BILL NUMBER: S7244A
SPONSOR: HOYLMAN-SIGAL
 
TITLE OF BILL:
An act to amend the uniform commercial code, in relation to controllable
electronic records
 
PURPOSE:
This bill would modernize, rationalize, and clarify the Uniform Commer-
cial Code (UCC) so that it effectively governs the commercial law
aspects of important transactions in digital assets, while applying to
certain digital assets the unique characteristics of New York law. These
characteristics facilitate the negotiability of written instruments. The
bill would enhance transactional certainty and generally modernize New
York's UCC to take into account modern electronic transactions and
communications.
 
SUMMARY OF SPECIFIC PROVISIONS:
Article 1 of the bill covers General Provisions
Section 1-201. General Definitions
Section 1-204. Value
Section 1-301. Territorial Applicability; Parties' Power to Choose
Applicable Law
Section 1-306. Waiver or Renunciation of Claim or Right After Breach
Article 2 of the bill covers Sales
Section 2-102. Scope; Certain Security and Other Transactions Excluded
From This Article
Section 2-106. Definitions. "Contract"; "Agreement"; "Contract for
Sale"; "Sale"; "Present Sale"; "Conforming" to Contract; "Termination";
"Cancellation"; "Hybrid Transaction".
Section 2-201. Formal Requirements; Statute of Frauds
Section 2-202. Final Written Expression: Parol or Extrinsic Evidence
Section 2-203. Seals Inoperative
Section 2-205. Firm Offers
Section 2-209. Modification, Rescission, and Waiver
Article 2A of the bill covers Leases
Section 2-A-102. Scope
Section 2-A-103. Definitions and Index of Definitions
Section 2-A-107. Waiver or Renunciation of Claim or Right After Default
Section 2-A-201. Statute of Frauds
Section 2-A-202. Final Written Expression: Parol or Extrinsic Evidence
Section 2-A-203. Seals Inoperative
Section 2-A-205. Firm Offers
Section 2-A-208. Modification, Rescission and Waiver
Article 3 of the bill covers Negotiable Instruments
Section 3-102. Definitions and Index of Definitions
Section 3-112. Terms and Omissions Not Affecting Negotiability
Section 3-605. Cancellation and Renunciation
Article 4A of the bill covers Funds Transfers
Section 4-A-103. Payment Order-Definitions
Section 4-A-201. Security Procedure
Section 4-A-202. Authorized and Verified Payment Orders
Section 4-A-203. Unenforceability of Certain Verified Payment Orders
Section 4-A-207. Misdescription of Beneficiary
Section 4-A-208. Misdescription of Intermediary Bank or Beneficiary's
Bank
Section 4-A-210. Rejection of Payment Order
Section 4-A-211. Cancellation and Amendment of Payment Order
Section 4-A-305. Liability for Late or Improper Execution or Failure to
Execute Payment Order
Article 5 of the bill covers Letters of Credit
Section 5-104. Formal requirements
Section 5-116. Choice of law and forum
Article 7 of the bill covers Documents of Title
Section 7-102. Definitions and Index of Definitions
Section 7-106. Control of Electronic Document of Title
Article 8 of the bill covers Investment Securities
Section 8-102. Definitions
Section 8-103. Rules for Determining Whether Certain Obligations and
Interests are Securities or Financial Assets
Section 8-106. Control
Section 8-110. Applicability; Choice of Law
Section 8-303. Protected Purchaser
Article 9 of the bill covers Secured Transactions
Section 9-102. Definitions And Index of Definitions
Section 9-104. Control of Deposit Account
Section 9-105. Control of Electronic Copy of Record Evidencing Chattel
Paper
Section 9-105A. Control of Electronic Money. {new}
Section 9-107A. Control of Controllable Electronic Record, Controllable
Account, or Controllable Payment Intangible. {new}
Section 9-107B. No Requirement to Acknowledge or Confirm; No Duties.
{new}
Section 9-203. Attachment and Enforceability of Security Interests;
Proceeds; Supporting Obligations; Formal Requisites
Section 9-204. After-acquired Property; Future Advances
Section 9-207. Rights and Duties of Secured Party Having Possession or
Control of Collateral
Section 9-208. Additional Duties of Secured Party Having Control of
Collateral
Section 9-209. Duties of Secured Party If Account Debtor Has Been Noti-
fied of Assignment
Section 9-210. Request for Accounting; Request Regarding List of Collat-
eral or Statement of Account
Section 9-301. Law Governing Perfection and Priority of Security Inter-
ests Section 9-304. Law Governing Perfection and Priority of Security
Interests in Deposit Accounts
Section 9-305. Law Governing Perfection and Priority of Security Inter-
ests in Investment Property
Section 9-306A. Law Governing Perfection and Priority of Security Inter-
ests in Chattel Paper. {new}
Section 9-306B. Law Governing Perfection and Priority of Security Inter-
ests in Controllable Accounts, Controllable Electronic Records, and
Controllable Payment Intangibles. {new}
Section 9-310. When Filing Required to Perfect Security Interest or
Agricultural Lien; Security Interests and Agricultural Liens to Which
Filing Provisions Do Not Apply
Section 9-312. Perfection of Security Interests in Chattel Paper,
Controllable Accounts, Controllable Electronic Records, Controllable
Payment Intangibles, Deposit Accounts, Documents, Goods Covered by Docu-
ments, Instruments, Investment Property, Letter-of-credit Rights, and
Money; Perfection by Permissive Filing; Temporary Perfection Without
Filing or Transfer of Possession
Section 9-313. When Possession by or Delivery to Secured Party Perfects
Security Interest Without Filing
Section 9-314. Perfection by Control
Section 9-314A. Perfection by Possession and Control of Chattel Paper.
{new}
Section 9-316. Effect of Change in Governing Law
Section 9-317. Interests That Take Priority over or Take Free of Securi-
ty Interest or Agricultural Lien
Section 9-323. Future Advances
Section 9-324. Priority of Purchase-money Security Interests
Section 9-326A. Priority of Security Interest in Controllable Account,
Controllable Electronic Record, and Controllable Payment Intangible.
{new}
Section 9-330. Priority of Purchaser of Chattel Paper or Instrument
Section 9-331. Priority of Rights of Purchasers of Controllable
Accounts, Controllable Electronic Records, Controllable Payment Intangi-
bles, Documents, Instruments, Documents, and Securities under Other
Articles; Priority of Interests in Financial Assets and Security Enti-
tlements and Protection Against Assertion of Claim under Article 8 Arti-
cles 8 and 12
Section 9-332. Transfer of Money; Transfer of Funds from Deposit Account
Section 9-334. Priority of Security Interests in Fixtures and Crops
Section 9-341. Bank's Rights and Duties with Respect to Deposit Account
Section 9-404. Rights Acquired by Assignee; Claims and Defenses Against
Assignee
Section 9-406. Discharge of Account Debtor; Notification of Assignment;
Identification and Proof of Assignment; Restrictions on Assignment of
Accounts, Chattel Paper, Payment Intangibles, and Promissory Notes Inef-
fective
Section 9-408. Restrictions on Assignment of Promissory Notes, Health-
care-insurance Receivables, and Certain General Intangibles Ineffective
Section 9-509. Persons Entitled to File a Record
Section 9-513. Termination Statement
Section 9-601. Rights after Default; Judicial Enforcement; Consignor or
Buyer of Accounts, Chattel Paper, Payment Intangibles, or Promissory
Notes
Section 9-605. Unknown Debtor or Secondary Obligor
Section 9-608. Application of Proceeds of Collection or Enforcement;
Liability for Deficiency and Right to Surplus
Section 9-611. Notification Before Disposition of Collateral
Section 9-613. Contents and Form of Notification Before Disposition of
Collateral: General
Section 9-614. Contents and Form of Notification Before Disposition of
Collateral: Consumer-goods Transaction
Section 9-615. Application of Proceeds of Disposition; Liability for
Deficiency and Right to Surplus
Section 9-616. Explanation of Calculation of Surplus or Deficiency
Section 9-619. Transfer of Record or Legal Title
Article 12 of the bill covers Controllable Electronic Records {new}
Section 12-101. Title.
Section 12-102. Definitions.
Section 12-103. Relation to Article 9 and Consumer Laws.
Section 12-104. Rights in Controllable Account, Controllable Electronic
Record, and Controllable Payment Intangible.
Section 12-105. Control of Controllable Electronic Record.
Section 12-106. Discharge of Account Debtor on Controllable Account or
Controllable Payment Intangible.
Section 12-107. Governing Law.
Article A of the bill covers Transitional Provisions for Uniform Commer-
cial Code Amendments {new}
Part 1 General Provisions and Definitions
Section A-101. Title.
Section A-102. Definitions.
Part 2 General Transitional Provisions
Section A-201. Saving Clause.
Part 3 Transitional Provisions for Articles 9 and 12
Section A-301. Saving Clause.
Section A-302. Security Interest Perfected Before Effective Date.
Section A-303. Security Interest Unperfected Before Effective Date.
Section A-304. Effectiveness of Actions Taken Before Effective Date.
Section A-305. Priority.
Section A-306. Priority of Claims When Priority Rules of Article 9 Do
Not Apply.
Part 4 Effective Date
Section A-401. Effective Date.
 
JUSTIFICATION:
New York commercial and financial law has unique respect for freedom of
contract and strong protections for the negotiability of commercial
instruments. This has long made New York the preferred U.S. jurisdic-
tion for paper-based commercial and financial transactions; this is not
yet the case for transactions involving digital assets. If New York
were to enact the bill, New York would retain its commercial primacy,
which otherwise might be lost to states that have modernized their
commercial law to take emerging technologies in to account. Enactment of
the bill will eliminate disincentives to the choice of New York law and
jurisdiction to govern transactions in, and to resolve disputes concern-
ing, digital assets. More than that, enactment of the bill would make
choice of New York law and jurisdiction affirmatively attractive for
purchasers of digital assets.This will further New York's long-standing
goals of (i) encouraging choice of New York law and jurisdiction to
govern commercial contracts and (ii) making the advantages of electronic
commerce available to the greatest extent in New York.
This bill is a modified version of the model Emerging Technologies
Amendments to the Uniform Commercial Code (UCC) as proposed by the
Uniform Law Commission and the American Law Institute, tailored to mesh
with important New York policies reflected in New York's version of the
UCC. The bill preserves and applies existing New York-specific princi-
ples, particularly those protecting the rights of good faith purchasers
of negotiable instruments and documents, to transactions involving
digital assets which are the electronic equivalent of such instruments
and documents. By updating New York's UCC to cover all digital assets
that meet the criteria for digital assets covered by the new Article 12
in the bill, prompt enactment of the bill would encourage parties to
choose New York law and courts to govern commerce in digital assets,
particularly those which function as electronic notes, drafts, bills of
exchange, or other electronic media. Encouragement of New York-based
digital commerce would be expected to increase business revenues,
professional service fees and incomes in New York, and, as a result, New
York tax revenues, and possibly future tax revenues on digital trans-
actions.
 
LEGISLATIVE HISTORY:
New bill
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None
 
EFFECTIVE DATE:
This bill provides that the Amendments will generally take effect six
months after enactment but provide for a longer delay before certain
provisions relating to secured transactions are effective so as to allow
parties to such transactions to adapt to new perfection and priority
rules that will apply to transactions entered into before the effective
date.