Senate File 2389 - Enrolled
Senate File 2389
AN ACT
RELATING TO COMMERCIAL TRANSACTIONS, INCLUDING CONTROL AND
TRANSMISSION OF ELECTRONIC RECORDS AND DIGITAL ASSETS.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 DIVISION I
2 UNIFORM COMMERCIAL CODE
3 PART A
4 ARTICLE 14
5 CONTROLLABLE ELECTRONIC RECORDS
6 Section 1. Section 554.14101, Code 2024, is amended to read
7 as follows:
8 554.14101 Short title.
9 This Article may be cited as the Uniform Commercial Code ——
10 Controllable Electronic Records.
11 Sec. 2. Section 554.14102, Code 2024, is amended to read as
12 follows:
13 554.14102 Definitions.
14 1. Article 14 definitions. Article 14 definitions. In this
15 Article:
16 a. “Controllable electronic record” means a record stored
17 in an electronic medium that can be subjected to control under
18 section 554.14105. The term does not include a controllable
19 account, a controllable payment intangible, a deposit account,
20 electronic chattel paper, an electronic copy of a record
21 evidencing chattel paper, an electronic document of title,
22 electronic money, investment property, or a transferable
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23 record.
24 b. “Qualifying purchaser” means a purchaser of a
25 controllable electronic record or an interest in the a
26 controllable electronic record that obtains control of the
27 controllable electronic record for value, in good faith,
28 and without notice of a claim of a property right in the
29 controllable electronic record.
30 c. “Transferable record” means has the meaning provided for
31 that term in:
32 (1) “Transferable record”, as defined in the federal Section
33 201(a)(1) of the Electronic Signatures in Global and National
34 Commerce Act, 15 U.S.C. §7021(a)(1), as amended.; or
35 (2) “Transferable record” as defined in the uniform
1 electronic transactions Uniform Electronic Transactions Act,
2 section 554D.118, subsection 1.
3 d. “Value” has the meaning provided in section 554.3303,
4 subsection 1, as if references in that subsection to an
5 “instrument” were references to a controllable account,
6 controllable electronic record, or controllable payment
7 intangible.
8 2. Definitions in Article 9. Definitions in Article 9. The
9 definitions in Article 9 of “account debtor”, “authenticate”,
10 “controllable account”, “controllable payment intangible”,
11 “chattel paper”, “deposit account”, “electronic chattel paper”,
12 “electronic money”, and “investment property” apply to this
13 Article.
14 3. Article 1 definitions and principles. Article 1 contains
15 general definitions and principles of construction and
16 interpretation applicable throughout this Article.
17 Sec. 3. Section 554.14103, Code 2024, is amended to read as
18 follows:
19 554.14103 Scope Relation to Article 9 and consumer laws.
20 1. Article 9 governs in case of conflict. If there is
21 conflict between this Article and Article 9, Article 9 governs.
22 2. Applicable consumer law and other laws. A transaction
23 subject to this Article is subject to:
24 a. any applicable rule of law that establishes a different
25 rule for consumers, including as provided in chapter 537 and
26 any other consumer protection statute or regulation of this
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27 state; and
28 b. any other statute or regulation of this state that
29 regulates the rates, charges, agreements, and practices for
30 loans, credit sales, or other extensions of credit or credit
31 transactions, including as provided in chapter 535.
32 2A. National digital currency not supported, endorsed,
33 created, or implemented. This Article shall not be construed
34 to support, endorse, create, or implement a national digital
35 currency.
1 Sec. 4. Section 554.14104, Code 2024, is amended to read as
2 follows:
3 554.14104 Rights in controllable account, controllable
4 electronic record, and controllable payment intangible.
5 1. Applicability of section to controllable account and
6 controllable payment intangible. This section applies to the
7 acquisition and purchase of rights in a controllable account
8 or controllable payment intangible, including the rights and
9 benefits under subsections 3, 4, 5, 7, and 8 of a purchaser
10 and a qualifying purchaser, and under subsections 3, 4, and 6,
11 and in the same manner this section applies to a controllable
12 electronic record.
13 2. Control of controllable account and controllable payment
14 intangible. To determine whether a purchaser of a controllable
15 account or a controllable payment intangible is a qualifying
16 purchaser, the purchaser obtains control of the account or
17 payment intangible if it obtains control of the controllable
18 electronic record that evidences the account or payment
19 intangible.
20 2. 3. Applicability of other law to acquisition of
21 rights. Except as provided in this section, law other than
22 this Article determines whether a person acquires a right in
23 a controllable electronic record and the right the person
24 acquires.
25 3. 4. Shelter principle and purchase of limited interest. A
26 purchaser of a controllable electronic record acquires
27 all rights in the controllable electronic record that the
28 transferor had or had power to transfer, except that a
29 purchaser of a limited interest in a controllable electronic
30 record acquires rights only to the extent of the interest
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31 purchased.
32 4. 5. Rights of qualifying purchaser. A qualifying
33 purchaser acquires its rights in the controllable electronic
34 record free of a claim of a property right in the controllable
35 electronic record.
1 5. 6. Limitation of rights of qualifying purchaser in
2 other property. Except as provided in subsections 1 and 4
3 5 for a controllable accounts account and a controllable
4 payment intangibles intangible or law other than this Article,
5 a qualifying purchaser takes a right to payment, right to
6 performance, or other interest in property evidenced by the
7 controllable electronic record subject to a claim of a property
8 right in the right to payment, right to performance, or other
9 interest in property.
10 6. 7. No-action protection for qualifying purchaser. An
11 action shall not be asserted against a qualifying purchaser
12 based on both a purchase by the qualifying purchaser of a
13 controllable electronic record and a claim of a property
14 right in another controllable electronic record, whether the
15 action is framed in conversion, replevin, constructive trust,
16 equitable lien, or other theory.
17 7. 8. Filing not notice. Filing of a financing statement
18 under Article 9 is not notice of a claim of a property right in
19 a controllable electronic record.
20 Sec. 5. Section 554.14105, Code 2024, is amended to read as
21 follows:
22 554.14105 Control of controllable electronic record.
23 1. General rule: —— control of controllable electronic
24 record. A person has control of a controllable electronic
25 record if the electronic record, a record attached to or
26 logically associated with the electronic record, or a system in
27 which the electronic record is recorded:
28 a. the electronic record, a record attached to or logically
29 associated with the electronic record, or a system in which the
30 electronic record is recorded gives the person:
31 (1) the power to avail itself of substantially all the
32 benefit from the electronic record; and
33 (2) exclusive power, subject to subsection 2, to:
34 (a) prevent others from availing themselves of
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35 substantially all the benefit from the electronic record; and
1 (b) transfer control of the electronic record to another
2 person or cause another person to obtain control of another
3 controllable electronic record as a result of the transfer of
4 the electronic record; and
5 b. the electronic record, a record attached to or logically
6 associated with the electronic record, or a system in which
7 the electronic record is recorded enables the person readily
8 to identify itself in any way, including by name, identifying
9 number, cryptographic key, office, or account number, as having
10 the powers specified in paragraph “a”.
11 2. Control through another person. A person has control of
12 a controllable electronic record if another person, other than
13 the transferor of an interest in the electronic record:
14 a. has control of the electronic record and acknowledges
15 that it has control on behalf of the person, or
16 b. obtains control of the electronic record after having
17 acknowledged that it will obtain control of the electronic
18 record on behalf of the person.
19 3. 2. Meaning of exclusive. A power specified in Subject
20 to subsection 1 3, paragraph “a”, subparagraph (2), a power is
21 exclusive, under subsection 1, paragraph “a”, subparagraph (2),
22 subparagraph divisions (a) and (b) even if:
23 a. the controllable electronic record, a record attached
24 to or logically associated with the electronic record, or a
25 system in which the electronic record is recorded limits the
26 use of the electronic record or has a protocol programmed to
27 cause a change, including a transfer or loss of control or a
28 modification of benefits afforded by the electronic record; or
29 b. the person has agreed to share the power is shared with
30 another person.
31 3. When power not shared with another person. A power of a
32 person is not shared with another person under subsection 2,
33 paragraph “b” and the person’s power is not exclusive if:
34 a. the person can exercise the power only if the power also
35 is exercised by the other person; and
1 b. the other person:
2 (1) can exercise the power without exercise of the power by
3 the person; or
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4 (2) is the transferor to the person of an interest in the
5 controllable electronic record or a controllable account or
6 controllable payment intangible evidenced by the controllable
7 electronic record.
8 4. Presumption of exclusivity of certain powers. If a
9 person has the powers specified in subsection 1, paragraph “a”,
10 subparagraph (2), subparagraph divisions (a) and (b) the powers
11 are presumed to be exclusive.
12 5. Control through another person. A person has control of
13 a controllable electronic record if another person, other than
14 the transferor to the person of an interest in the controllable
15 electronic record or a controllable account or controllable
16 payment intangible evidenced by the controllable electronic
17 record:
18 a. has control of the electronic record and acknowledges
19 that it has control on behalf of the person; or
20 b. obtains control of the electronic record after having
21 acknowledged that it will obtain control of the electronic
22 record on behalf of the person.
23 6. No requirement to acknowledge. A person that has control
24 under this section is not required to acknowledge that it has
25 control on behalf of another person.
26 7. No duties or confirmation. If a person acknowledges that
27 it has or will obtain control on behalf of another person,
28 unless the person otherwise agrees or law other than this
29 Article or Article 9 otherwise provides, the person does not
30 owe any duty to the other person and is not required to confirm
31 the acknowledgment to any other person.
32 Sec. 6. Section 554.14106, Code 2024, is amended to read as
33 follows:
34 554.14106 Discharge of account debtor on controllable account
35 or controllable payment intangible.
1 1. Discharge of account debtor. An account debtor on a
2 controllable account or controllable payment intangible may
3 discharge its obligation by paying:
4 a. the person having control of the controllable electronic
5 record that evidences the controllable account or controllable
6 payment intangible; or
7 b. except as provided in subsection 2, a person that
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8 formerly had control of the controllable electronic record.
9 2. Effect Content and effect of notification. Subject to
10 subsection 4, an the account debtor shall not discharge its
11 obligation by paying a person that formerly had control of the
12 controllable electronic record if the account debtor receives a
13 notification that:
14 a. is authenticated signed by a person that formerly had
15 control or the person to which control was transferred;
16 b. reasonably identifies the controllable account or
17 controllable payment intangible;
18 c. notifies the account debtor that control of the
19 controllable electronic record that evidences the controllable
20 account or controllable payment intangible was transferred;
21 d. identifies the transferee, in any reasonable way,
22 including by name, identifying number, cryptographic key,
23 office, or account number; and
24 e. provides a commercially reasonable method by which the
25 account debtor is to pay the transferee.
26 3. Discharge following effective notification. After
27 receipt of a notification that complies with subsection 2, the
28 account debtor may discharge its obligation only by paying in
29 accordance with the notification and shall not discharge the
30 obligation by paying a person that formerly had control.
31 4. When notification ineffective. Notification Subject to
32 subsection 8, notification is ineffective under subsection 2:
33 a. unless, before the notification is sent, an the account
34 debtor and the person that, at that time, had control of the
35 controllable electronic record that evidences the controllable
1 account or controllable payment intangible agree in an
2 authenticated a signed record to a commercially reasonable
3 method by which a person must furnish reasonable proof that
4 control has been transferred;
5 b. to the extent an agreement between an the account debtor
6 and seller of a payment intangible limits the account debtor’s
7 duty to pay a person other than the seller and the limitation
8 is effective under law other than this Article; or
9 c. at the option of an the account debtor, if the
10 notification notifies the account debtor to:
11 (1) divide a payment;
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12 (2) make less than the full amount of any an installment or
13 other periodic payment; or
14 (3) pay any part of a payment by more than one method or to
15 more than one person.
16 5. Proof of transfer of control. If Subject to subsection
17 8, if requested by the account debtor, the person giving the
18 notification under subsection 2 seasonably shall furnish
19 reasonable proof, using the agreed method in the agreement
20 referred to in subsection 4, paragraph “a”, that control of the
21 controllable electronic record has been transferred. Unless
22 the person complies with the request, the account debtor may
23 discharge its obligation by paying a person that formerly had
24 control, even if the account debtor has received a notification
25 under subsection 2.
26 6. What constitutes reasonable proof. A person furnishes
27 reasonable proof under subsection 5 that control has been
28 transferred if the person demonstrates, using the agreed method
29 in the agreement referred to in subsection 4, paragraph “a”,
30 that the transferee has the power to:
31 a. avail itself of substantially all the benefit from the
32 controllable electronic record;
33 b. prevent others from availing themselves of substantially
34 all the benefit from the controllable electronic record; and
35 c. transfer the powers mentioned specified in paragraphs “a”
1 and “b” to another person.
2 7. Rights not waivable. An Subject to subsection 8,
3 an account debtor shall not waive or vary its rights under
4 subsection 4, paragraph “a”, and subsection 5 or its option
5 under subsection 4, paragraph “c”.
6 8. Rule for individual under other law. This section is
7 subject to law other than this Article which establishes a
8 different rule for an account debtor who is an individual and
9 who incurred the obligation primarily for personal, family, or
10 household purposes.
11 Sec. 7. Section 554.14107, Code 2024, is amended by striking
12 the section and inserting in lieu thereof the following:
13 554.14107 Governing law.
14 1. Governing law: general rule. Except as provided in
15 subsection 2, the local law of a controllable electronic
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16 record’s jurisdiction governs a matter covered by this Article.
17 2. Governing law: section 554.14106. For a controllable
18 electronic record that evidences a controllable account
19 or controllable payment intangible, the local law of the
20 controllable electronic record’s jurisdiction governs a matter
21 covered by section 554.14106 u