "Document"  means  a  document  of  title  or  a  receipt of the type
 54        described in section 28-7-201(2b).
 55        (31) "Electronic chattel paper" means chattel paper evidenced by a  record
                                                                        
                                           40
                                                                        
  1        or records consisting of information stored in an electronic medium.
  2        (32) "Encumbrance"  means  a  right,  other than an ownership interest, in
  3        real property. The term includes mortgages and other liens on  real  prop-
  4        erty.
  5        (33) "Equipment"  means  goods other than inventory, farm products or con-
  6        sumer goods.
  7        (34) "Farm products" means goods, other than standing timber, with respect
  8        to which the debtor is engaged in a farming operation and which are:
  9             (A)  crops grown, growing, or to be grown, including:
 10                  (i)   crops produced on trees, vines and bushes; and
 11                  (ii)  aquatic goods produced in aquacultural operations;
 12             (B)  livestock, born or unborn, including aquatic goods  produced  in
 13             aquacultural operations;
 14             (C)  supplies used or produced in a farming operation; or
 15             (D)  products of crops or livestock in their unmanufactured states.
 16        (35) "Farming  operation" means raising, cultivating, propagating, fatten-
 17        ing, grazing, or any other farming, livestock, or aquacultural operation.
 18        (36) "File number" means the  number  assigned  to  an  initial  financing
 19        statement pursuant to section 28-9-519(a).
 20        (37) "Filing office" means an office designated in section 28-9-501 as the
 21        place to file a financing statement.
 22        (38) "Filing  office  rule"  means  a  rule  adopted  pursuant  to section
 23        28-9-526.
 24        (39) "Financing statement" means a record or records composed of  an  ini-
 25        tial  financing  statement  and  any  filed record relating to the initial
 26        financing statement.
 27        (40) "Fixture filing" means the filing of a financing  statement  covering
 28        goods   that  are  or  are  to  become  fixtures  and  satisfying  section
 29        28-9-502(a) and (b). The term includes the filing of a financing statement
 30        covering goods of a transmitting utility which are or are to  become  fix-
 31        tures.
 32        (41) "Fixtures" means goods that have become so related to particular real
 33        property that an interest in them arises under real property law.
 34        (42) "General intangible" means any personal property, including things in
 35        action,  other  than  accounts,  chattel  paper,  commercial  tort claims,
 36        deposit accounts, documents, goods, instruments, investment property, let-
 37        ter of credit rights, letters of credit, money, and  oil,  gas,  or  other
 38        minerals  before  extraction.  The  term  includes payment intangibles and
 39        software.
 40        (43) "Good faith" means honesty in fact and the observance  of  reasonable
 41        commercial standards of fair dealing.
 42        (44) "Goods"  means  all  things that are movable when a security interest
 43        attaches. The term includes: (i) fixtures; (ii) standing timber that is to
 44        be cut and removed under a conveyance or  contract  for  sale;  (iii)  the
 45        unborn  young  of animals; (iv) crops grown, growing, or to be grown, even
 46        if the crops are produced on trees, vines or bushes; and (v)  manufactured
 47        homes. The term also includes a computer program embedded in goods and any
 48        supporting  information provided in connection with a transaction relating
 49        to the program if: (i) the program is associated with the goods in such  a
 50        manner  that  it  customarily  is considered part of the goods; or (ii) by
 51        becoming the owner of the goods, a person acquires a right to use the pro-
 52        gram in connection with the goods. The term does not  include  a  computer
 53        program  embedded  in goods that consist solely of the medium in which the
 54        program is embedded.  The term also does  not  include  accounts,  chattel
 55        paper, commercial tort claims, deposit accounts, documents, general intan-
                                                                        
                                           41
                                                                        
  1        gibles, instruments, investment property, letter of credit rights, letters
  2        of credit, money, or oil, gas, or other minerals before extraction.
  3        (45) "Governmental  unit" means a subdivision, agency, department, county,
  4        parish, municipality, or other  unit  of  the  government  of  the  United
  5        States,  a  state, or a foreign country. The term includes an organization
  6        having a separate corporate existence if the organization is  eligible  to
  7        issue debt on which interest is exempt from income taxation under the laws
  8        of the United States.
  9        (46) "Health  care  insurance  receivable"  means  an interest in or claim
 10        under a policy of insurance which is a right  to  payment  of  a  monetary
 11        obligation for health care goods or services provided or to be provided.
 12        (47) "Instrument"  means a negotiable instrument or any other writing that
 13        evidences a right to the payment of a monetary obligation, is not itself a
 14        security agreement or lease, and is of a type that in the ordinary  course
 15        of  business  is transferred by delivery with any necessary indorsement or
 16        assignment. The term does not include: (i) investment property; (ii)  let-
 17        ters of credit; or (iii) writings that evidence a right to payment arising
 18        out  of  the use of a credit or charge card or information contained on or
 19        for use with the card.
 20        (48) "Inventory" means goods, other than farm products, which:
 21             (A)  are leased by a person as lessor;
 22             (B)  are held by a person for sale or lease or to be furnished  under
 23             a contract of service;
 24             (C)  are furnished by a person under a contract of service; or
 25             (D)  consist  of raw materials, work in process, or materials used or
 26             consumed in a business.
 27        (49) "Investment property"  means  a  security,  whether  certificated  or
 28        uncertificated,  security  entitlement, securities account, commodity con-
 29        tract or commodity account.
 30        (50) "Jurisdiction of organization," with respect to a registered  organi-
 31        zation,  means  the jurisdiction under whose law the organization is orga-
 32        nized.
 33        (51) "Letter of credit right" means a  right  to  payment  or  performance
 34        under  a  letter of credit, whether or not the beneficiary has demanded or
 35        is at the time entitled to demand payment or performance.  The  term  does
 36        not  include  the  right of a beneficiary to demand payment or performance
 37        under a letter of credit.
 38        (52) "Lien creditor" means:
 39             (A)  a creditor that has acquired a lien on the property involved  by
 40             attachment, levy, or the like;
 41             (B)  an  assignee  for  benefit of creditors from the time of assign-
 42             ment;
 43             (C)  a trustee in bankruptcy from the date of the filing of the peti-
 44             tion; or
 45             (D)  a receiver in equity from the time of appointment.
 46        (53) "Manufactured home" means a structure, transportable in  one  (1)  or
 47        more  sections,  which,  in  the traveling mode, is eight (8) body feet or
 48        more in width or forty (40) body feet or more in length, or, when  erected
 49        on  site,  is three hundred twenty (320) or more square feet, and which is
 50        built on a permanent chassis and designed to be used as a dwelling with or
 51        without a permanent foundation when connected to the  required  utilities,
 52        and  includes the plumbing, heating, air conditioning, and electrical sys-
 53        tems contained therein. The term includes any structure that meets all  of
 54        the  requirements  of this paragraph except the size requirements and with
 55        respect to  which  the  manufacturer  voluntarily  files  a  certification
                                                                        
                                           42
                                                                        
  1        required  by  the United States secretary of housing and urban development
  2        and complies with the standards established under title 42 of  the  United
  3        States Code.
  4        (54) "Manufactured home transaction" means a secured transaction:
  5             (A)  that  creates  a  purchase-money security interest in a manufac-
  6             tured home, other than a manufactured home held as inventory; or
  7             (B)  in which a manufactured home, other  than  a  manufactured  home
  8             held as inventory, is the primary collateral.
  9        (55) "Mortgage"  means  a  consensual interest in real property, including
 10        fixtures, which secures payment or performance of an obligation.
 11        (56) "New debtor" means a person that becomes bound as debtor  under  sec-
 12        tion    28-9-203(d)  by  a  security  agreement previously entered into by
 13        another person.
 14        (57) "New value" means: (i) money; (ii) money's worth  in  property,  ser-
 15        vices  or  new  credit; or (iii) release by a transferee of an interest in
 16        property previously transferred to  the  transferee.  The  term  does  not
 17        include an obligation substituted for another obligation.
 18        (58) "Noncash proceeds" means proceeds other than cash proceeds.
 19        (59) "Obligor"  means a person that, with respect to an obligation secured
 20        by a security interest in or an agricultural lien on the  collateral:  (i)
 21        owes  payment  or  other  performance of the obligation; (ii) has provided
 22        property other than the collateral to secure payment or other  performance
 23        of  the  obligation; or (iii) is otherwise accountable in whole or in part
 24        for payment or other performance of the  obligation.  The  term  does  not
 25        include issuers or nominated persons under a letter of credit.
 26        (60) "Original  debtor,"  except  as  used in section 28-9-310(c), means a
 27        person that, as debtor, entered into a security agreement to which  a  new
 28        debtor has become bound under section 28-9-203(d).
 29        (61) "Payment  intangible"  means  a  general  intangible  under which the
 30        account debtor's principal obligation is a monetary obligation.
 31        (62) "Person related to," with respect to an individual, means:
 32             (A)  the spouse of the individual;
 33             (B)  a brother, brother-in-law, sister, or sister-in-law of the indi-
 34             vidual;
 35             (C)  an ancestor or  lineal  descendant  of  the  individual  or  the
 36             individual's spouse; or
 37             (D)  any  other  relative, by blood or marriage, of the individual or
 38             the individual's spouse who shares the same home with the individual.
 39        (63) "Person related to," with respect to an organization, means:
 40             (A)  a person directly or indirectly controlling, controlled  by,  or
 41             under common control with the organization;
 42             (B)  an  officer or director of, or a person performing similar func-
 43             tions with respect to, the organization;
 44             (C)  an officer or director of, or a person performing similar  func-
 45             tions with respect to, a person described in subparagraph (A) of this
 46             paragraph;
 47             (D)  the  spouse  of an individual described in subparagraph (A), (B)
 48             or (C) of this paragraph; or
 49             (E)  an individual who is related by blood or marriage to an individ-
 50             ual described in subparagraph (A), (B), (C) or (D) of this  paragraph
 51             and shares the same home with the individual.
 52        (64) "Proceeds" means the following property:
 53             (A)  whatever  is acquired upon the sale, lease, license, exchange or
 54             other disposition of collateral;
 55             (B)  whatever is collected on, or distributed on account of,  collat-
                                                                        
                                           43
                                                                        
  1             eral;
  2             (C)  rights arising out of collateral;
  3             (D)  to  the extent of the value of collateral, claims arising out of
  4             the loss, nonconformity, or interference with the use of, defects  or
  5             infringement of rights in, or damage to, the collateral; or
  6             (E)  to  the extent of the value of collateral and to the extent pay-
  7             able to the debtor or the secured party, insurance payable by  reason
  8             of  the  loss  or nonconformity of, defects or infringement of rights
  9             in, or damage to, the collateral.
 10        (65) "Promissory note" means an instrument that evidences a promise to pay
 11        a monetary obligation, does not evidence an order to  pay,  and  does  not
 12        contain an acknowledgment by a bank that the bank has received for deposit
 13        a sum of money or funds.
 14        (66) "Proposal"  means  a  record  authenticated  by a secured party which
 15        includes the terms on which the secured party is willing to accept collat-
 16        eral in full or partial satisfaction of the obligation it secures pursuant
 17        to sections 28-9-620, 28-9-621 and 28-9-622.
 18        (67) "Public-finance transaction" means a secured transaction  in  connec-
 19        tion with which:
 20             (A)  debt securities are issued;
 21             (B)  all or a portion of the securities issued have an initial stated
 22             maturity of at least twenty (20) years; and
 23             (C)  the debtor, obligor, secured party, account debtor or other per-
 24             son  obligated on collateral, assignor or assignee of a secured obli-
 25             gation, or assignor or assignee of a security interest is a state  or
 26             a governmental unit of a state.
 27        (68) "Pursuant  to  commitment,"  with respect to an advance made or other
 28        value given by a secured party, means  pursuant  to  the  secured  party's
 29        obligation,  whether  or  not a subsequent event of default or other event
 30        not within the secured party's control has relieved  or  may  relieve  the
 31        secured party from its obligation.
 32        (69) "Record,"  except  as  used  in "for record," "of record," "record or
 33        legal title," and "record owner," means information that is inscribed on a
 34        tangible medium or which is stored in an electronic or other medium and is
 35        retrievable in perceivable form.
 36        (70) "Registered organization"  means  an  organization  organized  solely
 37        under  the  law of a single state or the United States and as to which the
 38        state or the United States must maintain a public record showing the orga-
 39        nization to have been organized.
 40        (71) "Secondary obligor" means an obligor to the extent that:
 41             (A)  the obligor's obligation is secondary; or
 42             (B)  the obligor has a right of recourse with respect to  an  obliga-
 43             tion  secured  by  collateral against the debtor, another obligor, or
 44             property of either.
 45        (72) "Secured party" means:
 46             (A)  a person in whose favor a security interest is created  or  pro-
 47             vided  for  under a security agreement, whether or not any obligation
 48             to be secured is outstanding;
 49             (B)  a person that holds an agricultural lien;
 50             (C)  a consignor;
 51             (D)  a person to which accounts, chattel paper,  payment  intangibles
 52             or promissory notes have been sold;
 53             (E)  a  trustee, indenture trustee, agent, collateral agent, or other
 54             representative in whose favor a  security  interest  or  agricultural
 55             lien is created or provided for; or
                                                                        
                                           44
                                                                        
  1             (F)  a  person  that  holds a security interest arising under section
  2             28-2-401, 28-2-505, 28-2-711(3), 28-4-210, 28-5-120 or 28-12-508(5).
  3        (73) "Security agreement" means an agreement that creates or provides  for
  4        a security interest.
  5        (74) "Send," in connection with a record or notification, means:
  6             (A)  to deposit in the mail, deliver for transmission, or transmit by
  7             any  other  usual  means  of  communication,  with postage or cost of
  8             transmission provided for, addressed to any address reasonable  under
  9             the circumstances; or
 10             (B)  to  cause  the  record or notification to be received within the
 11             time that  it would have been received if properly  sent  under  sub-
 12             paragraph (A) of this paragraph.
 13        (75) "Software"  means  a  computer program and any supporting information
 14        provided in connection with a transaction relating  to  the  program.  The
 15        term  does  not include a computer program that is included in the defini-
 16        tion of goods.
 17        (76) "State" means a state of the United States, the District of Columbia,
 18        Puerto Rico, the United States Virgin Islands, or any territory or insular
 19        possession subject to the jurisdiction of the United States.
 20        (77) "Supporting obligation" means a letter of credit right  or  secondary
 21        obligation that supports the payment or performance of an account, chattel
 22        paper, a document, a general intangible, an instrument or investment prop-
 23        erty.
 24        (78) "Tangible chattel paper" means chattel paper evidenced by a record or
 25        records consisting of information that is inscribed on a tangible medium.
 26        (79) "Termination  statement"  means an amendment of a financing statement
 27        which:
 28             (A)  identifies, by its file number, the initial financing  statement
 29             to which it relates; and
 30             (B)  indicates  either that it is a termination statement or that the
 31             identified financing statement is no longer effective.
 32        (80) "Transmitting utility" means a person primarily engaged in the  busi-
 33        ness of:
 34             (A)  operating a railroad, subway, street railway, or trolley bus;
 35             (B)  transmitting communications electrically, electromagnetically or
 36             by light;
 37             (C)  transmitting goods by pipeline or sewer; or
 38             (D)  transmitting  or  producing and transmitting electricity, steam,
 39             gas or water.
 40        (b)  "Control" as provided in section 28-7-106 and tThe following  defini-
 41    tions in other chapters apply to this chapter:
 42        "Applicant"                                              section 28-5-102.
 43        "Beneficiary"                                            section 28-5-102.
 44        "Broker"                                                 section 28-8-102.
 45        "Certificated security"                                  section 28-8-102.
 46        "Check"                                                  section 28-3-104.
 47        "Clearing corporation"                                   section 28-8-102.
 48        "Contract for sale"                                      section 28-2-106.
 49        "Customer"                                               section 28-4-104.
 50        "Entitlement holder"                                     section 28-8-102.
 51        "Financial asset"                                        section 28-8-102.
 52        "Holder in due course"                                   section 28-3-302.
 53        "Issuer" (with respect to a letter of credit
 54          or letter of credit right)                             section 28-5-102.
 55        "Issuer" (with respect to a security)                    section 28-8-201.
                                                                        
                                           45
                                                                        
  1        "Issuer" (with respect to documents of title)            section 28-7-102.
  2        "Lease"                                                 section 28-12-103.
  3        "Lease agreement"                                       section 28-12-103.
  4        "Lease contract"                                        section 28-12-103.
  5        "Leasehold interest"                                    section 28-12-103.
  6        "Lessee"                                                section 28-12-103.
  7        "Lessee in ordinary course of business"                 section 28-12-103.
  8        "Lessor"                                                section 28-12-103.
  9        "Lessor's residual interest"                            section 28-12-103.
 10        "Letter of credit"                                       section 28-5-102.
 11        "Merchant"                                               section 28-2-104.
 12        "Negotiable instrument"                                  section 28-3-104.
 13        "Nominated person"                                       section 28-5-102.
 14        "Note"                                                   section 28-3-104.
 15        "Proceeds of a letter of credit"                         section 28-5-114.
 16        "Prove"                                                  section 28-3-103.
 17        "Sale"                                                   section 28-2-106.
 18        "Securities account"                                     section 28-8-501.
 19        "Securities intermediary"                                section 28-8-102.
 20        "Security"                                               section 28-8-102.
 21        "Security certificate"                                   section 28-8-102.
 22        "Security entitlement"                                   section 28-8-102.
 23        "Uncertificated security"                                section 28-8-102.
 24        (c)  Chapter  1,  title 28, contains general definitions and principles of
 25    construction and interpretation applicable throughout this chapter.
                                                                        
 26        SECTION 22.  That Section 28-9-203, Idaho Code, be, and the same is hereby
 27    amended to read as follows:
                                                                        
 28        28-9-203.  ATTACHMENT AND ENFORCEABILITY OF SECURITY INTEREST --  PROCEEDS
 29    --  SUPPORTING  OBLIGATIONS  --  FORMAL  REQUISITES.  (a)  A security interest
 30    attaches to collateral when it becomes enforceable  against  the  debtor  with
 31    respect to the collateral, unless an agreement expressly postpones the time of
 32    attachment.
 33        (b)  Except  as  otherwise provided in subsections (c) through (i) of this
 34    section, a security interest is enforceable against the debtor and third  par-
 35    ties with respect to the collateral only if:
 36        (1)  Value has been given;
 37        (2)  The  debtor  has  rights  in  the collateral or the power to transfer
 38        rights in the collateral to a secured party; and
 39        (3)  One (1) of the following conditions is met:
 40             (A)  the debtor has authenticated a security agreement that  provides
 41             a  description of the collateral and, if the security interest covers
 42             timber to be cut, a description of the land concerned;
 43             (B)  the collateral is not a certificated security and is in the pos-
 44             session of the secured party under section 28-9-313 pursuant  to  the
 45             debtor's security agreement;
 46             (C)  the collateral is a certificated security in registered form and
 47             the  security  certificate  has  been  delivered to the secured party
 48             under section 28-8-301 pursuant to the debtor's  security  agreement;
 49             or
 50             (D)  the  collateral  is  deposit accounts, electronic chattel paper,
 51             investment property, or letter of credit rights, or electronic  docu-
 52             ments,  and  the  secured  party  has control under section 28-7-106,
 53             28-9-104, 28-9-105, 28-9-106 or 28-9-107  pursuant  to  the  debtor's
                                                                        
                                           46
                                                                        
  1             security agreement.
  2        (c)  Subsection  (b) of this section is subject to section 28-4-210 on the
  3    security interest of a collecting  bank,  section  28-5-120  on  the  security
  4    interest  of  a letter of  credit issuer or nominated person, section 28-9-110
  5    on a security interest arising under chapter 2 or 12, title  28,  and  section
  6    28-9-206 on security interests in investment property.
  7        (d)  A person becomes bound as debtor by a security agreement entered into
  8    by  another  person if, by operation of law other than this chapter or by con-
  9    tract:
 10        (1)  The security agreement becomes effective to create a security  inter-
 11        est in the person's property; or
 12        (2)  The  person  becomes  generally  obligated for the obligations of the
 13        other person, including the obligation secured under the  security  agree-
 14        ment,  and  acquires or succeeds to all or substantially all of the assets
 15        of the other person.
 16        (e)  If a new debtor becomes bound  as  debtor  by  a  security  agreement
 17    entered into by another person:
 18        (1)  The  agreement  satisfies  subsection  (b)(3)  of  this  section with
 19        respect to existing or after-acquired property of the new  debtor  to  the
 20        extent the property is described in the agreement; and
 21        (2)  Another agreement is not necessary to make a security interest in the
 22        property enforceable.
 23        (f)  The attachment of a security interest in collateral gives the secured
 24    party  the rights to proceeds provided by section 28-9-315 and is also attach-
 25    ment of a security interest in a supporting obligation for the collateral.
 26        (g)  The attachment of a security interest in a right to payment  or  per-
 27    formance  secured  by  a  security  interest or other lien on personal or real
 28    property is also attachment of a security interest in the  security  interest,
 29    mortgage or other lien.
 30        (h)  The attachment of a security interest in a securities account is also
 31    attachment  of a security interest in the security entitlements carried in the
 32    securities account.
 33        (i)  The attachment of a security interest in a commodity account is  also
 34    attachment  of  a  security interest in the commodity contracts carried in the
 35    commodity account.
                                                                        
 36        SECTION 23.  That Section 28-9-207, Idaho Code, be, and the same is hereby
 37    amended to read as follows:
                                                                        
 38        28-9-207.  RIGHTS AND DUTIES OF SECURED PARTY HAVING POSSESSION OR CONTROL
 39    OF COLLATERAL. (a) Except as otherwise provided in subsection (d) of this sec-
 40    tion, a secured party shall use reasonable care in the custody  and  preserva-
 41    tion  of  collateral in the secured party's possession. In the case of chattel
 42    paper or an instrument, reasonable care includes  taking  necessary  steps  to
 43    preserve rights against prior parties unless otherwise agreed.
 44        (b)  Except  as otherwise provided in subsection (d) of this section, if a
 45    secured party has possession of collateral:
 46        (1)  Reasonable expenses, including the cost of insurance and  payment  of
 47        taxes  or  other  charges,  incurred  in the custody, preservation, use or
 48        operation of the collateral are chargeable to the debtor and  are  secured
 49        by the collateral;
 50        (2)  The  risk of accidental loss or damage is on the debtor to the extent
 51        of a deficiency in any effective insurance coverage;
 52        (3)  The secured party shall keep the collateral identifiable, but  fungi-
 53        ble collateral may be commingled; and
                                                                        
                                           47
                                                                        
  1        (4)  The secured party may use or operate the collateral:
  2             (A)  for the purpose of preserving the collateral or its value;
  3             (B)  as  permitted  by an order of a court having competent jurisdic-
  4             tion; or
  5             (C)  except in the case of consumer goods, in the manner and  to  the
  6             extent agreed by the debtor.
  7        (c)  Except  as  otherwise  provided  in subsection (d) of this section, a
  8    secured party having possession of collateral or control of  collateral  under
  9    section 28-7-106, 28-9-104, 28-9-105, 28-9-106 or 28-9-107:
 10        (1)  May  hold as additional security any proceeds, except money or funds,
 11        received from the collateral;
 12        (2)  Shall apply money or funds received from the collateral to reduce the
 13        secured obligation, unless remitted to the debtor; and
 14        (3)  May create a security interest in the collateral.
 15        (d)  If the secured party is a buyer of accounts, chattel  paper,  payment
 16    intangibles, or promissory notes or a consignor:
 17        (1)  Subsection  (a)  of  this  section  does not apply unless the secured
 18        party is entitled under an agreement:
 19             (A)  to charge back uncollected collateral; or
 20             (B)  otherwise to full or limited recourse against the  debtor  or  a
 21             secondary  obligor  based  on  the  nonpayment or other default of an
 22             account debtor or other obligor on the collateral; and
 23        (2)  Subsections (b) and (c) of this section do not apply.
                                                                        
 24        SECTION 24.  That Section 28-9-208, Idaho Code, be, and the same is hereby
 25    amended to read as follows:
                                                                        
 26        28-9-208.  ADDITIONAL DUTIES OF SECURED PARTY HAVING  CONTROL  OF  COLLAT-
 27    ERAL.  (a)  This  section  applies  to  cases in which there is no outstanding
 28    secured obligation and the secured party is not committed  to  make  advances,
 29    incur obligations, or otherwise give value.
 30        (b)  Within  ten  (10) days after receiving an authenticated demand by the
 31    debtor:
 32        (1)  A secured party having control of a  deposit  account  under  section
 33        28-9-104(a)(2)  shall  send  to the bank with which the deposit account is
 34        maintained an authenticated statement that releases the bank from any fur-
 35        ther obligation to comply with  instructions  originated  by  the  secured
 36        party;
 37        (2)  A  secured  party  having  control of a deposit account under section
 38        28-9-104(a)(3) shall:
 39             (A)  pay the debtor the balance on deposit in the deposit account; or
 40             (B)  transfer the balance on deposit into a deposit  account  in  the
 41             debtor's name;
 42        (3)  A  secured  party,  other  than a buyer, having control of electronic
 43        chattel paper under section 28-9-105 shall:
 44             (A)  communicate the authoritative copy  of  the  electronic  chattel
 45             paper to the debtor or its designated custodian;
 46             (B)  if the debtor designates a custodian that is the designated cus-
 47             todian  with  which  the authoritative copy of the electronic chattel
 48             paper is maintained for the secured party, communicate to the  custo-
 49             dian  an authenticated record releasing the designated custodian from
 50             any further obligation to comply with instructions originated by  the
 51             secured   party and instructing the custodian to comply with instruc-
 52             tions originated by the debtor; and
 53             (C)  take appropriate action to enable the debtor or  its  designated
                                                                        
                                           48
                                                                        
  1             custodian  to  make  copies of or revisions to the authoritative copy
  2             which add or change an identified assignee of the authoritative  copy
  3             without the consent of the secured party;
  4        (4)  A  secured  party having control of investment property under section
  5        28-8-106(4)(b) or 28-9-106(b) shall send to the securities intermediary or
  6        commodity intermediary with which the security  entitlement  or  commodity
  7        contract  is  maintained an authenticated record that releases the securi-
  8        ties intermediary or commodity intermediary from any further obligation to
  9        comply with entitlement orders or directions  originated  by  the  secured
 10        party; and
 11        (5)  A secured party having control of a letter of credit right under sec-
 12        tion  28-9-107  shall send to each person having an unfulfilled obligation
 13        to pay or deliver proceeds of the letter of credit to the secured party an
 14        authenticated release from any further obligation to pay or  deliver  pro-
 15        ceeds of the letter of credit to the secured party.
 16        (6)  A secured party having control of an electronic document shall:
 17             (A)  Give  control  of  the  electronic document to the debtor or its
 18             designated custodian;
 19             (B)  If the debtor designates a custodian that is the designated cus-
 20             todian with which the authoritative copy of the  electronic  document
 21             is  maintained for the secured party, communicate to the custodian an
 22             authenticated record releasing the designated custodian from any fur-
 23             ther obligation to comply with instructions originated by the secured
 24             party and instructing the custodian to comply with instructions orig-
 25             inated by the debtor; and
 26             (C)  Take appropriate action to enable the debtor or  its  designated
 27             custodian  to  make  copies of or revisions to the authoritative copy
 28             which add or change an identified assignee of the authoritative  copy
 29             without the consent of the secured party.
                                                                        
 30        SECTION 25.  That Section 28-9-301, Idaho Code, be, and the same is hereby
 31    amended to read as follows:
                                                                        
 32        28-9-301.  LAW  GOVERNING  PERFECTION  AND PRIORITY OF SECURITY INTERESTS.
 33    Except as otherwise provided in sections 28-9-303 through 28-9-306,  the  fol-
 34    lowing  rules determine the law governing perfection, the effect of perfection
 35    or nonperfection, and the priority of a security interest in collateral:
 36        (1)  Except as otherwise provided in  this  section,  while  a  debtor  is
 37    located  in a jurisdiction, the local law of that jurisdiction governs perfec-
 38    tion, the effect of perfection or nonperfection, and the priority of  a  secu-
 39    rity interest in collateral.
 40        (2)  While  collateral is located in a jurisdiction, the local law of that
 41    jurisdiction governs perfection, the effect of  perfection  or  nonperfection,
 42    and the priority of a possessory security interest in that collateral.
 43        (3)  Except as otherwise provided in subsection (4) of this section, while
 44    tangible  negotiable  documents, goods, instruments, money or tangible chattel
 45    paper is located in a jurisdiction, the local law of  that  jurisdiction  gov-
 46    erns:
 47        (A)  Perfection  of  a  security interest in the goods by filing a fixture
 48        filing;
 49        (B)  Perfection of a security interest in timber to be cut; and
 50        (C)  The effect of perfection or  nonperfection  and  the  priority  of  a
 51        nonpossessory security interest in the collateral.
 52        (4)  The  local  law of the jurisdiction in which the wellhead or minehead
 53    is located governs perfection, the effect of perfection or nonperfection,  and
                                                                        
                                           49
                                                                        
  1    the priority of a security interest in as-extracted collateral.
                                                                        
  2        SECTION 26.  That Section 28-9-310, Idaho Code, be, and the same is hereby
  3    amended to read as follows:
                                                                        
  4        28-9-310.  WHEN  FILING  REQUIRED TO PERFECT SECURITY INTEREST OR AGRICUL-
  5    TURAL LIEN -- SECURITY INTERESTS AND AGRICULTURAL LIENS TO WHICH FILING PROVI-
  6    SIONS DO NOT APPLY. (a) Except as otherwise provided in subsection (b) of this
  7    section and section 28-9-312(b), a financing statement must be filed  to  per-
  8    fect all security interests and agricultural liens.
  9        (b)  The  filing  of  a  financing statement is not necessary to perfect a
 10    security interest:
 11        (1)  That is perfected under section 28-9-308(d), (e), (f) or (g);
 12        (2)  That is perfected under section 28-9-309 when it attaches;
 13        (3)  In property subject to a statute, regulation or treaty  described  in
 14        section 28-9-311(a);
 15        (4)  In  goods  in possession of a bailee which is perfected under section
 16        28-9-312(d)(1) or (2);
 17        (5)  In certificated securities, documents, goods or instruments which  is
 18        perfected   without   filing,   control,   or   possession  under  section
 19        28-9-312(e), (f) or (g);
 20        (6)  In  collateral  in  the  secured  party's  possession  under  section
 21        28-9-313;
 22        (7)  In a certificated security which is  perfected  by  delivery  of  the
 23        security certificate to the secured party under section 28-9-313;
 24        (8)  In  deposit accounts, electronic chattel paper, electronic documents,
 25        investment property, or letter of credit rights which is perfected by con-
 26        trol under section 28-9-314;
 27        (9)  In proceeds which is perfected under section 28-9-315; or
 28        (10) That is perfected under section 28-9-316.
 29        (c)  If a secured party assigns a perfected security interest or  agricul-
 30    tural  lien,  a filing under this chapter is not required to continue the per-
 31    fected status of the security interest against creditors  of  and  transferees
 32    from the original debtor.
                                                                        
 33        SECTION 27.  That Section 28-9-312, Idaho Code, be, and the same is hereby
 34    amended to read as follows:
                                                                        
 35        28-9-312.  PERFECTION  OF  SECURITY  INTERESTS  IN  CHATTEL PAPER, DEPOSIT
 36    ACCOUNTS, DOCUMENTS, GOODS COVERED BY DOCUMENTS, INSTRUMENTS, INVESTMENT PROP-
 37    ERTY, LETTER OF CREDIT RIGHTS AND MONEY -- PERFECTION BY PERMISSIVE FILING  --
 38    TEMPORARY  PERFECTION WITHOUT FILING OR TRANSFER OF POSSESSION. (a) A security
 39    interest in chattel paper, negotiable  documents,  instruments  or  investment
 40    property may be perfected by filing.
 41        (b)  Except  as otherwise provided in section 28-9-315(c) and (d) for pro-
 42    ceeds:
 43        (1)  A security interest in a deposit account may  be  perfected  only  by
 44        control under section 28-9-314;
 45        (2)  And  except  as otherwise provided in section 28-9-308(d), a security
 46        interest in a letter of credit right may  be  perfected  only  by  control
 47        under section 28-9-314; and
 48        (3)  A  security  interest  in  money may be perfected only by the secured
 49        party's taking possession under section 28-9-313.
 50        (c)  While goods are in the possession of a bailee that has issued a nego-
 51    tiable document covering the goods:
                                                                        
                                           50
                                                                        
  1        (1)  A security interest in the goods may be  perfected  by  perfecting  a
  2        security interest in the document; and
  3        (2)  A  security  interest perfected in the document has priority over any
  4        security interest that becomes perfected in the goods  by  another  method
  5        during that time.
  6        (d)  While  goods are in the possession of a bailee that has issued a non-
  7    negotiable document covering the goods, a security interest in the  goods  may
  8    be perfected by:
  9        (1)  Issuance of a document in the name of the secured party;
 10        (2)  The bailee's receipt of notification of the secured party's interest;
 11        or
 12        (3)  Filing as to the goods.
 13        (e)  A  security interest in certificated securities, negotiable documents
 14    or instruments is perfected without filing or the taking of possession or con-
 15    trol for a period of twenty (20) days from the time it attaches to the  extent
 16    that it arises for new value given under an authenticated security agreement.
 17        (f)  A  perfected  security  interest in a negotiable document or goods in
 18    possession of a bailee, other than one that has issued a  negotiable  document
 19    for  the  goods,  remains perfected for twenty (20) days without filing if the
 20    secured party makes available to the debtor the goods or documents  represent-
 21    ing the goods for the purpose of:
 22        (1)  Ultimate sale or exchange; or
 23        (2)  Loading,  unloading, storing, shipping, transshipping, manufacturing,
 24        processing or otherwise dealing with them in a manner preliminary to their
 25        sale or exchange.
 26        (g)  A perfected security interest in a certificated security  or  instru-
 27    ment  remains  perfected  for  twenty  (20) days without filing if the secured
 28    party delivers the security certificate or instrument to the  debtor  for  the
 29    purpose of:
 30        (1)  Ultimate sale or exchange; or
 31        (2)  Presentation,  collection,  enforcement,  renewal  or registration of
 32        transfer.
 33        (h)  After the twenty (20) day period specified in subsection (e), (f)  or
 34    (g)  of  this  section  expires,  perfection depends upon compliance with this
 35    chapter.
                                                                        
 36        SECTION 28.  That Section 28-9-313, Idaho Code, be, and the same is hereby
 37    amended to read as follows:
                                                                        
 38        28-9-313.  WHEN POSSESSION BY OR DELIVERY TO SECURED PARTY PERFECTS  SECU-
 39    RITY  INTEREST  WITHOUT FILING. (a) Except as otherwise provided in subsection
 40    (b) of this section, a secured party may perfect a security interest in tangi-
 41    ble negotiable documents, goods, instruments, money or tangible chattel  paper
 42    by taking possession of the collateral. A secured party may perfect a security
 43    interest  in  certificated  securities  by taking delivery of the certificated
 44    securities under section 28-8-301.
 45        (b)  With respect to goods covered by a certificate  of  title  issued  by
 46    this  state,  a  secured party may perfect a security interest in the goods by
 47    taking possession of the goods only in the circumstances described in  section
 48    28-9-316(d).
 49        (c)  With  respect  to  collateral  other than certificated securities and
 50    goods covered by a document, a secured party takes possession of collateral in
 51    the possession of a person other than the debtor, the secured party or a  les-
 52    see  of the collateral from the debtor  in the ordinary course of the debtor's
 53    business, when:
                                                                        
                                           51
                                                                        
  1        (1)  The person in possession authenticates a record acknowledging that it
  2        holds possession of the collateral for the secured party's benefit; or
  3        (2)  The person takes possession of the collateral after having  authenti-
  4        cated  a  record  acknowledging that it will hold possession of collateral
  5        for the secured party's benefit.
  6        (d)  If perfection of a security interest depends upon possession  of  the
  7    collateral  by a secured party, perfection occurs no earlier than the time the
  8    secured party takes possession and continues  only  while  the  secured  party
  9    retains possession.
 10        (e)  A  security interest in a certificated security in registered form is
 11    perfected by delivery when delivery of the certificated security occurs  under
 12    section  28-8-301,  and remains perfected by delivery until the debtor obtains
 13    possession of the security certificate.
 14        (f)  A person in possession of collateral is not required  to  acknowledge
 15    that it holds possession for a secured party's benefit.
 16        (g)  If  a  person  acknowledges  that it holds possession for the secured
 17    party's benefit:
 18        (1)  The acknowledgment is effective under subsection (c) of this  section
 19        or  section 28-8-301(1), even if the acknowledgment violates the rights of
 20        a debtor; and
 21        (2)  Unless the person otherwise agrees, or law other  than  this  chapter
 22        otherwise  provides, the person does not owe any duty to the secured party
 23        and is not required to confirm the acknowledgment to another person.
 24        (h)  A secured party having possession of collateral does  not  relinquish
 25    possession by delivering the collateral to a person other than the debtor or a
 26    lessee  of  the  collateral  from  the  debtor  in  the ordinary course of the
 27    debtor's business if the person was  instructed  before  the  delivery  or  is
 28    instructed contemporaneously with the delivery:
 29        (1)  To hold possession of the collateral for the secured party's benefit;
 30        or
 31        (2)  To redeliver the collateral to the secured party.
 32        (i)  A  secured  party  does not relinquish possession, even if a delivery
 33    under subsection (h) of this section violates the rights of a debtor. A person
 34    to which collateral is delivered under subsection (h) of this section does not
 35    owe any duty to the secured party and is not required to confirm the  delivery
 36    to  another  person unless the person otherwise agrees, or law other than this
 37    chapter otherwise provides.
                                                                        
 38        SECTION 29.  That Section 28-9-314, Idaho Code, be, and the same is hereby
 39    amended to read as follows:
                                                                        
 40        28-9-314.  PERFECTION BY CONTROL. (a) A security  interest  in  investment
 41    property,  deposit  accounts,  letter  of credit rights, or electronic chattel
 42    paper, or electronic documents may be perfected by control of  the  collateral
 43    under section 28-7-106, 28-9-104, 28-9-105, 28-9-106 or 28-9-107.
 44        (b)  A security interest in deposit accounts, electronic chattel paper, or
 45    letter of credit rights, or electronic documents is perfected by control under
 46    section  28-7-106,  28-9-104,  28-9-105  or  28-9-107,  when the secured party
 47    obtains control and remains perfected by control only while the secured  party
 48    retains control.
 49        (c)  A  security  interest  in investment property is perfected by control
 50    under section 28-9-106 from the time the secured  party  obtains  control  and
 51    remains perfected by control until:
 52        (1)  The secured party does not have control; and
 53        (2)  One (1) of the following occurs:
                                                                        
                                           52
                                                                        
  1             (A)  if  the collateral is a certificated security, the debtor has or
  2             acquires possession of the security certificate;
  3             (B)  if the collateral is an uncertificated security, the issuer  has
  4             registered or registers the debtor as the registered owner; or
  5             (C)  if  the  collateral  is a security entitlement, the debtor is or
  6             becomes the entitlement holder.
                                                                        
  7        SECTION 30.  That Section 28-9-317, Idaho Code, be, and the same is hereby
  8    amended to read as follows:
                                                                        
  9        28-9-317.  INTERESTS THAT TAKE PRIORITY OVER  OR  TAKE  FREE  OF  SECURITY
 10    INTEREST OR AGRICULTURAL LIEN. (a) A security interest or agricultural lien is
 11    subordinate to the rights of:
 12        (1)  A person entitled to priority under section 28-9-322; and
 13        (2)  Except  as  otherwise  provided  in subsection (e) of this section, a
 14        person that becomes a lien creditor before the earlier of the time:
 15             (A)  the security interest or agricultural lien is perfected; or
 16             (B)  one (1) of the conditions specified in section 28-9-203(b)(3) is
 17             met and a financing statement covering the collateral is filed.
 18        (b)  Except as otherwise provided in subsection (e)  of  this  section,  a
 19    buyer,  other  than a secured party, of tangible chattel paper, tangible docu-
 20    ments, goods, instruments or a security certificate takes free of  a  security
 21    interest  or  agricultural lien if the buyer gives value and receives delivery
 22    of the collateral without knowledge of the security interest  or  agricultural
 23    lien and before it is perfected.
 24        (c)  Except  as  otherwise  provided  in subsection (e) of this section, a
 25    lessee of goods takes free of a security interest or agricultural lien if  the
 26    lessee  gives  value and receives delivery of the collateral without knowledge
 27    of the security interest or agricultural lien and before it is perfected.
 28        (d)  A licensee of a general intangible or a buyer, other than  a  secured
 29    party,  of  accounts,  electronic chattel paper, electronic documents, general
 30    intangibles, or investment property other than a certificated  security  takes
 31    free  of  a  security  interest  if  the licensee or buyer gives value without
 32    knowledge of the security interest and before it is perfected.
 33        (e)  Except as otherwise provided in sections 28-9-320 and 28-9-321, if  a
 34    person  files  a financing statement with respect to a purchase-money security
 35    interest before or within twenty (20) days after the debtor receives  delivery
 36    of  the  collateral, the security interest takes priority over the rights of a
 37    buyer, lessee, or lien creditor which arise  between  the  time  the  security
 38    interest attaches and the time of filing.
                                                                        
 39        SECTION 31.  That Section 28-9-338, Idaho Code, be, and the same is hereby
 40    amended to read as follows:
                                                                        
 41        28-9-338.  PRIORITY OF SECURITY INTEREST OR AGRICULTURAL LIEN PERFECTED BY
 42    FILED  FINANCING STATEMENT PROVIDING CERTAIN INCORRECT INFORMATION. If a secu-
 43    rity interest or agricultural lien is perfected by a filed financing statement
 44    providing information described in section 28-9-516(b)(5) which  is  incorrect
 45    at the time the financing statement is filed:
 46        (1)  The  security  interest or agricultural lien is subordinate to a con-
 47    flicting  perfected security interest in the collateral to the extent that the
 48    holder of the conflicting security interest gives value in reasonable reliance
 49    upon the incorrect information; and
 50        (2)  A purchaser, other than a secured party, of the collateral takes free
 51    of the security interest or agricultural lien to the extent that,  in  reason-
                                                                        
                                           53
                                                                        
  1    able  reliance  upon the incorrect information, the purchaser gives value and,
  2    in the case of tangible chattel paper, tangible documents, goods, instruments,
  3    or a security certificate, receives delivery of the collateral.
                                                                        
  4        SECTION 32.  That Section 28-9-601, Idaho Code, be, and the same is hereby
  5    amended to read as follows:
                                                                        
  6        28-9-601.  RIGHTS AFTER DEFAULT -- JUDICIAL ENFORCEMENT  --  CONSIGNOR  OR
  7    BUYER OF ACCOUNTS, CHATTEL PAPER, PAYMENT INTANGIBLES OR PROMISSORY NOTES. (a)
  8    After  default,  a  secured  party  has  the rights provided in this part and,
  9    except as otherwise provided in section 28-9-602, those provided by  agreement
 10    of the parties. A secured party:
 11        (1)  May  reduce  a  claim to judgment, foreclose or otherwise enforce the
 12        claim, security interest or agricultural lien by  any  available  judicial
 13        procedure; and
 14        (2)  If  the  collateral  is documents, may proceed either as to the docu-
 15        ments or as to the goods they cover.
 16        (b)  A secured party in possession of collateral or control of  collateral
 17    under  section  28-7-106,  28-9-104,  28-9-105,  28-9-106  or 28-9-107 has the
 18    rights and duties provided in section 28-9-207.
 19        (c)  The rights under subsections (a) and (b) of this section are  cumula-
 20    tive and may be exercised simultaneously.
 21        (d)  Except  as  otherwise  provided in subsection (g) of this section and
 22    section 28-9-605, after default, a debtor and an obligor have the rights  pro-
 23    vided in this part and by agreement of the parties.
 24        (e)  If a secured party has reduced its claim to judgment, the lien of any
 25    levy that may be made upon the collateral by virtue of an execution based upon
 26    the judgment relates back to the earliest of:
 27        (1)  The  date of perfection of the security interest or agricultural lien
 28        in the collateral;
 29        (2)  The date of filing a financing statement covering the collateral; or
 30        (3)  Any date specified in a statute under which the agricultural lien was
 31        created.
 32        (f)  A sale pursuant to an execution is  a  foreclosure  of  the  security
 33    interest or agricultural lien by judicial procedure within the meaning of this
 34    section. A secured party may purchase at the sale and thereafter hold the col-
 35    lateral free of any other requirements of this chapter.
 36        (g)  Except  as  otherwise  provided  in  section  28-9-607(c),  this part
 37    imposes no duties upon a secured party that is a consignor or is  a  buyer  of
 38    accounts, chattel paper, payment intangibles, or promissory notes.
                                                                        
 39        SECTION  33.  That  Section  28-10-104,  Idaho  Code,  be, and the same is
 40    hereby repealed.
                                                                        
 41        SECTION 34.  That Section 22-5111, Idaho Code, be, and the same is  hereby
 42    amended to read as follows:
                                                                        
 43        22-5111.  SUSPENSION  OR  REVOCATION  OF  LICENSE. Pursuant to chapter 52,
 44    title 67, Idaho Code, the department may suspend or revoke any license  issued
 45    under the provisions of this chapter, for any violation of, or failure to com-
 46    ply  with,  any  provision of this chapter or chapter 7, title 28, Idaho Code,
 47    including, but not limited to, sections 28-7-101 through 28-7-603, Idaho Code.
 48    Pending investigation, the department, whenever it deems necessary,  may  sus-
 49    pend a license temporarily without a hearing.
                                                                        
                                           54
                                                                        
  1        SECTION  35.  That  Section  28-50-116,  Idaho  Code,  be, and the same is
  2    hereby amended to read as follows:
                                                                        
  3        28-50-116.  TRANSFERABLE  RECORD.  (a)  In  this  section,   "transferable
  4    record" means an electronic record that:
  5        (1)  Would  be  a note under chapter 3, title 28, Idaho Code (uniform com-
  6        mercial code -- negotiable instruments) or a  document  under  chapter  7,
  7        title 28, Idaho Code (uniform commercial code -- warehouse receipts, bills
  8        of  lading  and other documents of title) if the electronic record were in
  9        writing; and
 10        (2)  The issuer of the electronic record expressly has agreed is a  trans-
 11        ferable record.
 12        (b)  A  person  has  control of a transferable record if a system employed
 13    for evidencing the transfer of interests in the transferable  record  reliably
 14    establishes  that  person  as  the person to which the transferable record was
 15    issued or transferred.
 16        (c)  A system satisfies subsection (b) of this section, and  a  person  is
 17    deemed to have control of a transferable record, if the transferable record is
 18    created, stored and assigned in such a manner that:
 19        (1)  A  single  authoritative copy of the transferable record exists which
 20        is unique, identifiable, and, except as otherwise provided  in  paragraphs
 21        (4), (5) and (6) of this subsection, unalterable;
 22        (2)  The authoritative copy identifies the person asserting control as:
 23             (A)  The person to which the transferable record was issued; or
 24             (B)  If the authoritative copy indicates that the transferable record
 25             has been transferred, the person to which the transferable record was
 26             most recently transferred;
 27        (3)  The  authoritative copy is communicated to and maintained by the per-
 28        son asserting control or its designated custodian;
 29        (4)  Copies or revisions that add or change an identified assignee of  the
 30        authoritative copy can be made only with the consent of the person assert-
 31        ing control;
 32        (5)  Each copy of the authoritative copy and any copy of a copy is readily
 33        identifiable as a copy that is not the authoritative copy; and
 34        (6)  Any  revision  of  the  authoritative copy is readily identifiable as
 35        authorized or unauthorized.
 36        (d)  Except as otherwise agreed, a person having control of a transferable
 37    record is the holder, as defined in section 28-1-201(20), Idaho Code,  of  the
 38    transferable  record  and  has  the same rights and defenses as a holder of an
 39    equivalent record or writing under chapters 1 through 12, title 28, Idaho Code
 40    (uniform commercial code), including, if the applicable statutory requirements
 41    under section 28-3-302(1), 28-7-501 or 28-9-330, Idaho  Code,  are  satisfied,
 42    the  rights  and defenses of a holder in due course, a holder to which a nego-
 43    tiable document of title has been duly negotiated,  or  a  purchaser,  respec-
 44    tively.    Delivery,  possession and indorsement are not required to obtain or
 45    exercise any of the rights under this subsection.
 46        (e)  Except as otherwise agreed, an obligor under  a  transferable  record
 47    has  the  same  rights  and defenses as an equivalent obligor under equivalent
 48    records or writings under chapters 1 through 12, title 28, Idaho Code (uniform
 49    commercial code).
 50        (f)  If requested by a person against which  enforcement  is  sought,  the
 51    person  seeking  to  enforce  the transferable record shall provide reasonable
 52    proof that the person is in control of  the  transferable  record.  Proof  may
 53    include  access  to  the  authoritative  copy  of  the transferable record and
 54    related business records sufficient to review the terms  of  the  transferable
                                                                        
                                           55
                                                                        
  1    record  and  to  establish  the  identity  of the person having control of the
  2    transferable record.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE
                             RS 13529

This legislation revises and updates Article 7 of the Uniform
Commercial Code, the article which deals with warehouse bills of
lading and other documents of title.  The purpose of the revision
is to provide a framework for the further development of
electronic documents of title, and update the law to reflect
state, federal and international developments and practice.

                          FISCAL IMPACT
No fiscal impact on the General Fund







Contact
Name:  Senator Bart M. Davis 
      (208) 332-1305
       Dale G. Higer, Uniform Law Commissioner
       (208) 387-4288
       Rex Blackburn, Uniform Law Commissioner
       (208) 489-8989


STATEMENT OF PURPOSE/FISCAL NOTE                    S 1227