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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,
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
]]]] 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
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
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.
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
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-
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,
1 the document has a conspicuous legend, however expressed, that it is nonnego-
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-
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-
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-
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
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-
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
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-
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
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-
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
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
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-
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-
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
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
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
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-
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.
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
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.
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-
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.
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
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
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
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
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-
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
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;
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-
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
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
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-
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-
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
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
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
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
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-
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
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 a A 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;
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
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
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-
15 (20) "Holder" with respect to a negotiable instrument, means:
16 (A) T the 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;
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
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
38 (25) Subject to subsection (27) of this section, a A 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, a A 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
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
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-
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-
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) T to 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
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
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.
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 t The 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
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
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
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
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
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
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:
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-
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
1 (c) such acknowledgment to the buyer by a carrier by reshipment or as a
2 warehouse man; 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
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
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-
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
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-
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-
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
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
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).
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-
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
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;
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 warehouse man.
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.
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 t The 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-
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-
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:
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
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
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
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
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-
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
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
1 office, to transmit a record by any means prescribed by filing office
3 (19) "Consignee" means a merchant to which goods are delivered in a con-
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;
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
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
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
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-
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
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-
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
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-
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
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-
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-
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-
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
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-
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
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-
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
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-
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
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 t The 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.
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
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;
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
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-
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
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
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
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
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-
47 (A) Perfection of a security interest in the goods by filing a fixture
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
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
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-
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:
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;
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
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
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
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:
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;
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:
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-
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
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.
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
1 record and to establish the identity of the person having control of the
2 transferable record.
STATEMENT OF PURPOSE
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.
No fiscal impact on the General Fund
Name: Senator Bart M. Davis
Dale G. Higer, Uniform Law Commissioner
Rex Blackburn, Uniform Law Commissioner
STATEMENT OF PURPOSE/FISCAL NOTE S 1227