AB688: Bill Text

LRB-0388/1

MDK:cjs:md

2009 - 2010 LEGISLATURE

2009 Assembly BILL 688

January 25, 2010 - Introduced by Representatives Cullen, Turner, Townsend, A. Williams and A. Ott, cosponsored by Senators Risser and Taylor. Referred to Committee on Jobs, the Economy and Small Business.

AB688,1,11 An Act to amend 99.01 (2), 137.24 (1), 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), 411.526 (2) (c) and 799.45 (3) (b); to repeal and recreate 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 of 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 mean "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 revised article 7 of the UCC. When a document is required to be signed under article 7 of the UCC, electronic signing satisfies the requirement under 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:

AB688, s. 1 Section 1. 99.01 (2) of the statutes is amended to read:

AB688,3,3 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.

AB688, s. 2 Section 2. 137.12 (6) of the statutes is created to read:

AB688,3,6 137.12 (6) To the extent there is a conflict between this subchapter and ch. 407, ch. 407 governs.

AB688, s. 3 Section 3. 137.24 (1) of the statutes is amended to read:

AB688,3,10 137.24 (1) In this section, "transferable record" means an electronic record that would be is a note under ch. 403 or a record under ch. 407 if the electronic record were in writing.

AB688, s. 4 Section 4. 402.103 (3) (dm) of the statutes is created to read:

AB688,3,12 402.103 (3) (dm) "Control" — s. 407.106.

AB688, s. 5 Section 5. 402.104 (2) of the statutes is amended to read:

AB688,3,22 402.104 (2) "Financing agency" means a bank, finance company or other person who in the ordinary course of business makes advances against goods or documents of title or who by arrangement with either the seller or the buyer intervenes in ordinary course to make or collect payment due or claimed under the contract for sale, as by purchasing or paying the seller's draft or making advances against it or by merely taking it for collection whether or not documents of title accompany or are associated with the draft. "Financing agency" includes also a bank or other person who similarly intervenes between persons who are in the position of seller and buyer in respect to the goods (s. 402.707).

AB688, s. 6 Section 6. 402.310 (3) of the statutes is amended to read:

AB688,4,4 402.310 (3) If delivery is authorized and made by way of documents of title otherwise than by sub. (2) then payment is due regardless of where the goods are to be received at the time and place at which the buyer is to receive the documents regardless of where the goods are to be received; or at the time the buyer is to receive delivery of the electronic documents and at the seller's place of business or, if none, the seller's residence; and

AB688, s. 7 Section 7. 402.323 (2) (intro.) of the statutes is amended to read:

AB688,4,10 402.323 (2) (intro.) Where in a case within sub. (1) a tangible bill of lading has been issued in a set of parts, unless otherwise agreed if the documents are not to be sent from abroad the buyer may demand tender of the full set; otherwise only one part of the bill of lading need be tendered. Even if the agreement expressly requires a full set:

AB688, s. 8 Section 8. 402.401 (3) (a) of the statutes is amended to read:

AB688,4,15 402.401 (3) (a) If the seller is to deliver a tangible document of title, title passes at the time when and the place where the seller delivers such documents and, if the seller is to deliver an electronic document of title, title passes when the seller delivers the document; or

AB688, s. 9 Section 9. 402.401 (3) (b) of the statutes is amended to read:

AB688,4,19 402.401 (3) (b) If the goods are at the time of contracting already identified and no documents of title are to be delivered, title passes at the time and place of contracting.

AB688, s. 10 Section 10. 402.503 (4) (b) of the statutes is amended to read:

AB688,5,4 402.503 (4) (b) Tender to the buyer of a nonnegotiable document of title or of a written direction to record directing the bailee to deliver is sufficient tender unless the buyer seasonably objects, and except as otherwise provided in ch. 409 receipt by the bailee of notification of the buyer's rights fixes those rights as against the bailee and all 3rd persons; but risk of loss of the goods and of any failure by the bailee to honor the nonnegotiable document of title or to obey the direction remains on the seller until the buyer has had a reasonable time to present the document or direction, and a refusal by the bailee to honor the document or to obey the direction defeats the tender.

AB688, s. 11 Section 11. 402.503 (5) (b) of the statutes is amended to read:

AB688,5,8 402.503 (5) (b) Tender through customary banking channels is sufficient and dishonor of a draft accompanying or associated with the documents constitutes nonacceptance or rejection.

AB688, s. 12 Section 12. 402.505 (1) (b) of the statutes is amended to read:

AB688,5,14 402.505 (1) (b) A nonnegotiable bill of lading to the seller or the seller's nominee reserves possession of the goods as security but except in a case of conditional delivery (s. 402.507 (2)) a nonnegotiable bill of lading naming the buyer as consignee reserves no security interest even though the seller retains possession or control of the bill of lading.

AB688, s. 13 Section 13. 402.505 (2) of the statutes is amended to read:

AB688,5,20 402.505 (2) When shipment by the seller with reservation of a security interest is in violation of the contract for sale it constitutes an improper contract for transportation within s. 402.504 but impairs neither the rights given to the buyer by shipment and identification of the goods to the contract nor the seller's powers as a holder of a negotiable document of title.

AB688, s. 14 Section 14. 402.506 (2) of the statutes is amended to read:

AB688,5,25 402.506 (2) The right to reimbursement of a financing agency which has in good faith honored or purchased the draft under commitment to or authority from the buyer is not impaired by subsequent discovery of defects with reference to any relevant document which was apparently regular on its face.

AB688, s. 15 Section 15. 402.509 (2) (a) of the statutes is amended to read:

AB688,6,3 402.509 (2) (a) On the buyer's receipt of possession or control of a negotiable document of title covering the goods; or

AB688, s. 16 Section 16. 402.509 (2) (c) of the statutes is amended to read:

AB688,6,7 402.509 (2) (c) After the buyer's receipt of possession or control of a nonnegotiable document of title or other written direction to deliver in a record, as provided in s. 402.503 (4) (b).

AB688, s. 17 Section 17. 402.605 (2) of the statutes is amended to read:

AB688,6,11 402.605 (2) Payment against documents made without reservation of rights precludes recovery of the payment for defects apparent on the face of in the documents.

AB688, s. 18 Section 18. 402.705 (2) (c) of the statutes is amended to read:

AB688,6,14 402.705 (2) (c) Such acknowledgment to the buyer by a carrier by reshipment or as a warehouse keeper; or

AB688, s. 19 Section 19. 402.705 (3) (c) of the statutes is amended to read: