LRB-1881/1
MDK&RAC:wlj:rs
2007 - 2008 LEGISLATURE
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 1An Act to amend 99.01 (2), 137.24 (1), 401.201 (5), 401.201 (6), 401.201 (14),
2401.201 (25), 401.201 (26) (a), 401.201 (45), 402.104 (2), 402.310 (3), 402.323 (2)
3(intro.), 402.401 (3) (a), 402.401 (3) (b), 402.503 (4) (b), 402.503 (5) (b), 402.505
4(1) (b), 402.505 (2), 402.506 (2), 402.509 (2) (a), 402.509 (2) (c), 402.605 (2),
5402.705 (2) (c), 402.705 (3) (c), 404.210 (3) (intro.), 409.203 (2) (c) 4., 409.207 (3)
6(intro.), 409.208 (2) (d), 409.208 (2) (e), 409.301 (3) (intro.), 409.310 (2) (e),
7409.310 (2) (h), 409.312 (5), 409.313 (1), 409.314 (1), 409.314 (2), 409.317 (2),
8409.317 (4), 409.338 (2), 409.601 (2), 411.103 (1) (a), 411.103 (1) (o), 411.514 (2)
9and 411.526 (2) (c); to repeal and recreate 401.201 (10), 401.201 (15), 401.201
10(20), 401.201 (38) and chapter 407; and to create 137.12 (6), 402.103 (3) (dm),
11404.104 (3) (fc), 408.103 (7), 409.102 (2) (df) and 409.208 (2) (f) of the statutes;

1relating to: adopting revised Article 7 of the Uniform Commercial Code,
2concerning 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 1Section 1. 99.01 (2) of the statutes is amended to read:
AB481,3,62 99.01 (2) "Property" means goods as defined in s. 407.102 (1) (f) (g). "Property"
3includes food; agricultural and commercial products, commodities or equipment;
4household furnishings; automobiles, boats, snowmobiles or other vehicles and
5conveyances; and all other items of a personal, family, household, agricultural,
6business or commercial nature which may be the subject of a contract of storage.
AB481, s. 2 7Section 2. 137.12 (6) of the statutes is created to read:
AB481,3,98 137.12 (6) To the extent there is a conflict between this subchapter and ch. 407,
9ch. 407 governs.
AB481, s. 3 10Section 3. 137.24 (1) of the statutes is amended to read:
AB481,3,1311 137.24 (1) In this section, "transferable record" means an electronic record that
12would be a note under ch. 403 or a record under ch. 407 if the electronic record were
13in writing
.
AB481, s. 4 14Section 4. 401.201 (5) of the statutes is amended to read:
AB481,3,1715 401.201 (5) "Bearer" means the a person in control of a negotiable electronic
16document of title or
person in possession of an instrument, negotiable tangible
17document of title, or certificated security payable to bearer or endorsed in blank.
AB481, s. 5 18Section 5. 401.201 (6) of the statutes is amended to read:
AB481,4,419 401.201 (6) "Bill of lading" means a document of title evidencing the receipt of
20goods for shipment issued by a person engaged in the business of directly or

1indirectly
transporting or forwarding goods, and includes an airbill. "Airbill" means
2a document serving for air transportation as a bill of lading does for marine or rail
3transportation, and includes an air consignment note or air waybill.
. The term does
4not include a warehouse receipt.
AB481, s. 6 5Section 6. 401.201 (10) of the statutes is repealed and recreated to read:
AB481,4,96 401.201 (10) "Conspicuous," with reference to a term, means so written,
7displayed, or presented that a reasonable person against which it is to operate ought
8to have noticed it. Whether a term is "conspicuous" or not is a decision for the court.
9Conspicuous terms include the following:
AB481,4,1110 (a) A heading in capitals equal to or greater in size than the surrounding text,
11or in contrasting type, font, or color to the surrounding text of the same or lesser size.
AB481,4,1512 (b) Language in the body of a record or display in larger type than the
13surrounding text, or in contrasting type, font, or color to the surrounding text of the
14same size, or set off from surrounding text of the same size by symbols or other marks
15that call attention to the language.
AB481, s. 7 16Section 7. 401.201 (14) of the statutes is amended to read:
AB481,4,2017 401.201 (14) "Delivery" with respect to electronic documents of title means
18voluntary transfer of control and with respect to
instruments, tangible documents
19of title, chattel paper, or certificated securities means voluntary transfer of
20possession.
AB481, s. 8 21Section 8. 401.201 (15) of the statutes is repealed and recreated to read:
AB481,5,722 401.201 (15) "Document of title" means a record that in the regular course of
23business or financing is treated as adequately evidencing that the person in
24possession or control of the record is entitled to receive, control, hold, and dispose of
25the record and the goods the record covers; and that purports to be issued by or

1addressed to a bailee and to cover goods in the bailee's possession which are either
2identified or are fungible portions of an identified mass. The term includes a bill of
3lading, transport document, dock warrant, dock receipt, warehouse receipt, and
4order for delivery of goods. An electronic document of title is evidenced by a record
5consisting of information stored in an electronic medium. A tangible document of
6title is evidenced by a record consisting of information that is inscribed on a tangible
7medium.
AB481, s. 9 8Section 9. 401.201 (20) of the statutes is repealed and recreated to read:
AB481,5,99 401.201 (20) "Holder" means any of the following:
AB481,5,1110 (a) The person in possession of a negotiable instrument that is payable either
11to bearer or to an identified person that is the person in possession.
AB481,5,1312 (b) The person in possession of a negotiable tangible document of title if the
13goods are deliverable either to bearer or to the order of the person in possession.
AB481,5,1414 (c) A person in control of a negotiable electronic document of title.
AB481, s. 10 15Section 10. 401.201 (25) of the statutes is amended to read:
AB481,5,1716 401.201 (25) A Subject to sub. (26) (b), a person has "notice" of a fact when any
17of the following are satisfied
:
AB481,5,1818 (a) The person has actual knowledge of it; or.
AB481,5,1919 (b) The person has received a notice or notification of it; or.
AB481,5,2120 (c) From all the facts and circumstances known to the person at the time in
21question, the person has reason to know that it exists.
AB481, s. 11 22Section 11. 401.201 (26) (a) of the statutes is amended to read:
AB481,6,223 401.201 (26) (a) A person "notifies" or "gives" a notice or notification to another
24person by taking such steps as may be reasonably required to inform the other person
25in ordinary course, whether or not such the other person actually comes to know of

1it. A Subject to par. (b), a person "receives" a notice or notification when any of the
2following are satisfied
:
AB481,6,33 1. It comes to the that person's attention; or.
AB481,6,64 2. It is duly delivered in a form reasonable under the circumstances at the place
5of business through which the contract was made or at any other place another
6location
held out by the that person as the place for receipt of such communications.
AB481, s. 12 7Section 12. 401.201 (38) of the statutes is repealed and recreated to read:
AB481,6,98 401.201 (38) "Send," in connection with a writing, record, or notice, means any
9of the following:
AB481,6,1410 (a) To deposit in the mail or deliver for transmission by any other usual means
11of communication with postage or cost of transmission provided for and properly
12addressed and, in the case of an instrument, to an address specified thereon or
13otherwise agreed, or if there be none to any address reasonable under the
14circumstances.
AB481,6,1615 (b) In any other way to cause to be received any record or notice within the time
16it would have arrived if properly sent.
AB481, s. 13 17Section 13. 401.201 (45) of the statutes is amended to read:
AB481,6,1918 401.201 (45) "Warehouse receipt" means a receipt document of title issued by
19a person engaged in the business of storing goods for hire.
AB481, s. 14 20Section 14. 402.103 (3) (dm) of the statutes is created to read:
AB481,6,2121 402.103 (3) (dm) "Control" — s. 407.106.
AB481, s. 15 22Section 15. 402.104 (2) of the statutes is amended to read:
AB481,7,623 402.104 (2) "Financing agency" means a bank, finance company or other person
24who in the ordinary course of business makes advances against goods or documents
25of title or who by arrangement with either the seller or the buyer intervenes in

1ordinary course to make or collect payment due or claimed under the contract for
2sale, as by purchasing or paying the seller's draft or making advances against it or
3by merely taking it for collection whether or not documents of title accompany or are
4associated with
the draft. "Financing agency" includes also a bank or other person
5who similarly intervenes between persons who are in the position of seller and buyer
6in respect to the goods (s. 402.707).
AB481, s. 16 7Section 16. 402.310 (3) of the statutes is amended to read:
AB481,7,138 402.310 (3) If delivery is authorized and made by way of documents of title
9otherwise than by sub. (2) then payment is due regardless of where the goods are to
10be received
at the time and place at which the buyer is to receive the documents
11regardless of where the goods are to be received; or at the time the buyer is to receive
12delivery of the electronic documents and at the seller's place of business or, if none,
13the seller's residence
; and
AB481, s. 17 14Section 17. 402.323 (2) (intro.) of the statutes is amended to read:
AB481,7,1915 402.323 (2) (intro.) Where in a case within sub. (1) a tangible bill of lading has
16been issued in a set of parts, unless otherwise agreed if the documents are not to be
17sent from abroad the buyer may demand tender of the full set; otherwise only one
18part of the bill of lading need be tendered. Even if the agreement expressly requires
19a full set:
AB481, s. 18 20Section 18. 402.401 (3) (a) of the statutes is amended to read:
AB481,7,2421 402.401 (3) (a) If the seller is to deliver a tangible document of title, title passes
22at the time when and the place where the seller delivers such documents and, if the
23seller is to deliver an electronic document of title, title passes when the seller delivers
24the document
; or
AB481, s. 19 25Section 19. 402.401 (3) (b) of the statutes is amended to read:
AB481,8,3
1402.401 (3) (b) If the goods are at the time of contracting already identified and
2no documents of title are to be delivered, title passes at the time and place of
3contracting.
AB481, s. 20 4Section 20. 402.503 (4) (b) of the statutes is amended to read:
AB481,8,135 402.503 (4) (b) Tender to the buyer of a nonnegotiable document of title or of
6a written direction to record directing the bailee to deliver is sufficient tender unless
7the buyer seasonably objects, and except as otherwise provided in ch. 409 receipt by
8the bailee of notification of the buyer's rights fixes those rights as against the bailee
9and all 3rd persons; but risk of loss of the goods and of any failure by the bailee to
10honor the nonnegotiable document of title or to obey the direction remains on the
11seller until the buyer has had a reasonable time to present the document or direction,
12and a refusal by the bailee to honor the document or to obey the direction defeats the
13tender.
AB481, s. 21 14Section 21. 402.503 (5) (b) of the statutes is amended to read:
AB481,8,1715 402.503 (5) (b) Tender through customary banking channels is sufficient and
16dishonor of a draft accompanying or associated with the documents constitutes
17nonacceptance or rejection.
AB481, s. 22 18Section 22. 402.505 (1) (b) of the statutes is amended to read:
AB481,8,2319 402.505 (1) (b) A nonnegotiable bill of lading to the seller or the seller's nominee
20reserves possession of the goods as security but except in a case of conditional
21delivery (s. 402.507 (2)) a nonnegotiable bill of lading naming the buyer as consignee
22reserves no security interest even though the seller retains possession or control of
23the bill of lading.
AB481, s. 23 24Section 23. 402.505 (2) of the statutes is amended to read:
AB481,9,5
1402.505 (2) When shipment by the seller with reservation of a security interest
2is in violation of the contract for sale it constitutes an improper contract for
3transportation within s. 402.504 but impairs neither the rights given to the buyer by
4shipment and identification of the goods to the contract nor the seller's powers as a
5holder of a negotiable document of title.
AB481, s. 24 6Section 24. 402.506 (2) of the statutes is amended to read:
AB481,9,107 402.506 (2) The right to reimbursement of a financing agency which has in good
8faith honored or purchased the draft under commitment to or authority from the
9buyer is not impaired by subsequent discovery of defects with reference to any
10relevant document which was apparently regular on its face.
AB481, s. 25 11Section 25. 402.509 (2) (a) of the statutes is amended to read:
AB481,9,1312 402.509 (2) (a) On the buyer's receipt of possession or control of a negotiable
13document of title covering the goods; or
AB481, s. 26 14Section 26. 402.509 (2) (c) of the statutes is amended to read:
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