AB480-ASA1,4,1211 (b) To permit the continued expansion of commercial practices through custom,
12usage, and agreement of the parties.
AB480-ASA1,4,1313 (c) To make uniform the law among the various jurisdictions.
AB480-ASA1,4,18 14(2) Unless displaced by the particular provisions of chs. 401 to 411, the
15principles of law and equity, including the law merchant and the law relative to
16capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress,
17coercion, mistake, bankruptcy, or other validating or invalidating cause shall
18supplement its provisions.
AB480-ASA1,4,22 19401.104 Construction against implied repeal. Chapters 401 to 411 being
20a general act intended as a unified coverage of its subject matter, no part of it shall
21be deemed to be impliedly repealed by subsequent legislation if such construction can
22reasonably be avoided.
AB480-ASA1,4,24 23401.106 Use of singular and plural; gender. In chs. 401 to 411, unless the
24statutory context otherwise requires, all of the following apply:
AB480-ASA1,5,2
1(1) Words in the singular number include the plural, and those in the plural
2include the singular.
AB480-ASA1,5,3 3(2) Words of any gender also refer to any other gender.
AB480-ASA1,5,5 4401.107 Captions. Section captions are part of chs. 401 to 411,
5notwithstanding s. 990.001 (6).
AB480-ASA1,5,66 Subchapter Ii
AB480-ASA1,5,87 GENERAL DEFINITIONS AND
8 PRINCIPLES OF INTERPRETATION
AB480-ASA1,5,12 9401.201 General definitions. (1) Unless the context otherwise requires,
10words or phrases defined in this section, or in the additional definitions contained
11in chs. 402 to 411 that apply to particular chapters or subchapters thereof, have the
12meanings stated.
AB480-ASA1,5,14 13(2) Subject to definitions contained in chs. 402 to 411 that apply to particular
14chapters or subchapters thereof, in chs. 401 to 411:
AB480-ASA1,5,1715 (a) "Action," in the sense of a judicial proceeding, includes recoupment,
16counterclaim, setoff, suit in equity, and any other proceeding in which rights are
17determined.
AB480-ASA1,5,1818 (am) "Aggrieved party" means a party entitled to pursue a remedy.
AB480-ASA1,5,2119 (b) "Agreement" means the bargain of the parties in fact, as found in their
20language or inferred from other circumstances, including course of performance,
21course of dealing, or usage of trade as provided in s. 401.303. (Compare "Contract.")
AB480-ASA1,5,2322 (c) "Bank" means a person engaged in the business of banking and includes a
23savings bank, savings and loan association, credit union, and trust company.
AB480-ASA1,6,3
1(cm) "Bearer" means a person in control of a negotiable electronic document of
2title or person in possession of an instrument, negotiable tangible document of title,
3or certificated security payable to bearer or endorsed in blank.
AB480-ASA1,6,64 (d) "Bill of lading" means a document of title evidencing the receipt of goods for
5shipment issued by a person engaged in the business of directly or indirectly
6transporting or forwarding goods. The term does not include a warehouse receipt.
AB480-ASA1,6,77 (dm) "Branch" includes a separately incorporated foreign branch of a bank.
AB480-ASA1,6,98 (e) "Burden of establishing" a fact means the burden of persuading the trier of
9fact that the existence of the fact is more probable than its nonexistence.
AB480-ASA1,6,2410 (em) "Buyer in ordinary course of business" means a person that buys goods in
11good faith, without knowledge that the sale violates the rights of another person in
12the goods, and in the ordinary course from a person, other than a pawnbroker, in the
13business of selling goods of that kind. A person buys goods in the ordinary course if
14the sale to the person comports with the usual or customary practices in the kind of
15business in which the seller is engaged or with the seller's own usual or customary
16practices. A person that sells oil, gas, or other minerals at the wellhead or minehead
17is a person in the business of selling goods of that kind. A buyer in ordinary course
18of business may buy for cash, by exchange of other property, or on secured or
19unsecured credit, and may acquire goods or documents of title under a preexisting
20contract for sale. Only a buyer that takes possession of the goods or has a right to
21recover the goods from the seller under ch. 402 may be a buyer in ordinary course of
22business. A person that acquires goods in a transfer in bulk or as security for or in
23total or partial satisfaction of a money debt is not a buyer in ordinary course of
24business.
AB480-ASA1,7,4
1(f) "Conspicuous," with reference to a term, means so written, displayed, or
2presented that a reasonable person against which it is to operate ought to have
3noticed it. Whether a term is "conspicuous" or not is a decision for the court.
4Conspicuous terms include any of the following:
AB480-ASA1,7,65 1. A heading in capitals equal to or greater in size than the surrounding text,
6or in contrasting type, font, or color to the surrounding text of the same or lesser size.
AB480-ASA1,7,107 2. Language in the body of a record or display in larger type than the
8surrounding text, or in contrasting type, font, or color to the surrounding text of the
9same size, or set off from surrounding text of the same size by symbols or other marks
10that call attention to the language.
AB480-ASA1,7,1211 (fm) "Consumer" means an individual who enters into a transaction primarily
12for personal, family, or household purposes.
AB480-ASA1,7,1513 (g) "Contract" means the total legal obligation that results from the parties'
14agreement as determined by chs. 401 to 411 as supplemented by any other applicable
15laws. (Compare "Agreement.")
AB480-ASA1,7,1916 (gm) "Creditor" includes a general creditor, a secured creditor, a lien creditor,
17and any representative of creditors, including an assignee for the benefit of creditors,
18a trustee in bankruptcy, a receiver in equity, and an executor or administrator of an
19insolvent debtor's or assignor's estate.
AB480-ASA1,7,2120 (h) "Defendant" includes a person in the position of defendant in a counterclaim
21or 3rd party claim.
AB480-ASA1,7,2422 (hm) "Delivery" with respect to electronic documents of title means voluntary
23transfer of control and with respect to instruments, tangible documents of title,
24chattel paper, or certificated securities means voluntary transfer of possession.
AB480-ASA1,8,11
1(i) "Document of title" means a record that in the regular course of business or
2financing is treated as adequately evidencing that the person in possession or control
3of the record is entitled to receive, control, hold, and dispose of the record and the
4goods the record covers; and that purports to be issued by or addressed to a bailee and
5to cover goods in the bailee's possession which are either identified or are fungible
6portions of an identified mass. The term includes a bill of lading, transport
7document, dock warrant, dock receipt, warehouse receipt, and order for delivery of
8goods. An electronic document of title is evidenced by a record consisting of
9information stored in an electronic medium. A tangible document of title is
10evidenced by a record consisting of information that is inscribed on a tangible
11medium.
AB480-ASA1,8,1212 (im) "Fault" means a wrongful act, omission, breach, or default.
AB480-ASA1,8,1313 (j) "Fungible goods" means any of the following:
AB480-ASA1,8,1514 1. Goods of which any unit, by nature or usage of trade, is the equivalent of any
15other like unit.
AB480-ASA1,8,1616 2. Goods which by agreement are treated as equivalent.
AB480-ASA1,8,1717 (jm) "Genuine" means free of forgery or counterfeiting.
AB480-ASA1,8,1918 (k) "Good faith," except as otherwise provided in ch. 405, means honesty in fact
19and the observance of reasonable commercial standards of fair dealing.
AB480-ASA1,8,2020 (km) "Holder" means any of the following:
AB480-ASA1,8,2221 1. The person in possession of a negotiable instrument that is payable either
22to bearer or to an identified person that is the person in possession.
AB480-ASA1,8,2423 2. A person in possession of a document of title if the goods are deliverable
24either to bearer or to the order of the person in possession.
AB480-ASA1,8,2525 3. A person in control of a negotiable electronic document of title.
AB480-ASA1,9,3
1(L) "Insolvency proceeding" includes an assignment for the benefit of creditors
2or other proceeding intended to liquidate or rehabilitate the estate of the person
3involved.
AB480-ASA1,9,44 (Lm) "Insolvent" means any of the following:
AB480-ASA1,9,65 1. Having generally ceased to pay debts in the ordinary course of business other
6than as a result of bona fide dispute.
AB480-ASA1,9,77 2. Unable to pay debts as they become due.
AB480-ASA1,9,88 3. Insolvent within the meaning of federal bankruptcy law.
AB480-ASA1,9,129 (m) "Money" means a medium of exchange currently authorized or adopted by
10a domestic or foreign government. The term includes a monetary unit of account
11established by an intergovernmental organization or by agreement between 2 or
12more countries.
AB480-ASA1,9,1313 (mm) "Organization" means a person other than an individual.
AB480-ASA1,9,1514 (n) "Party," as distinct from a "3rd party," means a person that has engaged in
15a transaction or made an agreement subject to chs. 401 to 411.
AB480-ASA1,9,1916 (nm) "Person" means an individual, corporation, business trust, estate, trust,
17partnership, limited liability company, association, joint venture, government,
18governmental subdivision, agency, or instrumentality, public corporation, or any
19other legal or commercial entity.
AB480-ASA1,9,2520 (p) "Present value" means the amount as of a date certain of one or more sums
21payable in the future, discounted to the date certain by use of either an interest rate
22specified by the parties if that rate is not manifestly unreasonable at the time the
23transaction is entered into or, if an interest rate is not so specified, a commercially
24reasonable rate that takes into account the facts and circumstances at the time the
25transaction is entered into.
AB480-ASA1,10,3
1(pm) "Presumption" or "presumed" means that the trier of fact must find the
2existence of the fact presumed unless and until evidence is introduced which would
3support a finding of its nonexistence.
AB480-ASA1,10,64 (q) "Purchase" means taking by sale, lease, discount, negotiation, mortgage,
5pledge, lien, security interest, issue or reissue, gift, or any other voluntary
6transaction creating an interest in property.
AB480-ASA1,10,77 (qm) "Purchaser" means a person that takes by purchase.
AB480-ASA1,10,98 (r) "Record" means information that is inscribed on a tangible medium or that
9is stored in an electronic or other medium and is retrievable in perceivable form.
AB480-ASA1,10,1110 (rm) "Remedy" means any remedial right to which an aggrieved party is
11entitled with or without resort to a tribunal.
AB480-ASA1,10,1412 (s) "Representative" means any person empowered to act for another, including
13an agent, an officer of a corporation or association, and a trustee, executor, or
14administrator of an estate.
AB480-ASA1,10,1515 (sm) "Right" includes remedy.
AB480-ASA1,11,316 (t) "Security interest" means an interest in personal property or fixtures which
17secures payment or performance of an obligation. The term also includes any
18interest of a consignor and a buyer of accounts, chattel paper, a payment intangible,
19or a promissory note in a transaction that is subject to ch. 409. The special property
20interest of a buyer of goods on identification of those goods to a contract for sale under
21s. 402.401 is not a "security interest," but a buyer may also acquire a "security
22interest" by complying with ch. 409. Except as otherwise provided in s. 402.505, the
23right of a seller or lessor of goods under ch. 402 or 411 to retain or acquire possession
24of the goods is not a "security interest," but a seller or lessor may also acquire a
25"security interest" by complying with ch. 409. The retention or reservation of title

1by a seller of goods notwithstanding shipment or delivery to the buyer (s. 402.401)
2is limited in effect to a reservation of a "security interest." Whether a transaction in
3the form of a lease creates a "security interest" is determined pursuant to s. 401.203.
AB480-ASA1,11,54 (tm) "Send" in connection with a writing, record, or notice means any of the
5following:
AB480-ASA1,11,106 1. To deposit in the mail or deliver for transmission by any other usual means
7of communication with postage or cost of transmission provided for and properly
8addressed and, in the case of an instrument, to an address specified thereon or
9otherwise agreed, or if there be none to any address reasonable under the
10circumstances.
AB480-ASA1,11,1211 2. In any other way to cause to be received any record or notice within the time
12it would have arrived if properly sent.
AB480-ASA1,11,1413 (u) "Signed" includes any symbol executed or adopted with present intention
14to adopt or accept a writing.
AB480-ASA1,11,1715 (um) "State" means a state of the United States, the District of Columbia,
16Puerto Rico, the United States Virgin Islands, or any territory or insular possession
17subject to the jurisdiction of the United States.
AB480-ASA1,11,1818 (v) "Surety" includes a guarantor or other secondary obligor.
AB480-ASA1,11,2019 (vm) "Term" means a portion of an agreement that relates to a particular
20matter.
AB480-ASA1,11,2221 (w) "Unauthorized signature" means a signature made without actual,
22implied, or apparent authority. The term includes a forgery.
AB480-ASA1,11,2423 (wm) "Warehouse receipt" means a receipt issued by a person engaged in the
24business of storing goods for hire.
AB480-ASA1,12,2
1(x) "Writing" includes printing, typewriting, or any other intentional reduction
2to tangible form. "Written" has a corresponding meaning.
AB480-ASA1,12,4 3401.202 Notice; knowledge. (1) Subject to sub. (6), a person has "notice" of
4a fact if the person satisfies any of the following:
AB480-ASA1,12,55 (a) Has actual knowledge of it.
AB480-ASA1,12,66 (b) Has received a notice or notification of it.
AB480-ASA1,12,87 (c) From all the facts and circumstances known to the person at the time in
8question, has reason to know that it exists.
AB480-ASA1,12,9 9(2) "Knowledge" means actual knowledge.
AB480-ASA1,12,11 10(3) "Discover," "learn," or words of similar import refer to knowledge rather
11than to notice.
AB480-ASA1,12,14 12(4) A person "notifies" or "gives" a notice or notification to another by taking
13such steps as may be reasonably required to inform the other in ordinary course,
14whether or not the other person actually comes to know of it.
AB480-ASA1,12,16 15(5) Subject to sub. (6), a person "receives" a notice or notification when any of
16the following apply:
AB480-ASA1,12,1717 (a) It comes to that person's attention.
AB480-ASA1,12,2018 (b) It is duly delivered in a form reasonable under the circumstances at the
19place of business through which the contract was made or at another location held
20out by that person as the place for receipt of such communications.
AB480-ASA1,13,6 21(6) Notice, knowledge, or a notice or notification received by an organization
22is effective for a particular transaction from the time it is brought to the attention
23of the individual conducting that transaction and, in any event, from the time it
24would have been brought to the individual's attention if the organization had
25exercised due diligence. An organization exercises due diligence if it maintains

1reasonable routines for communicating significant information to the person
2conducting the transaction and there is reasonable compliance with the routines.
3Due diligence does not require an individual acting for the organization to
4communicate information unless the communication is part of the individual's
5regular duties or the individual has reason to know of the transaction and that the
6transaction would be materially affected by the information.
AB480-ASA1,13,9 7401.203 Lease distinguished from security interest. (1) Whether a
8transaction in the form of a lease creates a lease or security interest is determined
9by the facts of each case.
AB480-ASA1,13,13 10(2) A transaction in the form of a lease creates a security interest if the
11consideration that the lessee is to pay the lessor for the right to possession and use
12of the goods is an obligation for the term of the lease and is not subject to termination
13by the lessee, and if any of the following apply:
AB480-ASA1,13,1514 (a) The original term of the lease is equal to or greater than the remaining
15economic life of the goods.
AB480-ASA1,13,1716 (b) The lessee is bound to renew the lease for the remaining economic life of the
17goods or is bound to become the owner of the goods.
AB480-ASA1,13,2018 (c) The lessee has an option to renew the lease for the remaining economic life
19of the goods for no additional consideration or for nominal additional consideration
20upon compliance with the lease agreement.
AB480-ASA1,13,2321 (d) The lessee has an option to become the owner of the goods for no additional
22consideration or for nominal additional consideration upon compliance with the
23lease agreement.
AB480-ASA1,13,25 24(3) A transaction in the form of a lease does not create a security interest merely
25because of any of the following:
AB480-ASA1,14,3
1(a) The present value of the consideration the lessee is obligated to pay the
2lessor for the right to possession and use of the goods is substantially equal to or is
3greater than the fair market value of the goods at the time the lease is entered into.
AB480-ASA1,14,44 (b) The lessee assumes risk of loss of the goods.
AB480-ASA1,14,65 (c) The lessee agrees to pay taxes, insurance, filing, recording, or registration
6fees, or service or maintenance costs with respect to the goods.
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