Texas adopts the 2022 uniform commercial code updates

The text as introduced · 25,382 words

89R13938 PRL-D

By: Parker
S.B. No. 2223

A BILL TO BE ENTITLED

AN ACT

relating to amendments to the Uniform Commercial Code, including

amendments concerning certain intangible assets and the perfection

of security interests in those assets.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

ARTICLE 1. GENERAL PROVISIONS

SECTION 1.01. Section 1.201(b), Business & Commerce Code,

is amended by amending Subdivisions (10), (15), (21), (24), (27),

(33), (36), and (37) and adding Subdivision (16-a) to read as

follows:

(10) "Conspicuous," with reference to a term, means so

written, displayed, or presented that , based on the totality of the

circumstances, a reasonable person against which it is to operate

ought to have noticed it. Whether a term is "conspicuous" or not is

a decision for the court. [ Conspicuous terms include the

following:

[ (A) a heading in capitals equal to or greater in

size than the surrounding text, or in contrasting type, font, or

color to the surrounding text of the same or lesser size; and

[ (B) language in the body of a record or display

in larger type than the surrounding text, or in contrasting type,

font, or color to the surrounding text of the same size, or set off

from surrounding text of the same size by symbols or other marks

that call attention to the language. ]

(15) "Delivery," with respect to an electronic

document of title, means voluntary transfer of control, and with

respect to an instrument, a tangible document of title, or an

authoritative tangible copy of a record evidencing chattel paper,

means voluntary transfer of possession.

(16-a) "Electronic" means relating to technology

having electrical, digital, magnetic, wireless, optical,

electromagnetic, or similar capabilities.

(21) "Holder" means:

(A) the person in possession of a negotiable

instrument that is payable either to bearer or to an identified

person that is the person in possession;

(B) the person in possession of a negotiable

tangible document of title if the goods are deliverable either to

bearer or to the order of the person in possession; or

(C) a person in control , other than pursuant to

Section 7.106(g), of a negotiable electronic document of title.

(24) "Money" means a medium of exchange that is

currently authorized or adopted by a domestic or foreign

government. The term includes a monetary unit of account

established by an intergovernmental organization , or pursuant to an

[ by ] agreement between two or more countries. The term does not

include an electronic record that is a medium of exchange recorded

and transferable in a system that existed and operated for the

medium of exchange before the medium of exchange was authorized or

adopted by the government.

(27) "Person" means an individual, corporation,

business trust, estate, trust, partnership, limited liability

company, association, joint venture, government, governmental

subdivision, agency, or instrumentality, or [ public corporation, ]

any other legal or commercial entity[ , or a protected series or

registered series of a for-profit entity ]. The term includes a

protected series or registered series, however denominated, of an

entity if the protected series or registered series is established

under law other than this title that limits, or limits if conditions

specified under the law are satisfied, the ability of a creditor of

the entity or of any other protected series or registered series of

the entity to satisfy a claim from assets of the protected series or

registered series.

(33) "Representative" means a person empowered to act

for another, including an agent, an officer of an organization [ a

corporation or association ], and a trustee, executor, or

administrator of an estate.

(36) "Send , " in connection with a [ writing, ] record[ , ]

or notification, [ notice ] means:

(A) to deposit in the mail , [ or ] deliver for

transmission , or transmit 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; or

(B) to [ in any other way ] cause the record or

notification to be received [ any record or notice ] within the time

[ at which ] it would have been received [ arrived ] if properly sent

under Paragraph (A) .

(37) "Sign" means, with present intent to authenticate

or adopt a record:

(A) execute or adopt a tangible symbol; or

(B) attach to or logically associate with the

record an electronic symbol, sound, or process.

"Signed , " "signing," and "signature" have corresponding meanings

[ includes using any symbol executed or adopted with present

intention to adopt or accept a writing ].

SECTION 1.02. Section 1.204, Business & Commerce Code, is

amended to read as follows:

Sec. 1.204. VALUE. Except as otherwise provided in

Chapters 3, 4, [ and ] 5, and 12A, a person gives value for rights if

the person acquires them:

(1) 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 charge-back is

provided for in the event of difficulties in collection;

(2) as security for, or in total or partial

satisfaction of, a preexisting claim;

(3) by accepting delivery under a preexisting contract

for purchase; or

(4) in return for any consideration sufficient to

support a simple contract.

SECTION 1.03. Section 1.301(b), Business & Commerce Code,

is amended to read as follows:

(b) Where one of the following provisions of this title

specifies the applicable law, that provision governs and a contrary

agreement is effective only to the extent permitted by the law

(including the conflict of laws rules) so specified:

Rights of creditors against sold goods. Section 2.402.

Applicability of the chapter on Leases. Sections 2A.105 and

2A.106.

Applicability of the chapter on Bank Deposits and

Collections. Section 4.102.

Governing law in the chapter on Funds Transfers. Section

4A.507.

Letters of Credit. Section 5.116.

Applicability of the chapter on Investment Securities.

Section 8.110.

Law governing perfection, the effect of perfection or

nonperfection, and the priority of security interests and

agricultural liens. Sections 9.301-9.307.

Controllable electronic record. Section 12A.107.

SECTION 1.04. Section 1.306, Business & Commerce Code, is

amended to read as follows:

Sec. 1.306. WAIVER OF RENUNCIATION OF CLAIM OR RIGHT AFTER

BREACH. A claim or right arising out of an alleged breach may be

discharged in whole or in part without consideration by agreement

of the aggrieved party in a signed [ an authenticated ] record.

ARTICLE 2. SALES

SECTION 2.01. Section 2.102, Business & Commerce Code, is

amended to read as follows:

Sec. 2.102. SCOPE; CERTAIN SECURITY AND OTHER TRANSACTIONS

EXCLUDED FROM THIS CHAPTER. (a) Unless the context otherwise

requires, and except as provided in Subsection (c), this chapter

applies to transactions in goods and, in the case of a hybrid

transaction, it applies to the extent provided in Subsection (b).

(b) In a hybrid transaction:

(1) if the sale-of-goods aspects do not predominate,

only the provisions of this chapter which relate primarily to the

sale-of-goods aspects of the transaction apply, and the provisions

that relate primarily to the transaction as a whole do not apply; or

(2) if the sale-of-goods aspects predominate, this

chapter applies to the transaction but does not preclude

application in appropriate circumstances of other law to aspects of

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

(c) This chapter [ ; it ] does not :

(1) apply to a [ any ] transaction that, even though

[ which although ] in the form of an unconditional contract to sell or

present sale , operates only to create a security interest; or

(2) [ is intended to operate only as a security

transaction nor does this chapter ] impair or repeal any statute

regulating sales to consumers, farmers , or other specified classes

of buyers.

SECTION 2.02. The heading to Section 2.106, Business &

Commerce Code, is amended to read as follows:

Sec. 2.106. DEFINITIONS: "CONTRACT"; "AGREEMENT";

"CONTRACT FOR SALE"; "SALE"; "PRESENT SALE"; "CONFORMING" TO

CONTRACT; "TERMINATION"; "CANCELLATION" ; "HYBRID TRANSACTION" .

SECTION 2.03. Section 2.106, Business & Commerce Code, is

amended by adding Subsection (e) to read as follows:

(e) "Hybrid transaction" means a single transaction

involving a sale of goods and:

(1) the provision of services;

(2) a lease of other goods; or

(3) a sale, lease, or license of property other than

goods.

SECTION 2.04. Sections 2.201(a) and (b), Business &

Commerce Code, are amended to read as follows:

(a) Except as otherwise provided in this section a contract

for the sale of goods for the price of $500 or more is not

enforceable by way of action or defense unless there is a record

[ some writing ] sufficient to indicate that a contract for sale has

been made between the parties and signed by the party against whom

enforcement is sought or by the party's [ his ] authorized agent or

broker. A record [ writing ] is not insufficient because it omits or

incorrectly states a term agreed upon but the contract is not

enforceable under this subsection [ paragraph ] beyond the quantity

of goods shown in the record [ such writing ].

(b) Between merchants if within a reasonable time a record

[ writing ] in confirmation of the contract and sufficient against

the sender is received and the party receiving it has reason to know

its contents, it satisfies the requirements of Subsection (a)

against the [ such ] party unless [ written ] notice in a record of

objection to its contents is given within ten days after it is

received.

SECTION 2.05. Section 2.202, Business & Commerce Code, is

amended to read as follows:

Sec. 2.202. FINAL [ WRITTEN ] EXPRESSION: PAROL OR EXTRINSIC

EVIDENCE. Terms with respect to which the confirmatory memoranda

of the parties agree or which are otherwise set forth in a record

[ 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 :

(1) by course of performance, course of dealing, or

usage of trade (Section 1.303); and

(2) by evidence of consistent additional terms unless

the court finds the record [ writing ] to have been intended also as a

complete and exclusive statement of the terms of the agreement.

SECTION 2.06. Section 2.203, Business & Commerce Code, is

amended to read as follows:

Sec. 2.203. SEALS INOPERATIVE. The affixing of a seal to a

record [ writing ] evidencing a contract for sale or an offer to buy

or sell goods does not constitute the record [ writing ] a sealed

instrument and the law with respect to sealed instruments does not

apply to such a contract or offer.

SECTION 2.07. Section 2.205, Business & Commerce Code, is

amended to read as follows:

Sec. 2.205. FIRM OFFERS. An offer by a merchant to buy or

sell goods in a signed record [ writing ] which by its terms gives

assurance that it will be held open is not revocable, for lack of

consideration, during the time stated or if no time is stated for a

reasonable time, but in no event may such period of irrevocability

exceed three months; but any such term of assurance on a form

supplied by the offeree must be separately signed by the offeror.

SECTION 2.08. Section 2.209(b), Business & Commerce Code,

is amended to read as follows:

(b) A signed agreement which excludes modification or

rescission except by a signed writing or other signed record cannot

be otherwise modified or rescinded, but except as between merchants

such a requirement on a form supplied by the merchant must be

separately signed by the other party.

ARTICLE 3. LEASES

SECTION 3.01. Section 2A.102, Business & Commerce Code, is

amended to read as follows:

Sec. 2A.102. SCOPE. (a) This chapter applies to any

transaction, regardless of form, that creates a lease of goods and,

in the case of a hybrid lease, it applies to the extent provided in

Subsection (b) . This chapter does not apply to a transaction that

creates an interest in or lease of real estate, except to the extent

that provision is made for leases of fixtures by Section 2A.309.

(b) In a hybrid lease:

(1) if the lease-of-goods aspects do not predominate:

(A) only the provisions of this chapter which

relate primarily to the lease-of-goods aspects of the transaction

apply, and the provisions that relate primarily to the transaction

as a whole do not apply;

(B) Section 2A.209 applies if the lease is a

finance lease; and

(C) Section 2A.407 applies to the promises of the

lessee in a finance lease to the extent the promises are

consideration for the right to possession and use of the leased

goods; and

(2) if the lease-of-goods aspects predominate, this

chapter applies to the transaction, but does not preclude

application in appropriate circumstances of other law to aspects of

the lease which do not relate to the lease of goods.

SECTION 3.02. Section 2A.103(a), Business & Commerce Code,

is amended by adding Subdivision (8-a) to read as follows:

(8-a) "Hybrid lease" means a single transaction

involving a lease of goods and:

(A) the provision of services;

(B) the sale of other goods; or

(C) subject to the second sentence of Section

2A.102(a), a sale, lease, or license of property other than goods.

SECTION 3.03. Section 2A.107, Business & Commerce Code, is

amended to read as follows:

Sec. 2A.107. WAIVER OR RENUNCIATION OF CLAIM OR RIGHT AFTER

DEFAULT. A claim or right arising out of an alleged default or

breach of warranty may be discharged in whole or in part without

consideration by a [ written ] waiver or renunciation in a signed

record [ and ] delivered by the aggrieved party.

SECTION 3.04. Sections 2A.201(a), (c), and (e), Business &

Commerce Code, are amended to read as follows:

(a) A lease contract is not enforceable by way of action or

defense unless:

(1) the total payments to be made under the lease

contract, excluding payments for options to renew or buy, are less

than $1,000; or

(2) there is a record [ writing ], signed by the party

against whom enforcement is sought or by that party's authorized

agent, sufficient to indicate that a lease contract has been made

between the parties and to describe the goods leased and the lease

term.

(c) A record [ writing ] is not insufficient because it omits

or incorrectly states a term agreed upon, but the lease contract is

not enforceable under Subsection (a)(2) beyond the lease term and

the quantity of goods shown in the record [ writing ].

(e) The lease term under a lease contract referred to in

Subsection (d) is:

(1) if there is a record [ writing ] signed by the party

against whom enforcement is sought or by that party's authorized

agent specifying the lease term, the term so specified;

(2) if the party against whom enforcement is sought

admits in that party's pleading, testimony, or otherwise in court a

lease term, the term so admitted; or

(3) a reasonable lease term.

SECTION 3.05. Section 2A.202, Business & Commerce Code, is

amended to read as follows:

Sec. 2A.202. FINAL [ WRITTEN ] EXPRESSION; PAROL OR

EXTRINSIC EVIDENCE. Terms with respect to which the confirmatory

memoranda of the parties agree or which are otherwise set forth in a

record [ 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 a prior agreement or of a

contemporaneous oral agreement but may be explained or

supplemented:

(1) by course of dealing or usage of trade or by course

of performance; and

(2) by evidence of consistent additional terms unless

the court finds the record [ writing ] to have been intended also as a

complete and exclusive statement of the terms of the agreement.

SECTION 3.06. Section 2A.203, Business & Commerce Code, is

amended to read as follows:

Sec. 2A.203. SEALS INOPERATIVE. The affixing of a seal to a

record [ writing ] evidencing a lease contract or an offer to enter

into a lease contract does not render the record [ writing ] a sealed

instrument and the law with respect to sealed instruments does not

apply to the lease contract or offer.

SECTION 3.07. Section 2A.205, Business & Commerce Code, is

amended to read as follows:

Sec. 2A.205. FIRM OFFERS. An offer by a merchant to lease

goods to or from another person in a signed record [ writing ] that by

its terms gives assurance it will be held open is not revocable, for

lack of consideration, during the time stated or, if no time is

stated, for a reasonable time, but in no event may the period of

irrevocability exceed three months. Any such term of assurance on a

form supplied by the offeree must be separately signed by the

offeror.

SECTION 3.08. The heading of Section 2A.208, Business &

Commerce Code, is amended to read as follows:

Sec. 2A.208. MODIFICATION, RESCISSION , AND WAIVER.

SECTION 3.09. Section 2A.208(b), Business & Commerce Code,

is amended to read as follows:

(b) A signed lease agreement that excludes modification or

rescission except by a signed record [ writing ] may not be otherwise

modified or rescinded, but, except as between merchants, such a

requirement on a form supplied by a merchant must be separately

signed by the other party.

ARTICLE 4. NEGOTIABLE INSTRUMENTS

SECTION 4.01. Section 3.104(a), Business & Commerce Code,

is amended to read as follows:

(a) Except as provided in Subsections (c) and (d),

"negotiable instrument" means an unconditional promise or order to

pay a fixed amount of money, with or without interest or other

charges described in the promise or order, if it:

(1) is payable to bearer or to order at the time it is

issued or first comes into possession of a holder;

(2) is payable on demand or at a definite time; and

(3) does not state any other undertaking or

instruction by the person promising or ordering payment to do any

act in addition to the payment of money, but the promise or order

may contain:

(A) an undertaking or power to give, maintain, or

protect collateral to secure payment;

(B) an authorization or power to the holder to

confess judgment or realize on or dispose of collateral; [ or ]

(C) a waiver of the benefit of any law intended

for the advantage or protection of an obligor ;

(D) a term that specifies the law that governs

the promise or order; or

(E) an undertaking to resolve in a specified

forum a dispute concerning the promise or order .

SECTION 4.02. Section 3.105(a), Business & Commerce Code,

is amended to read as follows:

(a) "Issue" means :

(1) the first delivery of an instrument by the maker or

drawer, whether to a holder or nonholder, for the purpose of giving

rights on the instrument to any person ; or

(2) if agreed by the payee, the first transmission by

the drawer to the payee of an image of an item and information

derived from the item that enables the depositary bank to collect

the item by transferring or presenting under federal law an

electronic check .

SECTION 4.03. Section 3.401, Business & Commerce Code, is

amended to read as follows:

Sec. 3.401. SIGNATURE NECESSARY FOR LIABILITY ON

INSTRUMENT . [ (a) ] A person is not liable on an instrument unless

the person:

(1) signed the instrument; or

(2) is represented by an agent or representative who

signed the instrument and the signature is binding on the

represented person under Section 3.402.

[ (b) A signature may be made (i) manually or by means of a

device or machine, and (ii) by the use of any name, including a

trade or assumed name, or by a word, mark, or symbol executed or

adopted by a person with present intention to authenticate a

writing. ]

SECTION 4.04. Section 3.604, Business & Commerce Code, is

amended to read as follows:

Sec. 3.604. DISCHARGE BY CANCELLATION OR RENUNCIATION. (a)

A person entitled to enforce an instrument, with or without

consideration, may discharge the obligation of a party to pay the

instrument:

(1) by an intentional voluntary act, such as surrender

of the instrument to the party, destruction, mutilation, or

cancellation of the instrument, cancellation or striking out of the

party's signature, or the addition of words to the instrument

indicating discharge; or

(2) by agreeing not to sue or otherwise renouncing

rights against the party by a signed record.

(b) The obligation of a party to pay a check is not

discharged solely by destruction of the check in connection with a

process in which information is extracted from the check and an

image of the check is made and, subsequently, the information and

image are transmitted for payment.

(c) Cancellation or striking out of an indorsement pursuant

to Subsection (a) does not affect the status and rights of a party

derived from the indorsement.

[ (c) In this section, "signed," with respect to a record

that is not a writing, includes the attachment to or logical

association with the record of an electronic symbol, sound, or

process with the present intent to adopt or accept the record. ]

ARTICLE 5. FUNDS TRANSFERS

SECTION 5.01. Section 4A.103(a)(1), Business & Commerce

Code, is amended to read as follows:

(1) "Payment order" means an instruction of a sender

to a receiving bank, transmitted orally or in a record ,

[ electronically, or in writing, ] to pay, or to cause another bank to

pay, a fixed or determinable amount of money to a beneficiary if:

(A) the instruction does not state a condition of

payment to the beneficiary other than the time of payment;

(B) the receiving bank is to be reimbursed by

debiting an account of, or otherwise receiving payment from, the

sender; and

(C) the instruction is transmitted by the sender

directly to the receiving bank or to an agent, funds transfer

system, or communication system for transmittal to the receiving

bank.

SECTION 5.02. Section 4A.201, Business & Commerce Code, is

amended to read as follows:

Sec. 4A.201. SECURITY PROCEDURE. "Security procedure"

means a procedure established by an agreement between a customer

and a receiving bank for the purpose of (i) verifying that a payment

order or communication amending or cancelling a payment order is

that of the customer, or (ii) detecting error in the transmission or

the content of the payment order or communication. A security

procedure may impose an obligation on the receiving bank or the

customer and may require the use of algorithms or other codes,

identifying words , [ or ] numbers, symbols, sounds, biometrics,

encryption, callback procedures, or similar security devices.

Comparison of a signature on a payment order or communication with

an authorized specimen signature of the customer or requiring a

payment order to be sent from a known e-mail address, IP address, or

telephone number is not by itself a security procedure.

SECTION 5.03. Sections 4A.202(b) and (c), Business &

Commerce Code, are amended to read as follows:

(b) If a bank and its customer have agreed that the

authenticity of payment orders issued to the bank in the name of the

customer as sender will be verified pursuant to a security

procedure, a payment order received by the receiving bank is

effective as the order of the customer, whether or not authorized,

if (i) the security procedure is a commercially reasonable method

of providing security against unauthorized payment orders, and (ii)

the bank proves that it accepted the payment order in good faith and

in compliance with the bank's obligations under the security

procedure and any [ written ] agreement or instruction of the

customer , evidenced by a record, restricting acceptance of payment

orders issued in the name of the customer. The bank is not required

to follow an instruction that violates an [ a written ] agreement

with the customer evidenced by a record, or notice of which is not

received at a time and in a manner affording the bank a reasonable

opportunity to act on it before the payment order is accepted.

(c) Commercial reasonableness of a security procedure is a

question of law to be determined by considering the wishes of the

customer expressed to the bank, the circumstances of the customer

known to the bank, including the size, type, and frequency of

payment orders normally issued by the customer to the bank,

alternative security procedures offered to the customer, and

security procedures in general use by customers and receiving banks

similarly situated. A security procedure is deemed to be

commercially reasonable if:

(1) the security procedure was chosen by the customer

after the bank offered, and the customer refused, a security

procedure that was commercially reasonable for the customer; and

(2) the customer expressly agreed in a record

[ writing ] to be bound by any payment order, whether or not

authorized, issued in its name and accepted by the bank in

compliance with the bank's obligations under the security procedure

chosen by the customer.

SECTION 5.04. Section 4A.203(a), Business & Commerce Code,

is amended to read as follows:

(a) If an accepted payment order is not, under Section

4A.202(a), an authorized order of a customer identified as sender,

but is effective as an order of the customer pursuant to Section

4A.202(b), the following rules apply:

(1) By express [ written ] agreement evidenced by a

record , the receiving bank may limit the extent to which it is

entitled to enforce or retain payment of the payment order.

(2) The receiving bank is not entitled to enforce or

retain payment of the payment order if the customer proves that the

order was not caused, directly or indirectly, by a person:

(A) entrusted at any time with duties to act for

the customer with respect to payment orders or the security

procedure; or

(B) who obtained access to transmitting

facilities of the customer or who obtained, from a source

controlled by the customer and without authority of the receiving

bank, information facilitating breach of the security procedure,

regardless of how the information was obtained or whether the

customer was at fault. Information includes any access device,

computer software, or the like.

SECTION 5.05. Section 4A.207(c), Business & Commerce Code,

is amended to read as follows:

(c) If (i) a payment order described in Subsection (b) is

accepted, (ii) the originator's payment order described the

beneficiary inconsistently by name and number, and (iii) the

beneficiary's bank pays the person identified by number as

permitted by Subsection (b)(1), the following rules apply:

(1) If the originator is a bank, the originator is

obliged to pay its order.

(2) If the originator is not a bank and proves that the

person identified by number was not entitled to receive payment

from the originator, the originator is not obliged to pay its order

unless the originator's bank proves that the originator, before

acceptance of the originator's order, had notice that payment of a

payment order issued by the originator might be made by the

beneficiary's bank on the basis of an identifying or bank account

number even if it identifies a person different from the named

beneficiary. Proof of notice may be made by any admissible

evidence. The originator's bank satisfies the burden of proof if it

proves that the originator, before the payment order was accepted,

signed a record [ writing ] stating the information to which the

notice relates.

SECTION 5.06. Section 4A.208(b), Business & Commerce Code,

is amended to read as follows:

(b) This subsection applies to a payment order identifying

an intermediary bank or the beneficiary's bank both by name and an

identifying number if the name and number identify different

persons.

(1) If the sender is a bank, the receiving bank may

rely on the number as the proper identification of the intermediary

or beneficiary's bank if the receiving bank, when it executes the

sender's order, does not know that the name and number identify

different persons. The receiving bank need not determine whether

the name and number refer to the same person or whether the number

refers to a bank. The sender is obliged to compensate the receiving

bank for any loss and expenses incurred by the receiving bank as a

result of its reliance on the number in executing or attempting to

execute the order.

(2) If the sender is not a bank and the receiving bank

proves that the sender, before the payment order was accepted, had

notice that the receiving bank might rely on the number as the

proper identification of the intermediary or beneficiary's bank

even if it identifies a person different from the bank identified by

name, the rights and obligations of the sender and the receiving

bank are governed by Subsection (b)(1), as though the sender were a

bank. Proof of notice may be made by any admissible evidence. The

receiving bank satisfies the burden of proof if it proves that the

sender, before the payment order was accepted, signed a record

[ writing ] stating the information to which the notice relates.

(3) Regardless of whether the sender is a bank, the

receiving bank may rely on the name as the proper identification of

the intermediary or beneficiary's bank if the receiving bank, at

the time it executes the sender's order, does not know that the name

and number identify different persons. The receiving bank need not

determine whether the name and number refer to the same person.

(4) If the receiving bank knows that the name and

number identify different persons, reliance on either the name or

the number in executing the sender's payment order is a breach of

the obligation stated in Section 4A.302(a)(1).

SECTION 5.07. Section 4A.210(a), Business & Commerce Code,

is amended to read as follows:

(a) A payment order is rejected by the receiving bank by a

notice of rejection transmitted to the sender orally[ ,

electronically, ] or in a record [ writing ]. A notice of rejection

need not use any particular words and is sufficient if it indicates

that the receiving bank is rejecting the order or will not execute

or pay the order. Rejection is effective when the notice is given

if transmission is by a means that is reasonable under the

circumstances. If notice of rejection is given by a means that is

not reasonable, rejection is effective when the notice is received.

If an agreement of the sender and receiving bank establishes the

means to be used to reject a payment order:

(1) any means complying with the agreement is

reasonable; and

(2) any means not complying is not reasonable unless

no significant delay in receipt of the notice resulted from the use

of the noncomplying means.

SECTION 5.08. Section 4A.211(a), Business & Commerce Code,

is amended to read as follows:

(a) A communication of the sender of a payment order

cancelling or amending the order may be transmitted to the

receiving bank orally[ , electronically, ] or in a record [ writing ].

If a security procedure is in effect between the sender and the

receiving bank, the communication is not effective to cancel or

amend the order unless the communication is verified pursuant to

the security procedure or the bank agrees to the cancellation or

amendment.

SECTION 5.09. Sections 4A.305(c) and (d), Business &

Commerce Code, are amended to read as follows:

(c) In addition to the amounts payable under Subsections (a)

and (b), damages, including consequential damages, are recoverable

to the extent provided in an express [ written ] agreement of the

receiving bank , evidenced by a record .

(d) If a receiving bank fails to execute a payment order it

was obliged by express agreement to execute, the receiving bank is

liable to the sender for its expenses in the transaction and for

incidental expenses and interest losses resulting from the failure

to execute. Additional damages, including consequential damages,

are recoverable to the extent provided in an express [ written ]

agreement of the receiving bank, evidenced by a record, but are not

otherwise recoverable.

ARTICLE 6. LETTERS OF CREDIT

SECTION 6.01. Section 5.104, Business & Commerce Code, is

amended to read as follows:

Sec. 5.104. FORMAL REQUIREMENTS. A letter of credit,

confirmation, advice, transfer, amendment, or cancellation may be

issued in any form that is a signed record [ and is authenticated:

[ (1) by a signature; or

[ (2) in accordance with the agreement of the parties

or the standard practice referred to in Section 5.108(e) ].

SECTION 6.02. Section 5.116, Business & Commerce Code, is

amended to read as follows:

Sec. 5.116. CHOICE OF LAW AND FORUM. (a) The liability of

an issuer, nominated person, or adviser for action or omission is

governed by the law of the jurisdiction chosen by an agreement in

the form of a record signed [ or otherwise authenticated ] by the

affected parties [ in the manner provided in Section 5.104 ] or by a

provision in the person's letter of credit, confirmation, or other

undertaking. The jurisdiction whose law is chosen need not bear any

relation to the transaction.

(b) Unless Subsection (a) applies, the liability of an

issuer, nominated person, or adviser for action or omission is

governed by the law of the jurisdiction in which the person is

located. The person is considered to be located at the address

indicated in the person's undertaking. If more than one address is

indicated, the person is considered to be located at the address

from which the person's undertaking was issued.

(c) For the purpose of jurisdiction, choice of law, and

recognition of interbranch letters of credit, but not enforcement

of a judgment, all branches of a bank are considered separate

juridical entities, and a bank is considered to be located at the

place where its relevant branch is considered to be located under

Subsection (d) [ this subsection ].

(d) A branch of a bank is considered to be located at the

address indicated in the branch's undertaking. If more than one

address is indicated, the branch is considered to be located at the

address from which the undertaking was issued.

(e) [ (c) ] Except as otherwise provided in this subsection,

the liability of an issuer, nominated person, or adviser is

governed by any rules of custom or practice, such as the Uniform

Customs and Practice for Documentary Credits, to which the letter

of credit, confirmation, or other undertaking is expressly made

subject. If (i) this chapter would govern the liability of an

issuer, nominated person, or adviser under Subsection (a) or (b),

(ii) the relevant undertaking incorporates rules of custom or

practice, and (iii) there is conflict between this chapter and

those rules as applied to that undertaking, those rules govern

except to the extent of any conflict with the nonvariable

provisions specified in Section 5.103(c).

(f) [ (d) ] If there is conflict between this chapter and

Chapter 3, 4, 4A, or 9, this chapter governs.

(g) [ (e) ] The forum for settling disputes arising out of an

undertaking within this chapter may be chosen in the manner and with

the binding effect that governing law may be chosen in accordance

with Subsection (a).

ARTICLE 7. DOCUMENTS OF TITLE

SECTION 7.01. Section 7.106, Business & Commerce Code, is

amended by amending Subsection (b) and adding Subsections (c), (d),

(e), (f), (g), (h), and (i) to read as follows:

(b) A system satisfies Subsection (a), and a person has [ is

deemed to have ] control of an electronic document of title, if the

document is created, stored, and transferred [ assigned ] in [ such ] a

manner that:

(1) a single authoritative copy of the document exists

which 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 transferee [ 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.

(c) A system satisfies Subsection (a), and a person has

control of an electronic document of title, if an authoritative

electronic copy of the document, a record attached to or logically

associated with the electronic copy, or a system in which the

electronic copy is recorded:

(1) enables the person readily to identify each

electronic copy as either an authoritative copy or a

nonauthoritative copy;

(2) enables the person readily to identify itself in

any way, including by name, identifying number, cryptographic key,

office, or account number, as the person to which each

authoritative electronic copy was issued or transferred; and

(3) gives the person exclusive power, subject to

Subsection (d), to:

(A) prevent others from adding or changing the

person to which each authoritative electronic copy has been issued

or transferred; and

(B) transfer control of each authoritative

electronic copy.

(d) Subject to Subsection (e), a power is exclusive under

Subsections (c)(3)(A) and (B), even if:

(1) the authoritative electronic copy, a record

attached to or logically associated with the authoritative

electronic copy, or a system in which the authoritative electronic

copy is recorded limits the use of the document of title or has a

protocol that is programmed to cause a change, including a transfer

or loss of control; or

(2) the power is shared with another person.

(e) A power of a person is not shared with another person

under Subsection (d)(2) and the person's power is not exclusive if:

(1) the person can exercise the power only if the power

also is exercised by the other person; and

(2) the other person:

(A) can exercise the power without exercise of

the power by the person; or

(B) is the transferor to the person of an

interest in the document of title.

(f) If a person has the powers specified in Subsections

(c)(3)(A) and (B), the powers are presumed to be exclusive.

(g) A person has control of an electronic document of title

if another person, other than the transferor to the person of an

interest in the document:

(1) has control of the document and acknowledges that

it has control on behalf of the person; or

(2) obtains control of the document after having

acknowledged that it will obtain control of the document on behalf

of the person.

(h) A person that has control under this section is not

required to acknowledge that it has control on behalf of another

person.

(i) If a person acknowledges that it has or will obtain

control on behalf of another person, unless the person otherwise

agrees or law other than this chapter or Chapter 9 otherwise

provides, the person does not owe any duty to the other person and

is not required to confirm the acknowledgment to any other person.

ARTICLE 8. INVESTMENT SECURITIES

SECTION 8.01. Section 8.102(a)(6), Business & Commerce

Code, is amended to read as follows:

(6) "Communicate" means to:

(A) send a signed record [ writing ]; or

(B) transmit information by any mechanism agreed

on by the persons transmitting and receiving the information.

SECTION 8.02. Section 8.102(b), Business & Commerce Code,

is amended to read as follows:

(b) The following [ Other ] definitions in [ applying to ] this

chapter and other chapters apply to this chapter [ the sections in

which they appear are ]:

Appropriate person
Section 8.107

Control
Section 8.106

Controllable account
Section 9.102

Controllable electronic record
Section 12A.102

Controllable payment intangible
Section 9.102

Delivery
Section 8.301

Investment company security
Section 8.103

Issuer
Section 8.201

Overissue
Section 8.210

Protected purchaser
Section 8.303

Securities account
Section 8.501

SECTION 8.03. Section 8.103, Business & Commerce Code, is

amended by adding Subsection (h) to read as follows:

(h) A controllable account, controllable electronic record,

or controllable payment intangible is not a financial asset unless

Section 8.102(a)(9)(C) applies.

SECTION 8.04. Section 8.106, Business & Commerce Code, is

amended by amending Subsection (d) and adding Subsections (h) and

(i) to read as follows:

(d) A purchaser has control of a security entitlement if:

(1) the purchaser becomes the entitlement holder;

(2) the securities intermediary has agreed that it

will comply with entitlement orders originated by the purchaser

without further consent by the entitlement holder; or

(3) another person , other than the transferor to the

purchaser of an interest in the security entitlement:

(A) has control of the security entitlement and

[ on behalf of the purchaser or, having previously acquired control

of the security entitlement, ] acknowledges that it has control on

behalf of the purchaser ; or

(B) obtains control of the security entitlement

after having acknowledged that it will obtain control of the

security entitlement on behalf of the purchaser .

(h) A person that has control under this section is not

required to acknowledge that it has control on behalf of a

purchaser.

(i) If a person acknowledges that it has or will obtain

control on behalf of a purchaser, unless the person otherwise

agrees or law other than this chapter or Chapter 9 otherwise

provides, the person does not owe any duty to the purchaser and is

not required to confirm the acknowledgment to any other person.

SECTION 8.05. Section 8.110, Business & Commerce Code, is

amended by adding Subsection (g) to read as follows:

(g) The local law of the issuer's jurisdiction or the

securities intermediary's jurisdiction governs a matter or

transaction specified in Subsection (a) or (b) even if the matter or

transaction does not bear any relation to the jurisdiction.

SECTION 8.06. Section 8.303(b), Business & Commerce Code,

is amended to read as follows:

(b) A [ In addition to acquiring the rights of a purchaser,

a ] protected purchaser [ also ] acquires its interest in the security

free of any adverse claim.

ARTICLE 9. SECURED TRANSACTIONS

SECTION 9.01. Section 9.102(a), Business & Commerce Code,

is amended by amending Subdivisions (2), (3), (4), (11), (42),

(47), (62), and (67) and adding Subdivisions (7-a), (7-b), (27-a),

(27-b), (31-a), (54-a), and (79-a) to read as follows:

(2) "Account," except as used in "account for,"

"account statement," "account to," the definition of "commodity

account" in Subdivision (14), "customer's account," the definition

of "deposit account" in Subdivision (29), "on account of," and

"statement of account," means a right to payment of a monetary

obligation, whether or not earned by performance, (i) for property

that has been or is to be sold, leased, licensed, assigned, or

otherwise disposed of, (ii) for services rendered or to be

rendered, (iii) for a policy of insurance issued or to be issued,

(iv) for a secondary obligation incurred or to be incurred, (v) for

energy provided or to be provided, (vi) for the use or hire of a

vessel under a charter or other contract, (vii) arising out of the

use of a credit or charge card or information contained on or for

use with the card, or (viii) as winnings in a lottery or other game

of chance operated or sponsored by a state, governmental unit of a

state, or person licensed or authorized to operate the game by a

state or governmental unit of a state. The term includes

controllable accounts and health-care-insurance receivables. The

term does not include (i) chattel paper [ rights to payment

evidenced by chattel paper or an instrument ], (ii) commercial tort

claims, (iii) deposit accounts, (iv) investment property, (v)

letter-of-credit rights or letters of credit, [ or ] (vi) rights to

payment for money or funds advanced or sold, other than rights

arising out of the use of a credit or charge card or information

contained on or for use with the card , or (vii) rights to payment

evidenced by an instrument .

(3) "Account debtor" means a person obligated on an

account, chattel paper, or general intangible. The term does not

include persons obligated to pay a negotiable instrument, even if

the negotiable instrument evidences [ constitutes part of ] chattel

paper.

(4) "Accounting," except as used in "accounting for,"

means a record:

(A) signed [ authenticated ] by a secured party;

(B) indicating the aggregate unpaid secured

obligations as of a date not more than 35 days earlier or 35 days

later than the date of the record; and

(C) identifying the components of the

obligations in reasonable detail.

(7-a) "Assignee," except as used in "assignee for

benefit of creditors," means a person (i) in whose favor a security

interest that secures an obligation is created or provided for

under a security agreement, whether or not the obligation is

outstanding or (ii) to which an account, chattel paper, payment

intangible, or promissory note has been sold. The term includes a

person to which a security interest has been transferred by a

secured party.

(7-b) "Assignor" means a person that (i) under a

security agreement creates or provides for a security interest that

secures an obligation or (ii) sells an account, chattel paper,

payment intangible, or promissory note. The term includes a

secured party that has transferred a security interest to another

person.

(11) "Chattel paper" means :

(A) a right to payment of a monetary obligation

secured by specific goods, if the right to payment and security

agreement are evidenced by a record; or

(B) a right to payment of a monetary obligation

owed by a lessee under a lease agreement with respect to specific

goods and a monetary obligation owed by the lessee in connection

with the transaction giving rise to the lease, if:

(i) the right to payment and lease

agreement are evidenced by a record; and

(ii) the predominant purpose of the

transaction giving rise to the lease was to give the lessee the

right to possession and use of the goods. The term does not include

a right to payment arising out of a charter or other contract

involving the use or hire of a vessel or a right to payment arising

out of the use of a credit or charge card or information contained

on or for use with the card [ a record or records that evidence both a

monetary obligation and a security interest in specific goods, a

security interest in specific goods and software used in the goods,

a security interest in specific goods and license of software used

in the goods, a lease of specific goods, or a lease of specific

goods and license of software used in the goods. In this

subdivision, "monetary obligation" means a monetary obligation

secured by the goods or owed under a lease of the goods and includes

a monetary obligation with respect to software used in the goods.

The term does not include (i) charters or other contracts involving

the use or hire of a vessel or (ii) records that evidence a right to

payment arising out of the use of a credit or charge card or

information contained on or for use with the card. If a transaction

is evidenced by records that include an instrument or series of

instruments, the group of records taken together constitutes

chattel paper ].

(27-a) "Controllable account" means an account

evidenced by a controllable electronic record that provides that

the account debtor undertakes to pay the person that has control

under Section 12A.105 of the controllable electronic record.

(27-b) "Controllable payment intangible" means a

payment intangible evidenced by a controllable electronic record

that provides that the account debtor undertakes to pay the person

that has control under Section 12A.105 of the controllable

electronic record.

(31-a) "Electronic money" means money in an electronic

form.

(42) "General intangible" means any personal

property, including things in action, other than accounts, chattel

paper, commercial tort claims, deposit accounts, documents, goods,

instruments, investment property, letter-of-credit rights, letters

of credit, money, and oil, gas, or other minerals before

extraction. The term includes controllable electronic records,

payment intangibles , and software.

(47) "Instrument" means a negotiable instrument or any

other writing that evidences a right to the payment of a monetary

obligation, is not itself a security agreement or lease, and is of a

type that in ordinary course of business is transferred by delivery

with any necessary indorsement or assignment. The term does not

include (i) investment property, (ii) letters of credit, (iii)

writings that evidence a right to payment arising out of the use of

a credit or charge card or information contained on or for use with

the card, [ or ] (iv) nonnegotiable certificates of deposit , or (v)

writings that evidence chattel paper .

(54-a) "Money" has the meaning in Section

1.201(b)(24), but does not include (i) a deposit account or (ii)

money in an electronic form that cannot be subjected to control

under Section 9.1051.

(62) "Payment intangible" means a general intangible

under which the account debtor's principal obligation is a monetary

obligation. The term includes a controllable payment intangible.

(67) "Proposal" means a record signed [ authenticated ]

by a secured party that includes the terms on which the secured

party is willing to accept collateral in full or partial

satisfaction of the obligation it secures pursuant to Sections

9.620, 9.621, and 9.622.

(79-a) "Tangible money" means money in a tangible

form.

SECTION 9.02. Section 9.102(b), Business & Commerce Code,

is amended to read as follows:

(b) "Control" as provided in Section 7.106 and the [ The ]

following definitions in other chapters apply to this chapter:

"Applicant"
Section 5.102.

"Beneficiary"
Section 5.102.

"Broker"
Section 8.102.

"Certificated security"
Section 8.102.

"Check"
Section 3.104.

"Clearing corporation"
Section 8.102.

"Contract for sale"
Section 2.106.

[ "Control" (with respect to a ]
[ Section 7.106. ]

[]
[ Section 7.106. ]

"Controllable electronic record"
Section 12A.102.

"Customer"
Section 4.104.

"Entitlement holder"
Section 8.102.

"Financial asset"
Section 8.102.

"Holder in due course"
Section 3.302.

"Issuer" (with respect to a letter of credit

"Issuer" (with respect to a letter of credit

or letter-of-credit right)
Section 5.102.

"Issuer" (with respect to a security)
Section 8.201.

"Issuer" (with respect to a security)
Section 8.201.

"Lease"
Section 2A.103.

"Lease agreement"
Section 2A.103.

"Lease contract"
Section 2A.103.

"Leasehold interest"
Section 2A.103.

"Lessee"
Section 2A.103.

"Lessee in ordinary course of business"
Section 2A.103.

"Lessee in ordinary course of business"
Section 2A.103.

"Lessor"
Section 2A.103.

"Lessor's residual interest"
Section 2A.103.

"Letter of credit"
Section 5.102.

"Merchant"
Section 2.104.

"Negotiable instrument"
Section 3.104.

"Nominated person"
Section 5.102.

"Note"
Section 3.104.

"Proceeds of a letter of credit"
Section 5.114.

"Protected purchaser"
Section 8.303.

"Prove"
Section 3.103.

"Qualifying purchaser"
Section 12A.102.

"Sale"
Section 2.106.

"Securities account"
Section 8.501.

"Securities intermediary"
Section 8.102.

"Security"
Section 8.102.

"Security certificate"
Section 8.102.

"Security entitlement"
Section 8.102.

"Uncertificated security"
Section 8.102.

[ "Virtual currency" ]
[ Section 12.001. ]

SECTION 9.03. Section 9.104(a), Business & Commerce Code,

is amended to read as follows:

(a) A secured party has control of a deposit account if:

(1) the secured party is the bank with which the

deposit account is maintained;

(2) the debtor, secured party, and bank have agreed in

a signed [ an authenticated ] record that the bank will comply with

instructions originated by the secured party directing disposition

of the funds in the deposit account without further consent by the

debtor; [ or ]

(3) the secured party becomes the bank's customer with

respect to the deposit account ; or

(4) another person, other than the debtor:

(A) has control of the deposit account and

acknowledges that it has control on behalf of the secured party; or

(B) obtains control of the deposit account after

having acknowledged that it will obtain control of the deposit

account on behalf of the secured party .

SECTION 9.04. Section 9.105, Business & Commerce Code, is

amended to read as follows:

Sec. 9.105. CONTROL OF ELECTRONIC COPY OF RECORD EVIDENCING

CHATTEL PAPER. (a) A purchaser [ secured party ] has control of an

authoritative electronic copy of a record evidencing chattel paper

if a system employed for evidencing the assignment [ transfer ] of

interests in the chattel paper reliably establishes the purchaser

[ secured party ] as the person to which the authoritative electronic

copy [ chattel paper ] was assigned.

(b) A system satisfies Subsection (a)[ , and a secured party

has control of electronic chattel paper, ] if the record or records

evidencing [ comprising ] the chattel paper are created, stored, and

assigned in [ such ] a manner that:

(1) a single authoritative copy of the record or

records exists which [ that ] is unique, identifiable, and, except as

otherwise provided in Subdivisions (4), (5), and (6), unalterable;

(2) the authoritative copy identifies the purchaser

[ secured party ] as the assignee of the record or records;

(3) the authoritative copy is communicated to and

maintained by the purchaser [ secured party ] 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 purchaser [ secured party ];

(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.

(c) A system satisfies Subsection (a), and a purchaser has

control of an authoritative electronic copy of a record evidencing

chattel paper, if the electronic copy, a record attached to or

logically associated with the electronic copy, or a system in which

the electronic copy is recorded:

(1) enables the purchaser readily to identify each

electronic copy as an authoritative copy or a nonauthoritative

copy;

(2) enables the purchaser readily to identify itself

in any way, including by name, identifying number, cryptographic

key, office, or account number, as the assignee of the

authoritative electronic copy; and

(3) gives the purchaser exclusive power, subject to

Subsection (d), to:

(A) prevent others from adding or changing an

identified assignee of the authoritative electronic copy; and

(B) transfer control of the authoritative

electronic copy.

(d) Subject to Subsection (e), a power is exclusive under

Subsections (c)(3)(A) and (B) even if:

(1) the authoritative electronic copy, a record

attached to or logically associated with the authoritative

electronic copy, or a system in which the authoritative electronic

copy is recorded limits the use of the authoritative electronic

copy or has a protocol programmed to cause a change, including a

transfer or loss of control; or

(2) the power is shared with another person.

(e) A power of a purchaser is not shared with another person

under Subsection (d)(2) and the purchaser's power is not exclusive

if:

(1) the purchaser can exercise the power only if the

power also is exercised by the other person; and

(2) the other person:

(A) can exercise the power without exercise of

the power by the purchaser; or

(B) is the transferor to the purchaser of an

interest in the chattel paper.

(f) If a purchaser has the powers specified in Subsections

(c)(3)(A) and (B), the powers are presumed to be exclusive.

(g) A purchaser has control of an authoritative electronic

copy of a record evidencing chattel paper if another person, other

than the transferor to the purchaser of an interest in the chattel

paper:

(1) has control of the authoritative electronic copy

and acknowledges that it has control on behalf of the purchaser; or

(2) obtains control of the authoritative electronic

copy after having acknowledged that it will obtain control of the

electronic copy on behalf of the purchaser.

SECTION 9.05. Subchapter A, Chapter 9, Business & Commerce

Code, is amended by adding Section 9.1051 to read as follows:

Sec. 9.1051. CONTROL OF ELECTRONIC MONEY. (a) A person has

control of electronic money if:

(1) the electronic money, a record attached to or

logically associated with the electronic money, or a system in

which the electronic money is recorded gives the person:

(A) power to avail itself of substantially all

the benefit from the electronic money; and

(B) exclusive power, subject to Subsection (b),

to:

(i) prevent others from availing themselves

of substantially all the benefit from the electronic money; and

(ii) transfer control of the electronic

money to another person or cause another person to obtain control of

other electronic money as a result of the transfer of the electronic

money; and

(2) the electronic money, a record attached to or

logically associated with the electronic money, or a system in

which the electronic money is recorded enables the person readily

to identify itself in any way, including by name, identifying

number, cryptographic key, office, or account number, as having the

powers under Subdivision (1).

(b) Subject to Subsection (c), a power is exclusive under

Subsections (a)(1)(B)(i) and (ii) even if:

(1) the electronic money, a record attached to or

logically associated with the electronic money, or a system in

which the electronic money is recorded limits the use of the

electronic money or has a protocol programmed to cause a change,

including a transfer or loss of control; or

(2) the power is shared with another person.

(c) A power of a person is not shared with another person

under Subsection (b)(2) and the person's power is not exclusive if:

(1) the person can exercise the power only if the power

also is exercised by the other person; and

(2) the other person:

(A) can exercise the power without exercise of

the power by the person; or

(B) is the transferor to the person of an

interest in the electronic money.

(d) If a person has the powers specified in Subsections

(a)(1)(B)(i) and (ii), the powers are presumed to be exclusive.

(e) A person has control of electronic money if another

person, other than the transferor to the person of an interest in

the electronic money:

(1) has control of the electronic money and

acknowledges that it has control on behalf of the person; or

(2) obtains control of the electronic money after

having acknowledged that it will obtain control of the electronic

money on behalf of the person.

SECTION 9.06. Subchapter A, Chapter 9, Business & Commerce

Code, is amended by adding Sections 9.1072 and 9.1073 to read as

follows:

Sec. 9.1072. CONTROL OF CONTROLLABLE ELECTRONIC RECORD,

CONTROLLABLE ACCOUNT, OR CONTROLLABLE PAYMENT INTANGIBLE. (a) A

secured party has control of a controllable electronic record as

provided in Section 12A.105.

(b) A secured party has control of a controllable account or

controllable payment intangible if the secured party has control of

the controllable electronic record that evidences the controllable

account or controllable payment intangible.

Sec. 9.1073. NO REQUIREMENT TO ACKNOWLEDGE OR CONFIRM; NO

DUTIES. (a) A person that has control under Section 9.104, 9.105,

or 9.1051 is not required to acknowledge that it has control on

behalf of another person.

(b) If a person acknowledges that it has or will obtain

control on behalf of another person, unless the person otherwise

agrees or law other than this chapter otherwise provides, the

person does not owe any duty to the other person and is not required

to confirm the acknowledgment to any other person.

SECTION 9.07. Section 9.203(b), Business & Commerce Code,

is amended to read as follows:

(b) Except as otherwise provided in Subsections (c)-(j), a

security interest is enforceable against the debtor and third

parties with respect to the collateral only if:

(1) value has been given;

(2) the debtor has rights in the collateral or the

power to transfer rights in the collateral to a secured party; and

(3) one of the following conditions is met:

(A) the debtor has signed [ authenticated ] a

security agreement that provides a description of the collateral

and, if the security interest covers timber to be cut, a description

of the land concerned;

(B) the collateral is not a certificated security

and is in the possession of the secured party under Section 9.313

pursuant to the debtor's security agreement;

(C) the collateral is a certificated security in

registered form and the security certificate has been delivered to

the secured party under Section 8.301 pursuant to the debtor's

security agreement; [ or ]

(D) the collateral is controllable accounts,

controllable electronic records, controllable payment intangibles,

deposit accounts, electronic documents, electronic money,

[ electronic chattel paper, ] investment property, or

letter-of-credit rights, [ or electronic documents, ] and the

secured party has control under Section 7.106, 9.104, 9.1051

[ 9.105 ], 9.106, [ or ] 9.107 , or 9.1072 pursuant to the debtor's

security agreement ; or

(E) the collateral is chattel paper and the

secured party has possession and control under Section 9.3141

pursuant to the debtor's security agreement .

SECTION 9.08. Section 9.204, Business & Commerce Code, is

amended by amending Subsection (b) and adding Subsection (b-1) to

read as follows:

(b) Subject to Subsection (b-1), a [ A ] security interest

does not attach under a term constituting an after-acquired

property clause to:

(1) consumer goods, other than an accession when given

as additional security, unless the debtor acquires rights in them

within 10 days after the secured party gives value; or

(2) a commercial tort claim.

(b-1) Subsection (b) does not prevent a security interest

from attaching:

(1) to consumer goods as proceeds under Section

9.315(a) or commingled goods under Section 9.336(c);

(2) to a commercial tort claim as proceeds under

Section 9.315(a); or

(3) under an after-acquired property clause to

property that is proceeds of consumer goods or a commercial tort

claim.

SECTION 9.09. Section 9.207(c), Business & Commerce Code,

is amended to read as follows:

(c) Except as otherwise provided in Subsection (d), a

secured party having possession of collateral or control of

collateral under Section 7.106, 9.104, 9.105, 9.1051, 9.106, [ or ]

9.107 , or 9.1072 :

(1) may hold as additional security any proceeds,

except money or funds, received from the collateral;

(2) shall apply money or funds received from the

collateral to reduce the secured obligation, unless remitted to the

debtor; and

(3) may create a security interest in the collateral.

SECTION 9.10. Section 9.208(b), Business & Commerce Code,

is amended to read as follows:

(b) Within 10 days after receiving a signed [ an

authenticated ] demand by the debtor:

(1) a secured party having control of a deposit

account under Section 9.104(a)(2) shall send to the bank with which

the deposit account is maintained a signed record [ an authenticated

statement ] that releases the bank from any further obligation to

comply with instructions originated by the secured party;

(2) a secured party having control of a deposit

account under Section 9.104(a)(3) shall:

(A) pay the debtor the balance on deposit in the

deposit account; or

(B) transfer the balance on deposit into a

deposit account in the debtor's name;

(3) a secured party, other than a buyer, having

control [ of electronic chattel paper ] under Section 9.105 of an

authoritative electronic copy of a record evidencing chattel paper

shall transfer control of the electronic copy to the debtor or a

person designated by the debtor [ :

[ (A) communicate the authoritative copy of the

electronic chattel paper to the debtor or its designated custodian;

[ (B) if the debtor designates a custodian that is

the designated custodian with which the authoritative copy of the

electronic chattel paper is maintained for the secured party,

communicate to the custodian an authenticated record releasing the

designated custodian from any further obligation to comply with

instructions originated by the secured party and instructing the

custodian to comply with instructions originated by the debtor; and

[ (C) take appropriate action to enable the debtor

or its designated custodian to make copies of or revisions to the

authoritative copy that add or change an identified assignee of the

authoritative copy without the consent of the secured party ];

(4) a secured party having control of investment

property under Section 8.106(d)(2) or 9.106(b) shall send to the

securities intermediary or commodity intermediary with which the

security entitlement or commodity contract is maintained a signed

[ an authenticated ] record that releases the securities

intermediary or commodity intermediary from any further obligation

to comply with entitlement orders or directions originated by the

secured party;

(5) a secured party having control of a

letter-of-credit right under Section 9.107 shall send to each

person having an unfulfilled obligation to pay or deliver proceeds

of the letter of credit to the secured party a signed [ an

authenticated ] release from any further obligation to pay or

deliver proceeds of the letter of credit to the secured party; [ and ]

(6) a secured party having control under Section 7.106

of an authoritative copy of an electronic document of title [ of an

electronic document ] shall transfer control of the electronic copy

to the debtor or a person designated by the debtor;

(7) a secured party having control under Section

9.1051 of electronic money shall transfer control of the electronic

money to the debtor or a person designated by the debtor; and

(8) a secured party having control under Section

12A.105 of a controllable electronic record, other than a buyer of a

controllable account or controllable payment intangible evidenced

by the controllable electronic record, shall transfer control of

the controllable electronic record to the debtor or a person

designated by the debtor [ :

[ (A) give control of the electronic document to

the debtor or its designated custodian;

[ (B) if the debtor designates a custodian that is

the designated custodian with which the authoritative copy of the

electronic document is maintained for the secured party,

communicate to the custodian an authenticated record releasing the

designated custodian from any further obligation to comply with

instructions originated by the secured party and instructing the

custodian to comply with instructions originated by the debtor; and

[ (C) take appropriate action to enable the debtor

or its designated custodian to make copies of or revisions to the

authoritative copy which add or change an identified assignee of

the authoritative copy without the consent of the secured party ].

SECTION 9.11. Section 9.209(b), Business & Commerce Code,

is amended to read as follows:

(b) Within 10 days after receiving a signed [ an

authenticated ] demand by the debtor, a secured party shall send to

an account debtor that has received notification under Section

9.406(a) or 12A.106(b) of an assignment to the secured party as

assignee a signed [ under Section 9.406(a) an authenticated ] record

that releases the account debtor from any further obligation to the

secured party.

SECTION 9.12. Sections 9.210(a), (b), (c), (d), and (e),

Business & Commerce Code, are amended to read as follows:

(a) In this section:

(1) "Request" means a record of a type described in

Subdivision (2), (3), or (4).

(2) "Request for an accounting" means a record signed

[ authenticated ] by a debtor requesting that the recipient provide

an accounting of the unpaid obligations secured by collateral and

reasonably identifying the transaction or relationship that is the

subject of the request.

(3) "Request regarding a list of collateral" means a

record signed [ authenticated ] by a debtor requesting that the

recipient approve or correct a list of what the debtor believes to

be the collateral securing an obligation and reasonably identifying

the transaction or relationship that is the subject of the request.

(4) "Request regarding a statement of account" means a

record signed [ authenticated ] by a debtor requesting that the

recipient approve or correct a statement indicating what the debtor

believes to be the aggregate amount of unpaid obligations secured

by collateral as of a specified date and reasonably identifying the

transaction or relationship that is the subject of the request.

(b) Subject to Subsections (c), (d), (e), and (f), a secured

party, other than a buyer of accounts, chattel paper, payment

intangibles, or promissory notes or a consignor, shall comply with

a request within 14 days after receipt:

(1) in the case of a request for an accounting, by

signing [ authenticating ] and sending to the debtor an accounting;

and

(2) in the case of a request regarding a list of

collateral or a request regarding a statement of account, by

signing [ authenticating ] and sending to the debtor an approval or

correction.

(c) A secured party that claims a security interest in all

of a particular type of collateral owned by the debtor may comply

with a request regarding a list of collateral by sending to the

debtor a signed [ an authenticated ] record including a statement to

that effect within 14 days after receipt.

(d) A person that receives a request regarding a list of

collateral, claims no interest in the collateral when it receives

the request, and claimed an interest in the collateral at an earlier

time shall comply with the request within 14 days after receipt by

sending to the debtor a signed [ an authenticated ] record:

(1) disclaiming any interest in the collateral; and

(2) if known to the recipient, providing the name and

mailing address of any assignee of or successor to the recipient's

interest in the collateral.

(e) A person that receives a request for an accounting or a

request regarding a statement of account, claims no interest in the

obligations when it receives the request, and claimed an interest

in the obligations at an earlier time shall comply with the request

within 14 days after receipt by sending to the debtor a signed [ an

authenticated ] record:

(1) disclaiming any interest in the obligations; and

(2) if known to the recipient, providing the name and

mailing address of any assignee of or successor to the recipient's

interest in the obligations.

SECTION 9.13. Section 9.301, Business & Commerce Code, is

amended to read as follows:

Sec. 9.301. LAW GOVERNING PERFECTION AND PRIORITY OF

SECURITY INTERESTS. Except as otherwise provided in Sections 9.303

through 9.3062 [ 9.306 ], the following rules determine the law

governing perfection, the effect of perfection or nonperfection,

and the priority of a security interest in collateral:

(1) Except as otherwise provided in this section,

while a debtor is located in a jurisdiction, the local law of that

jurisdiction governs perfection, the effect of perfection or

nonperfection, and the priority of a security interest in

collateral.

(2) While collateral is located in a jurisdiction, the

local law of that jurisdiction governs perfection, the effect of

perfection or nonperfection, and the priority of a possessory

security interest in that collateral.

(3) Except as otherwise provided in Subdivision (4),

while [ tangible ] negotiable tangible documents, goods,

instruments, or tangible money[ , or tangible chattel paper ] is

located in a jurisdiction, the local law of that jurisdiction

governs:

(A) perfection of a security interest in the

goods by filing a fixture filing;

(B) perfection of a security interest in timber

to be cut; and

(C) the effect of perfection or nonperfection and

the priority of a nonpossessory security interest in the

collateral.

(4) The local law of the jurisdiction in which the

wellhead or minehead is located governs perfection, the effect of

perfection or nonperfection, and the priority of a security

interest in as-extracted collateral.

SECTION 9.14. Section 9.304(a), Business & Commerce Code,

is amended to read as follows:

(a) The local law of a bank's jurisdiction governs

perfection, the effect of perfection or nonperfection, and the

priority of a security interest in a deposit account maintained

with that bank even if the transaction does not bear any relation to

the bank's jurisdiction .

SECTION 9.15. Section 9.305(a), Business & Commerce Code,

is amended to read as follows:

(a) Except as otherwise provided in Subsection (c), the

following rules apply:

(1) While a security certificate is located in a

jurisdiction, the local law of that jurisdiction governs

perfection, the effect of perfection or nonperfection, and the

priority of a security interest in the certificated security

represented thereby.

(2) The local law of the issuer's jurisdiction as

specified in Section 8.110(d) governs perfection, the effect of

perfection or nonperfection, and the priority of a security

interest in an uncertificated security.

(3) The local law of the securities intermediary's

jurisdiction as specified in Section 8.110(e) governs perfection,

the effect of perfection or nonperfection, and the priority of a

security interest in a security entitlement or securities account.

(4) The local law of the commodity intermediary's

jurisdiction governs perfection, the effect of perfection or

nonperfection, and the priority of a security interest in a

commodity contract or commodity account.

(5) Subdivisions (2), (3), and (4) apply even if the

transaction does not bear any relation to the jurisdiction.

SECTION 9.16. Subchapter C, Chapter 9, Business & Commerce

Code, is amended by adding Sections 9.3061 and 9.3062 to read as

follows:

Sec. 9.3061. LAW GOVERNING PERFECTION AND PRIORITY OF

SECURITY INTERESTS IN CHATTEL PAPER. (a) Except as provided in

Subsection (d), if chattel paper is evidenced only by an

authoritative electronic copy of the chattel paper or is evidenced

by an authoritative electronic copy and an authoritative tangible

copy, the local law of the chattel paper's jurisdiction governs

perfection, the effect of perfection or nonperfection, and the

priority of a security interest in the chattel paper, even if the

transaction does not bear any relation to the chattel paper's

jurisdiction.

(b) The following rules determine the chattel paper's

jurisdiction under this section:

(1) If the authoritative electronic copy of the record

evidencing chattel paper, or a record attached to or logically

associated with the electronic copy and readily available for

review, expressly provides that a particular jurisdiction is the

chattel paper's jurisdiction for purposes of this subchapter, this

chapter, or this title, that jurisdiction is the chattel paper's

jurisdiction.

(2) If Subdivision (1) does not apply and the rules of

the system in which the authoritative electronic copy is recorded

are readily available for review and expressly provide that a

particular jurisdiction is the chattel paper's jurisdiction for

purposes of this subchapter, this chapter, or this title, that

jurisdiction is the chattel paper's jurisdiction.

(3) If Subdivisions (1) and (2) do not apply and the

authoritative electronic copy, or a record attached to or logically

associated with the electronic copy and readily available for

review, expressly provides that the chattel paper is governed by

the law of a particular jurisdiction, that jurisdiction is the

chattel paper's jurisdiction.

(4) If Subdivisions (1), (2), and (3) do not apply and

the rules of the system in which the authoritative electronic copy

is recorded are readily available for review and expressly provide

that the chattel paper or the system is governed by the law of a

particular jurisdiction, that jurisdiction is the chattel paper's

jurisdiction.

(5) If Subdivisions (1) through (4) do not apply, the

chattel paper's jurisdiction is the jurisdiction in which the

debtor is located.

(c) If an authoritative tangible copy of a record evidences

chattel paper and the chattel paper is not evidenced by an

authoritative electronic copy, while the authoritative tangible

copy of the record evidencing chattel paper is located in a

jurisdiction, the local law of that jurisdiction governs:

(1) perfection of a security interest in the chattel

paper by possession under Section 9.3141; and

(2) the effect of perfection or nonperfection and the

priority of a security interest in the chattel paper.

(d) The local law of the jurisdiction in which the debtor is

located governs perfection of a security interest in chattel paper

by filing.

Sec. 9.3062. LAW GOVERNING PERFECTION AND PRIORITY OF

SECURITY INTERESTS IN CONTROLLABLE ACCOUNTS, CONTROLLABLE

ELECTRONIC RECORDS, AND CONTROLLABLE PAYMENT INTANGIBLES. (a)

Except as provided in Subsection (b), the local law of the

controllable electronic record's jurisdiction specified in

Sections 12A.107(c) and (d) governs perfection, the effect of

perfection or nonperfection, and the priority of a security

interest in a controllable electronic record and a security

interest in a controllable account or controllable payment

intangible evidenced by the controllable electronic record.

(b) The local law of the jurisdiction in which the debtor is

located governs:

(1) perfection of a security interest in a

controllable account, controllable electronic record, or

controllable payment intangible by filing; and

(2) automatic perfection of a security interest in a

controllable payment intangible created by a sale of the

controllable payment intangible.

SECTION 9.17. Section 9.310(b), Business & Commerce Code,

is amended to read as follows:

(b) The filing of a financing statement is not necessary to

perfect a security interest:

(1) that is perfected under Section 9.308(d), (e),

(f), or (g);

(2) that is perfected under Section 9.309 when it

attaches;

(3) in property subject to a statute, regulation, or

treaty described in Section 9.311(a);

(4) in goods in possession of a bailee that is

perfected under Section 9.312(d)(1) or (2);

(5) in certificated securities, documents, goods, or

instruments which is perfected without filing, control or

possession under Section 9.312(e), (f), or (g);

(6) in collateral in the secured party's possession

under Section 9.313;

(7) in a certificated security that is perfected by

delivery of the security certificate to the secured party under

Section 9.313;

(8) in controllable accounts, controllable electronic

records, controllable payment intangibles, deposit accounts,

[ electronic chattel paper, ] electronic documents, investment

property, [ virtual currencies, ] or letter-of-credit rights that is

perfected by control under Section 9.314;

(8-a) in chattel paper which is perfected by

possession and control under Section 9.3141;

(9) in proceeds that is perfected under Section 9.315;

or

(10) that is perfected under Section 9.316.

SECTION 9.18. The heading to Section 9.312, Business &

Commerce Code, is amended to read as follows:

Sec. 9.312. PERFECTION OF SECURITY INTERESTS IN CHATTEL

PAPER, CONTROLLABLE ACCOUNTS, CONTROLLABLE ELECTRONIC RECORDS,

CONTROLLABLE PAYMENT INTANGIBLES, DEPOSIT ACCOUNTS, DOCUMENTS, AND

GOODS COVERED BY DOCUMENTS, INSTRUMENTS, INVESTMENT PROPERTY,

[ VIRTUAL CURRENCIES, ] LETTER-OF-CREDIT RIGHTS, AND MONEY;

PERFECTION BY PERMISSIVE FILING; TEMPORARY PERFECTION WITHOUT

FILING OR TRANSFER OF POSSESSION.

SECTION 9.19. Sections 9.312(a), (b), and (e), Business &

Commerce Code, are amended to read as follows:

(a) A security interest in chattel paper, controllable

accounts, controllable electronic records, controllable payment

intangibles, [ negotiable documents, ] instruments, investment

property, or negotiable documents [ and virtual currencies ] may be

perfected by filing.

(b) Except as otherwise provided in Sections 9.315(c) and

(d) for proceeds:

(1) a security interest in a deposit account may be

perfected only by control under Section 9.314;

(2) and except as otherwise provided in Section

9.308(d), a security interest in a letter-of-credit right may be

perfected only by control under Section 9.314; [ and ]

(3) a security interest in tangible money may be

perfected only by the secured party's taking possession under

Section 9.313 ; and

(4) a security interest in electronic money may be

perfected only by control under Section 9.314 .

(e) A security interest in certificated securities,

negotiable documents, or instruments is perfected without filing or

the taking of possession or control for a period of 20 days from the

time it attaches to the extent that it arises for new value given

under a signed [ an authenticated ] security agreement.

SECTION 9.20. Sections 9.313(a), (c), and (d), Business &

Commerce Code, are amended to read as follows:

(a) Except as otherwise provided in Subsection (b), a

secured party may perfect a security interest in [ tangible

negotiable documents, ] goods, instruments, negotiable tangible

documents, or tangible money[ , or tangible chattel paper ] by taking

possession of the collateral. A secured party may perfect a

security interest in certificated securities by taking delivery of

the certificated securities under Section 8.301.

(c) With respect to collateral other than certificated

securities and goods covered by a document, a secured party takes

possession of collateral in the possession of a person other than

the debtor, the secured party, or a lessee of the collateral from

the debtor in the ordinary course of the debtor's business when:

(1) the person in possession signs [ authenticates ] a

record acknowledging that it holds possession of the collateral for

the secured party's benefit; or

(2) the person takes possession of the collateral

after having signed [ authenticated ] a record acknowledging that it

will hold possession of the collateral for the secured party's

benefit.

(d) If perfection of a security interest depends upon

possession of the collateral by a secured party, perfection occurs

not [ no ] earlier than the time the secured party takes possession

and continues only while the secured party retains possession.

SECTION 9.21. Sections 9.314(a), (b), and (c), Business &

Commerce Code, are amended to read as follows:

(a) A security interest in controllable accounts,

controllable electronic records, controllable payment intangibles,

deposit accounts, electronic documents, electronic money,

investment property, or letter-of-credit rights [ investment

property, deposit accounts, letter-of-credit rights, virtual

currencies, electronic chattel paper, or electronic documents ] may

be perfected by control of the collateral under Section 7.106,

9.104, 9.1051, [ 9.105, ] 9.106, 9.107, or 9.1072 [ 9.1071 ].

(b) A security interest in controllable accounts,

controllable electronic records, controllable payment intangibles,

deposit accounts, electronic documents, electronic money, or

letter-of-credit rights [ deposit accounts, electronic chattel

paper, virtual currencies, letter-of-credit rights, or electronic

documents ] is perfected by control under Section 7.106, 9.104,

9.1051, [ 9.105, ] 9.107, or 9.1072 not earlier than the time [ 9.1071

when ] the secured party obtains control and remains perfected by

control only while the secured party retains control.

(c) A security interest in investment property is perfected

by control under Section 9.106 not earlier than [ from ] the time the

secured party obtains control and remains perfected by control

until:

(1) the secured party does not have control; and

(2) one of the following occurs:

(A) if the collateral is a certificated security,

the debtor has or acquires possession of the security certificate;

(B) if the collateral is an uncertificated

security, the issuer has registered or registers the debtor as the

registered owner; or

(C) if the collateral is a security entitlement,

the debtor is or becomes the entitlement holder.

SECTION 9.22. Subchapter C, Chapter 9, Business & Commerce

Code, is amended by adding Section 9.3141 to read as follows:

Sec. 9.3141. PERFECTION BY POSSESSION AND CONTROL OF

CHATTEL PAPER. (a) A secured party may perfect a security interest

in chattel paper by taking possession of each authoritative

tangible copy of the record evidencing the chattel paper and

obtaining control of each authoritative electronic copy of the

electronic record evidencing the chattel paper.

(b) A security interest is perfected under Subsection (a)

not earlier than the time the secured party takes possession and

obtains control and remains perfected under Subsection (a) only

while the secured party retains possession and control.

(c) Sections 9.313(c) and (f) through (i) apply to

perfection by possession of an authoritative tangible copy of a

record evidencing chattel paper.

SECTION 9.23. Sections 9.316(a) and (f), Business &

Commerce Code, are amended to read as follows:

(a) A security interest perfected pursuant to the law of the

jurisdiction designated in Section 9.301(1) , [ or ] 9.305(c) ,

9.3061(d), or 9.3062(b) remains perfected until the earliest of:

(1) the time perfection would have ceased under the

law of that jurisdiction;

(2) the expiration of four months after a change of the

debtor's location to another jurisdiction; or

(3) the expiration of one year after a transfer of

collateral to a person that thereby becomes a debtor and is located

in another jurisdiction.

(f) A security interest in chattel paper, controllable

accounts, controllable electronic records, controllable payment

intangibles, deposit accounts, letter-of-credit rights, or

investment property that is perfected under the law of the chattel

paper's jurisdiction, the controllable electronic record's

jurisdiction, the bank's jurisdiction, the issuer's jurisdiction, a

nominated person's jurisdiction, the securities intermediary's

jurisdiction, or the commodity intermediary's jurisdiction, as

applicable, remains perfected until the earlier of:

(1) the time the security interest would have become

unperfected under the law of that jurisdiction; or

(2) the expiration of four months after a change of the

applicable jurisdiction to another jurisdiction.

SECTION 9.24. Section 9.317, Business & Commerce Code, is

amended by amending Subsections (b) and (d) and adding Subsections

(f), (g), (h), and (i) to read as follows:

(b) Except as otherwise provided in Subsection (e), a buyer,

other than a secured party, of [ tangible chattel paper, tangible

documents, ] goods, instruments, tangible documents, or a

certificated security takes free of a security interest or

agricultural lien if the buyer gives value and receives delivery of

the collateral without knowledge of the security interest or

agricultural lien and before it is perfected.

(d) Subject to Subsections (f) through (i), a [ A ] licensee

of a general intangible or a buyer, other than a secured party, of

collateral other than electric money, [ tangible chattel paper, ]

tangible documents, goods, instruments, or a certificated security

takes free of a security interest if the licensee or buyer gives

value without knowledge of the security interest and before it is

perfected.

(f) A buyer, other than a secured party, of chattel paper

takes free of a security interest if, without knowledge of the

security interest and before it is perfected, the buyer gives value

and:

(1) receives delivery of each authoritative tangible

copy of the record evidencing the chattel paper; and

(2) if each authoritative electronic copy of the

record evidencing the chattel paper can be subjected to control

under Section 9.105, obtains control of each authoritative

electronic copy.

(g) A buyer of an electronic document takes free of a

security interest if, without knowledge of the security interest

and before it is perfected, the buyer gives value and, if each

authoritative electronic copy of the document can be subjected to

control under Section 7.106, obtains control of each authoritative

electronic copy.

(h) A buyer of a controllable electronic record takes free

of a security interest if, without knowledge of the security

interest and before it is perfected, the buyer gives value and

obtains control of the controllable electronic record.

(i) A buyer, other than a secured party, of a controllable

account or a controllable payment intangible takes free of a

security interest if, without knowledge of the security interest

and before it is perfected, the buyer gives value and obtains

control of the controllable account or controllable payment

intangible.

SECTION 9.25. Sections 9.323(d) and (f), Business &

Commerce Code, are amended to read as follows:

(d) Except as otherwise provided in Subsection (e), a buyer

of goods [ other than a buyer in ordinary course of business ] takes

free of a security interest to the extent that it secures advances

made after the earlier of:

(1) the time the secured party acquires knowledge of

the buyer's purchase; or

(2) 45 days after the purchase.

(f) Except as otherwise provided in Subsection (g), a lessee

of goods[ , other than a lessee in ordinary course of business, ]

takes the leasehold interest free of a security interest to the

extent that it secures advances made after the earlier of:

(1) the time the secured party acquires knowledge of

the lease; or

(2) 45 days after the lease contract becomes

enforceable.

SECTION 9.26. Sections 9.324(b) and (d), Business &

Commerce Code, are amended to read as follows:

(b) Subject to Subsection (c) and except as otherwise

provided in Subsection (g), a perfected purchase-money security

interest in inventory has priority over a conflicting security

interest in the same inventory, has priority over a conflicting

security interest in chattel paper or an instrument constituting

proceeds of the inventory and in proceeds of the chattel paper, if

so provided in Section 9.330, and, except as otherwise provided in

Section 9.327, also has priority in identifiable cash proceeds of

the inventory to the extent the identifiable cash proceeds are

received on or before the delivery of the inventory to a buyer, if:

(1) the purchase-money security interest is perfected

when the debtor receives possession of the inventory;

(2) the purchase-money secured party sends a signed

[ an authenticated ] notification to the holder of the conflicting

security interest;

(3) the holder of the conflicting security interest

receives any required notification within five years before the

debtor receives possession of the inventory; and

(4) the notification states that the person sending

the notification has or expects to acquire a purchase-money

security interest in inventory of the debtor and describes the

inventory.

(d) Subject to Subsection (e) and except as otherwise

provided in Subsection (g), a perfected purchase-money security

interest in livestock that are farm products has priority over a

conflicting security interest in the same livestock, and, except as

otherwise provided in Section 9.327, a perfected security interest

in their identifiable proceeds and identifiable products in their

unmanufactured states also has priority, if:

(1) the purchase-money security interest is perfected

when the debtor receives possession of the livestock;

(2) the purchase-money secured party sends a signed

[ an authenticated ] notification to the holder of the conflicting

security interest;

(3) the holder of the conflicting security interest

receives the notification within six months before the debtor

receives possession of the livestock; and

(4) the notification states that the person sending

the notification has or expects to acquire a purchase-money

security interest in livestock of the debtor and describes the

livestock.

SECTION 9.27. Subchapter C, Chapter 9, Business & Commerce

Code, is amended by adding Section 9.3261 to read as follows:

Sec. 9.3261. PRIORITY OF SECURITY INTEREST IN CONTROLLABLE

ACCOUNT, CONTROLLABLE ELECTRONIC RECORD, AND CONTROLLABLE PAYMENT

INTANGIBLE. A security interest in a controllable account,

controllable electronic record, or controllable payment intangible

held by a secured party having control of the account, electronic

record, or payment intangible has priority over a conflicting

security interest held by a secured party that does not have

control.

SECTION 9.28. Sections 9.330(a), (b), and (f), Business &

Commerce Code, are amended to read as follows:

(a) A purchaser of chattel paper has priority over a

security interest in the chattel paper that is claimed merely as

proceeds of inventory subject to a security interest if:

(1) in good faith and in the ordinary course of the

purchaser's business, the purchaser gives new value and takes

possession of each authoritative tangible copy of the record

evidencing the chattel paper , and [ or ] obtains control under

Section 9.105 of each authoritative electronic copy of the record

evidencing [ of ] the chattel paper [ under Section 9.105 ]; and

(2) the authoritative copies of the record evidencing

the chattel paper do [ chattel paper does ] not indicate that the

chattel paper [ it ] has been assigned to an identified assignee

other than the purchaser.

(b) A purchaser of chattel paper has priority over a

security interest in the chattel paper that is claimed other than

merely as proceeds of inventory subject to a security interest if

the purchaser gives new value , [ and ] takes possession of each

authoritative tangible copy of the record evidencing the chattel

paper , and [ or ] obtains control under Section 9.105 of each

authoritative electronic copy of the record evidencing [ of ] the

chattel paper [ under Section 9.105 ] in good faith, in the ordinary

course of the purchaser's business, and without knowledge that the

purchase violates the rights of the secured party.

(f) For purposes of Subsections (b) and (d), if the

authoritative copies of the record evidencing chattel paper or an

instrument indicate [ indicates ] that the chattel paper or

instrument [ it ] has been assigned to an identified secured party

other than the purchaser, a purchaser of the chattel paper or

instrument has knowledge that the purchase violates the rights of

the secured party.

SECTION 9.29. The heading to Section 9.331, Business &

Commerce Code, is amended to read as follows:

Sec. 9.331. PRIORITY OF RIGHTS OF PURCHASERS OF

CONTROLLABLE ACCOUNTS, CONTROLLABLE ELECTRONIC RECORDS,

CONTROLLABLE PAYMENT INTANGIBLES, [ INSTRUMENTS, ] DOCUMENTS,

INSTRUMENTS, AND SECURITIES[ , AND VIRTUAL CURRENCIES ] UNDER OTHER

CHAPTERS; PRIORITY OF INTERESTS IN FINANCIAL ASSETS AND SECURITY

ENTITLEMENTS AND PROTECTION AGAINST ASSERTION OF CLAIM UNDER

CHAPTERS [ CHAPTER ] 8 AND 12A [ VIRTUAL CURRENCIES UNDER CHAPTER 12 ].

SECTION 9.30. Sections 9.331(a) and (b), Business &

Commerce Code, are amended to read as follows:

(a) This chapter does not limit the rights of a holder in due

course of a negotiable instrument, a holder to which a negotiable

document of title has been duly negotiated, a protected purchaser

of a security, or a qualifying purchaser of a controllable account,

controllable electronic record, or controllable payment intangible

[ virtual currency ]. These holders or purchasers take priority over

an earlier security interest, even if perfected, to the extent

provided in Chapters 3, 7, 8, and 12A [ 12 ].

(b) This chapter does not limit the rights of or impose

liability on a person to the extent that the person is protected

against the assertion of a claim under Chapter 8 or 12A [ 12 ].

SECTION 9.31. Section 9.332, Business & Commerce Code, is

amended to read as follows:

Sec. 9.332. TRANSFER OF MONEY; TRANSFER OF FUNDS FROM

DEPOSIT ACCOUNT. (a) A transferee of tangible money takes the

money free of a security interest if the transferee receives

possession of the money without acting [ unless the transferee acts ]

in collusion with the debtor in violating the rights of the secured

party.

(b) A transferee of funds from a deposit account takes the

funds free of a security interest in the deposit account if the

transferee receives the funds without acting [ unless the transferee

acts ] in collusion with the debtor in violating the rights of the

secured party.

(c) A transferee of electronic money takes the money free of

a security interest if the transferee obtains control of the money

without acting in collusion with the debtor in violating the rights

of the secured party.

SECTION 9.32. Section 9.334(f), Business & Commerce Code,

is amended to read as follows:

(f) A security interest in fixtures, whether or not

perfected, has priority over the conflicting interest of an

encumbrancer or owner of the real property if:

(1) the encumbrancer or owner has, in a signed [ an

authenticated ] record, consented to the security interest or

disclaimed an interest in the goods as fixtures; or

(2) the debtor has a right to remove the goods as

against the encumbrancer or owner.

SECTION 9.33. Section 9.341, Business & Commerce Code, is

amended to read as follows:

Sec. 9.341. BANK'S RIGHTS AND DUTIES WITH RESPECT TO

DEPOSIT ACCOUNT. Except as otherwise provided in Section 9.340(c),

and unless the bank otherwise agrees in a signed [ an authenticated ]

record, a bank's rights and duties with respect to a deposit account

maintained with the bank are not terminated, suspended, or modified

by:

(1) the creation, attachment, or perfection of a

security interest in the deposit account;

(2) the bank's knowledge of the security interest; or

(3) the bank's receipt of instructions from the

secured party.

SECTION 9.34. Section 9.404(a), Business & Commerce Code,

is amended to read as follows:

(a) Unless an account debtor has made an enforceable

agreement not to assert defenses or claims, and subject to

Subsections (b)-(e), the rights of an assignee are subject to:

(1) all terms of the agreement between the account

debtor and assignor and any defense or claim in recoupment arising

from the transaction that gave rise to the contract; and

(2) any other defense or claim of the account debtor

against the assignor that accrues before the account debtor

receives a notification of the assignment signed [ authenticated ] by

the assignor or the assignee.

SECTION 9.35. Section 9.406, Business & Commerce Code, is

amended by amending Subsections (a), (b), (c), (d), and (g) and

adding Subsection (l) to read as follows:

(a) Subject to Subsections (b)-(i) and Subsection (l) , an

account debtor on an account, chattel paper, or a payment

intangible may discharge its obligation by paying the assignor

until, but not after, the account debtor receives a notification,

signed [ authenticated ] by the assignor or the assignee, that the

amount due or to become due has been assigned and that payment is to

be made to the assignee. After receipt of the notification, the

account debtor may discharge its obligation by paying the assignee

and may not discharge the obligation by paying the assignor.

(b) Subject to Subsections [ Subsection ] (h) and (l) ,

notification is ineffective under Subsection (a):

(1) if it does not reasonably identify the rights

assigned;

(2) to the extent that an agreement between an account

debtor and a seller of a payment intangible limits the account

debtor's duty to pay a person other than the seller and the

limitation is effective under law other than this chapter; or

(3) at the option of an account debtor, if the

notification notifies the account debtor to make less than the full

amount of any installment or other periodic payment to the

assignee, even if:

(A) only a portion of the account, chattel paper,

or payment intangible has been assigned to that assignee;

(B) a portion has been assigned to another

assignee; or

(C) the account debtor knows that the assignment

to that assignee is limited.

(c) Subject to Subsections [ Subsection ] (h) and (l) , if

requested by the account debtor, an assignee shall seasonably

furnish reasonable proof that the assignment has been made. Unless

the assignee complies, the account debtor may discharge its

obligation by paying the assignor, even if the account debtor has

received a notification under Subsection (a).

(d) In this subsection, "promissory note" includes a

negotiable instrument that evidences chattel paper. Except as

otherwise provided in Subsection (e) and Sections 2A.303 and 9.407,

and subject to Subsection (h), a term in an agreement between an

account debtor and an assignor or in a promissory note is

ineffective to the extent that it:

(1) prohibits, restricts, or requires the consent of

the account debtor or person obligated on the promissory note to the

assignment or transfer of, or the creation, attachment, perfection,

or enforcement of a security interest in, the account, chattel

paper, payment intangible, or promissory note; or

(2) provides that the assignment or transfer or the

creation, attachment, perfection, or enforcement of the security

interest may give rise to a default, breach, right of recoupment,

claim, defense, termination, right of termination, or remedy under

the account, chattel paper, payment intangible, or promissory note.

(g) Subject to Subsections [ Subsection ] (h) and (l) , an

account debtor may not waive or vary its option under Subsection

(b)(3).

(l) Subsections (a), (b), (c), and (g) do not apply to a

controllable account or controllable payment intangible.

SECTION 9.36. Section 9.408, Business & Commerce Code, is

amended by adding Subsection (f) to read as follows:

(f) In this section, "promissory note" includes a

negotiable instrument that evidences chattel paper.

SECTION 9.37. Sections 9.509(a) and (b), Business &

Commerce Code, are amended to read as follows:

(a) A person may file an initial financing statement,

amendment that adds collateral covered by a financing statement, or

amendment that adds a debtor to a financing statement only if:

(1) the debtor authorizes the filing in a signed [ an

authenticated ] record or pursuant to Subsection (b) or (c); or

(2) the person holds an agricultural lien that has

become effective at the time of filing and the financing statement

covers only collateral in which the person holds an agricultural

lien.

(b) By signing [ authenticating ] or becoming bound as debtor

by a security agreement, a debtor or new debtor authorizes the

filing of an initial financing statement, and an amendment,

covering:

(1) the collateral described in the security

agreement; and

(2) property that becomes collateral under Section

9.315(a)(2), whether or not the security agreement expressly covers

proceeds.

SECTION 9.38. Sections 9.513(b) and (c), Business &

Commerce Code, are amended to read as follows:

(b) To comply with Subsection (a), a secured party shall

cause the secured party of record to file the termination

statement:

(1) within one month after there is no obligation

secured by the collateral covered by the financing statement and no

commitment to make advances, incur an obligation, or otherwise give

value; or

(2) if earlier, within 20 days after the secured party

receives a signed [ an authenticated ] demand from a debtor.

(c) In cases not governed by Subsection (a), within 20 days

after a secured party receives a signed [ an authenticated ] demand

from a debtor, the secured party shall cause the secured party of

record for a financing statement to send the debtor a termination

statement for the financing statement or file the termination

statement in the filing office if:

(1) except in the case of a financing statement

covering accounts or chattel paper that has been sold or goods that

are the subject of a consignment, there is no obligation secured by

the collateral covered by the financing statement and no commitment

to make an advance, incur an obligation, or otherwise give value;

(2) the financing statement covers accounts or chattel

paper that has been sold but as to which the account debtor or other

person obligated has discharged its obligation;

(3) the financing statement covers goods that were the

subject of a consignment to the debtor but are not in the debtor's

possession; or

(4) the debtor did not authorize the filing of the

initial financing statement.

SECTION 9.39. Section 9.601(b), Business & Commerce Code,

is amended to read as follows:

(b) A secured party in possession of collateral or control

of collateral under Section 7.106, 9.104, 9.105, 9.1051, 9.106,

[ or ] 9.107 , or 9.1072 has the rights and duties provided in Section

9.207.

SECTION 9.40. Section 9.605, Business & Commerce Code, is

amended to read as follows:

Sec. 9.605. UNKNOWN DEBTOR OR SECONDARY OBLIGOR. (a)

Except as provided in Subsection (b), a [ A ] secured party does not

owe a duty based on its status as secured party:

(1) to a person that is a debtor or obligor, unless the

secured party knows:

(A) that the person is a debtor or obligor;

(B) the identity of the person; and

(C) how to communicate with the person; or

(2) to a secured party or lienholder that has filed a

financing statement against a person, unless the secured party

knows:

(A) that the person is a debtor; and

(B) the identity of the person.

(b) A secured party owes a duty based on its status as a

secured party to a person if, at the time the secured party obtains

control of collateral that is a controllable account, controllable

electronic record, or controllable payment intangible or at the

time the security interest attaches to the collateral, whichever is

later:

(1) the person is a debtor or obligor; and

(2) the secured party knows that the information in

Subsection (a)(1)(A), (B), or (C) relating to the person is not

provided by the collateral, a record attached to or logically

associated with the collateral, or the system in which the

collateral is recorded.

SECTION 9.41. Section 9.608(a), Business & Commerce Code,

is amended to read as follows:

(a) If a security interest or agricultural lien secures

payment or performance of an obligation, the following rules apply:

(1) A secured party shall apply or pay over for

application the cash proceeds of collection or enforcement under

Section 9.607 in the following order to:

(A) the reasonable expenses of collection and

enforcement and, to the extent provided for by agreement and not

prohibited by law, reasonable attorney's fees and legal expenses

incurred by the secured party;

(B) the satisfaction of obligations secured by

the security interest or agricultural lien under which the

collection or enforcement is made; and

(C) the satisfaction of obligations secured by

any subordinate security interest in or other lien on the

collateral subject to the security interest or agricultural lien

under which the collection or enforcement is made if the secured

party receives a signed [ an authenticated ] demand for proceeds

before distribution of the proceeds is completed.

(2) If requested by a secured party, a holder of a

subordinate security interest or other lien shall furnish

reasonable proof of the interest or lien within a reasonable time.

Unless the holder complies, the secured party need not comply with

the holder's demand under Subdivision (1)(C).

(3) A secured party need not apply or pay over for

application noncash proceeds of collection and enforcement under

Section 9.607 unless the failure to do so would be commercially

unreasonable. A secured party that applies or pays over for

application noncash proceeds shall do so in a commercially

reasonable manner.

(4) A secured party shall account to and pay a debtor

for any surplus, and the obligor is liable for any deficiency.

SECTION 9.42. Sections 9.611(a), (b), (c), and (e),

Business & Commerce Code, are amended to read as follows:

(a) In this section, "notification date" means the earlier

of the date on which:

(1) a secured party sends to the debtor and any

secondary obligor a signed [ an authenticated ] notification of

disposition; or

(2) the debtor and any secondary obligor waive the

right to notification.

(b) Except as otherwise provided in Subsection (d), a

secured party that disposes of collateral under Section 9.610 shall

send to the persons specified in Subsection (c) a reasonable signed

[ authenticated ] notification of disposition.

(c) To comply with Subsection (b), the secured party shall

send a signed [ an authenticated ] notification of disposition to:

(1) the debtor;

(2) any secondary obligor; and

(3) if the collateral is other than consumer goods:

(A) any other person from which the secured party

has received, before the notification date, a signed [ an

authenticated ] notification of a claim of an interest in the

collateral;

(B) any other secured party or lienholder that,

10 days before the notification date, held a security interest in or

other lien on the collateral perfected by the filing of a financing

statement that:

(i) identified the collateral;

(ii) was indexed under the debtor's name as

of that date; and

(iii) was filed in the office in which to

file a financing statement against the debtor covering the

collateral as of that date; and

(C) any other secured party that, 10 days before

the notification date, held a security interest in the collateral

perfected by compliance with a statute, regulation, or treaty

described in Section 9.311(a).

(e) A secured party complies with the requirement for

notification prescribed by Subsection (c)(3)(B) if:

(1) not later than 20 days or earlier than 30 days

before the notification date, the secured party requests, in a

commercially reasonable manner, information concerning financing

statements indexed under the debtor's name in the office indicated

in Subsection (c)(3)(B); and

(2) before the notification date, the secured party:

(A) did not receive a response to the request for

information; or

(B) received a response to the request for

information and sent a signed [ an authenticated ] notification of

disposition to each secured party or other lienholder named in that

response whose financing statement covered the collateral.

SECTION 9.43. Section 9.613, Business & Commerce Code, is

amended to read as follows:

Sec. 9.613. CONTENTS AND FORM OF NOTIFICATION BEFORE

DISPOSITION OF COLLATERAL: GENERAL. (a) Except in a

consumer-goods transaction, the following rules apply:

(1) The contents of a notification of disposition are

sufficient if the notification:

(A) describes the debtor and the secured party;

(B) describes the collateral that is the subject

of the intended disposition;

(C) states the method of intended disposition;

(D) states that the debtor is entitled to an

accounting of the unpaid indebtedness and states the charge, if

any, for an accounting; and

(E) states the time and place of a public

disposition or the time after which any other disposition is to be

made.

(2) Whether the contents of a notification that lacks

any of the information specified in Subdivision (1) are

nevertheless sufficient is a question of fact.

(3) The contents of a notification providing

substantially the information specified in Subdivision (1) are

sufficient, even if the notification includes:

(A) information not specified by that

subdivision; or

(B) minor errors that are not seriously

misleading.

(4) A particular phrasing of the notification is not

required.

(5) The following form of notification and the form

appearing in Section 9.614(a)(3) [ 9.614(3) ], when completed in

accordance with the instructions in Subsection (b) and Section

9.614(b) , each provide sufficient information:

NOTIFICATION OF DISPOSITION OF COLLATERAL

To: (Name of debtor, obligor, or other person to which the

notification is sent)

From: (Name, address, and telephone number of secured party)

{1} Name of any debtor that is not an addressee: (Name of each

debtor)

{2} We will sell (describe collateral) (to the highest qualified

bidder) at public sale. A sale could include a lease or license. The

sale will be held as follows:

(Date)

(Time)

(Place)

{3} We will sell (describe collateral) at private sale sometime

after (date). A sale could include a lease or license.

{4} You are entitled to an accounting of the unpaid indebtedness

secured by the property that we intend to sell or, as applicable,

lease or license.

{5} If you request an accounting you must pay a charge of $

(amount).

{6} You may request an accounting by calling us at (telephone

number).

(b) The following instructions apply to the form of

notification in Subsection (a)(5):

(1) The instructions in this subsection refer to the

numbers in braces before items in the form of notification in

Subsection (a)(5). Do not include the numbers or braces in the

notification. The numbers and braces are used only for the purpose

of these instructions.

(2) Include and complete item {1} only if there is a

debtor that is not an addressee of the notification and list the

name or names.

(3) Include and complete either item {2}, if the

notification relates to a public disposition of the collateral, or

item {3}, if the notification relates to a private disposition of

the collateral. If item {2} is included, include the words "to the

highest qualified bidder" only if applicable.

(4) Include and complete items {4} and {6}.

(5) Include and complete item {5} only if the sender

will charge the recipient for an accounting.

[ NOTIFICATION OF DISPOSITION OF COLLATERAL

[ To: __________________[Name of debtor, obligor, or other person to

which the notification is sent]

[ From: ________[Name, address, and telephone number of secured

party]

[ Name of Debtor(s): ________________ [Include only if debtor(s) are

not an addressee]

[ [For a public disposition:]

[ We will sell [or lease or license, as applicable] the [describe

collateral] [ to the highest qualified bidder] in public as follows:

[ Day and Date: ______ Time: _____ Place: _______[For a private

disposition:]

[ We will sell [or lease or license, as applicable] the _________

[describe collateral] privately sometime after _____ [day and

date].

[ You are entitled to an accounting of the unpaid indebtedness

secured by the property that we intend to sell [or lease or license,

as applicable] [for a charge of $____]. You may request an

accounting by calling us at ______ [telephone number]. ]

SECTION 9.44. Section 9.614, Business & Commerce Code, is

amended to read as follows:

Sec. 9.614. CONTENTS AND FORM OF NOTIFICATION BEFORE

DISPOSITION OF COLLATERAL: CONSUMER-GOODS TRANSACTION. (a) In a

consumer-goods transaction, the following rules apply:

(1) A notification of disposition must provide the

following information:

(A) the information specified in Section

9.613(a)(1) [ 9.613(1) ];

(B) a description of any liability for a

deficiency of the person to which the notification is sent;

(C) a telephone number from which the amount that

must be paid to the secured party to redeem the collateral under

Section 9.623 is available; and

(D) a telephone number or mailing address from

which additional information concerning the disposition and the

obligation secured is available.

(2) A particular phrasing of the notification is not

required.

(3) The following form of notification, when completed

in accordance with the instructions in Subsection (b) , provides

sufficient information:

(Name and address of secured party)

(Date)

NOTICE OF OUR PLAN TO SELL PROPERTY

(Name and address of any obligor who is also a debtor)

Subject: (Identify transaction)

We have your (describe collateral), because you broke promises in

our agreement.

{1} We will sell (describe collateral) at public sale. A sale could

include a lease or license. The sale will be held as follows:

(Date)

(Time)

(Place)

You may attend the sale and bring bidders if you want.

{2} We will sell (describe collateral) at private sale sometime

after (date). A sale could include a lease or license.

{3} The money that we get from the sale, after paying our costs,

will reduce the amount you owe. If we get less money than you owe,

you (will or will not, as applicable) still owe us the difference.

If we get more money than you owe, you will get the extra money,

unless we must pay it to someone else.

{4} You can get the property back at any time before we sell it by

paying us the full amount you owe, not just the past due payments,

including our expenses. To learn the exact amount you must pay, call

us at (telephone number).

{5} If you want us to explain to you in (writing) (writing or in

(description of electronic record)) (description of electronic

record) how we have figured the amount that you owe us,

{6} call us at (telephone number) (or) (write us at (secured

party's address)) (or contact us by (description of electronic

communication method))

{7} and request (a written explanation) (a written explanation or

an explanation in (description of electronic record)) (an

explanation in (description of electronic record)).

{8} We will charge you $ (amount) for the explanation if we sent you

another written explanation of the amount you owe us within the last

six months.

{9} If you need more information about the sale (call us at

(telephone number)) (or) (write us at (secured party's address))

(or contact us by (description of electronic communication

method)).

{10} We are sending this notice to the following other people who

have an interest in (describe collateral) or who owe money under

your agreement:

(Names of all other debtors and obligors, if any)

[ ________________ [Name and address of secured party]

[ ________________ [Date]

[ NOTICE OF OUR PLAN TO SELL PROPERTY

[ ________________ [Name and address of any obligor who is also a

debtor]

[ Subject: ___________ [Identification of Transaction]

[ We have your _________[describe collateral], because you broke

promises in our agreement.

[ [For a public disposition:]

[ We will sell _________[describe collateral] at public sale. A

sale could include a lease or license. The sale will be held as

follows:

[ Date:_______________________________________

[ Time:_______________________________________

[ Place:______________________________________

[ You may attend the sale and bring bidders if you want.

[ [For a private disposition:]

[ We will sell ___________[describe collateral] at private sale

sometime after ________[date]. A sale could include a lease or

license.

[ The money that we get from the sale (after paying our costs) will

reduce the amount you owe. If we get less money than you owe, you

________[will or will not, as applicable] still owe us the

difference. If we get more money than you owe, you will get the

extra money, unless we must pay it to someone else.

[ You can get the property back at any time before we sell it by

paying us the full amount you owe (not just the past due payments),

including our expenses. To learn the exact amount you must pay,

call us at __________[telephone number].

[ If you want us to explain to you in writing how we have figured the

amount that you owe us, you may call us at ______[telephone number]

[or write us at _______[secured party's address] ___________] and

request a written explanation. [We will charge you $________ for

the explanation if we sent you another written explanation of the

amount you owe us within the last six months.]

[ If you need more information about the sale call us at _________

[telephone number] [or write us at ______ [secured party's address]

_______________].

[ We are sending this notice to the following other people who have

an interest in _______________[describe collateral] or who owe

money under your agreement:

[ ______________________________________ [Names of all other

debtors and obligors, if any] ]

(4) A notification in the form of Subdivision (3) is

sufficient, even if additional information appears at the end of

the form.

(5) A notification in the form of Subdivision (3) is

sufficient, even if it includes errors in information not required

by Subdivision (1), unless the error is misleading with respect to

rights arising under this chapter.

(6) If a notification under this section is not in the

form of Subdivision (3), law other than this chapter determines the

effect of including information not required by Subdivision (1).

(b) The following instructions apply to the form of

notification in Subsection (a)(3):

(1) The instructions in this subsection refer to the

numbers in braces before items in the form of notification in

Subsection (a)(3). Do not include the numbers or braces in the

notification. The numbers and braces are used only for the purpose

of these instructions.

(2) Include and complete either item {1}, if the

notification relates to a public disposition of the collateral, or

item {2}, if the notification relates to a private disposition of

the collateral.

(3) Include and complete items {3}, {4}, {5}, {6}, and

{7}.

(4) In item {5}, include and complete any one of the

three alternative methods for the explanation-writing, writing or

electronic record, or electronic record.

(5) In item {6}, include the telephone number. In

addition, the sender may include and complete either or both of the

two additional alternative methods of communication-writing or

electronic communication-for the recipient of the notification to

communicate with the sender. Neither of the two additional methods

of communication is required to be included.

(6) In item {7}, include and complete the method or

methods for the explanation-writing, writing or electronic record,

or electronic record-included in item {5}.

(7) Include and complete item {8} only if a written

explanation is included in item {5} as a method for communicating

the explanation and the sender will charge the recipient for

another written explanation.

(8) In item {9}, include either the telephone number

or the address or both the telephone number and the address. In

addition, the sender may include and complete the additional method

of communication-electronic communication-for the recipient of the

notification to communicate with the sender. The additional method

of electronic communication is not required to be included.

(9) If item {10} does not apply, insert "None" after

"agreement:".

SECTION 9.45. Section 9.615(a), Business & Commerce Code,

is amended to read as follows:

(a) A secured party shall apply or pay over for application

the cash proceeds of disposition under Section 9.610 in the

following order to:

(1) the reasonable expenses of retaking, holding,

preparing for disposition, processing, and disposing and, to the

extent provided for by agreement and not prohibited by law,

reasonable attorney's fees and legal expenses incurred by the

secured party;

(2) the satisfaction of obligations secured by the

security interest or agricultural lien under which the disposition

is made;

(3) the satisfaction of obligations secured by any

subordinate security interest in or other subordinate lien on the

collateral if:

(A) the secured party receives from the holder of

the subordinate security interest or other lien a signed [ an

authenticated ] demand for proceeds before distribution of the

proceeds is completed; and

(B) in a case in which a consignor has an interest

in the collateral, the subordinate security interest or other lien

is senior to the interest of the consignor; and

(4) a secured party that is a consignor of the

collateral if the secured party receives from the consignor a

signed [ an authenticated ] demand for proceeds before distribution

of the proceeds is completed.

SECTION 9.46. Sections 9.616(a), (b), and (c), Business &

Commerce Code, are amended to read as follows:

(a) In this section:

(1) "Explanation" means a record [ writing ] that:

(A) states the amount of the surplus or

deficiency;

(B) provides an explanation in accordance with

Subsection (c) of how the secured party calculated the surplus or

deficiency;

(C) states, if applicable, that future debits,

credits, charges, including additional credit service charges or

interest, rebates, and expenses may affect the amount of the

surplus or deficiency; and

(D) provides a telephone number or mailing

address from which additional information concerning the

transaction is available.

(2) "Request" means a record:

(A) signed [ authenticated ] by a debtor or

consumer obligor;

(B) requesting that the recipient provide an

explanation; and

(C) sent after disposition of the collateral

under Section 9.610.

(b) In a consumer-goods transaction in which the debtor is

entitled to a surplus or a consumer obligor is liable for a

deficiency under Section 9.615, the secured party shall:

(1) send an explanation to the debtor or consumer

obligor, as applicable, after the disposition and:

(A) before or when the secured party accounts to

the debtor and pays any surplus or first makes [ written ] demand in a

record on the consumer obligor after the disposition for payment of

the deficiency; and

(B) within 14 days after receipt of a request; or

(2) in the case of a consumer obligor who is liable for

a deficiency, within 14 days after receipt of a request, send to the

consumer obligor a record waiving the secured party's right to a

deficiency.

(c) To comply with Subsection (a)(1)(B), an explanation [ a

writing ] must provide the following information in the following

order:

(1) the aggregate amount of obligations secured by the

security interest under which the disposition was made and, if the

amount reflects a rebate of unearned interest or credit service

charge, an indication of that fact, calculated as of a specified

date:

(A) if the secured party takes or receives

possession of the collateral after default, not more than 35 days

before the secured party takes or receives possession; or

(B) if the secured party takes or receives

possession of the collateral before default or does not take

possession of the collateral, not more than 35 days before the

disposition;

(2) the amount of proceeds of the disposition;

(3) the aggregate amount of the obligations after

deducting the amount of proceeds;

(4) the amount, in the aggregate or by type, and types

of expenses, including expenses of retaking, holding, preparing for

disposition, processing, and disposing of the collateral, and

attorney's fees secured by the collateral which are known to the

secured party and relate to the current disposition;

(5) the amount, in the aggregate or by type, and types

of credits, including rebates of interest or credit service

charges, to which the obligor is known to be entitled and which are

not reflected in the amount in Subdivision (1); and

(6) the amount of the surplus or deficiency.

SECTION 9.47. Section 9.619(a), Business & Commerce Code,

is amended to read as follows:

(a) In this section, "transfer statement" means a record

signed [ authenticated ] by a secured party stating:

(1) that the debtor has defaulted in connection with

an obligation secured by specified collateral;

(2) that the secured party has exercised its

post-default remedies with respect to the collateral;

(3) that, by reason of the exercise, a transferee has

acquired the rights of the debtor in the collateral; and

(4) the name and mailing address of the secured party,

debtor, and transferee.

SECTION 9.48. Sections 9.620(a), (b), (c), and (f),

Business & Commerce Code, are amended to read as follows:

(a) Except as otherwise provided in Subsection (g), a

secured party may accept collateral in full or partial satisfaction

of the obligation it secures only if:

(1) the debtor consents to the acceptance under

Subsection (c);

(2) the secured party does not receive, within the

time set forth in Subsection (d), a notification of objection to the

proposal signed [ authenticated ] by:

(A) a person to which the secured party was

required to send a proposal under Section 9.621; or

(B) any other person, other than the debtor,

holding an interest in the collateral subordinate to the security

interest that is the subject of the proposal;

(3) if the collateral is consumer goods, the

collateral is not in the possession of the debtor when the debtor

consents to the acceptance; and

(4) Subsection (e) does not require the secured party

to dispose of the collateral or the debtor waives the requirement

pursuant to Section 9.624.

(b) A purported or apparent acceptance of collateral under

this section is ineffective unless:

(1) the secured party consents to the acceptance in a

signed [ an authenticated ] record or sends a proposal to the debtor;

and

(2) the conditions of Subsection (a) are met.

(c) For purposes of this section:

(1) a debtor consents to an acceptance of collateral

in partial satisfaction of the obligation it secures only if the

debtor agrees to the terms of the acceptance in a record signed

[ authenticated ] after default; and

(2) a debtor consents to an acceptance of collateral

in full satisfaction of the obligation it secures only if the debtor

agrees to the terms of the acceptance in a record signed

[ authenticated ] after default or the secured party:

(A) sends to the debtor after default a proposal

that is unconditional or subject only to a condition that

collateral not in the possession of the secured party be preserved

or maintained;

(B) in the proposal, proposes to accept

collateral in full satisfaction of the obligation it secures; and

(C) does not receive a notification of objection

signed [ authenticated ] by the debtor within 20 days after the

proposal is sent.

(f) To comply with Subsection (e), the secured party shall

dispose of the collateral:

(1) within 90 days after taking possession; or

(2) within any longer period to which the debtor and

all secondary obligors have agreed in an agreement to that effect

entered into and signed [ authenticated ] after default.

SECTION 9.49. Section 9.621(a), Business & Commerce Code,

is amended to read as follows:

(a) A secured party that desires to accept collateral in

full or partial satisfaction of the obligation it secures shall

send its proposal to:

(1) any person from which the secured party has

received, before the debtor consented to the acceptance, a signed

[ an authenticated ] notification of a claim of an interest in the

collateral;

(2) any other secured party or lienholder that, 10

days before the debtor consented to the acceptance, held a security

interest in or other lien on the collateral perfected by the filing

of a financing statement that:

(A) identified the collateral;

(B) was indexed under the debtor's name as of

that date; and

(C) was filed in the office or offices in which to

file a financing statement against the debtor covering the

collateral as of that date; and

(3) any other secured party that, 10 days before the

debtor consented to the acceptance, held a security interest in the

collateral perfected by compliance with a statute, regulation, or

treaty described in Section 9.311(a).

SECTION 9.50. Section 9.624, Business & Commerce Code, is

amended to read as follows:

Sec. 9.624. WAIVER. (a) A debtor or secondary obligor may

waive the right to notification of disposition of collateral under

Section 9.611 only by an agreement to that effect entered into and

signed [ authenticated ] after default.

(b) A debtor may waive the right to require disposition of

collateral under Section 9.620(e) only by an agreement to that

effect entered into and signed [ authenticated ] after default.

(c) Except in a consumer-goods transaction, a debtor or

secondary obligor may waive the right to redeem collateral under

Section 9.623 only by an agreement to that effect entered into and

signed [ authenticated ] after default.

SECTION 9.51. Section 9.628, Business & Commerce Code, is

amended by amending Subsections (a) and (b) and adding Subsection

(f) to read as follows:

(a) Subject to Subsection (f), unless [ Unless ] a secured

party knows that a person is a debtor or obligor, knows the identity

of the person, and knows how to communicate with the person:

(1) the secured party is not liable to the person, or

to a secured party or lienholder that has filed a financing

statement against the person, for failure to comply with this

chapter; and

(2) the secured party's failure to comply with this

chapter does not affect the liability of the person for a

deficiency.

(b) Subject to Subsection (f), a [ A ] secured party is not

liable because of its status as secured party:

(1) to a person that is a debtor or obligor, unless the

secured party knows:

(A) that the person is a debtor or obligor;

(B) the identity of the person; and

(C) how to communicate with the person; or

(2) to a secured party or lienholder that has filed a

financing statement against a person, unless the secured party

knows:

(A) that the person is a debtor; and

(B) the identity of the person.

(f) Subsections (a) and (b) do not apply to limit the

liability of a secured party to a person if, at the time the secured

party obtains control of collateral that is a controllable account,

controllable electronic record, or controllable payment intangible

or at the time the security interest attaches to the collateral,

whichever is later:

(1) the person is a debtor or obligor; and

(2) the secured party knows that the information in

Subsection (b)(1)(A), (B), or (C) relating to the person is not

provided by the collateral, a record attached to or logically

associated with the collateral, or the system in which the

collateral is recorded.

ARTICLE 10. CONTROLLABLE ELECTRONIC RECORDS

SECTION 10.01. Title 1, Business & Commerce Code, is

amended by adding Chapters 12A and 12B to read as follows:

CHAPTER 12A. CONTROLLABLE ELECTRONIC RECORDS

Sec. 12A.101. TITLE. This chapter may be cited as Uniform

Commercial Code - Controllable Electronic Records.

Sec. 12A.102. DEFINITIONS. (a) In this chapter:

(1) "Controllable electronic record" means a record

stored in an electronic medium that can be subjected to control

under Section 12A.105. The term does not include a controllable

account, a controllable payment intangible, a deposit account, an

electronic copy of a record evidencing chattel paper, an electronic

document of title, electronic money, investment property, or a

transferable record.

(2) "Qualifying purchaser" means a purchaser of a

controllable electronic record or an interest in a controllable

electronic record that obtains control of the controllable

electronic record for value, in good faith, and without notice of a

claim of a property right in the controllable electronic record.

(3) "Transferable record" has the meaning provided for

that term in:

(A) Section 201(a)(1) of the Electronic

Signatures in Global and National Commerce Act, 15 U.S.C. Section

7021(a)(1), as amended; or

(B) Section 322.016(a) of this code.

(4) "Value" has the meaning provided in Section

3.303(a), as if references in that subsection to an "instrument"

were references to a controllable account, controllable electronic

record, or controllable payment intangible.

(b) The definitions in Chapter 9 of "account debtor,"

"controllable account," "controllable payment intangible,"

"chattel paper," "deposit account," "electronic money," and

"investment property" apply to this chapter.

(c) Chapter 1 contains general definitions and principles

of construction and interpretation applicable throughout this

chapter.

Sec. 12A.103. RELATION TO CHAPTER 9 AND CONSUMER LAWS. (a)

If there is conflict between this chapter and Chapter 9, Chapter 9

governs.

(b) A transaction subject to this chapter is subject to any

applicable rule of law that establishes a different rule for

consumers and to:

(1) Title 4, Finance Code; and

(2) Subchapter E, Chapter 17, of this code.

Sec. 12A.104. RIGHTS IN CONTROLLABLE ACCOUNT, CONTROLLABLE

ELECTRONIC RECORD, AND CONTROLLABLE PAYMENT INTANGIBLE. (a) This

section applies to the acquisition and purchase of rights in a

controllable account or controllable payment intangible, including

the rights and benefits under Subsections (c), (d), (e), (g), and

(h) of a purchaser and qualifying purchaser, in the same manner this

section applies to a controllable electronic record.

(b) To determine whether a purchaser of a controllable

account or a controllable payment intangible is a qualifying

purchaser, the purchaser obtains control of the account or payment

intangible if it obtains control of the controllable electronic

record that evidences the account or payment intangible.

(c) Except as provided in this section, law other than this

chapter determines whether a person acquires a right in a

controllable electronic record and the right the person acquires.

(d) A purchaser of a controllable electronic record

acquires all rights in the controllable electronic record that the

transferor had or had power to transfer, except that a purchaser of

a limited interest in a controllable electronic record acquires

rights only to the extent of the interest purchased.

(e) A qualifying purchaser acquires its rights in the

controllable electronic record free of a claim of a property right

in the controllable electronic record.

(f) Except as provided in Subsections (a) and (e) for a

controllable account and a controllable payment intangible or law

other than this chapter, a qualifying purchaser takes a right to

payment, right to performance, or other interest in property

evidenced by the controllable electronic record subject to a claim

of a property right in the right to payment, right to performance,

or other interest in property.

(g) An action may not be asserted against a qualifying

purchaser based on both a purchase by the qualifying purchaser of a

controllable electronic record and a claim of a property right in

another controllable electronic record, whether the action is

framed in conversion, replevin, constructive trust, equitable

lien, or other theory.

(h) Filing of a financing statement under Chapter 9 is not

notice of a claim of a property right in a controllable electronic

record.

Sec. 12A.105. CONTROL OF CONTROLLABLE ELECTRONIC RECORD.

(a) A person has control of a controllable electronic record if the

electronic record, a record attached to or logically associated

with the electronic record, or a system in which the electronic

record is recorded:

(1) gives the person:

(A) power to avail itself of substantially all

the benefit from the electronic record; and

(B) exclusive power, subject to Subsection (b),

to:

(i) prevent others from availing themselves

of substantially all the benefit from the electronic record; and

(ii) transfer control of the electronic

record to another person or cause another person to obtain control

of another controllable electronic record as a result of the

transfer of the electronic record; and

(2) enables the person readily to identify itself in

any way, including by name, identifying number, cryptographic key,

office, or account number, as having the powers specified in

Subdivision (1).

(b) Subject to Subsection (c), a power is exclusive under

Subsections (a)(1)(B)(i) and (ii) even if:

(1) the controllable electronic record, a record

attached to or logically associated with the electronic record, or

a system in which the electronic record is recorded limits the use

of the electronic record or has a protocol programmed to cause a

change, including a transfer or loss of control or a modification of

benefits afforded by the electronic record; or

(2) the power is shared with another person.

(c) A power of a person is not shared with another person

under Subsection (b)(2) and the person's power is not exclusive if:

(1) the person can exercise the power only if the power

also is exercised by the other person; and

(2) the other person:

(A) can exercise the power without exercise of

the power by the person; or

(B) is the transferor to the person of an

interest in the controllable electronic record or a controllable

account or controllable payment intangible evidenced by the

controllable electronic record.

(d) If a person has the powers specified in Subsections

(a)(1)(B)(i) and (ii), the powers are presumed to be exclusive.

(e) A person has control of a controllable electronic record

if another person, other than the transferor to the person of an

interest in the controllable electronic record or a controllable

account or controllable payment intangible evidenced by the

controllable electronic record:

(1) has control of the electronic record and

acknowledges that it has control on behalf of the person; or

(2) obtains control of the electronic record after

having acknowledged that it will obtain control of the electronic

record on behalf of the person.

(f) A person that has control under this section is not

required to acknowledge that it has control on behalf of another

person.

(g) If a person acknowledges that it has or will obtain

control on behalf of another person, unless the person otherwise

agrees or law other than this chapter or Chapter 9 otherwise

provides, the person does not owe any duty to the other person and

is not required to confirm the acknowledgment to any other person.

Sec. 12A.106. DISCHARGE OF ACCOUNT DEBTOR ON CONTROLLABLE

ACCOUNT OR CONTROLLABLE PAYMENT INTANGIBLE. (a) An account debtor

on a controllable account or controllable payment intangible may

discharge its obligation by paying:

(1) the person having control of the controllable

electronic record that evidences the controllable account or

controllable payment intangible; or

(2) except as provided in Subsection (b), a person

that formerly had control of the controllable electronic record.

(b) Subject to Subsection (d), the account debtor may not

discharge its obligation by paying a person that formerly had

control of the controllable electronic record if the account debtor

receives a notification that:

(1) is signed by a person that formerly had control or

the person to which control was transferred;

(2) reasonably identifies the controllable account or

controllable payment intangible;

(3) notifies the account debtor that control of the

controllable electronic record that evidences the controllable

account or controllable payment intangible was transferred;

(4) identifies the transferee, in any reasonable way,

including by name, identifying number, cryptographic key, office,

or account number; and

(5) provides a commercially reasonable method by which

the account debtor is to pay the transferee.

(c) After receipt of a notification that complies with

Subsection (b), the account debtor may discharge its obligation by

paying in accordance with the notification and may not discharge

the obligation by paying a person that formerly had control.

(d) Subject to Subsection (h), notification is ineffective

under Subsection (b):

(1) unless, before the notification is sent, the

account debtor and the person that, at that time, had control of the

controllable electronic record that evidences the controllable

account or controllable payment intangible agree in a signed record

to a commercially reasonable method by which a person may furnish

reasonable proof that control has been transferred;

(2) to the extent an agreement between the account

debtor and seller of a payment intangible limits the account

debtor's duty to pay a person other than the seller and the

limitation is effective under law other than this chapter; or

(3) at the option of the account debtor, if the

notification notifies the account debtor to:

(A) divide a payment;

(B) make less than the full amount of an

installment or other periodic payment; or

(C) pay any part of a payment by more than one

method or to more than one person.

(e) Subject to Subsection (h), if requested by the account

debtor, the person giving the notification under Subsection (b)

seasonably shall furnish reasonable proof, using the method in the

agreement referred to in Subsection (d)(1), that control of the

controllable electronic record has been transferred. Unless the

person complies with the request, the account debtor may discharge

its obligation by paying a person that formerly had control, even if

the account debtor has received a notification under Subsection

(b).

(f) A person furnishes reasonable proof under Subsection

(e) that control has been transferred if the person demonstrates,

using the method in the agreement referred to in Subsection (d)(1),

that the transferee has the power to:

(1) avail itself of substantially all the benefit from

the controllable electronic record;

(2) prevent others from availing themselves of

substantially all the benefit from the controllable electronic

record; and

(3) transfer the powers specified in Subdivisions (1)

and (2) to another person.

(g) Subject to Subsection (h), an account debtor may not

waive or vary its rights under Subsections (d)(1) and (e) or its

option under Subsection (d)(3).

(h) This section is subject to law other than this chapter

which establishes a different rule for an account debtor who is an

individual and who incurred the obligation primarily for personal,

family, or household purposes.

Sec. 12A.107. GOVERNING LAW. (a) Except as provided in

Subsection (b), the local law of a controllable electronic record's

jurisdiction governs a matter covered by this chapter.

(b) For a controllable electronic record that evidences a

controllable account or controllable payment intangible, the local

law of the controllable electronic record's jurisdiction governs a

matter covered by Section 12A.106 unless an effective agreement

determines that the local law of another jurisdiction governs.

(c) The following rules determine a controllable electronic

record's jurisdiction under this section:

(1) If the controllable electronic record, or a record

attached to or logically associated with the controllable

electronic record and readily available for review, expressly

provides that a particular jurisdiction is the controllable

electronic record's jurisdiction for purposes of this chapter or

this title, that jurisdiction is the controllable electronic

record's jurisdiction.

(2) If Subdivision (1) does not apply and the rules of

the system in which the controllable electronic record is recorded

are readily available for review and expressly provide that a

particular jurisdiction is the controllable electronic record's

jurisdiction for purposes of this chapter or this title, that

jurisdiction is the controllable electronic record's jurisdiction.

(3) If Subdivisions (1) and (2) do not apply and the

controllable electronic record, or a record attached to or

logically associated with the controllable electronic record and

readily available for review, expressly provides that the

controllable electronic record is governed by the law of a

particular jurisdiction, that jurisdiction is the controllable

electronic record's jurisdiction.

(4) If Subdivisions (1), (2), and (3) do not apply and

the rules of the system in which the controllable electronic record

is recorded are readily available for review and expressly provide

that the controllable electronic record or the system is governed

by the law of a particular jurisdiction, that jurisdiction is the

controllable electronic record's jurisdiction.

(5) If Subdivisions (1) through (4) do not apply, the

controllable electronic record's jurisdiction is the District of

Columbia.

(d) If Subsection (c)(5) applies and Chapter 12 is not in

effect in the District of Columbia without material modification,

the governing law for a matter covered by this chapter is the law of

the District of Columbia as though Chapter 12 were in effect in the

District of Columbia without material modification. In this

subsection, "Chapter 12" means Chapter 12 of Uniform Commercial

Code Amendments (2022).

(e) To the extent Subsections (a) and (b) provide that the

local law of the controllable electronic record's jurisdiction

governs a matter covered by this chapter, that law governs even if

the matter or a transaction to which the matter relates does not

bear any relation to the controllable electronic record's

jurisdiction.

CHAPTER 12B. TRANSITIONAL PROVISIONS FOR UNIFORM COMMERCIAL CODE

AMENDMENTS (2022)

SUBCHAPTER A. GENERAL PROVISIONS AND DEFINITIONS

Sec. 12B.101. TITLE. This chapter may be cited as

Transitional Provisions for Uniform Commercial Code Amendments

(2022).

Sec. 12B.102. DEFINITIONS. (a) In this chapter:

(1) "Adjustment date" means July 1, 2027.

(2) "Amending act" means the Act of the 89th

Legislature, Regular Session, 2025, that enacted this chapter.

(3) "Chapter 12A property" means a controllable

account, controllable electronic record, or controllable payment

intangible.

(4) "Repealed Chapter 12" means former Chapter 12 as

that chapter existed immediately before repeal by the amending act.

(b) The following definitions in other chapters of this

title apply to this chapter:

"Controllable account"Section 9.102.

"Controllable electronic record"Section 12A.102.

"Controllable payment intangible"Section 9.102.

"Electronic money"Section 9.102.

"Financing statement"Section 9.102.

(c) Chapter 1 contains general definitions and principles

of construction and interpretation applicable throughout this

chapter.

SUBCHAPTER B. GENERAL TRANSITIONAL PROVISION

Sec. 12B.201. SAVING CLAUSE. Except as provided in

Subchapter C, a transaction validly entered into before September

1, 2025, and the rights, duties, and interests flowing from the

transaction remain valid thereafter and may be terminated,

completed, consummated, or enforced as required or permitted by law

other than this title or, if applicable, this title, as though the

amending act had not taken effect.

SUBCHAPTER C. TRANSITIONAL PROVISIONS FOR CHAPTERS 9, 12, and 12A

Sec. 12B.301. SAVING CLAUSE. (a) Except as provided in

this subchapter, Chapter 9, as amended by the amending act, and

Chapter 12A, as added by the amending act, apply to a transaction,

lien, or other interest in property, even if the transaction, lien,

or interest was entered into, created, or acquired before September

1, 2025.

(b) Except as provided in Subsection (c) and Sections

12B.302 through 12B.306:

(1) a transaction, lien, or interest in property that

was validly entered into, created, or transferred before September

1, 2025, and was not governed by this title, but would be subject to

Chapter 9, as amended by the amending act, or Chapter 12A, as added

by the amending act, if it had been entered into, created, or

transferred on or after September 1, 2025, including the rights,

duties, and interests flowing from the transaction, lien, or

interest, remains valid on and after September 1, 2025; and

(2) the transaction, lien, or interest in property may

be terminated, completed, consummated, and enforced as required or

permitted by the amending act or by the law that would apply if the

amending act had not taken effect.

(c) Notwithstanding any other provision of this chapter:

(1) virtual currency under repealed Chapter 12 and

Chapter 9, as that chapter existed before its amendment by the

amending act, constitutes a controllable electronic record under

Chapter 9, as amended by the amending act, and Chapter 12A, as added

by the amending act; and

(2) control of a virtual currency accomplished under

repealed Chapter 12 constitutes control of a controllable

electronic record under Chapter 9, as amended by the amending act,

and Chapter 12A, as added by the amending act.

(d) The amending act does not affect an action, case, or

proceeding commenced before September 1, 2025.

Sec. 12B.302. SECURITY INTEREST PERFECTED BEFORE EFFECTIVE

DATE. (a) A security interest that is enforceable and perfected

immediately before September 1, 2025, is a perfected security

interest under this title, as amended by the amending act, if, on

September 1, 2025, the requirements for enforceability and

perfection under this title, as amended by the amending act, are

satisfied without further action.

(b) If a security interest is enforceable and perfected

immediately before September 1, 2025, but the requirements for

enforceability or perfection under this title, as amended by the

amending act, are not satisfied on September 1, 2025, the security

interest:

(1) is a perfected security interest until the earlier

of the time perfection would have ceased under the law in effect

immediately before September 1, 2025, or the adjustment date;

(2) remains enforceable thereafter only if the

security interest satisfies the requirements for enforceability

under Section 9.203, as amended by the amending act, before the

adjustment date; and

(3) remains perfected thereafter only if the

requirements for perfection under the title, as amended by the

amending act, are satisfied before the time specified in

Subdivision (1).

Sec. 12B.303. SECURITY INTEREST UNPERFECTED BEFORE

EFFECTIVE DATE. A security interest that is enforceable

immediately before September 1, 2025, but is unperfected at that

time:

(1) remains an enforceable security interest until the

adjustment date;

(2) remains enforceable thereafter if the security

interest becomes enforceable under Section 9.203, as amended by the

amending act, on September 1, 2025, or before the adjustment date;

and

(3) becomes perfected:

(A) without further action, on September 1, 2025,

if the requirements for perfection under this title, as amended by

the amending act, are satisfied before or at that time; or

(B) when the requirements for perfection are

satisfied if the requirements are satisfied after that time.

Sec. 12B.304. EFFECTIVENESS OF ACTION TAKEN BEFORE

EFFECTIVE DATE. (a) If action, other than the filing of a

financing statement, is taken before September 1, 2025, and the

action would have resulted in perfection of the security interest

had the security interest become enforceable before September 1,

2025, the action is effective to perfect a security interest that

attaches under this title, as amended by the amending act, before

the adjustment date. An attached security interest becomes

unperfected on the adjustment date unless the security interest

becomes a perfected security interest under this title, as amended

by the amending act, before the adjustment date.

(b) The filing of a financing statement before September 1,

2025, is effective to perfect a security interest on September 1,

2025, to the extent the filing would satisfy the requirements for

perfection under this title, as amended by the amending act.

(c) The taking of an action before September 1, 2025, is

sufficient for the enforceability of a security interest on

September 1, 2025, if the action would satisfy the requirements for

enforceability under this title, as amended by the amending act.

Sec. 12B.305. PRIORITY. (a) Subject to Subsections (b) and

(c), this title, as amended by the amending act, determines the

priority of conflicting claims to collateral.

(b) Subject to Subsection (c), if the priorities of claims

to collateral were established before September 1, 2025, Chapter 9,

as in effect immediately before September 1, 2025, determines

priority.

(c) On the adjustment date, to the extent the priorities

determined by Chapter 9, as amended by the amending act, modify the

priorities established before September 1, 2025, the priorities of

claims to Chapter 12A property and electronic money established

before September 1, 2025, cease to apply.

Sec. 12B.306. PRIORITY OF CLAIMS WHEN PRIORITY RULES OF

CHAPTER 9 DO NOT APPLY. (a) Subject to Subsections (b) and (c),

Chapter 12A determines the priority of conflicting claims to

Chapter 12A property when the priority rules of Chapter 9, as

amended by the amending act, do not apply.

(b) Subject to Subsection (c), when the priority rules of

Chapter 9, as amended by the amending act, do not apply and the

priorities of claims to Chapter 12A property were established

before September 1, 2025, law other than Chapter 12A determines

priority.

(c) When the priority rules of Chapter 9, as amended by the

amending act, do not apply, to the extent the priorities determined

by this title, as amended by the amending act, modify the priorities

established before September 1, 2025, the priorities of claims to

Chapter 12A property established before September 1, 2025, cease to

apply on the adjustment date.

ARTICLE 11. REPEALERS

SECTION 11.01. The following provisions of Title 1,

Business & Commerce Code, are repealed:

(1) Section 7.102(a)(12);

(2) Sections 9.102(a)(7), (31), (75), and (79);

(3) Section 9.1071; and

(4) Chapter 12.

ARTICLE 12. EFFECTIVE DATE

SECTION 12.01. This Act takes effect September 1, 2025.