Position Paper regarding the UCC Emerging Technology Model Act as proposed by the Uniform Law Commission. You will select a state and draft a Position Paper either taking the po

FOR APPROVAL

Uniform Commercial Code and Emerging Technologies

Uniform Law Commission

MEETING IN ITS ONE-HUNDRED-AND-THIRTY-FIRST YEAR PHILADELPHIA, PENNSYLVANIA

JULY 8 ‒ 14, 2022

VOTE BY STATE

Copyright © 2022 National Conference of Commissioners on Uniform State Laws

July 10, 2022

1

UNIFORM COMMERCIAL CODE AND EMERGING TECHNOLOGIES 1

ARTICLE 1 2

GENERAL PROVISIONS 3

Section 1-201. General Definitions. 4

* * * 5

(b) Subject to definitions contained in other articles of [the Uniform Commercial Code] 6

that apply to particular articles or parts thereof: 7

* * * 8

(3) “Agreement”, as distinguished from “contract”, means the bargain of the 9

parties in fact, as found in their language or inferred from other circumstances, including course 10

of performance, course of dealing, or usage of trade as provided in Section 1-303. 11

* * * 12

(10) “Conspicuous”, with reference to a term, means so written, displayed, or 13

presented that, based on the totality of the circumstances, a reasonable person against which it is 14

to operate ought to have noticed it. Whether a term is “conspicuous” or not is a decision for the 15

court. Conspicuous terms include the following: 16

(A) a heading in capitals equal to or greater in size than the surrounding 17

text, or in contrasting type, font, or color to the surrounding text of the same or lesser size; and 18

(B) language in the body of a record or display in larger type than the 19

surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or 20

set off from surrounding text of the same size by symbols or other marks that call attention to the 21

language. 22

* * * 23

2

(15) “Delivery”, with respect to an electronic document of title, means voluntary 1

transfer of control and, with respect to an instrument, a tangible document of title, or an 2

authoritative tangible copy of a record evidencing chattel paper, means voluntary 3

transfer of possession. 4

(16) “Document of title” means a record (i) that in the regular course of business 5

or financing is treated as adequately evidencing that the person in possession or control of the 6

record it is entitled to receive, control, hold, and dispose of the record and the goods the record 7

covers and (ii) that purports to be issued by or addressed to a bailee and to cover goods in the 8

bailee’s possession which are either identified or are fungible portions of an identified mass. The 9

term includes a bill of lading, transport document, dock warrant, dock receipt, warehouse receipt, 10

and order for delivery of goods. An electronic document of title means a document of title 11

evidenced by a record consisting of information stored in an electronic medium. A tangible 12

document of title means a document of title evidenced by a record consisting of information that 13

is inscribed on a tangible medium. 14

(16A) “Electronic” means relating to technology having electrical, digital, 15

magnetic, wireless, optical, electromagnetic, or similar capabilities. 16

* * * 17

(21) “Holder” means: 18

(A) the person in possession of a negotiable instrument that is payable 19

either to bearer or to an identified person that is the person in possession; or 20

(B) the person in possession of a negotiable tangible document of title if 21

the goods are deliverable either to bearer or to the order of the person in possession; or 22

(C) the person in control, other than pursuant to Section 7-106(g), of a 23

3

negotiable electronic document of title. 1

* * * 2

(24) “Money” means a medium of exchange that is currently authorized or 3

adopted by a domestic or foreign government. The term includes a monetary unit of account 4

established by an intergovernmental organization, or pursuant to an agreement between two or 5

more countries. The term does not include an electronic record that is a medium of exchange 6

recorded and transferable in a system that existed and operated for the medium of exchange 7

before the medium of exchange was authorized or adopted by the government. 8

* * * 9

(27) “Person” means an individual, corporation, business trust, estate, trust, 10

partnership, limited liability company, association, joint venture, government, governmental 11

subdivision, agency, or instrumentality, public corporation, or any other legal or commercial 12

entity. The term includes a protected series, however denominated, of an entity if the protected 13

series is established under law other than [the Uniform Commercial Code] that limits, or limits if 14

conditions specified under the law are satisfied, the ability of a creditor of the entity or of any 15

other protected series of the entity to satisfy a claim from assets of the protected series. 16

* * * 17

(33) “Representative” means a person empowered to act for another, including an 18

agent, an officer of a corporation or association, and a trustee, executor, or administrator of an 19

estate. 20

* * * 21

(36) “Send”, in connection with a writing, record, or notice notification means: 22

4

(A) to deposit in the mail, or deliver for transmission, or transmit by any 1

other usual means of communication, with postage or cost of transmission provided for, and 2

properly addressed and, in the case of an instrument, to an address specified thereon or otherwise 3

agreed, or if there be none addressed to any address reasonable under the circumstances; or 4

(B) in any other way to cause to be received any record or notice 5

within the time it would have arrived if properly sent to cause the record or notification to be 6

received within the time that it would have been received if properly sent under subparagraph 7

(A). 8

(37) “Signed” includes using any symbol executed or adopted with present 9

intention to adopt or accept a writing. “Sign” means, with present intent to authenticate or adopt 10

a record: 11

(A) execute or adopt a tangible symbol; or 12

(B) attach to or logically associate with the record an electronic symbol, 13

sound, or process. 14

“Signed” and “signature” have corresponding meanings. 15

* * * 16

Legislative Note: 17 18 A state should review and adjust any of its other statutes or regulations that rely on or refer to 19 the definition of “money” in the state’s Uniform Commercial Code, subsection (b)(24), to take 20 account of the amendment to that definition. 21 22 A state should enact the amendment to subsection (b)(27) whether the state has enacted the 23 Uniform Protected Series Act (2017) or otherwise recognizes a protected series under its law. 24 Because the amendment applies only under the enacting state’s Uniform Commercial Code, 25 inclusion of the amendment does not require the enacting state to recognize a limit on liability of 26 a protected series organized under the law of another jurisdiction or a limit on liability of the 27 entity that established the protected series. The amendment clarifies the status of a protected 28 series as a “person” under the choice-of-law and substantive law rules of the enacting state’s 29 Uniform Commercial Code. 30

5

* * * 1

Section 1-204. Value. Except as otherwise provided in Articles 3, 4, [and] 5, [and 6], 2

[6,] and 12, a person gives value for rights if the person acquires them: 3

(1) in return for a binding commitment to extend credit or for the extension of 4

immediately available credit, whether or not drawn upon and whether or not a charge-back is 5

provided for in the event of difficulties in collection; 6

(2) as security for, or in total or partial satisfaction of, a preexisting claim; 7

(3) by accepting delivery under a preexisting contract for purchase; or 8

(4) in return for any consideration sufficient to support a simple contract. 9

* * * 10

Section 1-301. Territorial Applicability; Parties’ Power to Choose Applicable 11

Law. 12

(a) Except as otherwise provided in this section, when a transaction bears a reasonable 13

relation to this state and also to another state or nation the parties may agree that the law either of 14

this state or of such other state or nation shall govern their rights and duties. 15

(b) In the absence of an agreement effective under subsection (a), and except as provided 16

in subsection (c), [the Uniform Commercial Code] applies to transactions bearing an appropriate 17

relation to this state. 18

(c) If one of the following provisions of [the Uniform Commercial Code] specifies the 19

applicable law, that provision governs and a contrary agreement is effective only to the extent 20

permitted by the law so specified: 21

(1) Section 2-402; 22

(2) Sections 2A-105 and 2A-106; 23

6

(3) Section 4-102; 1

(4) Section 4A-507; 2

(5) Section 5-116; 3

[(6) Section 6-103;] 4

(7) Section 8-110; 5

(8) Sections 9-301 through 9-307.; 6

(9) Section 12-107. 7

* * * 8

Section 1-306. Waiver or Renunciation of Claim or Right After Breach. 9

A claim or right arising out of an alleged breach may be discharged in whole or in part 10

without consideration by agreement of the aggrieved party in an authenticated a signed record. 11

* * * 12 13

ARTICLE 2 14

SALES 15

* * * 16

Section 2-102. Scope; Certain Security and Other Transactions Excluded from 17

this Article. 18

Unless the context otherwise requires, this Article applies to transactions in goods; it does 19

not apply to any transaction which although in the form of an unconditional contract to sell or 20

present sale is intended to operate only as a security transaction nor does this Article impair or 21

repeal any statute regulating sales to consumers, farmers or other specified classes of buyers. 22

Section 2-102. Scope; Certain Security and Other Transactions Excluded from 23

this Article. 24

7

(1) Unless the context otherwise requires, and except as provided in subsection (3), this 1

Article applies to transactions in goods and, in the case of a hybrid transaction, it applies to the 2

extent provided in subsection (2). 3

(2) In a hybrid transaction: 4

(a) If the sale-of-goods aspects do not predominate, only the provisions of this 5

Article which relate primarily to the sale-of-goods aspects of the transaction apply, and the 6

provisions that relate primarily to the transaction as a whole do not apply. 7

(b) If the sale-of-goods aspects predominate, this Article applies to the 8

transaction, but this does not preclude the application in appropriate circumstances of other law 9

to the aspects of the transaction which do not relate to the sale of goods. 10

(3) This Article does not apply to any transaction that, although in the form of an 11

unconditional contract to sell or present sale, operates only to create a security interest and this 12

Article does not impair or repeal any statute regulating sales to consumers, farmers, or other 13

specified classes of buyers. 14

* * * 15 16 Section 2-106. Definitions: “Contract”; “Agreement”; “Contract for Sale”; 17

“Sale”; “Present Sale”; “Conforming” to Contract; “Termination”; “Cancellation”; 18

“Hybrid Transaction”. 19

(1) In this Article unless the context otherwise requires “contract” and “agreement” are 20

limited to those relating to the present or future sale of goods. “Contract for sale” includes both a 21

present sale of goods and a contract to sell goods at a future time. A “sale” consists in the passing 22

of title from the seller to the buyer for a price (Section 2–401). A “present sale” means a sale 23

which is accomplished by the making of the contract. 24

8

(2) Goods or conduct including any part of a performance are “conforming” or conform 1

to the contract when they are in accordance with the obligations under the contract. 2

(3) “Termination” occurs when either party pursuant to a power created by agreement or 3

law puts an end to the contract otherwise than for its breach. On “termination” all obligations 4

which are still executory on both sides are discharged but any right based on prior breach or 5

performance survives. 6

(4) “Cancellation” occurs when either party puts an end to the contract for breach by the 7

other and its effect is the same as that of “termination” except that the cancelling party also 8

retains any remedy for breach of the whole contract or any unperformed balance. 9

(5) “Hybrid transaction” means a single transaction involving a sale of goods and: 10

(a) the provision of services; 11

(b) a lease of other goods; or 12

(c) a sale, lease, or license of property other than goods. 13

* * * 14

Section 2-201. Formal Requirements; Statute of Frauds. 15

(1) Except as otherwise provided in this section a contract for the sale of goods for the 16

price of $500 or more is not enforceable by way of action or defense unless there is some writing 17

a record sufficient to indicate that a contract for sale has been made between the parties and 18

signed by the party against whom enforcement is sought or by his the party’s authorized agent or 19

broker. A writing record is not insufficient because it omits or incorrectly states a term agreed 20

upon but the contract is not enforceable under this paragraph subsection beyond the quantity of 21

goods shown in such writing the record. 22

(2) Between merchants if within a reasonable time a writing record in confirmation of the 23

9

contract and sufficient against the sender is received and the party receiving it has reason to 1

know its contents, it satisfies the requirements of subsection (1) against such the party unless 2

written a record containing a notice of objection to its contents is given within 10 days after it is 3

received. 4

* * * 5

Section 2-202. Final Written Expression: Parol or Extrinsic Evidence. 6

Terms with respect to which the confirmatory memoranda of the parties agree or which 7

are otherwise set forth in a writing record intended by the parties as a final expression of their 8

agreement with respect to such terms as are included therein may not be contradicted by 9

evidence of any prior agreement or of a contemporaneous oral agreement but may be explained 10

or supplemented: 11

(a) by course of performance, course of dealing, or usage of trade (Section 1-303); 12

and 13

(b) by evidence of consistent additional terms unless the court finds the writing 14

record to have been intended also as a complete and exclusive statement of the terms of the 15

agreement. 16

Section 2-203. Seals Inoperative. 17

The affixing of a seal to a writing record evidencing a contract for sale or an offer to buy 18

or sell goods does not constitute the writing record a sealed instrument and the law with respect 19

to sealed instruments does not apply to such a contract or offer. 20

Section 2-205. Firm Offers. 21

An offer by a merchant to buy or sell goods in a signed writing record which by its terms 22

gives assurance that it will be held open is not revocable, for lack of consideration, during the 23

10

time stated or if no time is stated for a reasonable time, but in no event may such period of 1

irrevocability exceed three months; but any such term of assurance on a form supplied by the 2

offeree must be separately signed by the offeror. 3

* * * 4 5 Section 2-209. Modification, Rescission, and Waiver. 6

(1) An agreement modifying a contract within this Article needs no consideration to be 7

binding. 8

(2) A signed agreement which excludes modification or rescission except by a signed 9

writing or other signed record cannot be otherwise modified or rescinded, but except as between 10

merchants such a requirement on a form supplied by the merchant must be separately signed by 11

the other party. 12

* * * 13

Section 2-607. Effect of Acceptance; Notice of Breach; Burden of Establishing 14

Breach After Acceptance; Notice of Claim or Litigation to Person Answerable Over. 15

(1) The buyer must pay at the contract rate for any goods accepted. 16

(2) Acceptance of goods by the buyer precludes rejection of the goods accepted and if 17

made with knowledge of a non-conformity cannot be revoked because of it unless the acceptance 18

was on the reasonable assumption that the non-conformity would be seasonably cured, but 19

acceptance does not of itself impair any other remedy provided by this Article for non-20

conformity. 21

(3) Where a tender has been accepted 22

(a) the buyer must within a reasonable time after he it discovers or should have 23

discovered any breach notify the seller of breach or be barred from any remedy; and 24

11

(b) if the claim is one for infringement or the like (subsection (3) of Section 2-1

312) and the buyer is sued as a result of such a the breach, he the buyer must so notify the seller 2

within a reasonable time after he the buyer receives notice of the litigation or be barred from any 3

remedy over for liability established by the litigation. 4

(4) The burden is on the buyer to establish any breach with respect to the goods accepted. 5

(5) Where the buyer is sued for breach of a warranty or other obligation for which his 6

seller is answerable over 7

(a) he the buyer may give his the seller written notice of the litigation. If the 8

notice states that the seller may come in and defend and that if the seller does not do so he will 9

be bound in any action against him by his the buyer by any determination of fact common to the 10

two litigations, then unless the seller after seasonable receipt of the notice does come in and 11

defend he it is so bound. 12

(b) if the claim is one for infringement or the like (subsection (3) of Section 2-13

312) the original seller may demand in writing that his buyer turn over to him control of the 14

litigation including settlement or else be barred from any remedy over and if he also agrees to 15

bear all expense and to satisfy any adverse judgment, then unless the buyer after seasonable 16

receipt of the demand does turn over control the buyer is so barred. 17

(6) The provisions of subsections (3), (4) and (5) apply to any obligation of a buyer to 18

hold the seller harmless against infringement or the like (subsection (3) of Section 2-312). 19

* * * 20

Section 2-616. Procedure on Notice Claiming Excuse. 21

(1) Where the buyer receives notification of a material or indefinite delay or an allocation 22

justified under the preceding section he may by written notification to the seller as to any 23

12

delivery concerned, and where the prospective deficiency substantially impairs the value of the 1

whole contract under the provisions of this Article relating to breach of installment contracts 2

(Section 2-612), then also as to the whole, 3

(a) terminate and thereby discharge any unexecuted portion of the contract; or 4

(b) modify the contract by agreeing to take his available quota in substitution. 5

(2) If after receipt of such notification from the seller the buyer fails so to modify the 6

contract within a reasonable time not exceeding thirty days the contract lapses with respect to 7

any deliveries affected. 8

(3) The provisions of this section may not be negated by agreement except in so far as the 9

seller has assumed a greater obligation under the preceding section. 10

* * * 11

ARTICLE 2A 12

LEASES 13

* * * 14

Section 2A-102. Scope. 15

(1) This Article applies to any transaction, regardless of form, that creates a lease and, in 16

the case of a hybrid lease, it applies to the extent provided in subsection (2). 17

(2) In a hybrid lease: 18

(a) If the lease-of-goods aspects do not predominate: 19

(i) only the provisions of this Article which relate primarily to the lease-20

of-goods aspects of the transaction apply, and the provisions that relate primarily to the 21

transaction as a whole do not apply; 22

(ii) Section 2A-209 applies if the lease is a finance lease; and 23

13

(iii) Section 2A-407 applies to the promises of the lessee in a finance lease 1

to the extent the promises are consideration for the right to possession and use of the leased 2

goods. 3

(b) If the lease-of-goods aspects of a hybrid lease predominate, this Article 4

applies to the transaction, but this does not preclude the application in appropriate circumstances 5

of other law to the aspects the lease which do not relate to the lease of goods. 6

* * * 7

Section 2A-103. Definitions and Index of Definitions. 8

(1) In this Article, unless the context otherwise requires: 9

* * * 10

(h.1) “Hybrid lease” means a single transaction involving a lease of goods and: 11

(i) the provision of services; 12

(ii) a sale of other goods; or 13

(iii) a sale, lease, or license of property other than goods. 14

* * * 15 16 Section 2A-107. Waiver or Renunciation of Claim or Right After Default. 17

Any claim or right arising out of an alleged default or breach of warranty may be 18

discharged in whole or in part without consideration by a written waiver or renunciation in a 19

signed and record delivered by the aggrieved party. 20

* * * 21

Section 2A-201. Statute of Frauds. 22

(1) A lease contract is not enforceable by way of action or defense unless: 23

(a) the total payments to be made under the lease contract, excluding payments for 24

14

options to renew or buy, are less than $1,000; or 1

(b) there is a writing record, signed by the party against whom enforcement is 2

sought or by that party’s authorized agent, sufficient to indicate that a lease contract has been 3

made between the parties and to describe the goods leased and the lease term. 4

(2) Any description of leased goods or of the lease term is sufficient and satisfies 5

subsection (1)(b), whether or not it is specific, if it reasonably identifies what is described. 6

(3) A writing record is not insufficient because it omits or incorrectly states a term agreed 7

upon, but the lease contract is not enforceable under subsection (1)(b) beyond the lease term and 8

the quantity of goods shown in the writing record. 9

(4) A lease contract that does not satisfy the requirements of subsection (1), but which is 10

valid in other respects, is enforceable: 11

(a) if the goods are to be specially manufactured or obtained for the lessee and are 12

not suitable for lease or sale to others in the ordinary course of the lessor’s business, and the 13

lessor, before notice of repudiation is received and under circumstances that reasonably indicate 14

that the goods are for the lessee, has made either a substantial beginning of their manufacture or 15

commitments for their procurement; 16

(b) if the party against whom enforcement is sought admits in that party’s 17

pleading, testimony or otherwise in court that a lease contract was made, but the lease contract is 18

not enforceable under this provision beyond the quantity of goods admitted; or 19

(c) with respect to goods that have been received and accepted by the lessee. 20

(5) The lease term under a lease contract referred to in subsection (4) is: 21

(a) if there is a writing record signed by the party against whom enforcement is 22

sought or by that party’s authorized agent specifying the lease term, the term so specified; 23

15

(b) if the party against whom enforcement is sought admits in that party’s 1

pleading, testimony, or otherwise in court a lease term, the term so admitted; or 2

(c) a reasonable lease term. 3

* * * 4

Section 2A-202. Final Wri

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