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MDK&RAC:wlj:pg
2007 - 2008 LEGISLATURE
ASSEMBLY SUBSTITUTE AMENDMENT 1,
TO 2007 ASSEMBLY BILL 481
February 8, 2008 - Offered by Representative Cullen.
AB481-ASA1,1,11 1An Act to amend 99.01 (2), 137.24 (1), 402.104 (2), 402.310 (3), 402.323 (2)
2(intro.), 402.401 (3) (a), 402.401 (3) (b), 402.503 (4) (b), 402.503 (5) (b), 402.505
3(1) (b), 402.505 (2), 402.506 (2), 402.509 (2) (a), 402.509 (2) (c), 402.605 (2),
4402.705 (2) (c), 402.705 (3) (c), 404.210 (3) (intro.), 409.203 (2) (c) 4., 409.207 (3)
5(intro.), 409.208 (2) (d), 409.208 (2) (e), 409.301 (3) (intro.), 409.310 (2) (e),
6409.310 (2) (h), 409.312 (5), 409.313 (1), 409.314 (1), 409.314 (2), 409.317 (2),
7409.317 (4), 409.338 (2), 409.601 (2), 411.103 (1) (a), 411.103 (1) (o), 411.514 (2)
8and 411.526 (2) (c); to repeal and recreate chapter 407; and to create 137.12
9(6), 402.103 (3) (dm), 404.104 (3) (fc), 408.103 (7), 409.102 (2) (df) and 409.208
10(2) (f) of the statutes; relating to: adopting revised Article 7 of the Uniform
11Commercial Code, concerning documents of title.
Analysis by the Legislative Reference Bureau
Article 7 of the Uniform Commercial Code (UCC) regulates the transfer of goods
in interstate commerce, specifically dealing with the transfer of title to goods that are

moved or shipped from one location to another. Wisconsin had earlier enacted article
7 of the UCC, but in 2003 the National Conference of Commissioners on Uniform
State Laws adopted a revised version of article 7 of the UCC and recommended its
enactment in all of the states. This substitute amendment enacts the revised version
of article 7 of the UCC into Wisconsin law.
The transfer of goods in interstate commerce involves not only the shipment
and storage of tangible goods, but also the transfer of the ownership rights to those
goods. Under current law, such rights are transferred by specific documents of title.
These title documents are paper documents, consisting of originals and copies, and
may be either negotiable or nonnegotiable. The use of paper documents to transfer
title and other ownership rights has worked well in the past, but as commercial
transactions in the United States and around the world are increasingly conducted
and facilitated through electronic means the current-law requirements for paper
documents may now impede the transfer of title to goods that are moved or shipped
from one location to another. Revised article 7 of the UCC addresses this issue by
permitting electronic documents of title for the transfer of goods in interstate
commerce.
Under the substitute amendment, article 7 of the UCC is revised to provide that
a lawful document of title includes an electronic document of title, which is evidenced
by a record consisting of information stored in an electronic medium. Under the
substitute amendment, for the purpose of transferring ownership rights in tangible
goods, electronic documents of title are the legal equivalent to paper documents of
title. The remaining portions of current law relating to article 7 of the UCC are
amended to facilitate the use of either electronic documents of title or the current
paper documents of title. Most importantly, revised article 7 of the UCC, as
contained in the substitute amendment, creates new definitions of "record" and
"sign." Under the substitute amendment, a record is "information that is inscribed
on a tangible medium or that is stored in an electronic or other medium and is
retrievable in perceivable form." The term "sign" is defined to "execute or adopt a
tangible symbol" and "to attach or logically associate with the record an electronic
sound, symbol, or process." Wherever the term "writing" or an equivalent was
previously used in article 7 of the UCC, the term "record" is uniformly used in the
revised article 7 of the UCC. When a document is required to be signed under article
7 of the UCC, electronic signing meets the test under the revised article 7 of the UCC.
Finally, the substitute amendment incorporates all technical or nonsubstantive
portions of revised article 7 of the UCC that update or clarify the earlier version of
article 7 of the UCC, as well as eliminates provisions that no longer have legal effect.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB481-ASA1, s. 1 1Section 1. 99.01 (2) of the statutes is amended to read:
AB481-ASA1,3,5
199.01 (2) "Property" means goods as defined in s. 407.102 (1) (f) (g). "Property"
2includes food; agricultural and commercial products, commodities or equipment;
3household furnishings; automobiles, boats, snowmobiles or other vehicles and
4conveyances; and all other items of a personal, family, household, agricultural,
5business or commercial nature which may be the subject of a contract of storage.
AB481-ASA1, s. 2 6Section 2. 137.12 (6) of the statutes is created to read:
AB481-ASA1,3,87 137.12 (6) To the extent there is a conflict between this subchapter and ch. 407,
8ch. 407 governs.
AB481-ASA1, s. 3 9Section 3. 137.24 (1) of the statutes is amended to read:
AB481-ASA1,3,1210 137.24 (1) In this section, "transferable record" means an electronic record that
11would be a note under ch. 403 or a record under ch. 407 if the electronic record were
12in writing
.
AB481-ASA1, s. 4 13Section 4. 402.103 (3) (dm) of the statutes is created to read:
AB481-ASA1,3,1414 402.103 (3) (dm) "Control" — s. 407.106.
AB481-ASA1, s. 5 15Section 5. 402.104 (2) of the statutes is amended to read:
AB481-ASA1,3,2416 402.104 (2) "Financing agency" means a bank, finance company or other person
17who in the ordinary course of business makes advances against goods or documents
18of title or who by arrangement with either the seller or the buyer intervenes in
19ordinary course to make or collect payment due or claimed under the contract for
20sale, as by purchasing or paying the seller's draft or making advances against it or
21by merely taking it for collection whether or not documents of title accompany or are
22associated with
the draft. "Financing agency" includes also a bank or other person
23who similarly intervenes between persons who are in the position of seller and buyer
24in respect to the goods (s. 402.707).
AB481-ASA1, s. 6 25Section 6. 402.310 (3) of the statutes is amended to read:
AB481-ASA1,4,6
1402.310 (3) If delivery is authorized and made by way of documents of title
2otherwise than by sub. (2) then payment is due regardless of where the goods are to
3be received
at the time and place at which the buyer is to receive the documents
4regardless of where the goods are to be received; or at the time the buyer is to receive
5delivery of the electronic documents and at the seller's place of business or, if none,
6the seller's residence
; and
AB481-ASA1, s. 7 7Section 7. 402.323 (2) (intro.) of the statutes is amended to read:
AB481-ASA1,4,128 402.323 (2) (intro.) Where in a case within sub. (1) a tangible bill of lading has
9been issued in a set of parts, unless otherwise agreed if the documents are not to be
10sent from abroad the buyer may demand tender of the full set; otherwise only one
11part of the bill of lading need be tendered. Even if the agreement expressly requires
12a full set:
AB481-ASA1, s. 8 13Section 8. 402.401 (3) (a) of the statutes is amended to read:
AB481-ASA1,4,1714 402.401 (3) (a) If the seller is to deliver a tangible document of title, title passes
15at the time when and the place where the seller delivers such documents and, if the
16seller is to deliver an electronic document of title, title passes when the seller delivers
17the document
; or
AB481-ASA1, s. 9 18Section 9. 402.401 (3) (b) of the statutes is amended to read:
AB481-ASA1,4,2119 402.401 (3) (b) If the goods are at the time of contracting already identified and
20no documents of title are to be delivered, title passes at the time and place of
21contracting.
AB481-ASA1, s. 10 22Section 10. 402.503 (4) (b) of the statutes is amended to read:
AB481-ASA1,5,623 402.503 (4) (b) Tender to the buyer of a nonnegotiable document of title or of
24a written direction to record directing the bailee to deliver is sufficient tender unless
25the buyer seasonably objects, and except as otherwise provided in ch. 409 receipt by

1the bailee of notification of the buyer's rights fixes those rights as against the bailee
2and all 3rd persons; but risk of loss of the goods and of any failure by the bailee to
3honor the nonnegotiable document of title or to obey the direction remains on the
4seller until the buyer has had a reasonable time to present the document or direction,
5and a refusal by the bailee to honor the document or to obey the direction defeats the
6tender.
AB481-ASA1, s. 11 7Section 11. 402.503 (5) (b) of the statutes is amended to read:
AB481-ASA1,5,108 402.503 (5) (b) Tender through customary banking channels is sufficient and
9dishonor of a draft accompanying or associated with the documents constitutes
10nonacceptance or rejection.
AB481-ASA1, s. 12 11Section 12. 402.505 (1) (b) of the statutes is amended to read:
AB481-ASA1,5,1612 402.505 (1) (b) A nonnegotiable bill of lading to the seller or the seller's nominee
13reserves possession of the goods as security but except in a case of conditional
14delivery (s. 402.507 (2)) a nonnegotiable bill of lading naming the buyer as consignee
15reserves no security interest even though the seller retains possession or control of
16the bill of lading.
AB481-ASA1, s. 13 17Section 13. 402.505 (2) of the statutes is amended to read:
AB481-ASA1,5,2218 402.505 (2) When shipment by the seller with reservation of a security interest
19is in violation of the contract for sale it constitutes an improper contract for
20transportation within s. 402.504 but impairs neither the rights given to the buyer by
21shipment and identification of the goods to the contract nor the seller's powers as a
22holder of a negotiable document of title.
AB481-ASA1, s. 14 23Section 14. 402.506 (2) of the statutes is amended to read:
AB481-ASA1,6,224 402.506 (2) The right to reimbursement of a financing agency which has in good
25faith honored or purchased the draft under commitment to or authority from the

1buyer is not impaired by subsequent discovery of defects with reference to any
2relevant document which was apparently regular on its face.
AB481-ASA1, s. 15 3Section 15. 402.509 (2) (a) of the statutes is amended to read:
AB481-ASA1,6,54 402.509 (2) (a) On the buyer's receipt of possession or control of a negotiable
5document of title covering the goods; or
AB481-ASA1, s. 16 6Section 16. 402.509 (2) (c) of the statutes is amended to read:
AB481-ASA1,6,97 402.509 (2) (c) After the buyer's receipt of possession or control of a
8nonnegotiable document of title or other written direction to deliver in a record, as
9provided in s. 402.503 (4) (b).
AB481-ASA1, s. 17 10Section 17. 402.605 (2) of the statutes is amended to read:
AB481-ASA1,6,1311 402.605 (2) Payment against documents made without reservation of rights
12precludes recovery of the payment for defects apparent on the face of in the
13documents.
AB481-ASA1, s. 18 14Section 18. 402.705 (2) (c) of the statutes is amended to read:
AB481-ASA1,6,1615 402.705 (2) (c) Such acknowledgment to the buyer by a carrier by reshipment
16or as a warehouse keeper; or
AB481-ASA1, s. 19 17Section 19. 402.705 (3) (c) of the statutes is amended to read:
AB481-ASA1,6,2018 402.705 (3) (c) If a negotiable document of title has been issued for goods the
19bailee is not obliged to obey a notification to stop until surrender of possession or
20control
of the document.
AB481-ASA1, s. 20 21Section 20. 404.104 (3) (fc) of the statutes is created to read:
AB481-ASA1,6,2222 404.104 (3) (fc) "Control" — s. 407.106.
AB481-ASA1, s. 21 23Section 21. 404.210 (3) (intro.) of the statutes is amended to read:
AB481-ASA1,7,424 404.210 (3) (intro.) Receipt by a collecting bank of a final settlement for an item
25is a realization on its security interest in the item, accompanying documents and

1proceeds. So long as the bank does not receive final settlement for the item or give
2up possession of the item or possession or control of the accompanying documents for
3purposes other than collection, the security interest continues to that extent and is
4subject to ch. 409, but all of the following apply:
AB481-ASA1, s. 22 5Section 22. Chapter 407 of the statutes is repealed and recreated to read:
AB481-ASA1,7,66 CHAPTER 407
AB481-ASA1,7,77 Uniform commercial code
AB481-ASA1,7,8 8— documents of title
AB481-ASA1,7,99 Subchapter I
AB481-ASA1,7,1010 General
AB481-ASA1,7,12 11407.101 Short title. (1) This chapter may be cited as uniform commercial code
12— documents of title.
AB481-ASA1,7,14 13407.102 Definitions and index of definitions. (1) In this chapter, unless
14the context otherwise requires:
AB481-ASA1,7,1615 (a) "Bailee" means a person that by a warehouse receipt, bill of lading, or other
16document of title acknowledges possession of goods and contracts to deliver them.
AB481-ASA1,7,1717 (b) "Carrier" means a person that issues a bill of lading.
AB481-ASA1,7,1918 (c) "Consignee" means a person named in a bill of lading to which or to whose
19order the bill promises delivery.
AB481-ASA1,7,2120 (d) "Consignor" means a person named in a bill of lading as the person from
21which the goods have been received for shipment.
AB481-ASA1,7,2422 (e) "Delivery order" means a record that contains an order to deliver goods
23directed to a warehouse, carrier, or other person that in the ordinary course of
24business issues warehouse receipts or bills of lading.
AB481-ASA1,8,2
1(f) "Good faith" means honesty in fact and the observance of reasonable
2commercial standards of fair dealing.
AB481-ASA1,8,43 (g) "Goods" means all things that are treated as movable for the purposes of a
4contract for storage or transportation.
AB481-ASA1,8,105 (h) "Issuer" means a bailee that issues a document of title or, in the case of an
6unaccepted delivery order, the person that orders the possessor of goods to deliver.
7The term includes a person for which an agent or employee purports to act in issuing
8a document if the agent or employee has real or apparent authority to issue
9documents, even if the issuer did not receive any goods, the goods were misdescribed,
10or in any other respect the agent or employee violated the issuer's instructions.
AB481-ASA1,8,1411 (i) "Person entitled under the document" means the holder, in the case of a
12negotiable document of title, or the person to which delivery of the goods is to be made
13by the terms of, or pursuant to instructions in a record under, a nonnegotiable
14document of title.
AB481-ASA1,8,1615 (j) "Record" means information that is inscribed on a tangible medium or that
16is stored in an electronic or other medium and is retrievable in perceivable form.
AB481-ASA1,8,1817 (k) "Shipper" means a person that enters into a contract of transportation with
18a carrier.
AB481-ASA1,8,2019 (L) "Sign" means, with present intent to authenticate or adopt a record, any of
20the following:
AB481-ASA1,8,2121 1. To execute or adopt a tangible symbol.
AB481-ASA1,8,2322 2. To attach to or logically associate with the record an electronic sound, symbol,
23or process.
AB481-ASA1,8,2524 (m) "Warehouse" means a person engaged in the business of storing goods for
25hire.
AB481-ASA1,9,2
1(2) Definitions in other chapters applying to this chapter and the sections in
2which they appear are:
AB481-ASA1,9,33 (a) "Contract for sale," s. 402.106.
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