View Bill Status
View Bill Text
View Statement of Purpose / Fiscal Impact
S1228................................................by JUDICIARY AND RULES UNIFORM COMMERCIAL CODE - Amends, repeals and adds to existing law relating to the Uniform Commercial Code to revise terminology; to provide for application; to revise purposes and policies; to set forth the relation of the Uniform Commercial Code to the Electronic Signatures in Global and National Commerce Act; to revise definitions; to provide for "notice" and "knowledge"; to set forth the distinction between a lease and a security interest; to define when a person gives "value"; to remove language providing for agreements fixing reasonable times for actions; to revise language relating to whether a time is reasonable; to remove language relating to the statute of frauds; to provide for presumptions; to provide for territorial applicability and general rules; to define "course of performance"; to revise provisions relating to "course of dealing" and "usage of trade"; to provide for an obligation of good faith in performance and enforcement; to revise language relating to a waiver or renunciation of a claim or right following an alleged breach; to provide for subordinated obligations; and to repeal language relating to course of performance and practical construction. 01/26 Senate intro - 1st rdg - to printing 01/27 Rpt prt - to Jud 02/09 Rpt out - rec d/p - to 2nd rdg 02/10 2nd rdg - to 3rd rdg 02/17 3rd rdg - PASSED - 31-0-4 AYES -- Bailey, Bunderson, Burkett, Calabretta, Cameron, Compton, Darrington, Davis, Gannon, Geddes, Goedde, Hill, Ingram, Kennedy, Keough, Little, Lodge, Malepeai, Marley, McKenzie, McWilliams, Noble, Noh, Pearce, Richardson, Schroeder, Stegner, Stennett, Sweet, Werk, Williams NAYS -- None Absent and excused -- Andreason, Brandt, Burtenshaw, Sorensen Floor Sponsor - Davis Title apvd - to House 02/18 House intro - 1st rdg - to Bus 02/26 Rpt out - rec d/p - to 2nd rdg 02/27 2nd rdg - to 3rd rdg 03/02 3rd rdg - PASSED - 63-0-7 AYES -- Andersen, Barrett, Bauer, Bayer, Bedke, Bell, Black, Block, Boe, Bolz, Bradford, Cannon, Clark, Collins, Cuddy, Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge, Field(18), Gagner, Garrett, Harwood, Henbest, Jaquet, Jones, Kellogg, Kulczyk, Lake, Langford, Langhorst, Martinez, McGeachin, McKague, Meyer, Miller, Mitchell, Naccarato, Pasley-Stuart, Raybould, Ridinger, Ring, Ringo, Roberts, Robison, Rydalch, Sali, Sayler, Schaefer, Shepherd, Shirley, Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Trail(Bennett), Wills, Wood NAYS -- None Absent and excused -- Barraclough, Campbell, Crow, Field(23), Moyle, Nielsen, Mr. Speaker Floor Sponsor - Gagner 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 43 Effective: 07/01/04
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-seventh Legislature Second Regular Session - 2004IN THE SENATE SENATE BILL NO. 1228 BY JUDICIARY AND RULES COMMITTEE 1 AN ACT 2 RELATING TO THE UNIFORM COMMERCIAL CODE; AMENDING THE HEADING FOR PART 1, 3 CHAPTER 1, TITLE 28, IDAHO CODE; AMENDING SECTION 28-1-101, IDAHO CODE, TO 4 REVISE TERMINOLOGY, TO REMOVE A REFERENCE TO CODIFICATION AND TO PROVIDE 5 FOR A CHAPTER TITLE CITATION; AMENDING PART 1, CHAPTER 1, TITLE 28, IDAHO 6 CODE, BY THE ADDITION OF A NEW SECTION 28-1-102, IDAHO CODE, TO PROVIDE 7 FOR APPLICATION OF THE CHAPTER; REPEALING SECTION 28-1-103, IDAHO CODE, 8 RELATING TO SUPPLEMENTARY GENERAL PRINCIPLES OF LAW; AMENDING SECTION 9 28-1-102, IDAHO CODE, TO REDESIGNATE THE SECTION, TO PROVIDE FOR CONSTRUC- 10 TION OF THE UNIFORM COMMERCIAL CODE, TO PROVIDE A REFERENCE TO THE UNIFORM 11 COMMERCIAL CODE, TO REVISE PURPOSES AND POLICIES, TO MAKE PUNCTUATION 12 CHANGES, TO REMOVE LANGUAGE PROVIDING FOR VARIATION BY AGREEMENT, TO 13 REMOVE LANGUAGE PROVIDING FOR NUMERICAL AND GENDER INTERPRETATION, TO PRO- 14 VIDE FOR THE APPLICABILITY OF SUPPLEMENTAL PRINCIPLES OF LAW AND TO MAKE 15 TECHNICAL CORRECTIONS; AMENDING SECTION 28-1-104, IDAHO CODE, TO MAKE A 16 GRAMMATICAL CHANGE AND TO PROVIDE A REFERENCE TO THE UNIFORM COMMERCIAL 17 CODE; AMENDING SECTION 28-1-108, IDAHO CODE, TO REDESIGNATE THE SECTION, 18 TO PROVIDE REFERENCES TO THE UNIFORM COMMERCIAL CODE AND TO MAKE GRAMMATI- 19 CAL CHANGES; AMENDING PART 1, CHAPTER 1, TITLE 28, IDAHO CODE, BY THE 20 ADDITION OF A NEW SECTION 28-1-106, IDAHO CODE, TO PROVIDE FOR NUMERICAL 21 AND GENDER INTERPRETATION; AMENDING PART 1, CHAPTER 1, TITLE 28, IDAHO 22 CODE, BY THE ADDITION OF A NEW SECTION 28-1-107, IDAHO CODE, TO PROVIDE 23 THAT SECTION CAPTIONS ARE PART OF THE UNIFORM COMMERCIAL CODE; AMENDING 24 PART 1, CHAPTER 1, TITLE 28, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 25 28-1-108, IDAHO CODE, TO SET FORTH THE RELATION OF THE UNIFORM COMMERCIAL 26 CODE TO THE ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT; 27 AMENDING SECTION 28-1-201, IDAHO CODE, TO REVISE DEFINITIONS AND TO MAKE 28 TECHNICAL CORRECTIONS; AMENDING PART 2, CHAPTER 1, TITLE 28, IDAHO CODE, 29 BY THE ADDITION OF A NEW SECTION 28-1-202, IDAHO CODE, TO PROVIDE FOR 30 "NOTICE" AND "KNOWLEDGE"; AMENDING PART 2, CHAPTER 1, TITLE 28, IDAHO 31 CODE, BY THE ADDITION OF A NEW SECTION 28-1-203, IDAHO CODE, TO SET FORTH 32 THE DISTINCTION BETWEEN A LEASE AND A SECURITY INTEREST; AMENDING PART 2, 33 CHAPTER 1, TITLE 28, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 34 28-1-204, IDAHO CODE, TO DEFINE WHEN A PERSON GIVES "VALUE"; AMENDING SEC- 35 TION 28-1-204, IDAHO CODE, TO REDESIGNATE THE SECTION, TO REMOVE LANGUAGE 36 PROVIDING FOR AGREEMENTS FIXING REASONABLE TIMES FOR ACTIONS, TO REVISE 37 LANGUAGE RELATING TO WHETHER A TIME IS REASONABLE AND TO MAKE GRAMMATICAL 38 CHANGES; REPEALING SECTION 28-1-206, IDAHO CODE, RELATING TO THE STATUTE 39 OF FRAUDS; AMENDING PART 2, CHAPTER 1, TITLE 28, IDAHO CODE, BY THE ADDI- 40 TION OF A NEW SECTION 28-1-206, IDAHO CODE, TO PROVIDE FOR PRESUMPTIONS; 41 AMENDING CHAPTER 1, TITLE 28, IDAHO CODE, BY THE ADDITION OF A NEW HEADING 42 FOR PART 3, CHAPTER 1, TITLE 28, IDAHO CODE, TO PROVIDE FOR TERRITORIAL 43 APPLICABILITY AND GENERAL RULES; AMENDING SECTION 28-1-105, IDAHO CODE, TO 44 REDESIGNATE THE SECTION, TO PROVIDE REFERENCES TO THE UNIFORM COMMERCIAL 45 CODE AND TO MAKE TECHNICAL CORRECTIONS; AMENDING PART 3, CHAPTER 1, TITLE 46 28, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 28-1-302, IDAHO CODE, TO 2 1 PROVIDE FOR VARIATION OF UNIFORM COMMERCIAL CODE PROVISIONS BY AGREEMENT; 2 AMENDING SECTION 28-1-205, IDAHO CODE, TO REDESIGNATE THE SECTION, TO 3 DEFINE "COURSE OF PERFORMANCE," TO REVISE PROVISIONS RELATING TO "COURSE 4 OF DEALING" AND "USAGE OF TRADE" AND TO MAKE TECHNICAL CORRECTIONS; AMEND- 5 ING SECTION 28-1-203, IDAHO CODE, TO REDESIGNATE THE SECTION, TO PROVIDE A 6 REFERENCE TO THE UNIFORM COMMERCIAL CODE AND TO PROVIDE FOR AN OBLIGATION 7 OF GOOD FAITH IN PERFORMANCE AND ENFORCEMENT; AMENDING SECTION 28-1-106, 8 IDAHO CODE, TO REDESIGNATE THE SECTION, TO PROVIDE REFERENCES TO THE UNI- 9 FORM COMMERCIAL CODE AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 10 28-1-107, IDAHO CODE, TO REDESIGNATE THE SECTION AND TO REVISE LANGUAGE 11 RELATING TO A WAIVER OR RENUNCIATION OF A CLAIM OR RIGHT FOLLOWING AN 12 ALLEGED BREACH; AMENDING SECTION 28-1-202, IDAHO CODE, TO REDESIGNATE THE 13 SECTION AND TO MAKE A GRAMMATICAL CHANGE; AMENDING SECTION 28-1-207, IDAHO 14 CODE, TO REDESIGNATE THE SECTION AND TO MAKE GRAMMATICAL AND TECHNICAL 15 CHANGES; AMENDING SECTION 28-1-208, IDAHO CODE, TO REDESIGNATE THE SECTION 16 AND TO MAKE GRAMMATICAL CHANGES; AMENDING PART 3, CHAPTER 1, TITLE 28, 17 IDAHO CODE, BY THE ADDITION OF A NEW SECTION 28-1-310, IDAHO CODE, TO PRO- 18 VIDE FOR SUBORDINATED OBLIGATIONS; AMENDING SECTION 28-2-202, IDAHO CODE, 19 TO PROVIDE A CORRECT CODE CITATION AND TO MAKE TECHNICAL CORRECTIONS; 20 REPEALING SECTION 28-2-208, IDAHO CODE, RELATING TO COURSE OF PERFORMANCE 21 OR PRACTICAL CONSTRUCTION; AMENDING SECTION 28-3-103, IDAHO CODE, TO PRO- 22 VIDE A CORRECT CODE CITATION; AMENDING SECTION 28-4-605, IDAHO CODE, TO 23 PROVIDE A CORRECT CODE REFERENCE AND TO CORRECT A CODIFIER'S ERROR; AMEND- 24 ING SECTION 28-4-606, IDAHO CODE, TO MAKE TECHNICAL CORRECTIONS AND TO 25 PROVIDE A CORRECT CODE CITATION; AMENDING SECTION 28-4-612, IDAHO CODE, TO 26 MAKE TECHNICAL CORRECTIONS AND TO PROVIDE A CORRECT CODE CITATION; AMEND- 27 ING SECTION 28-5-103, IDAHO CODE, TO PROVIDE A CORRECT CODE CITATION; 28 AMENDING SECTION 28-12-103, IDAHO CODE, TO PROVIDE A CORRECT CODE REFER- 29 ENCE AND TO MAKE A TECHNICAL CORRECTION; REPEALING SECTION 28-12-207, 30 IDAHO CODE, RELATING TO COURSE OF PERFORMANCE OR PRACTICAL CONSTRUCTION; 31 AMENDING SECTIONS 28-12-501, 28-12-518, 28-12-519, 28-12-527 AND 32 28-12-528, IDAHO CODE, TO PROVIDE CORRECT CODE CITATIONS; AMENDING SECTION 33 28-50-103, IDAHO CODE, TO PROVIDE A CORRECT CODE CITATION AND TO MAKE A 34 TECHNICAL CORRECTION; AND AMENDING SECTION 28-50-116, IDAHO CODE, TO PRO- 35 VIDE A CORRECT CODE CITATION. 36 Be It Enacted by the Legislature of the State of Idaho: 37 SECTION 1. That the Heading for Part 1, Chapter 1, Title 28, Idaho Code, 38 be, and the same is hereby amended to read as follows: 39 PART 1. 40SHORT TITLE, CONSTRUCTION, APPLICATION AND SUBJECT MATTER OF41THE ACTGENERAL PROVISIONS 42 SECTION 2. That Section 28-1-101, Idaho Code, be, and the same is hereby 43 amended to read as follows: 44 28-1-101. SHORT TITLES.AND CODIFICATION.(a) Thisacttitle shall be 45 known and may be cited as the Uniform Commercial Code.It shall be codified as46a single title, without change and in conformity with the official numbering47herein.48 (b) This chapter may be cited as "Uniform Commercial Code -- General Pro- 49 visions." 3 1 SECTION 3. That Part 1, Chapter 1, Title 28, Idaho Code, be, and the same 2 is hereby amended by the addition thereto of a NEW SECTION, to be known and 3 designated as Section 28-1-102, Idaho Code, and to read as follows: 4 28-1-102. SCOPE OF CHAPTER. This chapter applies to a transaction to the 5 extent that it is governed by another chapter of the uniform commercial code. 6 SECTION 4. That Section 28-1-103, Idaho Code, be, and the same is hereby 7 repealed. 8 SECTION 5. That Section 28-1-102, Idaho Code, be, and the same is hereby 9 amended to read as follows: 10 28-1-1023. CONSTRUCTION OF UNIFORM COMMERCIAL CODE TO PROMOTE ITS PUR- 11 POSES AND POLICIES --RULES OF CONSTRUCTION -- VARIATION BY AGREEMENTAPPLICA- 12 BILITY OF SUPPLEMENTAL PRINCIPLES OF LAW. (1a)This actThe uniform commercial 13 code shall be liberally construed and applied to promote its underlying pur- 14 poses and policies., which are: 15(2) Underlying purposes and policies of this act are16 (a1)tTo simplify, clarify, and modernize the law governing commercial 17 transactions; 18 (b2)tTo permit the continued expansion of commercial practices through 19 custom, usage, and agreement of the parties; and 20 (c3)tTo make uniform the law among the various jurisdictions. 21(3) The effect of provisions of this act may be varied by agreement,22except as otherwise provided in this act and except that the obligations of23good faith, diligence, reasonableness and care prescribed by this act may not24be disclaimed by agreement but the parties may by agreement determine the25standards by which the performance of such obligations is to be measured if26such standards are not manifestly unreasonable.27(4) The presence in certain provisions of this act of the words "unless28otherwise agreed" or words of similar import does not imply that the effect of29other provisions may not be varied by agreement under subsection (3).30(5) In this act unless the context otherwise requires31(a) words in the singular number include the plural, and in the plural32include the singular;33(b) words of the masculine gender include the feminine and the neuter,34and when the sense so indicates words of the neuter gender may refer to35any gender.36 (b) Unless displaced by the particular provisions of the uniform commer- 37 cial code, the principles of law and equity, including the law merchant and 38 the law relative to capacity to contract, principal and agent, estoppel, 39 fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other 40 validating or invalidating cause supplement its provisions. 41 SECTION 6. That Section 28-1-104, Idaho Code, be, and the same is hereby 42 amended to read as follows: 43 28-1-104. CONSTRUCTION AGAINSTIMPLICITIMPLIED REPEAL.This actThe uni- 44 form commercial code being a general act intended as a unified coverage of its 45 subject matter, no part of it shall be deemed to be impliedly repealed by sub- 46 sequent legislation if such construction can reasonably be avoided. 47 SECTION 7. That Section 28-1-108, Idaho Code, be, and the same is hereby 48 amended to read as follows: 4 1 28-1-1085. SEVERABILITY. If any provision or clause ofthis actthe uni- 2 form commercial code or its applicationthereofto any person or circumstances3 is held invalid,suchthe invalidity shall not affect other provisions or 4 applications of theactuniform commercial code which can be given effect 5 without the invalid provision or application, and to this end the provisions 6 ofthis actthe uniform commercial code aredeclared to beseverable. 7 SECTION 8. That Part 1, Chapter 1, Title 28, Idaho Code, be, and the same 8 is hereby amended by the addition thereto of a NEW SECTION, to be known and 9 designated as Section 28-1-106, Idaho Code, and to read as follows: 10 28-1-106. USE OF SINGULAR AND PLURAL -- GENDER. In the uniform commercial 11 code, unless the statutory context otherwise requires: 12 (1) Words in the singular number include the plural, and those in the 13 plural include the singular; and 14 (2) Words of any gender also refer to any other gender. 15 SECTION 9. That Part 1, Chapter 1, Title 28, Idaho Code, be, and the same 16 is hereby amended by the addition thereto of a NEW SECTION, to be known and 17 designated as Section 28-1-107, Idaho Code, and to read as follows: 18 28-1-107. SECTION CAPTIONS. Section captions are part of the uniform com- 19 mercial code. 20 SECTION 10. That Part 1, Chapter 1, Title 28, Idaho Code, be, and the 21 same is hereby amended by the addition thereto of a NEW SECTION, to be known 22 and designated as Section 28-1-108, Idaho Code, and to read as follows: 23 28-1-108. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COM- 24 MERCE ACT. This chapter modifies, limits, and supersedes the federal Elec- 25 tronic Signatures in Global and National Commerce Act, 15 U.S.C. section 7001 26 et seq., except that nothing in this chapter modifies, limits, or supersedes 27 section 7001(c) of that act or authorizes electronic delivery of any of the 28 notices described in section 7003(b) of that act. 29 SECTION 11. That Section 28-1-201, Idaho Code, be, and the same is hereby 30 amended to read as follows: 31 28-1-201. GENERAL DEFINITIONS. (a) Unless the context otherwise 32 requires, words or phrases defined in this section, or in the additional defi- 33 nitions contained in other chapters of the uniform commercial code that apply 34 to particular chapters or parts thereof, have the meanings stated. 35 (b) Subject toadditionaldefinitions contained inthe subsequentother 36 chapters ofthis act which are applicablethe uniform commercial code that 37 apply tospecificparticular chapters or parts thereof, and unless the context38otherwise requires, in this act: 39 (1) "Action," in the sense of a judicial proceeding, includes recoupment, 40 counterclaim, set-off, suit in equity, and any other proceedingsin which 41 rights are determined. 42 (2) "Aggrieved party" means a party entitled toresort topursue a 43 remedy. 44 (3) "Agreement," as distinguished from "contract," means the bargain of 45 the parties in fact, as found in their language orby implicationinferred 46 from other circumstances, including course of performance, course of deal- 47 ing or usage of tradeor course of performance as provided in this act5 1(sections 28-1-205 and 28-2-208). Whether an agreement has legal conse-2quences is determined by the provisions of this act, if applicable; other-3wise by the law of contracts (section 28-1-103). (Compare "contract.")as 4 provided in section 28-1-303, Idaho Code. 5 (4) "Bank" means anyperson engaged in the business of banking, including6any insured bank, whether chartered by federal or state law, any insured7savings and loan association, whether insured by federal or state law, and8any insured credit union, whether chartered by federal or state law,9offering deposit or other accounts on which the depositor or account10holder is permitted to make withdrawals by negotiable or transferable11instrument, payment orders of withdrawal, telephone transfers, or other12similar items for the purpose of making payments or transfers to third13persons or others, including demand deposits, negotiable order of with-14drawal accounts, savings deposits subject to automatic transfers, and15share draft accountsand includes a savings bank, savings and loan associ- 16 ation, credit union, and trust company. 17 (5) "Bearer" meansthea person in possession of annegotiable instru- 18 ment, document of title, or certificated security that is payable to 19 bearer or indorsed in blank. 20 (6) "Bill of lading" means a document evidencing the receipt of goods for 21 shipment issued by a person engaged in the business of transporting or 22 forwarding goods, and includes an airbill. "Airbill" means a document23serving for air transportation as a bill of lading does for marine or rail24transportation, and includes an air consignment note or air waybill. 25 (7) "Branch" includes a separately incorporated foreign branch of a bank. 26 (8) "Burden of establishing" a fact means the burden of persuading the 27 triersof fact that the existence of the fact is more probable than its 28 nonexistence. 29 (9) "Buyer in ordinary course of business" means a person that buys goods 30 in good faith, without knowledge that the sale violates the rights of 31 another person in the goods, and in the ordinary course from a person, 32 other than a pawnbroker, in the business of selling goods of that kind. A 33 person buys goods in the ordinary course if the sale to the person 34 comports with the usual or customary practices in the kind of business in 35 which the seller is engaged or with the seller's own usual or customary 36 practices. A person that sells oil, gas or other minerals at the wellhead 37 or minehead is a person in the business of selling goods of that kind. A 38 buyer in ordinary course of business may buy for cash, by exchange of 39 other property, or on secured or unsecured credit, and may acquire goods 40 or documents of title under a preexisting contract for sale. Only a buyer 41 that takes possession of the goods or has a right to recover the goods 42 from the seller under chapter 2, title 28, Idaho Code, may be a buyer in 43 ordinary course of business. "Buyer in ordinary course of business" does 44 not include aAperson that acquires goods in a transfer in bulk or as 45 security for or in total or partial satisfaction of a money debt.is not a46buyer in ordinary course of business.47 (10) "Conspicuous.,"A term or clause is conspicuous when it iswith ref- 48 erence to a term, means so written, displayed, or presented that a reason- 49 able person againstwhomwhich it is to operate ought to have noticed it. 50A printed heading in capitals (as: NON-NEGOTIABLE BILL OF LADING) is con-51spicuous. Language in the body of a form is "conspicuous" if it is in52larger or other contrasting type or color. But in a telegram any stated53term is "conspicuous."Whether a termor clauseis "conspicuous" or not is 54fora decisionbyfor the court. Conspicuous terms include the following: 55 (A) A heading in capitals equal to or greater in size than the sur- 6 1 rounding text, or in contrasting type, font, or color to the sur- 2 rounding text of the same or lesser size; and 3 (B) Language in the body of a record or display in larger type than 4 the surrounding text, or in contrasting type, font, or color to the 5 surrounding text of the same size, or set off from the surrounding 6 text of the same size by symbols or other marks that call attention 7 to the language. 8 (11) "Consumer" means an individual who enters into a transaction primar- 9 ily for personal, family, or household purposes. 10 (12) "Contract," as distinguished from "agreement," means the total legal 11 obligationwhichthat results from the parties' agreement asaffected12 determined bythis act andthe uniform commercial code as supplemented by 13 any other applicablerules oflaws.(Compare "agreement.")14 (123) "Creditor" includes a general creditor, a secured creditor, a lien 15 creditor, and any representative of creditors, including an assignee for 16 the benefit of creditors, a trustee in bankruptcy, a receiver in equity, 17 and an executor or administrator of an insolvent debtor's or assignor's 18 estate. 19 (134) "Defendant" includes a person in the position of defendant in a 20cross-action orcounterclaim, cross-claim, or third-party claim. 21 (145) "Delivery," with respect to an instruments, documentsof title, or 22 chattel paper,or securitiesmeans voluntary transfer of possession. 23 (156) "Document of title" includes bill of lading, dock warrant, dock 24 receipt, warehouse receipt or order for the delivery of goods, and also 25 any other document which in the regular course of business or financing is 26 treated as adequately evidencing that the person in possession of it is 27 entitled to receive, hold, and dispose of the document and the goods it 28 covers. To be a document of title, a document must purport to be issued by 29 or addressed to a bailee and purport to cover goods in the bailee's pos- 30 session which are either identified or are fungible portions of an identi- 31 fied mass. 32 (167) "Fault" means a default, breach, or wrongful act,or omission.or33breach.34 (178) "Fungible goods"with respect to goods or securitiesmeans: 35 (A) Ggoodsor securitiesof which any unit,is,by nature or usage 36 of trade, is the equivalent of any other like unit. Goods which are37not fungible shall be deemed fungible for the purposes of this act to38the extent that under a particular agreement or document unlike39units; or 40 (B) Goods that by agreement are treated as equivalents. 41 (189) "Genuine" means free of forgery or counterfeiting. 42 (1920) "Good faith" means honesty in fact in the conduct or transaction 43 concerned. 44 (201) "Holder"with respect to a negotiable instrument,means: 45 (A) Tthe person in possessionif theof a negotiable instrument that 46 is payable either to bearer or, in the case of an instrument payable47 to an identified person, ifthat is theidentifiedpersonisin pos- 48 session.; or 49 (B)"Holder" with respect to a document of title, means tThe person 50 in possession of a document of title if the goods are deliverable 51 either to bearer or to the order of the person in possession. 52(21) To "honor" is to pay or to accept and pay, or where a credit so53engages to purchase or discount a draft complying with the terms of the54credit.55 (22) "Insolvency proceedings" includes anyassignment for the benefit of 7 1 creditors or other proceedingsintended to liquidate or rehabilitate the 2 estate of the person involved. 3 (23)A person is "insolvent" who either has"Insolvent" means: 4 (A) Having generally ceased to payhisdebts in the ordinary course 5 of businessor cannotother than as a result of bona fide dispute; 6 (B) Being unable to payhisdebts as they become due; or 7 (C)isBeing insolvent within the meaning ofthefederal bankruptcy 8 law. 9 (24) "Money" means a medium of exchange currently authorized or adopted by 10 a domestic or foreign government.andThe term includes a monetary unit of 11 account established by an intergovernmental organization or by agreement 12 between two (2) or morenationscountries. 13 (25)A person has "notice" of a fact when:14(a) He has actual knowledge of it; or15(b) He has received a notice or notification of it; or16(c) From all the facts and circumstances known to him at the time in17question he has reason to know that it exists.18A person "knows" or has "knowledge" of a fact when he has actual knowledge19of it. "Discover" or "learn" or a word or phrase of similar import refers to20knowledge rather than to reason to know. The time and circumstances under21which a notice or notification may cease to be effective are not determined by22this act.23(26) A person "notifies" or "gives" a notice or notification to another by24taking such steps as may be reasonably required to inform the other in ordi-25nary course whether or not such other actually comes to know of it. A person26"receives" a notice or notification when:27(a) It comes to his attention; or28(b) It is duly delivered at the place of business through which the con-29tract was made or at any other place held out by him as the place for30receipt of such communications.31(27) Notice, knowledge or a notice or notification received by an organi-32zation is effective for a particular transaction from the time when it is33brought to the attention of the individual conducting that transaction, and in34any event from the time when it would have been brought to his attention if35the organization had exercised due diligence. An organization exercises due36diligence if it maintains reasonable routines for communicating significant37information to the person conducting the transaction and there is reasonable38compliance with the routines. Due diligence does not require an individual39acting for the organization to communicate information unless such communica-40tion is part of his regular duties or unless he has reason to know of the41transaction and that the transaction would be materially affected by the42information.43(28)"Organization"includes a corporation, government or governmental44subdivision or agency, business trust, estate, trust, partnership or associa-45tion, two (2) or more persons having a joint or common interest, or any other46legal or commercial entitymeans a person other than an individual. 47 (296) "Party," asdistinctdistinguished from "third party," means a per- 48 sonwhothat has engaged in a transaction or made an agreementwithin this49actsubject to the uniform commercial code. 50 (3027) "Person"includes an individual or an organization (See section5128-1-102)means an individual, corporation, business trust, estate, trust, 52 partnership, limited liability company, association, joint venture, gov- 53 ernment, governmental subdivision, agency, or instrumentality, public cor- 54 poration, or any other legal or commercial entity. 55 (3128)"Presumption" or "presumed" means that the trier of fact must find8 1the existence of the fact presumed unless and until evidence is introduced2which would support a finding of its nonexistence"Present value" means 3 the amount as of a date certain of one (1) or more sums payable in the 4 future, discounted to the date certain by use of either an interest rate 5 specified by the parties if that rate is not manifestly unreasonable at 6 the time the transaction is entered into or, if an interest rate is not so 7 specified, a commercially reasonable rate that takes into account the 8 facts and circumstances at the time the transaction is entered into. 9 (329) "Purchase"includesmeans taking by sale, lease, discount, negotia- 10 tion, mortgage, pledge, lien, security interest, issue or reissue, gift, 11 or any other voluntary transaction creating an interest in property. 12 (330) "Purchaser" means a personwhothat takes by purchase. 13 (31) "Record" means information that is inscribed on a tangible medium or 14 that is stored in an electronic or other medium and is retrievable in 15 perceivable form. 16 (342) "Remedy" means any remedial right to which an aggrieved party is 17 entitled with or without resort to a tribunal. 18 (353) "Representative"includesmeans a person empowered to act for 19 another, including an agent, an officer of a corporation or association, 20 and a trustee, executor, or administrator of an estate, or any other per-21son empowered to act for another. 22 (364) "Rights" includesremediesremedy. 23 (375) "Security interest" means an interest in personal property or fix- 24 tures which secures payment or performance of an obligation.The term also25 "Security interest" includes any interest of a consignor and a buyer of 26 accounts, chattel paper, a payment intangible, or a promissory note in a 27 transaction that is subject to chapter 9, title 28, Idaho Code.The28 "Security interest" does not include the special property interest of a 29 buyer of goods on identification of those goods to a contract for sale 30 under section 28-2-401, Idaho Code,is not a "security interest,"but a 31 buyer may also acquire a "security interest" by complying with chapter 9, 32 title 28, Idaho Code. Except as otherwise provided in section 28-2-2505, 33 Idaho Code, the right of a seller or lessor of goods under chapter 2 or 34 chapter 12, title 28, Idaho Code, to retain or acquire possession of the 35 goods is not a "security interest," but a seller or lessor may also 36 acquire a "security interest" by complying with chapter 9, title 28, Idaho 37 Code. The retention or reservation of title by a seller of goods notwith- 38 standing shipment or delivery to the buyer under(section 28-2-401), Idaho 39 Code, is limited in effect to a reservation of a "security interest." 40 Whether a transactioncreatesin the form of a leaseor security interest41is determined by the facts of each case; however, a transactioncreates a 42 "security interest" is determined pursuant to section 28-1-203, Idaho 43 Code.if the consideration the lessee is to pay the lessor for the right44to possession and use of the goods is an obligation for the term of the45lease not subject to termination by the lessee, and:46(a) The original term of the lease is equal to or greater than the47remaining economic life of the goods; or48(b) The lessee is bound to renew the lease for the remaining economic49life of the goods or is bound to become the owner of the goods; or50(c) The lessee has an option to renew the lease for the remaining eco-51nomic life of the goods for no additional consideration or nominal addi-52tional consideration upon compliance with the lease agreement; or53(d) The lessee has an option to become the owner of the goods for no54additional consideration or nominal additional consideration upon compli-55ance with the lease agreement.9 1A transaction does not create a security interest merely because it pro-2vides that:3(a) The present value of the consideration the lessee is obligated to pay4the lessor for the right to possession and use of the goods is substan-5tially equal to or is greater than the fair market value of the goods at6the time the lease is entered into; or7(b) The lessee assumes risk of loss of the goods, or agrees to pay taxes,8insurance, filing, recording, or registration fees, or service or mainte-9nance costs with respect to the goods; or10(c) The lessee has an option to renew the lease or to become the owner of11the goods; or12(d) The lessee has an option to renew the lease for a fixed rent that is13equal to or greater than the reasonably predictable fair market rent for14the use of the goods for the term of the renewal at the time the option is15to be performed; or16(e) The lessee has an option to become the owner of the goods for a fixed17price that is equal to or greater than the reasonably predictable fair18market value of the goods at the time the option is to be performed.19For purposes of this subsection (37):20Additional consideration is not nominal if (i) when the option to renew21the lease is granted to the lessee the rent is stated to be the fair market22rent for the use of the goods for the term of the renewal determined at the23time the option is to be performed, or (ii) when the option to become the24owner of the goods is granted to the lessee the price is stated to be the fair25market value of the goods determined at the time the option is to be per-26formed.27Additional consideration is nominal if it is less than the lessee's rea-28sonably predictable cost of performing under the lease agreement if the option29is not exercised.30"Reasonably predictable" and "remaining economic life of the goods" are to31be determined with reference to the facts and circumstances at the time the32transaction is entered into.33"Present value" means the amount as of a date certain of one (1) or more34sums payable in the future, discounted to the date certain. The discount is35determined by the interest rate specified by the parties if the rate is not36manifestly unreasonable at the time the transaction is entered into; other-37wise, the discount is determined by a commercially reasonable rate that takes38into account the facts and circumstances of each case at the time the transac-39tion was entered into.40 (386) "Send" in connection with anywriting, record, or notice means: 41 (A) Tto deposit in the mail or deliver for transmission by any other 42 usual means of communication with postage or cost of transmission 43 provided for and properly addressed and, in the case of an 44 instrument, to an address specified thereon or otherwise agreed, or 45 if there be none to any address reasonable under the circumstances.; 46 or 47 (B)The receipt of any writingIn any other way to cause to be 48 received any record or notice within the timeat whichit would have 49 arrived if properly sent.has the effect of a proper sending.50 (397) "Signed" includes using any symbol executed or adoptedby a party51 with present intention toauthenticateadopt or accept a writing. 52 (38) "State" means a state of the United States, the District of Colum- 53 bia, Puerto Rico, the United States Virgin Islands, or any territory or 54 insular possession subject to the jurisdiction of the United States. 55 (4039) "Surety" includes a guarantor or other secondary obligor. 10 1(41) "Telegram" includes a message transmitted by radio, teletype, cable,2any mechanical method of transmission, or the like.3 (420) "Term" meansthata portion of an agreementwhichthat relates to a 4 particular matter. 5 (431) "Unauthorized"signature" meansonea signature made without actual, 6 implied, or apparent authority.andThe term includes a forgery. 7(44) "Value." Except as otherwise provided with respect to negotiable8instruments and bank collections (sections 28-3-303, 28-4-208 and928-4-209) a person gives "value" for rights if he acquires them:10(a) In return for a binding commitment to extend credit or for the exten-11sion of immediately available credit whether or not drawn upon and whether12or not a chargeback is provided for in the event of difficulties in col-13lection; or14(b) As security for or in total or partial satisfaction of a preexisting15claim; or16(c) By accepting delivery pursuant to a preexisting contract for pur-17chase; or18(d) Generally, in return for any consideration sufficient to support a19simple contract.20 (452) "Warehouse receipt" means a receipt issued by a person engaged in 21 the business of storing goods for hire. 22 (463) "Written" or "writing" includes printing, typewriting, or any other 23 intentional reduction to tangible form. 24 SECTION 12. That Part 2, Chapter 1, Title 28, Idaho Code, be, and the 25 same is hereby amended by the addition thereto of a NEW SECTION, to be known 26 and designated as Section 28-1-202, Idaho Code, and to read as follows: 27 28-1-202. NOTICE -- KNOWLEDGE. (a) Subject to subsection (f) of this 28 section, a person has "notice" of a fact if the person: 29 (1) Has actual knowledge of it; 30 (2) Has received a notice or notification of it; or 31 (3) From all the facts and circumstances known to the person at the time 32 in question, has reason to know that it exists. 33 (b) "Knowledge" means actual knowledge. "Knows" has a corresponding mean- 34 ing. 35 (c) "Discover," "learn," or words of similar import refer to knowledge 36 rather than to reason to know. 37 (d) A person "notifies" or "gives" a notice or notification to another 38 person by taking such steps as may be reasonably required to inform the other 39 person in ordinary course, whether or not the other person actually comes to 40 know of it. 41 (e) Subject to subsection (f) of this section, a person "receives" a 42 notice or notification when: 43 (1) It comes to that person's attention; or 44 (2) It is duly delivered in a form reasonable under the circumstances at 45 the place of business through which the contract was made or at another 46 location held out by that person as the place for receipt of such communi- 47 cations. 48 (f) Notice, knowledge, or a notice or notification received by an organi- 49 zation is effective for a particular transaction from the time it is brought 50 to the attention of the individual conducting that transaction and, in any 51 event, from the time it would have been brought to the individual's attention 52 if the organization had exercised due diligence. An organization exercises due 53 diligence if it maintains reasonable routines for communicating significant 11 1 information to the person conducting the transaction and there is reasonable 2 compliance with the routines. Due diligence does not require an individual 3 acting for the organization to communicate information unless the communica- 4 tion is part of the individual's regular duties or the individual has reason 5 to know of the transaction and that the transaction would be materially 6 affected by the information. 7 SECTION 13. That Part 2, Chapter 1, Title 28, Idaho Code, be, and the 8 same is hereby amended by the addition thereto of a NEW SECTION, to be known 9 and designated as Section 28-1-203, Idaho Code, and to read as follows: 10 28-1-203. LEASE DISTINGUISHED FROM SECURITY INTEREST. (a) Whether a 11 transaction in the form of a lease creates a lease or security interest is 12 determined by the facts of each case. 13 (b) A transaction in the form of a lease creates a security interest if 14 the consideration that the lessee is to pay the lessor for the right to pos- 15 session and use of the goods is an obligation for the term of the lease and is 16 not subject to termination by the lessee, and: 17 (1) The original term of the lease is equal to or greater than the 18 remaining economic life of the goods; 19 (2) The lessee is bound to renew the lease for the remaining economic 20 life of the goods or is bound to become the owner of the goods; 21 (3) The lessee has an option to renew the lease for the remaining eco- 22 nomic life of the goods for no additional consideration or for nominal 23 additional consideration upon compliance with the lease agreement; or 24 (4) The lessee has an option to become the owner of the goods for no 25 additional consideration or for nominal additional consideration upon com- 26 pliance with the lease agreement. 27 (c) A transaction in the form of a lease does not create a security 28 interest merely because: 29 (1) The present value of the consideration the lessee is obligated to pay 30 the lessor for the right to possession and use of the goods is substan- 31 tially equal to or is greater than the fair market value of the goods at 32 the time the lease is entered into; 33 (2) The lessee assumes risk of loss of the goods; 34 (3) The lessee agrees to pay, with respect to the goods, taxes, insur- 35 ance, filing, recording, or registration fees, or service or maintenance 36 costs; 37 (4) The lessee has an option to renew the lease or to become the owner of 38 the goods; 39 (5) The lessee has an option to renew the lease for a fixed rent that is 40 equal to or greater than the reasonably predictable fair market rent for 41 the use of the goods for the term of the renewal at the time the option is 42 to be performed; or 43 (6) The lessee has an option to become the owner of the goods for a fixed 44 price that is equal to or greater than the reasonably predictable fair 45 market value of the goods at the time the option is to be performed. 46 (d) Additional consideration is nominal if it is less than the lessee's 47 reasonably predictable cost of performing under the lease agreement if the 48 option is not exercised. Additional consideration is not nominal if: 49 (1) When the option to renew the lease is granted to the lessee, the rent 50 is stated to be the fair market rent for the use of the goods for the term 51 of the renewal determined at the time the option is to be performed; or 52 (2) When the option to become the owner of the goods is granted to the 53 lessee, the price is stated to be the fair market value of the goods 12 1 determined at the time the option is to be performed. 2 (e) The "remaining economic life of the goods" and "reasonably 3 predictable" fair market rent, fair market value, or cost of performing under 4 the lease agreement must be determined with reference to the facts and circum- 5 stances at the time the transaction is entered into. 6 SECTION 14. That Part 2, Chapter 1, Title 28, Idaho Code, be, and the 7 same is hereby amended by the addition thereto of a NEW SECTION, to be known 8 and designated as Section 28-1-204, Idaho Code, and to read as follows: 9 28-1-204. VALUE. Except as otherwise provided in chapters 3, 4, 5 and 6, 10 title 28, Idaho Code, a person gives value for rights if the person acquires 11 them: 12 (1) In return for a binding commitment to extend credit or for the exten- 13 sion of immediately available credit, whether or not drawn upon and whether or 14 not a charge-back is provided for in the event of difficulties in collection; 15 (2) As security for, or in total or partial satisfaction of, a preexist- 16 ing claim; 17 (3) By accepting delivery under a preexisting contract for purchase; or 18 (4) In return for any consideration sufficient to support a simple con- 19 tract. 20 SECTION 15. That Section 28-1-204, Idaho Code, be, and the same is hereby 21 amended to read as follows: 22 28-1-2045.TIME --REASONABLE TIME --"SEASONABLY."SEASONABLENESS.(1)23Whenever this act requires any action to be taken within a reasonable time,24any time which is not manifestly unreasonable may be fixed by agreement.25 (2a)What isWhether areasonabletime for taking anyaction required by 26 the uniform commercial code is reasonable depends on the nature, purpose, and 27 circumstances ofsuchthe action. 28 (3b) An action is taken"seasonably" whenif it is taken at or within the 29 time agreed or, if no time is agreed, at or within a reasonable time. 30 SECTION 16. That Section 28-1-206, Idaho Code, be, and the same is hereby 31 repealed. 32 SECTION 17. That Part 2, Chapter 1, Title 28, Idaho Code, be, and the 33 same is hereby amended by the addition thereto of a NEW SECTION, to be known 34 and designated as Section 28-1-206, Idaho Code, and to read as follows: 35 28-1-206. PRESUMPTIONS. Whenever the uniform commercial code creates a 36 "presumption" with respect to a fact, or provides that a fact is "presumed," 37 the trier of fact must find the existence of the fact unless and until evi- 38 dence is introduced that supports a finding of its nonexistence. 39 SECTION 18. That Title 28, Chapter 1, Idaho Code, be, and the same is 40 hereby amended by the addition thereto of a NEW PART HEADING, to be known and 41 designated as the Heading for Part 3, Chapter 1, Title 28, Idaho Code, and to 42 read as follows: 43 PART 3. 44 TERRITORIAL APPLICABILITY AND GENERAL RULES 45 SECTION 19. That Section 28-1-105, Idaho Code, be, and the same is hereby 13 1 amended to read as follows: 2 28-1-105301. TERRITORIAL APPLICATION OF THEACTUNIFORM COMMERCIAL CODE 3 -- PARTIES' POWER TO CHOOSE APPLICABLE LAW. (1a) Except as provided hereafter 4 in this section, when a transaction bears a reasonable relation to this state 5 and also to another state or nation the parties may agree that the law either 6 of this state or of such other state or nation shall govern their rights and 7 duties. Failing such agreementthis actthe uniform commercial code applies to 8 transactions bearing an appropriate relation to this state. 9 (2b) Where one (1) of the following provisions ofthis actthe uniform 10 commercial code specifies the applicable law, that provision governs and a 11 contrary agreement is effective only to the extent permitted by the law, 12 including the conflict of laws rules, so specified: 13 Rights of creditors against sold goods. Section 28-2-402, Idaho Code. 14 Applicability of the chapter on leases. Sections 28-12-105 and 28-12-106, 15 Idaho Code. 16 Applicability of the chapter on bank deposits and collections. Section 17 28-4-102, Idaho Code. 18 Governing law in the part on funds transfers. Section 28-4-638, Idaho 19 Code. 20 Letters of credit. Section 28-5-116, Idaho Code. 21 Applicability of the chapter on investment securities. Section 28-8-110, 22 Idaho Code. 23 Law governing perfection, the effect of perfection or nonperfection, the 24 priority of security interests and agricultural liens. Sections 28-9-301 25 through 28-9-307, Idaho Code. 26 SECTION 20. That Part 3, Chapter 1, Title 28, Idaho Code, be, and the 27 same is hereby amended by the addition thereto of a NEW SECTION, to be known 28 and designated as Section 28-1-302, Idaho Code, and to read as follows: 29 28-1-302. VARIATION BY AGREEMENT. (a) Except as otherwise provided in 30 subsection (b) of this section or elsewhere in the uniform commercial code, 31 the effect of provisions of the uniform commercial code may be varied by 32 agreement. 33 (b) The obligations of good faith, diligence, reasonableness, and care 34 prescribed by the uniform commercial code may not be disclaimed by agreement. 35 The parties, by agreement, may determine the standards by which the perfor- 36 mance of those obligations is to be measured if those standards are not mani- 37 festly unreasonable. Whenever the uniform commercial code requires an action 38 to be taken within a reasonable time, a time that is not manifestly unreason- 39 able may be fixed by agreement. 40 (c) The presence in certain provisions of the uniform commercial code of 41 the phrase "unless otherwise agreed," or words of similar import, does not 42 imply that the effect of other provisions may not be varied by agreement under 43 this section. 44 SECTION 21. That Section 28-1-205, Idaho Code, be, and the same is hereby 45 amended to read as follows: 46 28-1-205303. COURSE OF PERFORMANCE, COURSE OF DEALING, AND USAGE OF TRADE. 47 (1a) A "course of performance" is a sequence of conduct between the parties to 48 a particular transaction that exists if: 49 (1) The agreement of the parties with respect to the transaction involves 50 repeated occasions for performance by a party; and 14 1 (2) The other party, with knowledge of the nature of the performance and 2 opportunity for objection to it, accepts the performance or acquiesces in 3 it without objection. 4 (b) A "course of dealing" is a sequence ofpreviousconduct concerning 5 previous transactions between the parties to a particular transactionwhich6 that is fairly to be regarded as establishing a common basis of understanding 7 for interpreting their expressions and other conduct. 8 (2c) A "usage of trade" is any practice or method of dealing having such 9 regularity of observance in a place, vocation, or trade as to justify an 10 expectation that it will be observed with respect to the transaction in ques- 11 tion. The existence and scope of such a usageare tomust be proved as facts. 12 If it is established that such a usage is embodied in awrittentrade code or 13 similarwritingrecord, the interpretation of thewritingrecord isfor the14courta question of law. 15 (3d) A course of performance or course of dealing between the parties 16and anyor usage of trade in the vocation or trade in which they are engaged 17 or of which they are or should be aware is relevant in ascertaining the mean- 18 ing of the parties' agreement, may give particular meaning to specific terms 19 of the agreement, and may supplement or qualify the terms ofanthe agree- 20 ment. A usage of trade applicable in the place in which part of the perfor- 21 mance under the agreement is to occur may be so utilized as to that part of 22 the performance. 23 (4e)TheExcept as otherwise provided in subsection (f) of this section, 24 the express terms of an agreement and any applicable course of performance, 25 course of dealing, or usage of trade shall be construed wherever reasonable as 26 consistent with each other.; but whenIf such a construction is unreasonable: 27 (1) Eexpress termscontrol bothprevail over course of performance, 28 course of dealing, and usage of trade;and course of dealing controls29usage of trade30 (2) Course of performance prevails over course of dealing and usage of 31 trade; and 32 (3) Course of dealing prevails over usage of trade. 33 (5f)An applicable usage of trade in the place where any part of perfor-34mance is to occur shall be used in interpreting the agreement as to that part35ofSubject to section 28-2-209, Idaho Code, a course of performance is rele- 36 vant to show a waiver or modification of any term inconsistent with the course 37 of performance. 38 (6g) Evidence of a relevant usage of trade offered by one (1) party is 39 not admissible unlessand until hethat party has given the other partysuch40 noticeasthat the court finds sufficient to prevent unfair surprise to the 41latterother party. 42 SECTION 22. That Section 28-1-203, Idaho Code, be, and the same is hereby 43 amended to read as follows: 44 28-1-203304. OBLIGATION OF GOOD FAITH. Every contract or duty withinthis45actthe uniform commercial code imposes an obligation of good faith in its 46 performanceorand enforcement. 47 SECTION 23. That Section 28-1-106, Idaho Code, be, and the same is hereby 48 amended to read as follows: 49 28-1-106305. REMEDIES TO BE LIBERALLY ADMINISTERED. (1a) The remedies 50 provided bythis actthe uniform commercial code shall be liberally adminis- 51 tered to the end that the aggrieved party may be put in as good a position as 15 1 if the other party had fully performed but neither consequential or special 2 nor penal damages may be had except as specifically provided inthis actthe 3 uniform commercial code or by other rule of law. 4 (2b) Any right or obligation declared bythis actthe uniform commercial 5 code is enforceable by action unless the provision declaring it specifies a 6 different and limited effect. 7 SECTION 24. That Section 28-1-107, Idaho Code, be, and the same is hereby 8 amended to read as follows: 9 28-1-107306. WAIVER OR RENUNCIATION OF CLAIM OR RIGHT AFTER BREACH. Any10 claim or right arising out of an alleged breachcanmay be discharged in whole 11 or in part without consideration bya written waiver or renunciation signed12and delivered byagreement of the aggrieved party in an authenticated record. 13 SECTION 25. That Section 28-1-202, Idaho Code, be, and the same is hereby 14 amended to read as follows: 15 28-1-202307. PRIMA FACIE EVIDENCE BY THIRD PARTY DOCUMENTS. A document in 16 due form purporting to be a bill of lading, policy or certificate of insur- 17 ance, official weigher's or inspector's certificate, consular invoice, or any 18 other document authorized or required by the contract to be issued by a third 19 partyshall beis prima facie evidence of its own authenticity and genuineness 20 and of the facts stated in the document by the third party. 21 SECTION 26. That Section 28-1-207, Idaho Code, be, and the same is hereby 22 amended to read as follows: 23 28-1-207308. PERFORMANCE OR ACCEPTANCE UNDER RESERVATION OF RIGHTS. (1a) 24 A partywho,that with explicit reservation of rights,performs or promises 25 performance or assents to performance in a manner demanded or offered by the 26 other party does not thereby prejudice the rights reserved. Such words as 27 "without prejudice," "under protest," or the like are sufficient. 28 (2b) Subsection (1a) of this section does not apply to an accord and sat- 29 isfaction. 30 SECTION 27. That Section 28-1-208, Idaho Code, be, and the same is hereby 31 amended to read as follows: 32 28-1-208309. OPTION TO ACCELERATE AT WILL. A term providing that one (1) 33 party orhisthat party's successor in interest may accelerate payment or per- 34 formance or require collateral or additional collateral "at will" or"whenhe35 the party "deemshimselfitself insecure," orinwords of similar import, 36shall be construed tomeans thathe shall havethe party has power to do so 37 only ifhethat party in good faith believes that the prospect of payment or 38 performance is impaired. The burden of establishing lack of good faith is on 39 the party againstwhomwhich the power has been exercised. 40 SECTION 28. That Part 3, Chapter 1, Title 28, Idaho Code, be, and the 41 same is hereby amended by the addition thereto of a NEW SECTION, to be known 42 and designated as Section 28-1-310, Idaho Code, and to read as follows: 43 28-1-310. SUBORDINATED OBLIGATIONS. An obligation may be issued as subor- 44 dinated to performance of another obligation of the person obligated, or a 45 creditor may subordinate its right to performance of an obligation by agree- 16 1 ment with either the person obligated or another creditor of the person obli- 2 gated. Subordination does not create a security interest as against either the 3 common debtor or a subordinated creditor. 4 SECTION 29. That Section 28-2-202, Idaho Code, be, and the same is hereby 5 amended to read as follows: 6 28-2-202. FINAL WRITTEN EXPRESSION -- PAROL OR EXTRINSIC EVIDENCE. Terms 7 with respect to which the confirmatory memoranda of the parties agree or which 8 are otherwise set forth in a writing intended by the parties as a final 9 expression of their agreement with respect to such terms as are included 10 therein may not be contradicted by evidence of any prior agreement or of a 11 contemporaneous oral agreement but may be explained or supplemented 12 (a) By course of performance, course of dealing, or usage of trade 13 (section 28-1-205303);or by course of performance (section 28-2-208);and 14 (b) By evidence of consistent additional terms unless the court finds the 15 writing to have been intended also as a complete and exclusive statement of 16 the terms of the agreement. 17 SECTION 30. That Section 28-2-208, Idaho Code, be, and the same is hereby 18 repealed. 19 SECTION 31. That Section 28-3-103, Idaho Code, be, and the same is hereby 20 amended to read as follows: 21 28-3-103. DEFINITIONS. (1) In this chapter: 22 (a) "Acceptor" means a drawee who has accepted a draft. 23 (b) "Drawee" means a person ordered in a draft to make payment. 24 (c) "Drawer" means a person who signs or is identified in a draft as a 25 person ordering payment. 26 (d) "Good faith" means honesty in fact in the conduct or transaction con- 27 cerned. 28 (e) "Maker" means a person who signs or is identified in a note as a per- 29 son undertaking to pay. 30 (f) "Order" means a written instruction to pay money signed by the person 31 giving the instruction. The instruction may be addressed to any person, 32 including the person giving the instruction, or to one (1) or more persons 33 jointly or in the alternative but not in succession. An authorization to 34 pay is not an order unless the person authorized to pay is also instructed 35 to pay. 36 (g) "Ordinary care" in the case of a person engaged in business means 37 observance of reasonable commercial standards, prevailing in the area in 38 which the person is located, with respect to the business in which the 39 person is engaged. In the case of a bank that takes an instrument for 40 processing for collection or payment by automated means, reasonable com- 41 mercial standards do not require the bank to examine the instrument if the 42 failure to examine does not violate the bank's prescribed procedures and 43 the bank's procedures do not vary unreasonably from general banking usage 44 not disapproved by this chapter or chapter 4. 45 (h) "Party" means a party to an instrument. 46 (i) "Promise" means a written undertaking to pay money signed by the per- 47 son undertaking to pay. An acknowledgment of an obligation by the obligor 48 is not a promise unless the obligor also undertakes to pay the obligation. 49 (j) "Prove" with respect to a fact means to meet the burden of establish- 50 ing the fact (section 28-1-201(b)(8)). 17 1 (k) "Remitter" means a person who purchases an instrument from its issuer 2 if the instrument is payable to an identified person other than the pur- 3 chaser. 4 (2) Other definitions applying to this chapter and the sections in which 5 they appear are: 6 "Acceptance" Section 28-3-409 7 "Accommodated party" Section 28-3-419 8 "Accommodation party" Section 28-3-419 9 "Alteration" Section 28-3-407 10 "Anomalous indorsement" Section 28-3-205 11 "Blank indorsement" Section 28-3-205 12 "Cashier's check" Section 28-3-104 13 "Certificate of deposit" Section 28-3-104 14 "Certified check" Section 28-3-409 15 "Check" Section 28-3-104 16 "Consideration" Section 28-3-303 17 "Demand draft" Section 28-3-104 18 "Draft" Section 28-3-104 19 "Holder in due course" Section 28-3-302 20 "Incomplete instrument" Section 28-3-115 21 "Indorsement" Section 28-3-204 22 "Indorser" Section 28-3-204 23 "Instrument" Section 28-3-104 24 "Issue" Section 28-3-105 25 "Issuer" Section 28-3-105 26 "Negotiable instrument" Section 28-3-104 27 "Negotiation" Section 28-3-201 28 "Note" Section 28-3-104 29 "Payable at a definite time" Section 28-3-108 30 "Payable on demand" Section 28-3-108 31 "Payable to bearer" Section 28-3-109 32 "Payable to order" Section 28-3-109 33 "Payment" Section 28-3-602 34 "Person entitled to enforce" Section 28-3-301 35 "Presentment" Section 28-3-501 36 "Reacquisition" Section 28-3-207 37 "Special indorsement" Section 28-3-205 38 "Teller's check" Section 28-3-104 39 "Transfer of instrument" Section 28-3-203 40 "Traveler's check" Section 28-3-104 41 "Value" Section 28-3-303 42 (3) The following definitions in other chapters apply to this chapter: 43 "Bank" Section 28-4-105 44 "Banking day" Section 28-4-104 45 "Clearing house" Section 28-4-104 46 "Collecting bank" Section 28-4-105 47 "Depositary bank" Section 28-4-105 48 "Documentary draft" Section 28-4-104 49 "Intermediary bank" Section 28-4-105 50 "Item" Section 28-4-104 51 "Payor bank" Section 28-4-105 52 "Suspends payments" Section 28-4-104 53 (4) In addition, chapter 1 contains general definitions and principles of 54 construction and interpretation applicable throughout this chapter. 18 1 SECTION 32. That Section 28-4-605, Idaho Code, be, and the same is hereby 2 amended to read as follows: 3 28-4-605. OTHER DEFINITIONS. (1) In this part: 4 (a) "Authorized account" means a deposit account of a customer in a bank 5 designated by the customer as a source of payment of payment orders issued 6 by the customer to the bank. If a customer does not so designate an 7 account, any account of the customer is an authorized account if payment 8 of a payment order from that account is not inconsistent with a restric- 9 tion on the use of that account. 10 (b) "Bank" means a person engaged in the business of banking and includes 11 a savings bank, savings and loan association, credit union, and trust com- 12 pany. A branch or separate office of a bank is a separate bank for pur- 13 poses of this part. 14 (c) "Customer" means a person, including a bank, having an account with a 15 bank or from whom a bank has agreed to receive payment orders. 16 (d) "Funds-transfer business day" of a receiving bank means the part of a 17 day during which the receiving bank is open for the receipt, processing, 18 and transmittal of payment orders and cancellations and amendments of pay- 19 ment orders. 20 (e) "Funds-transfer system" means a wire transfer network, automated 21 clearing house, or other communication system of a clearing house or other 22 association of banks through which a payment order by a bank may be trans- 23 mitted to the bank to which the order is addressed. 24 (f) "Good faith" means honesty in fact and the observance of reasonable 25 commercial standards of fair dealing. 26 (g) "Prove" with respect to a fact means to meet the burden of establish- 27 ing the fact (section 28-1-201(b)(8)). 28 (2) Other definitions applying to this part and the sections in which 29 they appear are: 30 "Acceptance" Section 28-4-617.31 "Beneficiary" Section 28-4-603.32 "Beneficiary's bank" Section 28-4-603.33 "Executed" Section 28-4-621.34 "Execution date" Section 28-4-621.35 "Funds transfer" Section 28-4-604.36 "Funds-transfer system rule" Section 28-4-632.37 "Intermediary bank" Section 28-4-604.38 "Originator" Section 28-4-604.39 "Originator's bank" Section 28-4-604.40 "Payment by beneficiary's bank to beneficiary" Section 28-4-630.41 "Payment by originator to beneficiary" Section 28-4-631.42 "Payment by sender to receiving bank" Section 28-4-628.43 "Payment date" Section 28-4-626.44 "Payment order" Section 28-4-603.45 "Receiving bank" Section 28-4-603.46 "Security procedure" Section 28-4-609.47 "Sender" Section 28-4-603.48 (3) The following definitions in article 4 apply to this part: 49 "Clearing house" Section 28-4-104.50 "Item" Section 28-4-104.51 "Suspends payments" Section 28-4-104.52 (4) In addition article 1 contains general definitions and principles of 53 construction and interpretation applicable throughout this part. 19 1 SECTION 33. That Section 28-4-606, Idaho Code, be, and the same is hereby 2 amended to read as follows: 3 28-4-606. TIME PAYMENT ORDER IS RECEIVED. (1) The time of receipt of a 4 payment order or communicationcancellingcanceling or amending a payment 5 order is determined by the rules applicable to receipt of a notice stated in 6 section 28-1-201(27)202. A receiving bank may fix a cut-off time or times on a 7 funds-transfer business day for the receipt and processing of payment orders 8 and communicationscancellingcanceling or amending payment orders. Different 9 cut-off times may apply to payment orders, cancellations, or amendments, or to 10 different categories of payment orders, cancellations, or amendments. A cut- 11 off time may apply to senders generally or different cut-off times may apply 12 to different senders or categories of payment orders. If a payment order or 13 communicationcancellingcanceling or amending a payment order is received 14 after the close of a funds-transfer business day or after the appropriate cut- 15 off time on a funds-transfer business day, the receiving bank may treat the 16 payment order or communication as received at the opening of the next funds- 17 transfer business day. 18 (2) If this part refers to an execution date or payment date or states a 19 day on which a receiving bank is required to take action, and the date or day 20 does not fall on a funds-transfer business day, the next day that is a funds- 21 transfer business day is treated as the date or day stated, unless the con- 22 trary is stated in this part. 23 SECTION 34. That Section 28-4-612, Idaho Code, be, and the same is hereby 24 amended to read as follows: 25 28-4-612. REFUND OF PAYMENT AND DUTY OF CUSTOMER TO REPORT WITH RESPECT 26 TO UNAUTHORIZED PAYMENT ORDER. (1a) If a receiving bank accepts a payment 27 order issued in the name of its customer as sender which is: 28 (a1)nNot authorized and not effective as the order of the customer under 29 section 28-4-610, or 30 (b2)nNot enforceable, in whole or in part, against the customer under 31 section 28-4-611, the bank shall refund any payment of the payment order 32 received from the customer to the extent the bank is not entitled to 33 enforce payment and shall pay interest on the refundable amount calculated 34 from the date the bank received payment to the date of the refund. How- 35 ever, the customer is not entitled to interest from the bank on the amount 36 to be refunded if the customer fails to exercise ordinary care to deter- 37 mine that the order was not authorized by the customer and to notify the 38 bank of the relevant facts within a reasonable time not exceeding ninety 39 (90) days after the date the customer received notification from the bank 40 that the order was accepted or that the customer's account was debited 41 with respect to the order. The bank is not entitled to any recovery from 42 the customer on account of a failure by the customer to give notification 43 as stated in this section. 44 (2b) Reasonable time under subsection (1a) of this section may be fixed 45 by agreement as stated in section 28-2-2041-302(b), but the obligation of a 46 receiving bank to refund payment as stated in subsection (1a) of this section 47 may not otherwise be varied by agreement. 48 SECTION 35. That Section 28-5-103, Idaho Code, be, and the same is hereby 49 amended to read as follows: 50 28-5-103. SCOPE. (1) This chapter applies to letters of credit and to 20 1 certain rights and obligations arising out of transactions involving letters 2 of credit. 3 (2) The statement of a rule in this chapter does not by itself require, 4 imply, or negate application of the same or a different rule to a situation 5 not provided for, or to a person not specified, in this chapter. 6 (3) With the exception of this subsection, subsections (1) and (2), sec- 7 tions 28-5-102(1)(i) and (1)(j), 28-5-106(4) and 28-5-114(4), and except to 8 the extent prohibited in sections 28-1-102(3)302 and 28-5-117(4), the effect 9 of this chapter may be varied by agreement or by a provision stated or incor- 10 porated by reference in an undertaking. A term in an agreement or undertaking 11 generally excusing liability or generally limiting remedies for failure to 12 perform obligations is not sufficient to vary obligations prescribed by this 13 chapter. 14 (4) Rights and obligations of an issuer to a beneficiary or a nominated 15 person under a letter of credit are independent of the existence, performance, 16 or nonperformance of a contract or arrangement out of which the letter of 17 credit arises or which underlies it, including contracts or arrangements 18 between the issuer and the applicant and between the applicant and the benefi- 19 ciary. 20 SECTION 36. That Section 28-12-103, Idaho Code, be, and the same is 21 hereby amended to read as follows: 22 28-12-103. DEFINITIONS AND INDEX OF DEFINITIONS. (1) In this chapter 23 unless the context otherwise requires: 24 (a) "Buyer in ordinary course of business" means a person who in good 25 faith and without knowledge that the sale to him is in violation of the 26 ownership rights or security interest or leasehold interest of a third 27 party in the goods, buys in ordinary course from a person in the business 28 of selling goods of that kind but does not include a pawnbroker. "Buying" 29 may be for cash or by exchange of other property or on secured or unse- 30 cured credit and includes receiving goods or documents of title under a 31 preexisting contract for sale but does not include a transfer in bulk or 32 as security for or in total or partial satisfaction of a money debt. 33 (b) "Cancellation" occurs when either party puts an end to the lease con- 34 tract for default by the other party. 35 (c) "Commercial unit" means such a unit of goods as by commercial usage 36 is a single whole for purposes of lease and division of which materially 37 impairs its character or value on the market or in use. A commercial unit 38 may be a single article, as a machine, or a set of articles, as a suite of 39 furniture or a line of machinery, or a quantity, as a gross or carload, or 40 any other unit treated in use or in the relevant market as a single whole. 41 (d) "Conforming" goods or performance under a lease contract means goods 42 or performance thatareis in accordance with the obligations under the 43 lease contract. 44 (e) "Consumer lease" means a lease that a lessor regularly engaged in the 45 business of leasing or selling makes to a lessee who is an individual and 46 who takes under the lease primarily for a personal, family or household 47 purpose, if the total payments to be made under the lease contract, 48 excluding payments for options to renew or buy, do not exceed twenty-five 49 thousand dollars ($25,000). 50 (f) "Fault" means wrongful act, omission, breach or default. 51 (g) "Finance lease" means a lease with respect to which: 52 (i) The lessor does not select, manufacture, or supply the goods; 53 (ii) The lessor acquires the goods or the right to possession and 21 1 use of the goods in connection with the lease; and 2 (iii) One of the following occurs: 3 (A) The lessee receives a copy of the contract by which the 4 lessor acquired the goods or the right to possession and use of 5 the goods before signing the lease contract; 6 (B) The lessee's approval of the contract by which the lessor 7 acquired the goods or the right to possession and use of the 8 goods is a condition to effectiveness of the lease contract; 9 (C) The lessee, before signing the lease contract, receives an 10 accurate and complete statement designating the promises and 11 warranties, and any disclaimers of warranties, limitations or 12 modifications of remedies, or liquidated damages, including 13 those of a third party, such as the manufacturer of the goods, 14 provided to the lessor by the person supplying the goods in con- 15 nection with or as part of the contract by which the lessor 16 acquired the goods or the right to possession and use of the 17 goods; or 18 (D) If the lease is not a consumer lease, the lessor, before 19 the lessee signs the lease contract, informs the lessee in writ- 20 ing: 21 a. Of the identity of the person supplying the goods to 22 the lessor, unless the lessee has selected that person and 23 directed the lessor to acquire the goods or the right to 24 possession and use of the goods from that person; 25 b. That the lessee is entitled under this chapter to the 26 promises and warranties, including those of any third 27 party, provided to the lessor by the person supplying the 28 goods in connection with or as part of the contract by 29 which the lessor acquired the goods or the right to posses- 30 sion and use of the goods; and 31 c. That the lessee may communicate with the person supply- 32 ing the goods to the lessor and receive an accurate and 33 complete statement of those promises and warranties, 34 including any disclaimers and limitations of them or of 35 remedies. 36 (h) "Goods" means all things that are movable at the time of identifica- 37 tion to the lease contract, or are fixtures (section 28-12-309), but the 38 term does not include money, documents, instruments, accounts, chattel 39 paper, general intangibles, or minerals or the like, including oil and 40 gas, before extraction. The term also includes the unborn young of ani- 41 mals. 42 (i) "Installment lease contract" means a lease contract that authorizes 43 or requires the delivery of goods in separate lots to be separately 44 accepted, even though the lease contract contains a clause "each delivery 45 is a separate lease" or its equivalent. 46 (j) "Lease" means a transfer of the right to possession and use of goods 47 for a term in return for consideration, but a sale, including a sale on 48 approval or a sale or return, or retention or creation of a security 49 interest is not a lease. Unless the context clearly indicates otherwise, 50 the term includes a sublease. 51 (k) "Lease agreement" means the bargain, with respect to the lease, of 52 the lessor and the lessee in fact as found in their language or by impli- 53 cation from other circumstances including course of dealing or usage of 54 trade or course of performance as provided in this chapter. Unless the 55 context clearly indicates otherwise, the term includes a sublease agree- 22 1 ment. 2 (l) "Lease contract" means the total legal obligation that results from 3 the lease agreement as affected by this chapter and any other applicable 4 rules of law. Unless the context clearly indicates otherwise, the term 5 includes a sublease contract. 6 (m) "Leasehold interest" means the interest of the lessor or the lessee 7 under a lease contract. 8 (n) "Lessee" means a person who acquires the right to possession and use 9 of goods under a lease. Unless the context clearly indicates otherwise, 10 the term includes a sublessee. 11 (o) "Lessee in ordinary course of business" means a person who in good 12 faith and without knowledge that the lease to him is in violation of the 13 ownership rights or security interest or leasehold interest of a third 14 party in the goods leases in ordinary course from a person in the business 15 of selling or leasing goods of that kind but does not include a pawnbro- 16 ker. "Leasing" may be for cash or by exchange of other property or on 17 secured or unsecured credit and includes receiving goods or documents of 18 title under a preexisting lease contract but does not include a transfer 19 in bulk or as security for or in total or partial satisfaction of a money 20 debt. 21 (p) "Lessor" means a person who transfers the right to possession and use 22 of goods under a lease. Unless the context clearly indicates otherwise, 23 the term includes a sublessor. 24 (q) "Lessor's residual interest" means the lessor's interest in the goods 25 after expiration, termination or cancellation of the lease contract. 26 (r) "Lien" means a charge against or interest in goods to secure payment 27 of a debt or performance of an obligation, but the term does not include a 28 security interest. 29 (s) "Lot" means a parcel or a single article that is the subject matter 30 of a separate lease or delivery, whether or not it is sufficient to per- 31 form the lease contract. 32 (t) "Merchant lessee" means a lessee that is a merchant with respect to 33 goods of the kind subject to the lease. 34 (u) "Present value" means the amount as of a date certain of one (1) or 35 more sums payable in the future, discounted to the date certain. The dis- 36 count is determined by the interest rate specified by the parties if the 37 rate was not manifestly unreasonable at the time the transaction was 38 entered into; otherwise, the discount is determined by a commercially rea- 39 sonable rate that takes into account the facts and circumstances of each 40 case at the time the transaction was entered into. 41 (v) "Purchase" includes taking by sale, lease, mortgage, security inter- 42 est, pledge, gift or any other voluntary transaction creating an interest 43 in goods. 44 (w) "Sublease" means a lease of goods the right to possession and use of 45 which was acquired by the lessor as a lessee under an existing lease. 46 (x) "Supplier" means a person from whom a lessor buys or leases goods to 47 be leased under a finance lease. 48 (y) "Supply contract" means a contract under which a lessor buys or 49 leases goods to be leased. 50 (z) "Termination" occurs when either party pursuant to a power created by 51 agreement or law puts an end to the lease contract otherwise than for 52 default. 53 (2) Other definitions applying to this chapter and the sections in which 54 they appear are: 55 "Accessions." Section 28-12-310(1). 23 1 "Construction mortgage." Section 28-12-309(1)(d). 2 "Encumbrance." Section 28-12-309(1)(e). 3 "Fixtures." Section 28-12-309(1)(a). 4 "Fixture filing." Section 28-12-309(1)(b). 5 "Purchase money lease." Section 28-12-309(1)(c). 6 (3) The following definitions in other chapters apply to this chapter: 7 "Account." Section 28-9-102(a)(2). 8 "Between merchants." Section 28-2-104(3). 9 "Buyer." Section 28-2-103(1)(a). 10 "Chattel paper." Section 28-9-102(a)(11). 11 "Consumer goods." Section 28-9-102(a)(23). 12 "Document." Section 28-9-102(a)(30). 13 "Entrusting." Section 28-2-403(3). 14 "General intangible." Section 28-9-102(a)(42). 15 "Good faith." Section 28-1-201(b)(1920). 16 "Instrument." Section 28-9-102(a)(47). 17 "Merchant." Section 28-2-104(1). 18 "Mortgage." Section 28-9-102(a)(55). 19 "Pursuant to commitment." Section 28-9-102(a)(68). 20 "Receipt." Section 28-2-103(1)(c). 21 "Sale." Section 28-2-106(1). 22 "Sale on approval." Section 28-2-326. 23 "Sale or return." Section 28-2-326. 24 "Seller." Section 28-2-103(1)(d). 25 (4) In addition, chapter 1, title 28, contains general definitions and 26 principles of construction and interpretation applicable throughout this chap- 27 ter. 28 SECTION 37. That Section 28-12-207, Idaho Code, be, and the same is 29 hereby repealed. 30 SECTION 38. That Section 28-12-501, Idaho Code, be, and the same is 31 hereby amended to read as follows: 32 28-12-501. DEFAULT -- PROCEDURE. (1) Whether the lessor or the lessee is 33 in default under a lease contract is determined by the lease agreement and 34 this chapter. 35 (2) If the lessor or the lessee is in default under the lease contract, 36 the party seeking enforcement has rights and remedies as provided in this 37 chapter and, except as limited by this chapter, as provided in the lease 38 agreement. 39 (3) If the lessor or the lessee is in default under the lease contract, 40 the party seeking enforcement may reduce the party's claim to judgment, or 41 otherwise enforce the lease contract by self-help or any available judicial 42 procedure or nonjudicial procedure, including administrative proceeding, arbi- 43 tration, or the like, in accordance with the provisions of this chapter. 44 (4) Except as otherwise provided in section 28-1-106(1)305(a) or this 45 chapter or the lease agreement, the rights and remedies referred to in subsec- 46 tions (2) and (3) of this section are cumulative. 47 (5) If the lease agreement covers both real property and goods, the party 48 seeking enforcement may proceed under this part as to the goods, or under 49 other applicable law as to both the real property and the goods in accordance 50 with that party's rights and remedies in respect of the real property, in 51 which case the provisions of this part do not apply. 24 1 SECTION 39. That Section 28-12-518, Idaho Code, be, and the same is 2 hereby amended to read as follows: 3 28-12-518. COVER -- SUBSTITUTE GOODS. (1) After a default by a lessor 4 under the lease contract of the type described in section 28-12-508(1), or, if 5 agreed, after other default by the lessor, the lessee may cover by making any 6 purchase or lease of or contract to purchase or lease goods in substitution 7 for those due from the lessor. 8 (2) Except as otherwise provided with respect to damages liquidated in 9 the lease agreement (section 28-12-504) or otherwise determined pursuant to 10 agreement of the parties (sections 28-1-102(3)302 and 28-12-503), if a 11 lessee's cover is by a lease agreement substantially similar to the original 12 lease agreement and the new lease agreement is made in good faith and in a 13 commercially reasonable manner, the lessee may recover from the lessor as dam- 14 ages (i) the present value, as of the date of the commencement of the term of 15 the new lease agreement, of the rent under the new lease agreement applicable 16 to that period of the new lease term which is comparable to the then remaining 17 term of the original lease agreement minus the present value as of the same 18 date of the total rent for the then remaining lease term of the original lease 19 agreement, and (ii) any incidental or consequential damages, less expenses 20 saved in consequence of the lessor's default. 21 (3) If a lessee's cover is by lease agreement that for any reason does 22 not qualify for treatment under the provisions of subsection (2) of this sec- 23 tion, or is by purchase or otherwise, the lessee may recover from the lessor 24 as if the lessee had elected not to cover and section 28-12-519 governs. 25 SECTION 40. That Section 28-12-519, Idaho Code, be, and the same is 26 hereby amended to read as follows: 27 28-12-519. LESSEE'S DAMAGES FOR NONDELIVERY, REPUDIATION, DEFAULT, AND 28 BREACH OF WARRANTY IN REGARD TO ACCEPTED GOODS. (1) Except as otherwise pro- 29 vided with respect to damages liquidated in the lease agreement 30 (section 28-12-504) or otherwise determined pursuant to agreement of the par- 31 ties (sections 28-1-102(3)302 and 28-12-503), if a lessee elects not to cover 32 or a lessee elects to cover and the cover is by lease agreement that for any 33 reason does not qualify for treatment under section 28-12-518(2), or is by 34 purchase or otherwise, the measure of damages for nondelivery or repudiation 35 by the lessor or for rejection or revocation of acceptance by the lessee is 36 the present value, as of the date of the default, of the then market rent 37 minus the present value as of the same date of the original rent, computed for 38 the remaining lease term of the original lease agreement, together with inci- 39 dental and consequential damages, less expenses saved in consequence of the 40 lessor's default. 41 (2) Market rent is to be determined as of the place for tender or, in 42 cases of rejection after arrival or revocation of acceptance, as of the place 43 of arrival. 44 (3) Except as otherwise agreed, if the lessee has accepted goods and 45 given notification (section 28-12-516(3)), the measure of damages for noncon- 46 forming tender or delivery or other default by a lessor is the loss resulting 47 in the ordinary course of events from the lessor's default as determined in 48 any manner that is reasonable together with incidental and consequential dam- 49 ages, less expenses saved in consequence of the lessor's default. 50 (4) Except as otherwise agreed, the measure of damages for breach of war- 51 ranty is the present value at the time and place of acceptance of the differ- 52 ence between the value of the use of the goods accepted and the value if they 25 1 had been as warranted for the lease term, unless special circumstances show 2 proximate damages of a different amount, together with incidental and conse- 3 quential damages, less expenses saved in consequence of the lessor's default 4 or breach of warranty. 5 SECTION 41. That Section 28-12-527, Idaho Code, be, and the same is 6 hereby amended to read as follows: 7 28-12-527. LESSOR'S RIGHTS TO DISPOSE OF GOODS. (1) After a default by a 8 lessee under the lease contract of the type described in section 28-12-523(1) 9 or 28-12-523(3)(a) or after the lessor refuses to deliver or takes possession 10 of goods (section 28-12-525 or 28-12-526), or, if agreed, after other default 11 by a lessee, the lessor may dispose of the goods concerned or the undelivered 12 balance thereof by lease, sale or otherwise. 13 (2) Except as otherwise provided with respect to damages liquidated in 14 the lease agreement (section 28-12-504) or otherwise determined pursuant to 15 agreement of the parties (sections 28-1-102(3)302 and 28-12-503), if the dis- 16 position is by lease agreement substantially similar to the original lease 17 agreement and the new lease agreement is made in good faith and in a commer- 18 cially reasonable manner, the lessor may recover from the lessee as damages 19 (i) accrued and unpaid rent as of the date of the commencement of the term of 20 the new lease agreement, (ii) the present value, as of the same date, of the 21 total rent for the then remaining lease term of the original lease agreement 22 minus the present value, as of the same date, of the rent under the new lease 23 agreement applicable to that period of the new lease term which is comparable 24 to the then remaining term of the original lease agreement, and (iii) any 25 incidental damages allowed under section 28-12-530, less expenses saved in 26 consequence of the lessee's default. 27 (3) If the lessor's disposition is by lease agreement that for any reason 28 does not qualify for treatment under the provisions of subsection (2) of this 29 section, or is by sale or otherwise, the lessor may recover from the lessee as 30 if the lessor had elected not to dispose of the goods and section 28-12-528 31 governs. 32 (4) A subsequent buyer or lessee who buys or leases from the lessor in 33 good faith for value as a result of a disposition under the provisions of this 34 section takes the goods free of the original lease contract and any rights of 35 the original lessee even though the lessor fails to comply with one or more of 36 the requirements of this chapter. 37 (5) The lessor is not accountable to the lessee for any profit made on 38 any disposition. A lessee who has rightfully rejected or justifiably revoked 39 acceptance shall account to the lessor for any excess over the amount of the 40 lessee's security interest (section 28-12-508(5)). 41 SECTION 42. That Section 28-12-528, Idaho Code, be, and the same is 42 hereby amended to read as follows: 43 28-12-528. LESSOR'S DAMAGES FOR NONACCEPTANCE, FAILURE TO PAY, REPUDIA- 44 TION, OR OTHER DEFAULT. (1) Except as otherwise provided with respect to dam- 45 ages liquidated in the lease agreement (section 28-12-504) or otherwise deter- 46 mined pursuant to agreement of the parties (sections 28-1-102(3)302 and 47 28-12-503), if a lessor elects to retain the goods or a lessor elects to dis- 48 pose of the goods and the disposition is by lease agreement that for any rea- 49 son does not qualify for treatment under section 28-12-527(2), or is by sale 50 or otherwise, the lessor may recover from the lessee as damages for a default 51 of the type described in section 28-12-523(1) or 28-12-523(3)(a), or, if 26 1 agreed, for other default of the lessee, (i) accrued and unpaid rent as of the 2 date of default if the lessee has never taken possession of the goods, or, if 3 the lessee has taken possession of the goods, as of the date the lessor 4 repossesses the goods or an earlier date on which the lessee makes a tender of 5 the goods to the lessor, (ii) the present value as of the date determined 6 under clause (i) of this subsection, of the total rent for the then remaining 7 lease term of the original lease agreement minus the present value as of the 8 same date of the market rent at the place where the goods are located computed 9 for the same lease term, and (iii) any incidental damages allowed under sec- 10 tion 28-12-530, less expenses saved in consequence of the lessee's default. 11 (2) If the measure of damages provided in subsection (1) of this section 12 is inadequate to put a lessor in as good a position as performance would have, 13 the measure of damages is the present value of the profit, including reason- 14 able overhead, the lessor would have made from full performance by the lessee, 15 together with any incidental damages allowed under section 28-12-530, due 16 allowance for costs reasonably incurred and due credit for payments or pro- 17 ceeds of disposition. 18 SECTION 43. That Section 28-50-103, Idaho Code, be, and the same is 19 hereby amended to read as follows: 20 28-50-103. SCOPE. (a) Except as otherwise provided in subsection (b) of 21 this section, this chapter applies to electronic records and electronic signa- 22 tures relating to a transaction. 23 (b) This chapter does not apply to a transaction to the extent it is gov- 24 erned by: 25 (1) A law governing the creation and execution of wills, codicils or tes- 26 tamentary trusts; and 27 (2) The uniform commercial code, other than sections 28-1-107 and2828-1-20628-1-306, Idaho Code, chapter 2, title 28, Idaho Code (uniform 29 commercial code -- sales), and chapter 12, title 28, Idaho Code (uniform 30 commercial code -- leases):. 31 (c) This chapter applies to an electronic record or electronic signature 32 otherwise excluded from the application of this chapter under subsection (b) 33 of this section to the extent it is governed by a law other than those speci- 34 fied in subsection (b) of this section. 35 (d) A transaction subject to this chapter is also subject to other appli- 36 cable substantive law. 37 SECTION 44. That Section 28-50-116, Idaho Code, be, and the same is 38 hereby amended to read as follows: 39 28-50-116. TRANSFERABLE RECORD. (a) In this section, "transferable 40 record" means an electronic record that: 41 (1) Would be a note under chapter 3, title 28, Idaho Code (uniform com- 42 mercial code -- negotiable instruments) or a document under chapter 7, 43 title 28, Idaho Code (uniform commercial code -- warehouse receipts, bills 44 of lading and other documents of title) if the electronic record were in 45 writing; and 46 (2) The issuer of the electronic record expressly has agreed is a trans- 47 ferable record. 48 (b) A person has control of a transferable record if a system employed 49 for evidencing the transfer of interests in the transferable record reliably 50 establishes that person as the person to which the transferable record was 51 issued or transferred. 27 1 (c) A system satisfies subsection (b) of this section, and a person is 2 deemed to have control of a transferable record, if the transferable record is 3 created, stored and assigned in such a manner that: 4 (1) A single authoritative copy of the transferable record exists which 5 is unique, identifiable, and, except as otherwise provided in paragraphs 6 (4), (5) and (6) of this subsection, unalterable; 7 (2) The authoritative copy identifies the person asserting control as: 8 (A) The person to which the transferable record was issued; or 9 (B) If the authoritative copy indicates that the transferable record 10 has been transferred, the person to which the transferable record was 11 most recently transferred; 12 (3) The authoritative copy is communicated to and maintained by the per- 13 son asserting control or its designated custodian; 14 (4) Copies or revisions that add or change an identified assignee of the 15 authoritative copy can be made only with the consent of the person assert- 16 ing control; 17 (5) Each copy of the authoritative copy and any copy of a copy is readily 18 identifiable as a copy that is not the authoritative copy; and 19 (6) Any revision of the authoritative copy is readily identifiable as 20 authorized or unauthorized. 21 (d) Except as otherwise agreed, a person having control of a transferable 22 record is the holder, as defined in section 28-1-201(b)(201), Idaho Code, of 23 the transferable record and has the same rights and defenses as a holder of an 24 equivalent record or writing under chapters 1 through 12, title 28, Idaho Code 25 (uniform commercial code), including, if the applicable statutory requirements 26 under section 28-3-302(1), 28-7-501 or 28-9-330, Idaho Code, are satisfied, 27 the rights and defenses of a holder in due course, a holder to which a nego- 28 tiable document of title has been duly negotiated, or a purchaser, respec- 29 tively. Delivery, possession and indorsement are not required to obtain or 30 exercise any of the rights under this subsection. 31 (e) Except as otherwise agreed, an obligor under a transferable record 32 has the same rights and defenses as an equivalent obligor under equivalent 33 records or writings under chapters 1 through 12, title 28, Idaho Code (uniform 34 commercial code). 35 (f) If requested by a person against which enforcement is sought, the 36 person seeking to enforce the transferable record shall provide reasonable 37 proof that the person is in control of the transferable record. Proof may 38 include access to the authoritative copy of the transferable record and 39 related business records sufficient to review the terms of the transferable 40 record and to establish the identity of the person having control of the 41 transferable record.
STATEMENT OF PURPOSE RS 13557 This legislation revises and updates Article 1 of the Uniform Commercial Code and makes Article 1 consistent with other revised articles of the Uniform Commercial Code. FISCAL IMPACT No fiscal impact on the General Fund. Contact Name: Senator Bart M. Davis (208) 332-1305 Dale G. Higer, Uniform Law Commissioner (208) 387-4288 Rex Blackburn, Uniform Law Commissioner (208) 489-8989 STATEMENT OF PURPOSE/FISCAL NOTE S 1228