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,
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NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in
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this style type reconciles conflicts
between statutes enacted by the 2006 Regular Session of the General Assembly.
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