AB111: Bill Text

AB111,45,4 (om) "Securities account" — s. 408.501.

AB111,45,5 (p) "Securities intermediary" — s. 408.102.

AB111,45,6 (pm) "Security" — s. 408.102.

AB111,45,7 (q) "Security certificate" — s. 408.102.

AB111,45,8 (qm) "Security entitlement" — s. 408.102.

AB111,45,9 (r) "Uncertificated security" — s. 408.102.

AB111,45,12 (3) Chapter 401 definitions and principles. Chapter 401 contains general definitions and principles of construction and interpretation applicable throughout this chapter.

AB111,45,14 409.103 Purchase-money security interest; application of payments; burden of establishing. (1) Definitions. In this section:

AB111,45,16 (a) "Purchase-money collateral" means goods or software that secures a purchase-money obligation incurred with respect to that collateral.

AB111,45,19 (b) "Purchase-money obligation" means an obligation of an obligor incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used.

AB111,45,21 (2) Purchase-money security interest in goods. A security interest in goods is a purchase-money security interest:

AB111,45,23 (a) To the extent that the goods are purchase-money collateral with respect to that security interest;

AB111,46,2 (b) If the security interest is in inventory that is or was purchase-money collateral, also to the extent that the security interest secures a purchase-money obligation incurred with respect to other inventory in which the secured party holds or held a purchase-money security interest; and

AB111,46,5 (c) Also to the extent that the security interest secures a purchase-money obligation incurred with respect to software in which the secured party holds or held a purchase-money security interest.

AB111,46,9 (3) Purchase-money security interest in software. A security interest in software is a purchase-money security interest to the extent that the security interest also secures a purchase-money obligation incurred with respect to goods in which the secured party holds or held a purchase-money security interest if:

AB111,46,11 (a) The debtor acquired its interest in the software in an integrated transaction in which it acquired an interest in the goods; and

AB111,46,13 (b) The debtor acquired its interest in the software for the principal purpose of using the software in the goods.

AB111,46,16 (4) Consignor's inventory purchase-money security interest. The security interest of a consignor in goods that are the subject of a consignment is a purchase-money security interest in inventory.

AB111,46,20 (5) Application of payment in nonconsumer-goods transaction. In a transaction other than a consumer-goods transaction, if the extent to which a security interest is a purchase-money security interest depends on the application of a payment to a particular obligation, the payment must be applied:

AB111,46,22 (a) In accordance with any reasonable method of application to which the parties agree;

AB111,46,25 (b) In the absence of the parties' agreement to a reasonable method, in accordance with any intention of the obligor manifested at or before the time of payment; or

AB111,47,2 (c) In the absence of an agreement to a reasonable method and a timely manifestation of the obligor's intention, in the following order:

AB111,47,3 1. To obligations that are not secured; and

AB111,47,6 2. If more than one obligation is secured, to obligations secured by purchase-money security interests in the order in which those obligations were incurred.

AB111,47,10 (6) No loss of status of purchase-money security interest in nonconsumer-goods transaction. In a transaction other than a consumer-goods transaction, a purchase-money security interest does not lose its status as such, even if:

AB111,47,12 (a) The purchase-money collateral also secures an obligation that is not a purchase-money obligation;

AB111,47,14 (b) Collateral that is not purchase-money collateral also secures the purchase-money obligation; or

AB111,47,16 (c) The purchase-money obligation has been renewed, refinanced, consolidated, or restructured.

AB111,47,20 (7) Burden of proof in nonconsumer-goods transaction. In a transaction other than a consumer-goods transaction, a secured party claiming a purchase-money security interest has the burden of establishing the extent to which the security interest is a purchase-money security interest.

AB111,48,2 (8) Nonconsumer-goods transactions; no inference. The limitation of the rules in subs. (5) to (7) to transactions other than consumer-goods transactions is intended to leave to the court the determination of the proper rules in consumer-goods transactions. The court may not infer from that limitation the nature of the proper rule in consumer-goods transactions and may continue to apply established approaches.

AB111,48,4 409.104 Control of deposit account. (1) Requirements for control. A secured party has control of a deposit account if:

AB111,48,5 (a) The secured party is the bank with which the deposit account is maintained;

AB111,48,9 (b) The debtor, secured party, and bank have agreed in an authenticated record that the bank will comply with instructions originated by the secured party directing disposition of the funds in the deposit account without further consent by the debtor; or

AB111,48,11 (c) The secured party becomes the bank's customer with respect to the deposit account.

AB111,48,14 (2) Debtor's right to direct disposition. A secured party that has satisfied sub. (1) has control, even if the debtor retains the right to direct the disposition of funds from the deposit account.

AB111,48,17 409.105 Control of electronic chattel paper. A secured party has control of electronic chattel paper if the record or records comprising the chattel paper are created, stored, and assigned in such a manner that:

AB111,48,19 (1) A single authoritative copy of the record or records exists which is unique, identifiable and, except as otherwise provided in subs. (4) to (6), unalterable;

AB111,48,21 (2) The authoritative copy identifies the secured party as the assignee of the record or records;

AB111,48,23 (3) The authoritative copy is communicated to and maintained by the secured party or its designated custodian;

AB111,48,25 (4) Copies or revisions that add or change an identified assignee of the authoritative copy can be made only with the participation of the secured party;

AB111,49,2 (5) Each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and

AB111,49,4 (6) Any revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision.

AB111,49,7 409.106 Control of investment property. (1) Control under s. 408.106. A person has control of a certificated security, uncertificated security, or security entitlement as provided in s. 408.106.

AB111,49,9 (2) Control of commodity contract. A secured party has control of a commodity contract if:

AB111,49,11 (a) The secured party is the commodity intermediary with which the commodity contract is carried; or

AB111,49,15 (b) The commodity customer, secured party, and commodity intermediary have agreed that the commodity intermediary will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer.

AB111,49,19 (3) Effect of control of securities account or commodity account. A secured party having control of all security entitlements or commodity contracts carried in a securities account or commodity account has control over the securities account or commodity account.

AB111,49,24 409.107 Control of letter-of-credit right. A secured party has control of a letter-of-credit right to the extent of any right to payment or performance by the issuer or any nominated person if the issuer or nominated person has consented to an assignment of proceeds of the letter of credit under ch. 405 or otherwise applicable law or practice.

AB111,50,3 409.108 Sufficiency of description. (1) Sufficiency of description. Except as otherwise provided in subs. (3) to (5), a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described.

AB111,50,6 (2) Examples of reasonable identification. Except as otherwise provided in sub. (4), a description of collateral reasonably identifies the collateral if it identifies the collateral by:

AB111,50,7 (a) Specific listing;

AB111,50,8 (b) Category;

AB111,50,10 (c) Except as otherwise provided in sub. (5), a type of collateral defined in chs. 401 to 411;

AB111,50,11 (d) Quantity;

AB111,50,12 (e) Computational or allocational formula or procedure; or

AB111,50,14 (f) Except as otherwise provided in sub. (3), any other method, if the identity of the collateral is objectively determinable.

AB111,50,17 (3) Supergeneric description not sufficient. A description of collateral as "all the debtor's assets" or "all the debtor's personal property" or using words of similar import does not reasonably identify the collateral.

AB111,50,20 (4) Investment property. Except as otherwise provided in sub. (5), a description of a security entitlement, securities account, or commodity account is sufficient if it describes:

AB111,50,21 (a) The collateral by those terms or as investment property; or

AB111,50,22 (b) The underlying financial asset or commodity contract.

AB111,50,24 (5) When description by type insufficient. A description only by type of collateral defined in chs. 401 to 411 is an insufficient description of:

AB111,50,25 (a) A commercial tort claim; or

AB111,51,2 (b) In a consumer transaction, consumer goods, a security entitlement, a securities account, or a commodity account.

AB111,51,4 409.109 Scope. (1) General scope of chapter. Except as otherwise provided in subs. (3) and (4), this chapter applies to:

AB111,51,6 (a) A transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract;

AB111,51,7 (b) An agricultural lien;

AB111,51,8 (c) A sale of accounts, chattel paper, payment intangibles, or promissory notes;

AB111,51,9 (d) A consignment;

AB111,51,11 (e) A security interest arising under s. 402.401, 402.505, 402.711 (3), or 411.508 (5), as provided in s. 409.110; and

AB111,51,12 (f) A security interest arising under s. 404.210 or 405.118.

AB111,51,16 (2) Security interest in secured obligation. The application of this chapter to a security interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this chapter does not apply.

AB111,51,18 (3) Extent to which chapter does not apply. This chapter does not apply to the extent that:

AB111,51,19 (a) A statute, regulation, or treaty of the United States preempts this chapter;

AB111,51,22 (b) Another statute of this state expressly governs the creation, perfection, priority, or enforcement of a security interest created by this state or a governmental unit of this state;

AB111,52,2 (c) A statute of another state, a foreign country, or a governmental unit of another state or a foreign country, other than a statute generally applicable to security interests, expressly governs creation, perfection, priority, or enforcement of a security interest created by the state, country, or governmental unit; or

AB111,52,4 (d) The rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under ch.405.

AB111,52,5 (4) Inapplicability of chapter. This chapter does not apply to:

AB111,52,6 (a) A landlord's lien, other than an agricultural lien;

AB111,52,8 (b) A lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but s. 409.333 applies with respect to priority of the lien;

AB111,52,10 (c) An assignment of a claim for wages, salary, or other compensation of an employee;

AB111,52,12 (d) A sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of which they arose;

AB111,52,14 (e) An assignment of accounts, chattel paper, payment intangibles, or promissory notes which is for the purpose of collection only;

AB111,52,16 (f) An assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract;

AB111,52,18 (g) An assignment of a single account, payment intangible, or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness;

AB111,52,23 (h) A transfer of an interest in or an assignment of a claim under a policy of insurance, other than an assignment by or to a health-care provider of a health-care-insurance receivable and any subsequent assignment of the right to payment, but ss. 409.315 and 409.322 apply with respect to proceeds and priorities in proceeds;

AB111,52,25 (i) An assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral;

AB111,53,1 (j) A right of recoupment or setoff, but:

AB111,53,3 1. Section 409.340 applies with respect to the effectiveness of rights of recoupment or setoff against deposit accounts; and

AB111,53,5 2. Section 409.404 applies with respect to defenses or claims of an account debtor;