First Regular Session 115th General Assembly (2007)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
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    SENATE ENROLLED ACT No. 419



     AN ACT to amend the Indiana Code concerning commercial law.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 26-1-1-101; (07)SE0419.1.1. -->
    SECTION 1. IC 26-1-1-101 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 101. (1) IC 26-1 shall be known and may be cited as Uniform Commercial Code.
     (2) IC 26-1 applies to a transaction to the extent that it is governed by another article of the Uniform Commercial Code.
SOURCE: IC 26-1-1-108.2; (07)SE0419.1.2. -->     SECTION 2. IC 26-1-1-108.2 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 108.2. This article modifies, limits, and supersedes the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7001 et seq.). However, this article does not:
        (a) modify, limit, or supersede 15 U.S.C. 7001(c); or
        (b) authorize the electronic delivery of a notice described in 15 U.S.C. 7003(b).

SOURCE: IC 26-1-1-201; (07)SE0419.1.3. -->     SECTION 3. IC 26-1-1-201 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 201. Subject to additional definitions contained in IC 26-1-2 through IC 26-1-10 which are applicable to specific provisions, and unless the context otherwise requires, in IC 26-1:
        (1) "Action" in the sense of a judicial proceeding includes recoupment, counterclaim, setoff, suit in equity, and any other proceedings in which rights are determined.
        (2) "Aggrieved party" means a party entitled to resort to a remedy.
        (3) "Agreement" means the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in IC 26-1-1-205. and IC 26-1-2-208. Whether an agreement has legal consequences is determined by the provisions of IC 26-1, if applicable; otherwise by the law of contracts (IC 26-1-1-103). (Compare "Contract".)
        (4) "Bank" means any person engaged in the business of banking.
        (5) "Bearer" means the person:
             (A) in control of a negotiable electronic document of title; or
            (B)
in possession of an a negotiable instrument, a negotiable tangible document of title, or a certificated security payable to bearer or endorsed in blank.
        (6) "Bill of lading" means a document of title evidencing the receipt of goods for shipment issued by a person engaged in the business of directly or indirectly transporting or forwarding goods. and The term does not include a warehouse receipt. The term includes an airbill. "Airbill" means a document serving for air transportation as a bill of lading does for marine or rail transportation, and includes an air consignment note or air waybill.
        (7) "Branch" includes a separately incorporated foreign branch of a bank.
        (8) "Burden of establishing" a fact means the burden of persuading the triers of fact that the existence of the fact is more probable than its nonexistence.
        (9) "Buyer in ordinary course of business" means a person that buys goods in good faith without knowledge that the sale violates the rights of another person in the goods, and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind. A person buys goods in the ordinary course of business if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices. A person that sells oil, gas, or other minerals at the wellhead or minehead is a person in the business of selling goods of that kind. A buyer in ordinary course of business may buy for cash, by exchange of other property, or on secured or unsecured credit, and may require goods or documents of title under a preexisting contract for sale. Only a buyer that takes possession

of the goods or has a right to recover the goods from that seller under IC 26-1-2 may be a buyer in ordinary course of business. A person that acquires goods in a transfer in bulk or as security for or total or partial satisfaction of a money debt is not a buyer in ordinary course of business.
        (10) "Conspicuous". A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it. A printed heading in capitals (as: NONNEGOTIABLE BILL OF LADING) is conspicuous. Language in the body of a form is conspicuous if it is in larger or other contrasting type or color. But in a telegram any stated term is conspicuous. Whether a term or clause is conspicuous or not is for decision by the court.
        (11) "Contract" means the total legal obligation which results from the parties' agreement as affected by this Act and any other applicable rules of law. (Compare "Agreement".)
        (12) "Creditor" includes a general creditor, a secured creditor, a lien creditor and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity, and an executor or administrator of an insolvent debtor's or assignor's estate.
        (13) "Defendant" includes a person in the position of defendant in a cross-action or counterclaim.
        (14) "Delivery" means the following:
            (A) With respect to an electronic document of title, voluntary transfer of control.
            (B)
With respect to instruments, tangible documents of title, chattel paper, or certificated securities, means voluntary transfer of possession.
        (15) "Document of title" includes bill of lading, dock warrant, dock receipt, warehouse receipt, or order for the delivery of goods and also any other document, which means a record that:
            (A)
in the regular course of business or financing, is treated as adequately evidencing that the person in possession or control of it the record is entitled to receive, control, hold, and dispose of the document record and the goods it covers; To be a document of title, a document must purport and
            (B) purports
to be issued by or addressed to a bailee and purport purports to cover goods in the bailee's possession which are either identified or are fungible portions of an identified mass.
         The term includes a bill of lading, transport document, dock

warrant, dock receipt, warehouse receipt, or order for delivery of goods. An electronic document of title means a document of title evidenced by a record consisting of information stored in an electronic medium. A tangible document of title means a document of title evidenced by a record consisting of information that is inscribed on a tangible medium.
        (16) "Fault" means wrongful act, omission, or breach.
        (17) "Fungible" with respect to goods or securities means goods or securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit. Goods which are not fungible shall be deemed fungible for the purposes of IC 26-1 to the extent that under a particular agreement or document unlike units are treated as equivalents.
        (18) "Genuine" means free of forgery or counterfeiting.
        (19) "Good faith" means honesty in fact in the conduct or transaction concerned.
        (20) "Holder" with respect to means:
            (A) the person in possession of
a negotiable instrument means the person in possession if the instrument that is payable either to bearer or in the case of an instrument, payable to an identified person if the identified person is in possession of the instrument; "Holder" with respect to
             (B) the person in possession of a negotiable tangible document of title means the person in possession if the goods are deliverable either to bearer or to the order of the person in possession; or
            (C) the person in control of a negotiable electronic document of title.

        (21) To "honor" is to pay or to accept and pay or where a credit so engages to purchase or discount a draft complying with the terms of the credit.
        (22) "Insolvency proceedings" includes any assignment for the benefit of creditors or other proceedings intended to liquidate or rehabilitate the estate of the person involved.
        (23) A person is "insolvent" who either has ceased to pay his the person's debts in the ordinary course of business or cannot pay his the person's debts as they become due or is insolvent within the meaning of the federal bankruptcy law.
        (24) "Money" means a medium of exchange authorized or adopted by a domestic or foreign government and includes a monetary unit of account established by an intergovernmental

organization or by agreement between two (2) or more nations.
        (25) A person has "notice" of a fact when:
            (a) he the person has actual knowledge of it;
            (b) he the person has received a notice or notification of it; or
            (c) from all the facts and circumstances known to him the person at the time in question, he the person has reason to know that it exists.
        A person "knows" or has "knowledge" of a fact when he the person has actual knowledge of it. "Discover" or "learn" or a word or phrase of similar import refers to knowledge rather than to reason to know. The time and circumstances under which a notice or notification may cease to be effective are not determined by IC 26-1.
        (26) A person "notifies" or "gives" a notice or notification to another by taking such steps as may be reasonably required to inform the other in ordinary course whether or not such other actually comes to know of it. A person "receives" a notice or notification when:
            (a) it comes to his the person's attention; or
            (b) it is duly delivered at the place of business through which the contract was made or at any other place held out by him the person as the place for receipt of such communications.
        (27) Notice, knowledge, or a notice of notification received by an organization is effective for a particular transaction from the time when it is brought to the attention of the individual conducting that transaction and, in any event, from the time when it would have been brought to his the person's attention if the organization had exercised due diligence. An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines. Due diligence does not require an individual acting for the organization to communicate information unless such communication is part of his the person's regular duties or unless he the person has reason to know of the transaction and that the transaction would be materially affected by the information.
        (28) "Organization" includes a corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership or association, two (2) or more persons having a joint or common interest, or any other legal or commercial entity.
        (29) "Party", as distinct from "third party", means a person who has engaged in a transaction or made an agreement within

IC 26-1.
        (30) "Person" includes an individual or an organization. (See IC 26-1-1-102.)
        (31) "Presumption" or "presumed" means that the trier of fact must find the existence of the fact presumed unless and until evidence is introduced which would support a finding of its nonexistence.
        (32) "Purchase" includes taking by sale, discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift, or any other voluntary transaction creating an interest in property.
        (33) "Purchaser" means a person who takes by purchase.
        (33a) "Registered mail" includes certified mail.
        (34) "Remedy" means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal.
        (35) "Representative" includes an agent, an officer of a corporation or association, and a trustee, executor, or administrator of an estate, or any other person empowered to act for another.
        (36) "Rights" includes remedies.
        (37) "Security interest" means an interest in personal property or fixtures which secures payment or performance of an obligation. The term also includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction that is subject to IC 26-1-9.1. The special property interest of a buyer of goods on identification of such goods to a contract for sale under IC 26-1-2-401 is not a security interest, but a buyer may also acquire a security interest by complying with IC 26-1-9.1. Except as otherwise provided in IC 26-1-2-505, the right of a seller or lessor of goods under IC 26-1-2 or IC 26-1-2.1 to retain or acquire possession of the goods is not a "security interest", but a seller or lessor may also acquire a "security interest" by complying with IC 26-1-9.1. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer (IC 26-1-2-401) is limited in effect to a reservation of a "security interest". Whether a transaction creates a lease or security interest is determined by the facts of each case. However, a transaction creates a security interest if the consideration the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease not subject to termination by the lessee and:
            (a) the original term of the lease is equal to or greater than the

remaining economic life of the goods;
            (b) the lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods;
            (c) the lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement; or
            (d) the lessee has an option to become the owner of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement.
        A transaction does not create a security interest merely because it provides that:
            (a) the present value of the consideration the lessee is obligated to pay the lessor for the right to possession and use of the goods is substantially equal to or is greater than the fair market value of the goods at the time the lease is entered into;
            (b) the lessee assumes risk of loss of the goods, or agrees to pay taxes, insurance, filing, recording, or registration fees, or service or maintenance costs with respect to the goods;
            (c) the lessee has an option to renew the lease or to become the owner of the goods;
            (d) the lessee has an option to renew the lease for a fixed rent that is equal to or greater than the reasonably predictable fair market rent for the use of the goods for the term of the renewal at the time the option is to be performed; or
            (e) the lessee has an option to become the owner of the goods for a fixed price that is equal to or greater than the reasonably predictable fair market value of the goods at the time the option is to be performed.
        For purposes of this subsection:
            (x) Additional consideration is not nominal if:
                (i) when the option to renew the lease is granted to the lessee the rent is stated to be the fair market rent for the use of the goods for the term of the renewal determined at the time the option is to be performed; or
                (ii) when the option to become the owner of the goods is granted to the lessee the price is stated to be the fair market value of the goods determined at the time the option is to be performed.
            Additional consideration is nominal if it is less than the lessee's reasonably predictable cost of performing under the

lease agreement if the option is not exercised.
            (y) "Reasonably predictable" and "remaining economic life of the goods" are to be determined with reference to the facts and circumstances at the time the transaction is entered into.
            (z) "Present value" means the amount as of a date certain of one (1) or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate is not manifestly unreasonable at the time the transaction is entered into. Otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.
        (38) "Send" in connection with any writing or notice means to deposit in the mail or deliver for transmission by any other usual means of communication with postage or cost of transmission provided for and properly addressed and, in the case of an instrument, to an address specified thereon or otherwise agreed or, if there be none, to any address reasonable under the circumstances. The receipt of any writing or notice within the time at which it would have arrived if properly sent has the effect of a proper sending.
        (39) "Signed" includes any symbol executed or adopted by a party with present intention to authenticate a writing.
        (40) "Surety" includes guarantor.
        (41) "Telegram" includes a message transmitted by radio, teletype, cable, any mechanical method of transmission, or the like.
        (42) "Term" means that portion of an agreement which relates to a particular matter.
        (43) "Unauthorized" signature means one made without actual, implied, or apparent authority and includes a forgery.
        (44) "Value". Except as otherwise provided with respect to negotiable instruments and bank collections (IC 26-1-3.1-303, IC 26-1-4-208, and IC 26-1-4-209) a person gives value for rights if he the person acquires them:
            (a) in return for a binding commitment to extend credit or for the extension of immediately available credit whether or not drawn upon and whether or not a chargeback is provided for in the event of difficulties in collection;
            (b) as security for or in total or partial satisfaction of a preexisting claim;


            (c) by accepting delivery pursuant to a preexisting contract for purchase; or
            (d) generally, in return for any consideration sufficient to support a simple contract.
        (45) "Warehouse receipt" means a receipt document of title issued by a person engaged in the business of storing goods for hire.
        (46) "Written" or "writing" includes printing, typewriting, or any other intentional reduction to tangible form.
SOURCE: IC 26-1-1-205; (07)SE0419.1.4. -->     SECTION 4. IC 26-1-1-205 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 205. (1) A course of dealing is a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
     (2) A course of performance is a sequence of conduct between the parties to a particular transaction that exists if the:
        (a) agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and
        (b) other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.

    (2) (3) A usage of trade is any practice or method of dealing having such regularity of observance in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage are to be proved as facts. If it is established that such a usage is embodied in a written trade code or similar writing the interpretation of the writing is for the court.
    (3) (4) A course of dealing or course of performance between parties and any usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware give particular meaning to and supplement or qualify terms of an agreement.
    (4) (5) Except as provided in subsection (8), the express terms of an agreement and an applicable course of dealing, course of performance, or usage of trade shall be construed wherever reasonable as consistent with each other. but when If such a construction is unreasonable:
         (a) express terms control both prevail over course of dealing and course of performance;
        (b) course of performance prevails over course of dealing
and usage of trade; and
         (c) course of dealing controls prevails over usage of trade.
    (5) (6) An applicable usage of trade in the place where any part of performance is to occur shall be used in interpreting the agreement as to that part of the performance.
    (6) (7) Evidence of a relevant usage of trade offered by one party is not admissible unless and until he the party has given the other party such notice as the court finds sufficient to prevent unfair surprise to the latter.
     (8) Subject to IC 26-1-2-209, a course of performance is relevant to show a waiver or modification of any term inconsistent with the course of performance.
SOURCE: IC 26-1-1-301; (07)SE0419.1.5. -->     SECTION 5. IC 26-1-1-301 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 301. (1) Except as otherwise provided in this section, if a transaction bears a reasonable relation to Indiana and also to another state or nation, the parties may agree that the law either of Indiana or of the other state or nation shall govern their rights and duties.
    (2) In the absence of an agreement under subsection (1), and except as provided in subsection (3), IC 26-1 applies to transactions bearing an appropriate relation to Indiana.
    (3) If any of the following provisions specifies the applicable law, that provision governs, and a contrary agreement is effective only to the extent permitted by the law so specified:
        (a) IC 26-1-2-402.
        (b) IC 26-1-2.1-105 and IC 26-1-2.1-106.
        (c) IC 26-1-4-102.
        (d) IC 26-1-4.1-507.
        (e) IC 26-1-5.1-116.
        (f) IC 26-1-8.1-110.
        (g) IC 26-1-9.1-301 through IC 26-1-9.1-307.

SOURCE: IC 26-1-1-302; (07)SE0419.1.6. -->     SECTION 6. IC 26-1-1-302 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 302. (1) An obligation may be issued as subordinated to performance of another obligation of the person obligated, or a creditor may subordinate the creditor's right to performance of an obligation by agreement with either the person obligated or another creditor of the person obligated.
     (2) Subordination does not create a security interest as against either the common debtor or a subordinated creditor.
SOURCE: IC 26-1-2-103; (07)SE0419.1.7. -->     SECTION 7. IC 26-1-2-103 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 103. (1) In IC 26-1-2,

unless the context otherwise requires:
        (a) "Buyer" means a person who buys or contracts to buy goods.
        (b) "Good faith" in the case of a merchant means honesty in fact and observance of reasonable commercial standards of fair dealing in the trade.
        (c) "Receipt" of goods means taking physical possession of them.
        (d) "Seller" means a person who sells or contracts to sell goods.
    (2) Other definitions applying to IC 26-1-2, or to specified parts thereof, and the sections in which they appear are:
        "Acceptance". IC 26-1-2-606.
        "Banker's credit". IC 26-1-2-325.
        "Between merchants". IC 26-1-2-104.
        "Cancellation". IC 26-1-2-106(4).
        "Commercial unit". IC 26-1-2-105.
        "Confirmed credit". IC 26-1-2-325.
        "Conforming to contract". IC 26-1-2-106.
        "Contract for sale". IC 26-1-2-106.
        "Cover". IC 26-1-2-712.
        "Entrusting". IC 26-1-2-403.
        "Financing agency". IC 26-1-2-104.
        "Future goods". IC 26-1-2-105.
        "Goods". IC 26-1-2-105.
        "Identification". IC 26-1-2-501.
        "Installment contract". IC 26-1-2-612.
        "Letter of credit". IC 26-1-2-325.
        "Lot". IC 26-1-2-105.
        "Merchant". IC 26-1-2-104.
        "Overseas". IC 26-1-2-323.
        "Person in the position of seller". IC 26-1-2-707.
        "Present sale". IC 26-1-2-106.
        "Sale". IC 26-1-2-106.
        "Sale on approval". IC 26-1-2-326.
        "Sale or return". IC 26-1-2-326.
        "Termination". IC 26-1-2-106.
    (3) "Control" as provided in IC 26-1-7-106 and the following definitions apply to IC 26-1-2:
        "Check". IC 26-1-3.1-104.
        "Consignee". IC 26-1-7-102.
        "Consignor". IC 26-1-7-102.
        "Consumer goods". IC 26-1-9.1-102.
        "Dishonor". IC 26-1-3.1-502.
        "Draft". IC 26-1-3.1-104.


    (4) In addition, IC 26-1-1 contains general definitions and principles of construction and interpretation applicable throughout IC 26-1-2.
SOURCE: IC 26-1-2-104; (07)SE0419.1.8. -->     SECTION 8. IC 26-1-2-104 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 104. (1) "Merchant" means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.
    (2) "Financing agency" means a bank, finance company, or other person who in the ordinary course of business makes advances against goods or documents of title or who by arrangement with either the seller or the buyer intervenes in ordinary course to make or collect payment due or claimed under the contract for sale, as by purchasing or paying the seller's draft or making advances against it or by merely taking it for collection whether or not documents of title accompany or are associated with the draft. "Financing agency" includes also a bank or other person who similarly intervenes between persons who are in the position of seller and buyer in respect to the goods (IC 26-1-2-707).
    (3) "Between merchants" means in any transaction with respect to which both parties are chargeable with the knowledge or skill of merchants.
SOURCE: IC 26-1-2-202; (07)SE0419.1.9. -->     SECTION 9. IC 26-1-2-202 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 202. Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:
        (a) by course of dealing or usage of trade (IC 26-1-1-205) or by course of performance (IC 26-1-2-208); (IC 26-1-1-205); and
        (b) by evidence of consistent additional terms, unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
SOURCE: IC 26-1-2-310; (07)SE0419.1.10. -->     SECTION 10. IC 26-1-2-310 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 310. Unless otherwise agreed:
        (a) payment is due at the time and place at which the buyer is to receive the goods, even though the place of shipment is the place of delivery; and
        (b) if the seller is authorized to send the goods, he may ship them under reservation and may tender the documents of title, but the buyer may inspect the goods after their arrival before payment is due, unless such inspection is inconsistent with the terms of the contract (IC 26-1-2-513); and
        (c) if delivery is authorized and made by way of documents of title otherwise than by subdivision (b), then payment is due, regardless of where the goods are to be received:
            (i)
at the time and place at which the buyer is to receive delivery of the tangible documents; regardless of where the goods are to be received or
            (ii) at the time the buyer is to receive delivery of the electronic documents and at the seller's place of business or, if none, the seller's residence;
and
        (d) where the seller is required or authorized to ship the goods on credit, the credit period runs from the time of shipment, but postdating the invoice or delaying its dispatch will correspondingly delay the starting of the credit period.
SOURCE: IC 26-1-2-323; (07)SE0419.1.11. -->     SECTION 11. IC 26-1-2-323 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 323. (1) Where the contract contemplates overseas shipment and contains a term C.I.F. or C.&F. or F.O.B. vessel, the seller, unless otherwise agreed, must obtain a negotiable bill of lading stating that the goods have been loaded on board or, in the case of a term C.I.F. or C.&F., received for shipment.
    (2) Where in a case within subsection (1) a tangible bill of lading has been issued in a set of parts, unless otherwise agreed, if the documents are not to be sent from abroad, the buyer may demand tender of the full set. Otherwise, only one (1) part of the bill of lading need be tendered. Even if the agreement expressly requires a full set:
        (a) due tender of a single part is acceptable within the provisions of IC 26-1-2-508(1) on cure of improper delivery; and
        (b) even though the full set is demanded, if the documents are sent from abroad, the person tendering an incomplete set may nevertheless require payments upon furnishing an indemnity which the buyer in good faith deems adequate.
    (3) A shipment by water or by air or a contract contemplating such shipment is "overseas" insofar as by usage of trade or agreement it is subject to the commercial, financing, or shipping practices characteristic of international deep water commerce.
SOURCE: IC 26-1-2-401; (07)SE0419.1.12. -->     SECTION 12. IC 26-1-2-401 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 401. Each provision of IC 26-1-2 with regard to the rights, obligations, and remedies of the

seller, the buyer, purchasers, or other third parties applies irrespective of title to the goods, except where the provision refers to such title. Insofar as situations are not covered by the other provisions of IC 26-1-2 and matters concerning title become material, the following rules apply:
        (1) Title to goods cannot pass under a contract for sale prior to their identification to the contract (IC 26-1-2-501), and unless otherwise explicitly agreed, the buyer acquires by their identification a special property as limited by IC 26-1. Any retention or reservation by the seller of the title (property) in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest. Subject to these provisions and to the provisions of IC 26-1-9.1 on secured transactions, title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties.
        (2) Unless otherwise explicitly agreed, title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time or place, and in particular despite any reservation of a security interest by the bill of lading:
            (a) if the contract requires or authorizes the seller to send the goods to the buyer but does not require him to deliver them at destination, title passes to the buyer at the time and place of shipment; but
            (b) if the contract requires delivery at destination, title passes on tender there.
        (3) Unless otherwise explicitly agreed, where delivery is to be made without moving the goods:
            (a) if the seller is to deliver a tangible document of title, title passes at the time when and the place where he delivers such documents and if the seller is to deliver an electronic document of title, title passes when the seller delivers the document; or
            (b) if the goods are at the time of contracting already identified and no documents of title are to be delivered, title passes at the time and place of contracting.
        (4) A rejection or other refusal by the buyer to receive or retain the goods, whether or not justified, or a justified revocation of acceptance revests title to the goods in the seller. Such revesting occurs by operation of law and is not a "sale".


SOURCE: IC 26-1-2-503; (07)SE0419.1.13. -->     SECTION 13. IC 26-1-2-503 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 503. (1) Tender of delivery requires that the seller put and hold conforming goods at the buyer's disposition and give the buyer any notification reasonably necessary to enable him to take delivery. The manner, time and place for tender are determined by the agreement and IC 26-1-2, and in particular:
        (a) tender must be at a reasonable hour, and if it is of goods they must be kept available for the period reasonably necessary to enable the buyer to take possession; but
        (b) unless otherwise agreed, the buyer must furnish facilities reasonably suited to the receipt of the goods.
    (2) Where the case is within IC 26-1-2-504 respecting shipment, tender requires that the seller comply with its provisions.
    (3) Where the seller is required to deliver at a particular destination, tender requires that he comply with subsection (1) and also in any appropriate case tender documents as described in subsections (4) and (5).
    (4) Where goods are in the possession of a bailee and are to be delivered without being moved:
        (a) tender requires that the seller either tender a negotiable document of title covering such goods or procure acknowledgement by the bailee of the buyer's right to possession of the goods; but
        (b) tender to the buyer of a nonnegotiable document of title or of a written direction to record directing the bailee to deliver is sufficient tender unless the buyer seasonably objects, and except as otherwise provided in IC 26-1-9.1, receipt by the bailee of notification of the buyer's rights fixes those rights as against the bailee and all third persons; but risk of loss of the goods and of any failure by the bailee to honor the nonnegotiable document of title or to obey the direction remains on the seller until the buyer has had a reasonable time to present the document or direction, and a refusal by the bailee to honor the document or to obey the direction defeats the tender.
    (5) Where the contract requires the seller to deliver documents:
        (a) he must tender all such documents in correct form, except as provided in IC 26-1-2-323(2) with respect to bills of lading in a set; and
        (b) tender through customary banking channels is sufficient and dishonor of a draft accompanying the documents constitutes nonacceptance or rejection.
SOURCE: IC 26-1-2-505; (07)SE0419.1.14. -->     SECTION 14. IC 26-1-2-505 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 505. (1) Where the seller has identified goods to the contract by or before shipment:
        (a) His procurement of a negotiable bill of lading to his own order or otherwise reserves in him a security interest in the goods. His procurement of the bill to the order of a financing agency or of the buyer indicates in addition only the seller's expectation of transferring that interest to the person named.
        (b) A nonnegotiable bill of lading to himself or his nominee reserves possession of the goods as security, but except in a case of conditional delivery (IC 26-1-2-507(2)), a nonnegotiable bill of lading naming the buyer as consignee reserves no security interest even though the seller retains possession or control of the bill of lading.
    (2) When shipment by the seller with reservation of a security interest is in violation of the contract for sale, it constitutes an improper contract for transportation within IC 26-1-2-504, but impairs neither the rights given to the buyer by shipment and identification of the goods to the contract nor the seller's powers as a holder of a negotiable document of title.
SOURCE: IC 26-1-2-506; (07)SE0419.1.15. -->     SECTION 15. IC 26-1-2-506 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 506. (1) A financing agency by paying or purchasing for value a draft which relates to a shipment of goods acquires to the extent of the payment or purchase and in addition to its own rights under the draft and any document of title securing it any rights of the shipper in the goods including the right to stop delivery and the shipper's right to have the draft honored by the buyer.
    (2) The right to reimbursement of a financing agency which has in good faith honored or purchased the draft under commitment to or authority from the buyer is not impaired by subsequent discovery of defects with reference to any relevant document which was apparently regular. on its face.
SOURCE: IC 26-1-2-509; (07)SE0419.1.16. -->     SECTION 16. IC 26-1-2-509 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 509. (1) Where the contract requires or authorizes the seller to ship the goods by carrier:
        (a) if it does not require him to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier even though the shipment is under reservation (IC 26-1-2-505); but
        (b) if it does require him to deliver them at a particular destination and the goods are there duly tendered while in the possession of

the carrier, the risk of loss passes to the buyer when the goods are there duly so tendered as to enable the buyer to take delivery.
    (2) Where the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the buyer:
        (a) on his receipt of possession or control of a negotiable document of title covering the goods; or
        (b) on acknowledgment by the bailee of the buyer's right to possession of the goods; or
        (c) after his receipt of possession or control of a nonnegotiable document of title or other written direction to deliver in a record, as provided in IC 26-1-2-503(4)(b).
    (3) In any case not within subsection (1) or (2), the risk of loss passes to the buyer on his receipt of the goods if the seller is a merchant. Otherwise the risk passes to the buyer on tender of delivery.
    (4) The provisions of this section are subject to contrary agreement of the parties and to the provisions of IC 26-1-2-327 on sale on approval and IC 26-1-2-510 on effect of breach on risk of loss.

SOURCE: IC 26-1-2-605; (07)SE0419.1.17. -->     SECTION 17. IC 26-1-2-605 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 605. (1) The buyer's failure to state in connection with rejection a particular defect which is ascertainable by reasonable inspection precludes him from relying on the unstated defect to justify rejection or to establish breach:
        (a) where the seller could have cured it if stated seasonably; or
        (b) between merchants when the seller has after rejection made a request in writing for a full and final written statement of all defects on which the buyer proposes to rely.
    (2) Payment against documents made without reservation of rights precludes recovery of the payment for defects apparent on the face of in the documents.
SOURCE: IC 26-1-2-705; (07)SE0419.1.18. -->     SECTION 18. IC 26-1-2-705 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 705. (1) The seller may stop delivery of goods in the possession of a carrier or other bailee when he discovers the buyer to be insolvent (IC 26-1-2-702) and may stop delivery of carload, truckload, planeload, or larger shipments of express or freight when the buyer repudiates or fails to make a payment due before delivery or if for any other reason the seller has a right to withhold or reclaim the goods.
    (2) As against such buyer the seller may stop delivery until:
        (a) receipt of the goods by the buyer; or
        (b) acknowledgment to the buyer by any bailee of the goods except a carrier that the bailee holds the goods for the buyer; or
        (c) such acknowledgment to the buyer by a carrier by reshipment

or as warehouseman a warehouse; or
        (d) negotiation to the buyer of any negotiable document of title covering the goods.
    (3) (a) To stop delivery, the seller must so notify as to enable the bailee by reasonable diligence to prevent delivery of the goods.
    (b) After such notification, the bailee must hold and deliver the goods according to the directions of the seller, but the seller is liable to the bailee for any ensuing charges or damages.
    (c) If a negotiable document of title has been issued for goods, the bailee is not obliged to obey a notification to stop until surrender of possession or control of the document.
    (d) A carrier who has issued a nonnegotiable bill of lading is not obliged to obey a notification to stop received from a person other than the consignor.

SOURCE: IC 26-1-2.1-103; (07)SE0419.1.19. -->     SECTION 19. IC 26-1-2.1-103 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 103. (1) Unless the context otherwise requires, in IC 26-1-2.1:
        (a) "Buyer in ordinary course of business" means a person who in good faith and without knowledge that the sale to the person is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker. "Buying" may be for cash or by exchange of other property or on secured or unsecured credit and includes receiving acquiring goods or documents of title under a pre-existing contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
        (b) "Cancellation" occurs when either party puts an end to the lease contract for default by the other party.
        (c) "Commercial unit" means such a unit of goods as by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a single whole.
        (d) "Conforming" goods or performance under a lease contract means goods or performance that are in accordance with the obligations under the lease contract.
        (e) "Consumer lease" means a lease that a lessor regularly engaged in the business of leasing or selling makes to a lessee

who is an individual and who takes under the lease primarily for a personal, family, or household purpose if the total payments to be made under the lease contract, excluding payments for options to renew or buy, do not exceed twenty-five thousand dollars ($25,000).
        (f) "Fault" means wrongful act, omission, breach, or default.
        (g) "Finance lease" means a lease with respect to which:
            (i) the lessor does not select, manufacture, or supply the goods;
            (ii) the lessor acquires the goods or the right to possession and use of the goods in connection with the lease; and
            (iii) one (1) of the following occurs:
                (A) the lessee receives a copy of the contract by which the lessor acquired the goods or the right to possession and use of the goods before signing the lease contract;
                (B) the lessee's approval of the contract by which the lessor acquired the goods or the right to possession and use of the goods is a condition to effectiveness of the lease contract;
                (C) the lessee, before signing the lease contract, receives an accurate and complete statement designating the promises and warranties, and any disclaimers of warranties, limitations, or modifications of remedies, or liquidated damages, including those of a third party, such as the manufacturer of the goods, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; or
                (D) if the lease is not a consumer lease, the lessor, before the lessee signs the lease contract, informs the lessee in writing: (a) of the identity of the person supplying the goods to the lessor, unless the lessee has selected that person and directed the lessor to acquire the goods or the right to possession and use of the goods from that person; (b) that the lessee is entitled under IC 26-1-2.1 to the promises and warranties, including those of any third party, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; and (c) that the lessee may communicate with the person supplying the goods to the lessor and receive an accurate and complete statement of those promises and warranties, including any disclaimers and limitations of them or of remedies.


        (h) "Goods" means all things that are movable at the time of identification to the lease contract, or are fixtures (IC 26-1-2.1-309), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction. The term also includes the unborn young of animals.
        (i) "Installment lease contract" means a lease contract that authorizes or requires the delivery of goods in separate lots to be separately accepted, even though the lease contract contains a clause "each delivery is a separate lease" or its equivalent.
        (j) "Lease" means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease. Unless the context clearly indicates otherwise, the term includes a sublease.
        (k) "Lease agreement" means the bargain, with respect to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in IC 26-1-2.1. Unless the context clearly indicates otherwise, the term includes a sublease agreement.
        (l) "Lease contract" means the total legal obligation that results from the lease agreement as affected by IC 26-1-2.1 and any other applicable rules of law. Unless the context clearly indicates otherwise, the term includes a sublease contract.
        (m) "Leasehold interest" means the interest of the lessor or the lessee under a lease contract.
        (n) "Lessee" means a person who acquires the right to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessee.
        (o) "Lessee in ordinary course of business" means a person who in good faith and without knowledge that the lease to the person is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods leases in ordinary course from a person in the business of selling or leasing goods of that kind but does not include a pawnbroker. "Leasing" may be for cash or by exchange of other property or on secured or unsecured credit and includes receiving acquiring goods or documents of title under a pre-existing lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
        (p) "Lessor" means a person who transfers the right to possession

and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessor.
        (q) "Lessor's residual interest" means the lessor's interest in the goods after expiration, termination, or cancellation of the lease contract.
        (r) "Lien" means a charge against or interest in goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest.
        (s) "Lot" means a parcel or a single article that is the subject matter of a separate lease or delivery, whether or not it is sufficient to perform the lease contract.
        (t) "Merchant lessee" means a lessee that is a merchant with respect to goods of the kind subject to the lease.
        (u) "Present value" means the amount as of a date certain of one (1) or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate was not manifestly unreasonable at the time the transaction was entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.
        (v) "Purchase" includes taking by sale, lease, mortgage, security interest, pledge, gift, or any other voluntary transaction creating an interest in goods.
        (w) "Sublease" means a lease of goods the right to possession and use of which was acquired by the lessor as a lessee under an existing lease.
        (x) "Supplier" means a person from whom a lessor buys or leases goods to be leased under a finance lease.
        (y) "Supply contract" means a contract under which a lessor buys or leases goods to be leased.
        (z) "Termination" occurs when either party pursuant to a power created by agreement or law puts an end to the lease contract otherwise than for default.
    (2) Other definitions applying to IC 26-1-2.1 and the sections in which they appear are:
        "Accessions". IC 26-1-2.1-310(1).
        "Construction mortgage". IC 26-1-2.1-309(1)(d).
        "Encumbrance". IC 26-1-2.1-309(1)(e).
        "Fixtures". IC 26-1-2.1-309(1)(a).
        "Fixture filing". IC 26-1-2.1-309(1)(b).
        "Purchase money lease". IC 26-1-2.1-309(1)(c).


    (3) The following definitions in other chapters apply to IC 26-1-2.1:
        "Account". IC 26-1-9.1-102(a)(2).
        "Between merchants". IC 26-1-2-104(3).
        "Buyer". IC 26-1-2-103(1)(a).
        "Chattel paper". IC 26-1-9.1-102(a)(11).
        "Consumer goods". IC 26-1-9.1-102(a)(23).
        "Document". IC 26-1-9.1-102(a)(30).
        "Entrusting". IC 26-1-2-403(3).
        "General intangibles". IC 26-1-9.1-102(a)(42).
        "Good faith". IC 26-1-2-103(1)(b).
        "Instrument". IC 26-1-9.1-102(a)(47).
        "Merchant". IC 26-1-2-104(1).
        "Mortgage". IC 26-1-9.1-102(a)(55).
        "Pursuant to commitment". IC 26-1-9.1-102(a)(68).
        "Receipt". IC 26-1-2-103(1)(c).
        "Sale". IC 26-1-2-106(1).
        "Sale on approval". IC 26-1-2-326.
        "Sale or return". IC 26-1-2-326.
        "Seller". IC 26-1-2-103(1)(d).
    (4) In addition, IC 26-1-1 contains general definitions and principles of construction and interpretation applicable throughout IC 26-1-2.1.
SOURCE: IC 26-1-2.1-514; (07)SE0419.1.20. -->     SECTION 20. IC 26-1-2.1-514 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 514. (1) In rejecting goods, a lessee's failure to state a particular defect that is ascertainable by reasonable inspection precludes the lessee from relying on the defect to justify rejection or to establish default:
        (a) if, stated seasonably, the lessor or the supplier could have cured it (IC 26-1-2.1-513); or
        (b) between merchants if the lessor or the supplier after rejection has made a request in writing for a full and final written statement of all defects on which the lessee proposes to rely.
    (2) A lessee's failure to reserve rights when paying rent or other consideration against documents precludes recovery of the payment for defects apparent on the face of in the documents.
SOURCE: IC 26-1-2.1-526; (07)SE0419.1.21. -->     SECTION 21. IC 26-1-2.1-526 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 526. (1) A lessor may stop delivery of goods in the possession of a carrier or other bailee if the lessor discovers the lessee to be insolvent and may stop delivery of carload, truckload, planeload, or larger shipments of express or freight if the lessee repudiates or fails to make a payment due before delivery, whether for rent, security, or otherwise under the lease contract, or for any other reason the lessor has a right to withhold or take possession of

the goods.
    (2) In pursuing its remedies under subsection (1), the lessor may stop delivery until:
        (a) receipt of the goods by the lessee;
        (b) acknowledgment to the lessee by any bailee of the goods, except a carrier, that the bailee holds the goods for the lessee; or
        (c) such an acknowledgment to the lessee by a carrier via reshipment or as warehouseman a warehouse.
    (3)(a) To stop delivery, a lessor shall so notify as to enable the bailee by reasonable diligence to prevent delivery of the goods.
        (b) After notification, the bailee shall hold and deliver the goods according to the directions of the lessor, but the lessor is liable to the bailee for any ensuing charges or damages.
        (c) A carrier who has issued a nonnegotiable bill of lading is not obliged to obey a notification to stop received from a person other than the consignor.

SOURCE: IC 26-1-4-104; (07)SE0419.1.22. -->     SECTION 22. IC 26-1-4-104 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 104. (a) In IC 26-1-4, unless the context otherwise requires:
        (1) "Account" means any deposit or credit account with a bank, including a demand, time, savings, passbook, share draft, or like account, other than an account evidenced by a certificate of deposit.
        (2) "Afternoon" means the period of a day between noon and midnight.
        (3) "Banking day" means the part of a day on which a bank is open to the public for carrying on substantially all of its banking functions, but does not include Saturday, Sunday, or a legal holiday.
        (4) "Clearing house" means an association of banks or other payors regularly clearing items.
        (5) "Customer" means a person having an account with a bank or for whom a bank has agreed to collect items, including a bank that maintains an account at another bank.
        (6) "Documentary draft" means a draft to be presented for acceptance or payment if specified documents, certificated securities (IC 26-1-8.1-102), or instructions for uncertificated securities (IC 26-1-8.1-102) or other certificates, statements, or the like are to be received by the drawee or other payor before acceptance or payment of the draft.
        (7) "Draft" means a draft (as defined in IC 26-1-3.1-104) or an item, other than an instrument, that is an order.
        (8) "Drawee" means a person ordered in a draft to make payment.
        (9) "Item" means an instrument or a promise or order to pay money handled by a bank for collection or payment. The term does not include a payment order governed by IC 26-1-4.1 or a credit or debit card slip.
        (10) "Midnight deadline" with respect to a bank is midnight on its next banking day following the banking day on which it receives the relevant item or notice or from which the time for taking action commences to run, whichever is later.
        (11) "Settle" means to pay in cash, by clearing-house settlement, in a charge or credit, or by remittance, or otherwise as instructed. A settlement may be either provisional or final.
        (12) "Suspends payments" with respect to a bank means that it has been closed by order of the supervisory authorities, that a public officer has been appointed to take it over, or that it ceases or refuses to make payments in the ordinary course of business.
    (b) Other definitions applying to IC 26-1-4 and the sections in which they appear are:
        "Agreement for electronic presentment". IC 26-1-4-110.
        "Bank". IC 26-1-4-105.
        "Collecting bank". IC 26-1-4-105.
        "Depositary bank". IC 26-1-4-105.
        "Intermediary bank". IC 26-1-4-105.
        "Payor bank". IC 26-1-4-105.
        "Presenting bank". IC 26-1-4-105.
        "Presentment notice". IC 26-1-4-110.
    (c) "Control" as provided in IC 26-1-7-106 and the following definitions in IC 26-1-3.1 apply to IC 26-1-4:
        "Acceptance". IC 26-1-3.1-409.
        "Alteration". IC 26-1-3.1-407.
        "Cashier's check". IC 26-1-3.1-104.
        "Certificate of deposit". IC 26-1-3.1-104.
        "Certified check". IC 26-1-3.1-409.
        "Check". IC 26-1-3.1-104.
        "Holder in due course". IC 26-1-3.1-302.
        "Instrument". IC 26-1-3.1-104.
        "Notice of dishonor". IC 26-1-3.1-503.
        "Order". IC 26-1-3.1-103.
        "Ordinary care". IC 26-1-3.1-103.
        "Person entitled to enforce". IC 26-1-3.1-301.
        "Presentment". IC 26-1-3.1-501.
        "Promise". IC 26-1-3.1-103.
        "Prove". IC 26-1-3.1-103.
        "Teller's check". IC 26-1-3.1-104.
        "Unauthorized signature". IC 26-1-3.1-403.
    (d) In addition, IC 26-1-1 contains general definitions and principles of construction and interpretation applicable throughout IC 26-1-4.
SOURCE: IC 26-1-4-210; (07)SE0419.1.23. -->     SECTION 23. IC 26-1-4-210 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 210. (a) A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either:
        (1) in the case of an item deposited in an account, to the extent to which credit given for the item has been withdrawn or applied;
        (2) in the case of an item for which it has given credit available for withdrawal as of right, to the extent of the credit given, whether or not the credit is drawn upon or there is a right of charge-back; or
        (3) if it makes an advance on or against the item.
    (b) If credit given for several items received at one (1) time or under a single agreement is withdrawn or applied in part, the security interest remains upon all the items, any accompanying documents, or the proceeds of either. For the purpose of this section, credits first given are first withdrawn.
    (c) Receipt by a collecting bank of a final settlement for an item is a realization on its security interest in the item, accompanying documents, and proceeds. So long as the bank does not receive final settlement for the item or give up possession of the item or possession or control of the accompanying documents for purposes other than collection, the security interest continues to that extent and is subject to IC 26-1-9.1, but:
        (1) no security agreement is necessary to make the security interest enforceable (IC 26-1-9.1-203(b)(3)(A));
        (2) no filing is required to perfect the security interest; and
        (3) the security interest has priority over conflicting perfected security interests in the item, accompanying documents, or proceeds.
SOURCE: IC 26-1-7-101; (07)SE0419.1.24. -->     SECTION 24. IC 26-1-7-101 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 101. IC 26-1-7 shall be known and This chapter may be cited as Uniform Commercial Code . Documents of Title.
SOURCE: IC 26-1-7-102; (07)SE0419.1.25. -->     SECTION 25. IC 26-1-7-102 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 102. (1) (a) In IC 26-1-7, this chapter unless the context otherwise requires:
        (a) (1) "Bailee" means the a person who that by a warehouse

receipt, bill of lading, or other document of title acknowledges possession of goods and contracts to deliver them.
        (2) "Carrier" means a person that issues a bill of lading.
        (b) (3) "Consignee" means the a person named in a bill of lading to whom which or to whose order the bill promises delivery.
        (c) (4) "Consignor" means the a person named in a bill of lading as the person from whom which the goods have been received for shipment.
        (d) (5) "Delivery order" means a written record that contains an order to deliver goods directed to a warehouseman, warehouse, carrier, or other person who that in the ordinary course of business issues warehouse receipts or bills of lading.
        (e) "Document" means document of title as defined in the general definitions in IC 26-1-1-201.
        (6) "Good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing.
        (f) (7) "Goods" means all things which that are treated as movable for the purposes of a contract of for storage or transportation.
        (g) (8) "Issuer" means a bailee who that issues a document except that of title or, in relation to the case of an unaccepted delivery order, it means the person who that orders the possessor of goods to deliver. Issuer The term includes any a person for whom which an agent or employee purports to act in issuing a document if the agent or employee has real or apparent authority to issue documents, notwithstanding that even if the issuer received no did not receive any goods, or that the goods were misdescribed, or that in any other respect the agent or employees employee violated his the issuer's instructions.
        (9) "Person entitled under the document" means the holder, in the case of a negotiable document of title, or the person to which delivery of the goods is to be made by the terms of, or pursuant to instructions in a record under, a nonnegotiable document of title.
        (10) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
        (11) "Shipper" means a person that enters into a contract of transportation with a carrier.

        (12) "Sign" means, with present intent to authenticate or adopt a record:
            (A) to execute or adopt a tangible symbol; or


            (B) to attach to or logically associate with the record an electronic sound, symbol, or process.
        (h) "Warehouseman" is (13) "Warehouse" means a person engaged in the business of storing goods for hire.
    (2) (b) Other definitions applying to IC 26-1-7 this chapter and the sections in which they appear are:
        "Duly negotiate". IC 26-1-7-501.
        "Person entitled under the document". IC 26-1-7-403(4).
    (3) Definitions in IC 26-1-2 applying to IC 26-1-7 and the sections in which they appear are:
        "Contract for sale". IC 26-1-2-106.
        "Overseas". IC 26-1-2-323.
         "Lessee in the ordinary course of business". IC 26-1-2.1-103(o).
        "Receipt" of goods. IC 26-1-2-103.
    (4) (c) In addition, IC 26-1-1 contains general definitions and principles of construction and interpretation applicable throughout IC 26-1-7. this chapter.
SOURCE: IC 26-1-7-103; (07)SE0419.1.26. -->     SECTION 26. IC 26-1-7-103 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 103. To the extent that (a) This chapter is subject to any treaty or statute of the United States or regulatory statute of this state or tariff, classification, rule, or regulation filed or issued pursuant thereto is applicable, the provisions of IC 26-1-7 are subject thereto. to the extent the treaty, statute, or regulatory statute applies.
     (b) This chapter does not modify or repeal any law prescribing the form or content of a document of title or the services or facilities to be afforded by a bailee, or otherwise regulating a bailee's business in respects not specifically treated in this article. However, violation of such a law does not affect the status of a document of title that otherwise is within the definition of a document of title.
    (c) This chapter modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7001 et seq.) but does not modify, limit, or supersede Section 101(c) of that act (15 U.S.C. 7001(c)) or authorize electronic delivery of any of the notices described in section 103(b) of that act (15 U.S.C. 7003(b)).
    (d) To the extent there is a conflict between IC 26-2-8 and this chapter, this chapter governs.

SOURCE: IC 26-1-7-104; (07)SE0419.1.27. -->     SECTION 27. IC 26-1-7-104 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 104. (1) (a) Except as

otherwise provided in subsection (c), a warehouse receipt, bill of lading or other document of title is negotiable
    (a) if by its terms the goods are to be delivered to bearer or to the order of a named person. or
    (b) where recognized in overseas trade, if it runs to a named person or assigns.
    (2) Any other (b) A document of title other than one described in subsection (a) is nonnegotiable. A bill of lading in which it is stated that states that the goods are consigned to a named person is not made negotiable by a provision that the goods are to be delivered only against a written an order in a record signed by the same or another named person.
     (c) A document of title is nonnegotiable if, at the time it is issued, the document has a conspicuous legend, however expressed, that it is nonnegotiable.

SOURCE: IC 26-1-7-105; (07)SE0419.1.28. -->     SECTION 28. IC 26-1-7-105 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 105. The omission from either part 2 (IC 26-1-7-201 through IC 26-1-7-210) or part 3 (IC 26-1-7-301 through IC 26-1-7-309) of a provision corresponding to a provision made in the other part does not imply that a corresponding rule of law is not applicable. (a) Upon request of a person entitled under an electronic document of title, the issuer of the electronic document may issue a tangible document of title as a substitute for the electronic document if:
        (1) the person entitled under the electronic document surrenders control of the document to the issuer; and
        (2) the tangible document when issued contains a statement that it is issued in substitution for the electronic document.
    (b) Upon issuance of a tangible document of title in substitution for an electronic document of title in accordance with subsection (a):
        (1) the electronic document ceases to have any effect or validity; and
        (2) the person that procured issuance of the tangible document warrants to all subsequent persons entitled under the tangible document that the warrantor was a person entitled under the electronic document when the warrantor surrendered control of the electronic document to the issuer.
    (c) Upon request of a person entitled under a tangible document of title, the issuer of the tangible document may issue an electronic document of title as a substitute for the tangible document if:
        (1) the person entitled under the tangible document

surrenders possession of the document to the issuer; and
        (2) the electronic document when issued contains a statement that it is issued in substitution for the tangible document.
    (d) Upon issuance of an electronic document of title in substitution for a tangible document of title in accordance with subsection (c):
        (1) the tangible document ceases to have any effect or validity; and
        (2) the person that procured issuance of the electronic document warrants to all subsequent persons entitled under the electronic document that the warrantor was a person entitled under the tangible document when the warrantor surrendered possession of the tangible document to the issuer.

SOURCE: IC 26-1-7-106; (07)SE0419.1.29. -->     SECTION 29. IC 26-1-7-106 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 106. (a) A person has control of an electronic document of title if a system employed for evidencing the transfer of interests in the electronic document reliably establishes that person as the person to which the electronic document was issued or transferred.
    (b) A system satisfies subsection (a), and a person is deemed to have control of an electronic document of title, if the document is created, stored, and assigned in such a manner that:
        (1) a single authoritative copy of the document exists that is unique, identifiable, and, except as otherwise provided in subdivisions (4), (5), and (6), unalterable;
        (2) the authoritative copy identifies the person asserting control as:
            (A) the person to which the document was issued; or
            (B) if the authoritative copy indicates that the document has been transferred, the person to which the document was most recently transferred;
        (3) the authoritative copy is communicated to and maintained by the person asserting control or its designated custodian;
        (4) copies or amendments that add or change an identified assignee of the authoritative copy can be made only with the consent of the person asserting control;
        (5) each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and
        (6) any amendment of the authoritative copy is readily identifiable as authorized or unauthorized.

SOURCE: IC 26-1-7-201; (07)SE0419.1.30. -->     SECTION 30. IC 26-1-7-201 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 201. (1) (a) A warehouse receipt may be issued by any warehouseman. warehouse.
    (2) Where (b) If goods, including distilled spirits and agricultural commodities, are stored under a statute requiring a bond against withdrawal or a license for the issuance of receipts in the nature of warehouse receipts, a receipt issued for the goods has like effect as is considered to be a warehouse receipt even though if issued by a person who that is the owner of the goods and is not a warehouseman. warehouse.
SOURCE: IC 26-1-7-202; (07)SE0419.1.31. -->     SECTION 31. IC 26-1-7-202 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 202. (1) (a) A warehouse receipt need not be in any particular form.
    (2) (b) Unless a warehouse receipt embodies within its written or printed terms provides for each of the following, the warehouseman warehouse is liable for damages caused by the omission to a person injured thereby: by its omission:
        (a) (1) a statement of the location of the warehouse facility where the goods are stored;
        (b) (2) the date of issue of the receipt;
        (c) (3) the consecutive number unique identification code of the receipt;
        (d) (4) a statement whether the goods received will be delivered to the bearer, to a specified named person, or to a specified named person or his the person's order;
        (e) (5) the rate of storage and handling charges, except that where unless goods are stored under a field warehousing arrangement, in which case a statement of that fact is sufficient on a nonnegotiable receipt;
        (f) (6) a description of the goods or of the packages containing them;
        (g) (7) the signature of the warehouseman, which may be made by his authorized warehouse or its agent;
        (h) (8) if the receipt is issued for goods of which that the warehouseman is owner, warehouse owns, either solely, or jointly, or in common with others, the fact of such that ownership; and
        (i) (9) a statement of the amount of advances made and of liabilities incurred for which the warehouseman warehouse claims a lien or security interest (IC 26-1-7-209). If unless the precise amount of such advances made or of such liabilities incurred is, at the time of the issue of the receipt is unknown to

the warehouseman warehouse or to his its agent who issues it, that issued the receipt, in which case a statement of the fact that advances have been made or liabilities incurred and the purpose thereof of the advances or liabilities is sufficient.
    (3) (c) A warehouseman warehouse may insert in his its receipt any other terms which that are not contrary to the provisions of IC 26-1 and do not impair his its obligation of delivery (IC 26-1-7-403) under section 403 of this chapter or his its duty of care (IC 26-1-7-204). under section 204 of this chapter. Any contrary provisions shall be are ineffective.

SOURCE: IC 26-1-7-203; (07)SE0419.1.32. -->     SECTION 32. IC 26-1-7-203 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 203. A party to or purchaser for value in good faith of a document of title, other than a bill of lading, relying in either case that relies upon the description therein of the goods in the document may recover from the issuer damages caused by the nonreceipt or misdescription of the goods, except to the extent that:
         (1) the document conspicuously indicates that the issuer does not know whether all or any part or all of the goods in fact were received or conform to the description, such as where a case in which the description is in terms of marks or labels or kind, quantity, or condition, or the receipt or description is qualified by "contents, condition, and quality unknown", "said to contain", or the like, words of similar import, if such the indication be is true; or
         (2) the party or purchaser otherwise has notice of the nonreceipt or misdescription.
SOURCE: IC 26-1-7-204; (07)SE0419.1.33. -->     SECTION 33. IC 26-1-7-204 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 204. (1) (a) A warehouseman warehouse is liable for damages for loss of or injury to the goods caused by his its failure to exercise such care in with regard to them as the goods that a reasonably careful man person would exercise under like similar circumstances. but Unless otherwise agreed, he the warehouse is not liable for damages which that could not have been avoided by the exercise of such that care.
    (2) (b) Damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in case of loss or damage and setting forth a specific liability per article or item, or value per unit of weight, beyond which the warehouseman shall warehouse is not be liable. provided, however, that such liability may on written Such a limitation is not effective with respect to the warehouse's liability for conversion to its own use. On request of the bailor in a

record at the time of signing such the storage agreement or within a reasonable time after receipt of the warehouse receipt, the warehouse's liability may be increased on part or all of the goods thereunder, in which covered by the storage agreement or the warehouse receipt. In this event, increased rates may be charged based on such an increased valuation but that no such increase shall be permitted contrary to a lawful limitation of liability contained in the warehouseman's tariff, if any. No such limitation is effective with respect to the warehouseman's liability for conversion to his own use. of the goods.
    (3) (c) Reasonable provisions as to the time and manner of presenting claims and instituting commencing actions based on the bailment may be included in the warehouse receipt or tariff. storage agreement.

SOURCE: IC 26-1-7-205; (07)SE0419.1.34. -->     SECTION 34. IC 26-1-7-205 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 205. A buyer in the ordinary course of business of fungible goods sold and delivered by a warehouseman who warehouse that is also in the business of buying and selling such goods takes the goods free of any claim under a warehouse receipt even though it if the receipt is negotiable and has been duly negotiated.
SOURCE: IC 26-1-7-206; (07)SE0419.1.35. -->     SECTION 35. IC 26-1-7-206 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 206. (1) (a) A warehouseman may on notifying warehouse, by giving notice to the person on whose account the goods are held and any other person known to claim an interest in the goods, may require payment of any charges and removal of the goods from the warehouse at the termination of the period of storage fixed by the document of title, or, if no a period is not fixed, within a stated period not less than thirty (30) days after the notification. warehouse gives notice. If the goods are not removed before the date specified in the notification, notice, the warehouseman warehouse may sell them in accordance with the provisions of the under section 210 of this chapter on enforcement of a warehouseman's warehouse's lien. (IC 26-1-7-210).
    (2) (b) If a warehouseman warehouse in good faith believes that the goods are about to deteriorate or decline in value to less than the amount of his its lien within the time prescribed provided in subsection (1) for notification, advertisement, and sale, (a) and section 210 of this chapter, the warehouseman warehouse may specify in the notification notice given under subsection (a) any reasonable shorter time for removal of the goods and, in case if the goods are not removed, may sell them at public sale held not less than one (1) week

after a single advertisement or posting.
    (3) (c) If, as a result of a quality or condition of the goods of which the warehouseman had no warehouse did not have notice at the time of deposit, the goods are a hazard to other property, or to the warehouse facilities, or to other persons, the warehouseman warehouse may sell the goods at public or private sale without advertisement or posting on reasonable notification to all persons known to claim an interest in the goods. If the warehouseman warehouse, after a reasonable effort, is unable to sell the goods, he the warehouse may dispose of them in any lawful manner and shall does not incur no liability by reason of such the disposition.
    (4) The warehouseman must (d) A warehouse shall deliver the goods to any person entitled to them under IC 26-1-7 this chapter upon due demand made at any time prior to before sale or other disposition under this section.
    (5) The warehouseman (e) A warehouse may satisfy his its lien from the proceeds of any sale or disposition under this section but must shall hold the balance for delivery on the demand of any person to whom he which the warehouse would have been bound to deliver the goods.

SOURCE: IC 26-1-7-207; (07)SE0419.1.36. -->     SECTION 36. IC 26-1-7-207 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 207. (1) (a) Unless the warehouse receipt otherwise provides, a warehouseman must warehouse shall keep separate the goods covered by each receipt so as to permit at all times identification and delivery of those goods. except that However, different lots of fungible goods may be commingled.
    (2) (b) If different lots of fungible goods so are commingled, the goods are owned in common by the persons entitled thereto and the warehouseman warehouse is severally liable to each owner for that owner's share. Where If because of overissue, a mass of fungible goods is insufficient to meet all the receipts which the warehouseman warehouse has issued against it, the persons entitled include all holders to whom which overissued receipts have been duly negotiated.
SOURCE: IC 26-1-7-208; (07)SE0419.1.37. -->     SECTION 37. IC 26-1-7-208 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 208. Where If a blank in a negotiable tangible warehouse receipt has been filled in without authority, a good faith purchaser for value and without notice of the want lack of authority may treat the insertion as authorized. Any other unauthorized alteration leaves any tangible or electronic warehouse receipt enforceable against the issuer according to its original tenor.
SOURCE: IC 26-1-7-209; (07)SE0419.1.38. -->     SECTION 38. IC 26-1-7-209 IS AMENDED TO READ AS

FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 209. (1) (a) A warehouseman warehouse has a lien against the bailor on the goods covered by a warehouse receipt or storage agreement or on the proceeds thereof in his its possession for charges for storage or transportation, including demurrage and terminal charges, insurance, labor, or other charges, present or future, in relation to the goods, and for expenses necessary for preservation of the goods or reasonably incurred in their sale pursuant to law. If the person on whose account the goods are held is liable for like similar charges or expenses in relation to other goods whenever deposited and it is stated in the warehouse's receipt or storage agreement that a lien is claimed for charges and expenses in relation to other goods, the warehouseman warehouse also has a lien against him for such the goods covered by the warehouse receipt or storage agreement or on the proceeds thereof in its possession for the charges and expenses, whether or not the other goods have been delivered by the warehouseman. But warehouse. However, as against a person to whom which a negotiable warehouse receipt is duly negotiated, a warehouseman's warehouse's lien is limited to charges in an amount or at a rate specified on in the warehouse receipt or, if no charges are so specified, then to a reasonable charge for storage of the specific goods covered by the receipt subsequent to the date of the receipt.
    (2) The warehouseman (b) A warehouse may also reserve a security interest against the bailor for a the maximum amount specified on the receipt for charges other than those specified in subsection (1), (a), such as for money advanced and interest. Such a The security interest is governed by IC 26-1-9.1 on secured transactions.
    (3) A warehouseman's (c) A warehouse's lien for charges and expenses under subsection (1) (a) or a security interest under subsection (2) (b) is also effective against any person who so that entrusted the bailor with possession of the goods that a pledge of them by him the bailor to a good faith purchaser for value would have been valid. but However, the lien or security interest is not effective against a person as to whom the document confers no right in the goods covered by it under IC 26-1-7-503. that before issuance of a document of title had a legal interest or a perfected security interest in the goods and that did not:
        (1) deliver or entrust the goods or any document of title covering