AB481: Bill Text

LRB-1881/1

MDK&RAC:wlj:rs

2007 - 2008 LEGISLATURE

2007 Assembly BILL 481

August 7, 2007 - Introduced by Representatives Cullen and Gundrum, cosponsored by Senators Risser and Grothman. Referred to Committee on Judiciary and Ethics.

AB481,2,2 An Act to amend 99.01 (2), 137.24 (1), 401.201 (5), 401.201 (6), 401.201 (14), 401.201 (25), 401.201 (26) (a), 401.201 (45), 402.104 (2), 402.310 (3), 402.323 (2) (intro.), 402.401 (3) (a), 402.401 (3) (b), 402.503 (4) (b), 402.503 (5) (b), 402.505 (1) (b), 402.505 (2), 402.506 (2), 402.509 (2) (a), 402.509 (2) (c), 402.605 (2), 402.705 (2) (c), 402.705 (3) (c), 404.210 (3) (intro.), 409.203 (2) (c) 4., 409.207 (3) (intro.), 409.208 (2) (d), 409.208 (2) (e), 409.301 (3) (intro.), 409.310 (2) (e), 409.310 (2) (h), 409.312 (5), 409.313 (1), 409.314 (1), 409.314 (2), 409.317 (2), 409.317 (4), 409.338 (2), 409.601 (2), 411.103 (1) (a), 411.103 (1) (o), 411.514 (2) and 411.526 (2) (c); to repeal and recreate 401.201 (10), 401.201 (15), 401.201 (20), 401.201 (38) and chapter 407; and to create 137.12 (6), 402.103 (3) (dm), 404.104 (3) (fc), 408.103 (7), 409.102 (2) (df) and 409.208 (2) (f) of the statutes; relating to: adopting revised Article 7 of the Uniform Commercial 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 bill 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 bill, 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 bill, 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 bill, creates new definitions of "record" and "sign." Under the bill, 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 bill 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, s. 1 Section 1. 99.01 (2) of the statutes is amended to read:

AB481,3,6 99.01 (2) "Property" means goods as defined in s. 407.102 (1) (f) (g). "Property" includes food; agricultural and commercial products, commodities or equipment; household furnishings; automobiles, boats, snowmobiles or other vehicles and conveyances; and all other items of a personal, family, household, agricultural, business or commercial nature which may be the subject of a contract of storage.

AB481, s. 2 Section 2. 137.12 (6) of the statutes is created to read:

AB481,3,9 137.12 (6) To the extent there is a conflict between this subchapter and ch. 407, ch. 407 governs.

AB481, s. 3 Section 3. 137.24 (1) of the statutes is amended to read:

AB481,3,13 137.24 (1) In this section, "transferable record" means an electronic record that would be a note under ch. 403 or a record under ch. 407 if the electronic record were in writing.

AB481, s. 4 Section 4. 401.201 (5) of the statutes is amended to read:

AB481,3,17 401.201 (5) "Bearer" means the a person in control of a negotiable electronic document of title or person in possession of an instrument, negotiable tangible document of title, or certificated security payable to bearer or endorsed in blank.

AB481, s. 5 Section 5. 401.201 (6) of the statutes is amended to read:

AB481,4,4 401.201 (6) "Bill of lading" means a document of title evidencing the receipt of goods for shipment issued by a person engaged in the business of directly or indirectly transporting or forwarding goods, and includes an airbill. "Airbill" means a document serving for air transportation as a bill of lading does for marine or rail transportation, and includes an air consignment note or air waybill. . The term does not include a warehouse receipt.

AB481, s. 6 Section 6. 401.201 (10) of the statutes is repealed and recreated to read:

AB481,4,9 401.201 (10) "Conspicuous," with reference to a term, means so written, displayed, or presented that a reasonable person against which it is to operate ought to have noticed it. Whether a term is "conspicuous" or not is a decision for the court. Conspicuous terms include the following:

AB481,4,11 (a) A heading in capitals equal to or greater in size than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same or lesser size.

AB481,4,15 (b) Language in the body of a record or display in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from surrounding text of the same size by symbols or other marks that call attention to the language.

AB481, s. 7 Section 7. 401.201 (14) of the statutes is amended to read:

AB481,4,20 401.201 (14) "Delivery" with respect to electronic documents of title means voluntary transfer of control and with respect to instruments, tangible documents of title, chattel paper, or certificated securities means voluntary transfer of possession.

AB481, s. 8 Section 8. 401.201 (15) of the statutes is repealed and recreated to read:

AB481,5,7 401.201 (15) "Document of title" means a record that in the regular course of business or financing is treated as adequately evidencing that the person in possession or control of the record is entitled to receive, control, hold, and dispose of the record and the goods the record covers; and that purports to be issued by or addressed to a bailee and to cover goods in the bailee's possession which are either identified or are fungible portions of an identified mass. The term includes a bill of lading, transport document, dock warrant, dock receipt, warehouse receipt, and order for delivery of goods. An electronic document of title is evidenced by a record consisting of information stored in an electronic medium. A tangible document of title is evidenced by a record consisting of information that is inscribed on a tangible medium.

AB481, s. 9 Section 9. 401.201 (20) of the statutes is repealed and recreated to read:

AB481,5,9 401.201 (20) "Holder" means any of the following:

AB481,5,11 (a) The person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.

AB481,5,13 (b) The person in possession of a negotiable tangible document of title if the goods are deliverable either to bearer or to the order of the person in possession.

AB481,5,14 (c) A person in control of a negotiable electronic document of title.

AB481, s. 10 Section 10. 401.201 (25) of the statutes is amended to read:

AB481,5,17 401.201 (25) A Subject to sub. (26) (b), a person has "notice" of a fact when any of the following are satisfied:

AB481,5,18 (a) The person has actual knowledge of it; or.

AB481,5,19 (b) The person has received a notice or notification of it; or.

AB481,5,21 (c) From all the facts and circumstances known to the person at the time in question, the person has reason to know that it exists.

AB481, s. 11 Section 11. 401.201 (26) (a) of the statutes is amended to read:

AB481,6,2 401.201 (26) (a) A person "notifies" or "gives" a notice or notification to another person by taking such steps as may be reasonably required to inform the other person in ordinary course, whether or not such the other person actually comes to know of it. A Subject to par. (b), a person "receives" a notice or notification when any of the following are satisfied:

AB481,6,3 1. It comes to the that person's attention; or.

AB481,6,6 2. It is duly delivered in a form reasonable under the circumstances at the place of business through which the contract was made or at any other place another location held out by the that person as the place for receipt of such communications.

AB481, s. 12 Section 12. 401.201 (38) of the statutes is repealed and recreated to read:

AB481,6,9 401.201 (38) "Send," in connection with a writing, record, or notice, means any of the following:

AB481,6,14 (a) To deposit in the mail or deliver for transmission by any other usual means of communication with postage or cost of transmission provided for and properly addressed and, in the case of an instrument, to an address specified thereon or otherwise agreed, or if there be none to any address reasonable under the circumstances.

AB481,6,16 (b) In any other way to cause to be received any record or notice within the time it would have arrived if properly sent.

AB481, s. 13 Section 13. 401.201 (45) of the statutes is amended to read: