SB 2223

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:
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
(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
[(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.
(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
(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
(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
(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
(37)  "Sign" means, with present intent to authenticate
(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
Sec. 1.204.  VALUE.  Except as otherwise provided in
Chapters 3, 4, [and] 5, and 12A, a person gives value for rights if
(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
(4)  in return for any consideration sufficient to
SECTION 1.03.  Section 1.301(b), Business & Commerce Code,
(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
Applicability of the chapter on Bank Deposits and
Governing law in the chapter on Funds Transfers.  Section
Letters of Credit.  Section 5.116.
Applicability of the chapter on Investment Securities.
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
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.
SECTION 2.01.  Section 2.102, Business & Commerce Code, is
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).
(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
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
(1)  the provision of services;
(2)  a lease of other goods; or
(3)  a sale, lease, or license of property other than
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
SECTION 2.05.  Section 2.202, Business & Commerce Code, is
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
(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
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
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,
(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.
SECTION 3.01.  Section 2A.102, Business & Commerce Code, is
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.
(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
(B)  Section 2A.209 applies if the lease is a
(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
(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
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
(1)  the total payments to be made under the lease
contract, excluding payments for options to renew or buy, are less
(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
(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
(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
SECTION 3.05.  Section 2A.202, Business & Commerce Code, is
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
(1)  by course of dealing or usage of trade or by course
(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
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
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
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,
(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
ARTICLE 4.  NEGOTIABLE INSTRUMENTS
SECTION 4.01.  Section 3.104(a), Business & Commerce Code,
(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
(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
(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,
(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
SECTION 4.03.  Section 3.401, Business & Commerce Code, is
Sec. 3.401.  SIGNATURE NECESSARY FOR LIABILITY ON
INSTRUMENT.  [(a)]  A person is not liable on an instrument unless
(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
SECTION 4.04.  Section 3.604, Business & Commerce Code, is
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
(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
(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
[(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.]
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
(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
SECTION 5.02.  Section 4A.201, Business & Commerce Code, is
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
(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
SECTION 5.04.  Section 4A.203(a), Business & Commerce Code,
(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
(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,
(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
(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
SECTION 5.06.  Section 4A.208(b), Business & Commerce Code,
(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
(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
(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,
(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
(2)  any means not complying is not reasonable unless
no significant delay in receipt of the notice resulted from the use
SECTION 5.08.  Section 4A.211(a), Business & Commerce Code,
(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
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
SECTION 6.01.  Section 5.104, Business & Commerce Code, is
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:
[(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
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
(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
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
(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
(A)  the person to which the document was issued;
(B)  if the authoritative copy indicates that the
document has been transferred, the person to which the document was
(3)  the authoritative copy is communicated to and
maintained by the person asserting control or its designated
(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
(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
(1)  enables the person readily to identify each
electronic copy as either an authoritative copy or a
(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
(A)  prevent others from adding or changing the
person to which each authoritative electronic copy has been issued
(B)  transfer control of each authoritative
(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
(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
(A)  can exercise the power without exercise of
(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
(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
(h)  A person that has control under this section is not
required to acknowledge that it has control on behalf of another
(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:
(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,
(b)  The following [Other] definitions in [applying to] this
chapter and other chapters apply to this chapter [the sections in
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
(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
(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
(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,
(b)  A [In addition to acquiring the rights of a purchaser,
a] protected purchaser [also] acquires its interest in the security
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
(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
(4)  "Accounting," except as used in "accounting for,"
(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
(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
(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
(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
(31-a)  "Electronic money" means money in an electronic
(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
(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
(79-a)  "Tangible money" means money in a tangible
SECTION 9.02.  Section 9.102(b), Business & Commerce Code,
(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,
(a)  A secured party has control of a deposit ac