WEST VIRGINIA LEGISLATURE
2023 REGULAR SESSION
Introduced Senate Bill 549
INTERIM
BILL
By Senators Woodrum and Phillips [Introduced February 02, 2023; referred to the committee on the Judiciary]
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1 A BILL to amend and reenact §46-1-201, §46-1-204, §46-1-301, and §46-1-306 of the Code of
2 West Virginia, 1931 as amended; to amend and reenact §46-2-102, §46-2-106, §46-2-201,
3 §46-2-202, §46-2-203, §46-2-205, and §46-2-209 of said code; to amend and reenact §46-
4 2A-102, §46-2A-103, §46-2A-107, §46-2A-201, §46-2A-202, §46-2A-203, §46-2A-205,
5 and §46-2A-208 of said code; to amend and reenact §46-3-104, §46-3-105, §46-3-401,
6 and §46-3-604 of said code; to amend and reenact §46-4A-103, §46-4A-201, §46-4A-202,
7 §46-4A-203, §46-4A-207,§46-4A-208, §46-4A-210, §46-4A-211, and §46-4A-305 of said
8 code; to amend and reenact §46-5-104 and §46-5-116 of said code; to amend and reenact
9 §46-7-102 and §46-7-106 of said code; to amend and reenact §46-8-110 and §46-8-303 of
10 said code; to amend and reenact §46-9-102, §46-9-104, §46-9-105, §46-9-203, §46-9-
11 204, §46-9-207, §46-9-208, §46-9-209, §46-9-210, §46-9-301, §46-9-304, §46-9-305,
12 §46-9-310, §46-9-312, §46-9-313, §46-9-314, §46-9-316, §46-9-317, §46-9-323, §46-9-
13 324, §46-9-330, §46-9-331, §46-9-332, §46-9-334, §46-9-341, §46-9-404, §46-9-406,
14 §46-9-408, §46-9-509, §46-9-513, §46-9-601, §46-9-605, §46-9-608, §46-9-611, §46-9-
15 613, §46-9-614, §46-9-615, §46-9-616, §46-9-619, §46-9-620, §46-9-621, §46-9-624,
16 §46-9-628; to amend said code by adding thereto 7 new sections, designated §46-9-105A,
17 §46-9-107A, §46-9-107B, §46-9-306A, §46-9-306B, §46-9-314A, and §46-9-326A; to
18 amend said code by adding a new article, designated §46-12-101, §46-12-102, §46-12-
19 103, §46-12-104, §46-12-105, §46-12-106, §46-12-107; and to amend said code by
20 adding a new article, designated §46-12A-101, §46-12A-102, §46-12A-201, §46-12A-301,
21 §46-12A-302, §46-12A-303, §46-12A-304, §46-12A-305, §46-12A-306, §46-12A-401, all
22 relating to amending the Uniform Commercial Code; defining terms; clarifying article
23 applies to transactions in goods and setting forth the extent to which it applies in a hybrid
24 transaction; amending requirements for statute of frauds by requiring a record sufficient to
25 indicate the contract has been made rather than a writing; amending requirement for
26 parole or extrinsic evidence by replacing the requirement that the parties agree in writing
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27 and substituting a requirement that the parties agree in a record; amending the
28 requirement for seals by requiring that the seal be affixed to a record; amending the
29 requirement for firm offers in that the offer must be in a record rather than a writing;
30 amending the requirement for modification, recission and waiver; amending the scope of
31 leases to incorporate a hybrid lease; amending signature requirements; adding
32 requirement stating that an obligation of a party is not discharged solely by destruction of
33 the check in connection with a process in which information is extracted from the check
34 and an image of the check is made; amending security procedures to add an obligation on
35 the receiving bank or the customer to require symbols, sounds, or biometrics, or requiring a
36 payment or to be sent from a known email address, IP address, or telephone number;
37 clarifying choice of law provisions; clarifying when a person has control of an electronic
38 document of title; setting forth requirements for control of electronic copy of record
39 evidencing chattel paper; setting forth requirements for control of electronic money; setting
40 forth additional duties of security party having control of collateral; setting forth law
41 governing perfection and priority of security interests in chattel paper; amending the
42 perfection of security interests to include controllable accounts, controllable electronic
43 records, and controllable payment intangibles; setting forth that a security interest in
44 electronic money may be perfected only by control; providing a description of perfection by
45 possession and control and time of perfection; stating terms restricting assignment, legal
46 restrictions on assignment are generally ineffective and law relating to the inapplicability of
47 the assignment of health care insurance do not apply to a security interest in an ownership
48 interest in a general partnership, limited partnership, or a limited liability company; stating
49 that no duty is owed by a secured party but providing exceptions to this general rule;
50 providing new form for the disposition of collateral; providing exceptions to limitations of
51 liability; setting forth conflicts in relation to certain articles of code and consumer laws;
52 setting forth rights in controllable accounts, controllable electronic record, and controllable
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53 payment intangible; setting forth what constitutes control of controllable electronic record;
54 setting forth discharge of account debtor on controllable account or controllable payment
55 intangible; setting forth governing law; providing for transitional provisions; providing for
56 adjustment date; providing for saving clause; and providing for effective date.
Be it enacted by the Legislature of West Virginia:
ARTICLE 1. GENERAL PROVISIONS.
§46-1-201. General definitions.
1 (a) Unless the context otherwise requires, words or phrases defined in this section, or in
2 the additional definitions contained in other articles of this chapter that apply to particular articles
3 or parts thereof, have the meanings stated.
4 (b) Subject to definitions contained in other articles of this chapter that apply to particular
5 articles or parts thereof:
6 (1) "Action", in the sense of a judicial proceeding, includes recoupment, counterclaim, set-
7 off, suit in equity and any other proceeding in which rights are determined.
8 (2) "Aggrieved party" means a party entitled to pursue a remedy.
9 (3) "Agreement", as distinguished from "contract", means the bargain of the parties in fact,
10 as found in their language or inferred from other circumstances, including course of performance,
11 course of dealing, or usage of trade as provided in section 1-303.
12 (4) "Bank" means a person engaged in the business of banking and includes a savings
13 bank, savings and loan association, credit union, and trust company.
14 (5) "Bearer" means a person in control of a negotiable electronic document of title or a
15 person in possession of a negotiable instrument, document of title or certificated security that is
16 payable to bearer or indorsed in blank.
17 (6) "Bill of lading" means a document of title evidencing the receipt of goods for shipment
18 issued by a person engaged in the business of directly or indirectly transporting or forwarding
19 goods. The term does not include a warehouse receipt.
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20 (7) "Branch" includes a separately incorporated foreign branch of a bank.
21 (8) "Burden of establishing" a fact means the burden of persuading the trier of fact that the
22 existence of the fact is more probable than its nonexistence.
23 (9) "Buyer in ordinary course of business" means a person that buys goods in good faith,
24 without knowledge that the sale violates the rights of another person in the goods, and in the
25 ordinary course from a person, other than a pawnbroker, in the business of selling goods of that
26 kind. A person buys goods in the ordinary course if the sale to the person comports with the usual
27 or customary practices in the kind of business in which the seller is engaged or with the seller's
28 own usual or customary practices. A person that sells oil, gas or other minerals at the wellhead or
29 minehead is a person in the business of selling goods of that kind. A buyer in ordinary course of
30 business may buy for cash, by exchange of other property, or on secured or unsecured credit, and
31 may acquire goods or documents of title under a preexisting contract for sale. Only a buyer that
32 takes possession of the goods or has a right to recover the goods from the seller under article 2
33 may be a buyer in ordinary course of business. "Buyer in ordinary course of business" does not
34 include a person that acquires goods in a transfer in bulk or as security for or in total or partial
35 satisfaction of a money debt.
36 (10) "Conspicuous", with reference to a term, means so written, displayed, or presented
37 that, based on the totality of the circumstances, a reasonable person against which it is to operate
38 ought to have noticed it. Whether a term is "conspicuous" or not is a decision for the court.
39 Conspicuous terms include the following:
40 (A) A heading in capitals equal to or greater in size than the surrounding text, or in
41 contrasting type, font or color to the surrounding text of the same or lesser size; and
42 (B) Language in the body of a record or display in larger type than the surrounding text, or
43 in contrasting type, font, or color to the surrounding text of the same size, or set off from
44 surrounding text of the same size by symbols or other marks that call attention to the language
45 (11) "Consumer" means an individual who enters into a transaction primarily for personal,
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46 family or household purposes.
47 (12) "Contract", as distinguished from "agreement", means the total legal obligation that
48 results from the parties' agreement as determined by this chapter as supplemented by any other
49 applicable laws.
50 (13) "Creditor" includes a general creditor, a secured creditor, a lien creditor and any
51 representative of creditors, including an assignee for the benefit of creditors, a trustee in
52 bankruptcy, a receiver in equity, and an executor or administrator of an insolvent debtor's or
53 assignor's estate.
54 (14) "Defendant" includes a person in the position of defendant in a counterclaim, cross-
55 claim or third-party claim.
56 (15) "Delivery", with respect to an electronic document of title means voluntary transfer of
57 control and with respect to an instrument, document of title or an authoritative tangible copy of a
58 record evidencing chattel paper, means voluntary transfer of possession.
59 (16) "Document of title" means a record: (i) that in the regular course of business or
60 financing is treated as adequately evidencing that the person in possession or control of the record
61 is entitled to receive, control, hold, and dispose of the record and the goods the record covers and
62 (ii) that purports to be issued by or addressed to a bailee and to cover goods in the bailee's
63 possession which are either identified or are fungible portions of an identified mass. The term
64 includes a bill of lading, transport document, dock warrant, dock receipt, warehouse receipt, and
65 order for delivery of goods. An electronic document of title means a document of title evidenced by
66 a record consisting of information stored in an electronic medium. A tangible document of title
67 means a document of title evidenced by a record consisting of information that is inscribed on a
68 tangible medium.
69 (16A) "Electronic" means relating to technology having electrical, digital, magnetic,
70 wireless, optical, electromagnetic, or similar capabilities.
71 (17) "Fault" means a default, breach or wrongful act or omission.
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72 (18) "Fungible goods" means:
73 (A) Goods of which any unit, by nature or usage of trade, is the equivalent of any other like
74 unit; or
75 (B) Goods that by agreement are treated as equivalent.
76 (19) "Genuine" means free of forgery or counterfeiting.
77 (20) "Good faith", except as otherwise provided in article 5, means honesty in fact and the
78 observance of reasonable commercial standards of fair dealing.
79 (21) "Holder" means:
80 (A) The person in possession of a negotiable instrument that is payable either to bearer or
81 to an identified person that is the person in possession; or
82 (B) The person in possession of a negotiable tangible document of title if the goods are
83 deliverable either to bearer or to the order of the person in possession; or
84 (C) The person in control, other than pursuant to Section 7-106(6) of the negotiable
85 electronic document of title.
86 (22) "Insolvency proceeding" includes an assignment for the benefit of creditors or other
87 proceeding intended to liquidate or rehabilitate the estate of the person involved.
88 (23) "Insolvent" means:
89 (A) Having generally ceased to pay debts in the ordinary course of business other than as
90 a result of bona fide dispute;
91 (B) Being unable to pay debts as they become due; or
92 (C) Being insolvent within the meaning of federal bankruptcy law.
93 (24) "Money" means a medium of exchange currently authorized or adopted by a domestic
94 or foreign government. The term includes a monetary unit of account established by an
95 intergovernmental organization or by agreement between two or more countries. The term does
96 not include an electronic record that is a medium of exchange recorded and transferrable in a
97 system that existed and operated for the medium of exchange before the medium of exchange
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98 was authorized or adopted by the government.
99 (25) "Organization" means a person other than an individual.
100 (26) "Party", as distinguished from "third party", means a person that has engaged in a
101 transaction or made an agreement subject to this chapter.
102 (27) "Person" means an individual, corporation, business trust, estate, trust, partnership,
103 limited liability company, association, joint venture, government, governmental subdivision,
104 agency, or instrumentality, public corporation or any other legal or commercial entity. The term
105 includes a protected series, however denominated, of an entity if the protected series is
106 established under law other than the Uniform Commercial Code that limits, or limits if conditions
107 specified under the law are satisfied, the ability of a creditor of the entity of any other protected
108 services of the entity to satisfy a claim from the assets of the protected series.
109 (28) "Present value" means the amount as of a date certain of one or more sums payable in
110 the future, discounted to the date certain by use of either an interest rate specified by the parties if
111 that rate is not manifestly unreasonable at the time the transaction is entered into or, if an interest
112 rate is not so specified, a commercially reasonable rate that takes into account the facts and
113 circumstances at the time the transaction is entered into.
114 (29) "Purchase" means taking by sale, lease, discount, negotiation, mortgage, pledge, lien,
115 security interest, issue or reissue, gift or any other voluntary transaction creating an interest in
116 property.
117 (30) "Purchaser" means a person that takes by purchase.
118 (31) "Record" means information that is inscribed on a tangible medium or that is stored in
119 an electronic or other medium and is retrievable in perceivable form.
120 (32) "Remedy" means any remedial right to which an aggrieved party is entitled with or
121 without resort to a tribunal.
122 (33) "Representative" means a person empowered to act for another, including an agent,
123 an officer of a corporation or association, and a trustee, executor or administrator of an estate.
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124 (34) "Right" includes remedy.
125 (35) "Security interest" means an interest in personal property or fixtures which secures
126 payment or performance of an obligation. "Security interest" includes any interest of a consignor
127 and a buyer of accounts, chattel paper, a payment intangible or a promissory note in a transaction
128 that is subject to article 9. "Security interest" does not include the special property interest of a
129 buyer of goods on identification of those goods to a contract for sale under section 2-401, but a
130 buyer may also acquire a "security interest" by complying with article 9. Except as otherwise
131 provided in section 2-505, the right of a seller or lessor of goods under article 2 or 2A to retain or
132 acquire possession of the goods is not a "security interest", but a seller or lessor may also acquire