23.0116.01000
Sixty-eighth
Legislative Assembly HOUSE BILL NO. 1082
of North Dakota
Introduced by
Judiciary Committee
(At the request of the Commission on Uniform State Laws)
1 A BILL for an Act to create and enact a new subsection to section 41-08-03, a new subsection
2 to section 41-08-10, sections 41-09-05.1, 41-09-07.1, 41-09-07.2, 41-09-26.1, 41-09-26.2,
3 41-09-34.1, and 41-09-46.1, a new subsection to section 41-09-70, and chapters 41-11 and
4 41-12 of the North Dakota Century Code, relating to the adoption of the Uniform Commercial
5 Code amendments (2022); to amend and reenact sections 41-01-09, 41-01-12, 41-01-15,
6 41-01-20, 41-02-02, 41-02-06, 41-02-08, 41-02-09, 41-02-10, and 41-02-12, subsection 2 of
7 section 41-02-16, section 41-02.1-02, subsection 1 of section 41-02.1-03, sections 41-02.1-07,
8 41-02.1-10, 41-02.1-11, 41-02.1-12, and 41-02.1-14, subsection 2 of section 41-02.1-17,
9 subsection 1 of section 41-03-04, subsection 1 of section 41-03-05, sections 41-03-38,
10 41-03-66, 41-04.1-03, 41-04.1-09, 41-04.1-10, and 41-04.1-11, subsection 3 of section
11 41-04.1-15, subdivision b of subsection 2 of section 41-04.1-16, subsection 1 of section
12 41-04.1-18, subsection 1 of section 41-04.1-19, sections 41-04.1-25, 41-05-04, 41-05-16,
13 41-07-02, 41-07-06, 41-08-02, 41-08-06, 41-08-29, 41-09-02, 41-09-04, and 41-09-05,
14 subsection 2 of section 41-09-13, section 41-09-14, subsection 3 of section 41-09-17, sections
15 41-09-18, 41-09-19, 41-09-20, and 41-09-21, subsection 1 of section 41-09-24, subsection 1 of
16 section 41-09-25, sections 41-09-30, 41-09-32, 41-09-33, 41-09-34, 41-09-36, 41-09-37,
17 41-09-43, 41-09-44, 41-09-50, 41-09-51, and 41-09-52, subsection 6 of section 41-09-54,
18 section 41-09-61, subdivision b of subsection 1 of section 41-09-66, sections 41-09-68 and
19 41-09-80, subsection 2 of section 41-09-98, section 41-09-102, subdivision a of subsection 1 of
20 section 41-09-105, section 41-09-108, subsection 1 of section 41-09-111, subsection 1 of
21 section 41-09-114, section 41-09-115, subdivision a of subsection 1 of section 41-09-116, and
22 sections 41-09-119 and 41-09-123 of the North Dakota Century Code, relating to the adoption of
23 the Uniform Commercial Code amendments (2022).
24 BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
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1 SECTION 1. AMENDMENT. Section 41-01-09 of the North Dakota Century Code is
2 amended and reenacted as follows:
3 41-01-09. (1-201) General definitions.
4 1. Unless the context otherwise requires, words or phrases defined in this section, or in
5 additional definitions contained in other chapters of this title which apply to particular
6 chapters or parts of chapters, have the meanings stated.
7 2. Subject to definitions contained in other chapters of this title which apply to particular
8 chapters or parts of chapters:
9 a. "Action", in the sense of a judicial proceeding, includes recoupment,
10 counterclaim, setoff, suit in equity, and any other proceeding in which rights are
11 determined.
12 b. "Aggrieved party" means a party entitled to pursue a remedy.
13 c. "Agreement", as distinguished from "contract", means the bargain of the parties
14 in fact, as found in their language or inferred from other circumstances, including
15 course of performance, course of dealing, or usage of trade as provided under
16 section 41-09-17.
17 d. "Bank" means a person engaged in the business of banking and includes a
18 savings bank, savings and loan association, credit union, and trust company.
19 e. "Bearer" means a person in control of a negotiable electronic document of title or
20 a person in possession of a negotiable instrument, negotiable tangible document
21 of title, or certificated security that is payable to bearer or indorsed in blank.
22 f. "Bill of lading" means a document of title evidencing the receipt of goods for
23 shipment issued by a person engaged in the business of directly or indirectly
24 transporting or forwarding goods. The term does not include a warehouse receipt.
25 g. "Branch" includes a separately incorporated foreign branch of a bank.
26 h. "Burden of establishing" a fact means the burden of persuading the trier of fact
27 that the existence of the fact is more probable than its nonexistence.
28 i. "Buyer in ordinary course of business" means a person that buys goods in good
29 faith, without knowledge that the sale violates the rights of another person in the
30 goods, and in the ordinary course from a person, other than a pawnbroker, in the
31 business of selling goods of that kind. A person buys goods in the ordinary
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1 course if the sale to the person comports with the usual or customary practices in
2 the kind of business in which the seller is engaged or with the seller's own usual
3 or customary practices. A person that sells oil, gas, or other minerals at the
4 wellhead or minehead is a person in the business of selling goods of that kind. A
5 buyer in ordinary course of business may buy for cash, by exchange of other
6 property, or on secured or unsecured credit, and may acquire goods or
7 documents of title under a pre-existing contract for sale. Only a buyer that takes
8 possession of the goods or has a right to recover the goods from the seller under
9 chapter 41-02 may be a buyer in ordinary course of business. "Buyer in ordinary
10 course of business" does not include a person that acquires goods in a transfer in
11 bulk or as security for or in total or partial satisfaction of a money debt.
12 j. "Conspicuous", with reference to a term, means so written, displayed, or
13 presented that, based on the totality of the circumstances, a reasonable person
14 against which it is to operate ought to have noticed it. Whether a term is
15 "conspicuous" or not is a decision for the court. Conspicuous terms include the
16 following:
17 (1) A heading in capitals equal to or greater in size than the surrounding text, or
18 in contrasting type, font, or color to the surrounding text of the same or
19 lesser size; and
20 (2) Language in the body of a record or display in larger type than the
21 surrounding text, or in contrasting type, font, or color to the surrounding text
22 of the same size, or set off from surrounding text of the same size by
23 symbols or other marks that call attention to the language.
24 k. "Consumer" means an individual who enters into a transaction primarily for
25 personal, family, or household purposes.
26 l. "Contract", as distinguished from "agreement", means the total legal obligation
27 that results from the parties' agreement as determined by this title as
28 supplemented by any other applicable laws.
29 m. "Creditor" includes a general creditor, a secured creditor, a lien creditor, and any
30 representative of creditors, including an assignee for the benefit of creditors, a
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1 trustee in bankruptcy, a receiver in equity, and an executor or administrator of an
2 insolvent debtor's or assignor's estate.
3 n. "Defendant" includes a person in the position of defendant in a counterclaim,
4 cross-claim, or third-party claim.
5 o. "Delivery", with respect to an electronic document of title, means voluntary
6 transfer of control and, with respect to an instrument, a tangible document of title,
7 or an authoritative tangible copy of a record evidencing chattel paper, means
8 voluntary transfer of possession.
9 p. "Document of title" means a record that in the regular course of business or
10 financing is treated as adequately evidencing that the person in possession or
11 control of the record is entitled to receive, control, hold, and dispose of the record
12 and the goods the record covers and that purports to be issued by or addressed
13 to a bailee and to cover goods in the bailee's possession which are either
14 identified or are fungible portions of an identified mass. The term includes a bill of
15 lading, transport document, dock warrant, dock receipt, warehouse receipt, and
16 order for delivery of goods. An electronic document of title means a document of
17 title evidenced by a record consisting of information stored in an electronic
18 medium. A tangible document of title means a document of title evidenced by a
19 record consisting of information that is inscribed on a tangible medium.
20 q. "Electronic" means relating to technology having electrical, digital, magnetic,
21 wireless, optical, electromagnetic, or similar capabilities.
22 r. "Fault" means a default, breach, or wrongful act or omission.
23 r.s. "Fungible goods" means:
24 (1) Goods of which any unit, by nature or usage of trade, is the equivalent of
25 any other like unit; or
26 (2) Goods that by agreement are treated as equivalent.
27 s.t. "Genuine" means free of forgery or counterfeiting.
28 t.u. "Good faith", except as otherwise provided in chapter 41-05, means honesty in
29 fact and the observance of reasonable commercial standards of fair dealing.
30 u.v. "Holder" means:
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1 (1) The person in possession of a negotiable instrument that is payable either
2 to bearer or to an identified person that is the person in possession;
3 (2) The person in possession of a document of title if the goods are deliverable
4 either to bearer or to the order of the person in possession; or
5 (3) The person in control, other than pursuant to subsection 7 of section
6 41-07-06, of a negotiable electronic document of title.
7 v.w. "Insolvency proceeding" includes an assignment for the benefit of creditors or
8 other proceeding intended to liquidate or rehabilitate the estate of the person
9 involved.
10 w.x. "Insolvent" means:
11 (1) Having generally ceased to pay debts in the ordinary course of business
12 other than as a result of bona fide dispute;
13 (2) Being unable to pay debts as they become due; or
14 (3) Being insolvent within the meaning of federal bankruptcy law.
15 x.y. "Money" means a medium of exchange that is currently authorized or adopted by
16 a domestic or foreign government. The term includes a monetary unit of account
17 established by an intergovernmental organization, or by agreement between two
18 or more countries. The term does not include an electronic record that is a
19 medium of exchange recorded and transferable in a system that existed and
20 operated for the medium of exchange before the medium of exchange was
21 authorized or adopted by the government.
22 y.z. "Organization" means a person other than an individual.
23 z.aa. "Party", as distinguished from "third party", means a person that has engaged in
24 a transaction or made an agreement subject to this title.
25 aa.bb. "Person" means an individual, a corporation, a business trust, an estate, a trust,
26 a partnership, a limited liability company, an association, a joint venture, a
27 government, a governmental subdivision, an agency, or an instrumentality, a
28 public corporation, or any other legal or commercial entity. The term includes a
29 protected series, however denominated, of an entity if the protected series is
30 established under law other than this title which limits, or limits if conditions
31 specified under the law are satisfied, the ability of a creditor of the entity or of any
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1 other protected series of the entity to satisfy a claim from assets of the protected
2 series.
3 bb.cc. "Present value" means the amount as of a date certain of one or more sums
4 payable in the future, discounted to the date certain by use of either an interest
5 rate specified by the parties if that rate is not manifestly unreasonable at the time
6 the transaction is entered or, if an interest rate is not so specified, a commercially
7 reasonable rate that takes into account the facts and circumstances at the time
8 the transaction is entered.
9 cc.dd. "Purchase" means taking by sale, lease, discount, negotiation, mortgage, pledge,
10 lien, security interest, issue or reissue, gift, or any other voluntary transaction
11 creating an interest in property.
12 dd.ee. "Purchaser" means a person that takes by purchase.
13 ee.ff. "Record" means information that is inscribed on a tangible medium or that is
14 stored in an electronic or other medium and is retrievable in perceivable form.
15 ff.gg. "Remedy" means any remedial right to which an aggrieved party is entitled with
16 or without resort to a tribunal.
17 gg.hh. "Representative" means a person empowered to act for another, including an
18 agent, an officer of a corporation or association, and a trustee, executor, or
19 administrator of an estate.
20 hh.ii. "Right" includes remedy.
21 ii.jj. "Security interest" means an interest in personal property or fixtures which
22 secures payment or performance of an obligation. "Security interest" includes any
23 interest of a consignor and a buyer of accounts, chattel paper, a payment
24 intangible, or a promissory note in a transaction that is subject to chapter 41-09.
25 "Security interest" does not include the special property interest of a buyer of
26 goods on identification of those goods to a contract for sale under section
27 41-02-46, but a buyer may also acquire a "security interest" by complying with
28 chapter 41-09. Except as otherwise provided in section 41-02-53, the right of a
29 seller or lessor of goods under chapter 41-02 or 41-02.1 to retain or acquire
30 possession of the goods is not a "security interest", but a seller or lessor may
31 also acquire a "security interest" by complying with chapter 41-09. The retention
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1 or reservation of title by a seller of goods notwithstanding shipment or delivery to
2 the buyer under section 41-02-46 is limited in effect to a reservation of a "security
3 interest". Whether a transaction in the form of a lease creates a "security interest"
4 is determined under section 41-01-11.
5 jj.kk. "Send", in connection with a writing, record, or noticenotification, means:
6 (1) To deposit in the mail or, deliver for transmission, or transmit by any other
7 usual means of communication, with postage or cost of transmission
8 provided for and properly addressed and, in the case of an instrument, to an
9 address specified on the instrument or otherwise agreed, or if there be
10 none, addressed to any address reasonable under the circumstances; or
11 (2) In any other way to cause to be received any record or notice within the time
12 it would have arrived if properly sentTo cause the record or notification to be
13 received within the time it would have been received if properly sent under
14 paragraph 1.
15 kk. "Signed" includes using any symbol executed or adopted with present intention to
16 adopt or accept a writing
17 ll. "Sign" means, with present intent to authenticate or adopt a record, to execute or
18 adopt a tangible symbol, or attach to or logically associate with the record an
19 electronic symbol, sound, or process. "Signed", "signing", and "signature" have
20 corresponding meanings.
21