Public Act 095-0895
 
SB2080 Enrolled LRB095 16125 WGH 42144 b

    AN ACT concerning the Uniform Commercial Code.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Uniform Commercial Code is amended by
changing the heading of Article 1, Part 1 and Sections 1-101,
1-102, 1-103, 1-104, 1-105, 1-106, 1-107, 1-108, and 1-109, the
heading of Article 1, Part 2 and Sections 1-201, 1-202, 1-203,
1-204, 1-205, 1-206, 1-207, 1-208, and 1-209 and by adding the
heading of Article 1, Part 3 and Sections 1-301, 1-302, 1-303,
1-304, 1-305, 1-306, 1-307, 1-308, 1-309, and 1-310 as follows:
 
    (810 ILCS 5/Art. 1 Pt. 1 heading)
PART 1 .
GENERAL PROVISIONS SHORT TITLE, CONSTRUCTION, APPLICATION
AND SUBJECT MATTER OF THE ACT

 
    (810 ILCS 5/1-101)  (from Ch. 26, par. 1-101)
    Sec. 1-101. Short Titles. Short title.
    (a) This Act may be cited as the Uniform Commercial Code.
    (b) This Article may be cited as Uniform Commercial Code -
General Provisions. This Act shall be known and may be cited as
Uniform Commercial Code.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/1-102)  (from Ch. 26, par. 1-102)
    Sec. 1-102. Scope of Article. Purposes, rules of
construction, variation by agreement. This Article applies to a
transaction to the extent that it is governed by another
Article of the Uniform Commercial Code.
    (1) This Act shall be liberally construed and applied to
promote its underlying purposes and policies.
    (2) Underlying purposes and policies of this Act are
        (a) to simplify, clarify and modernize the law
governing commercial transactions;
        (b) to permit the continued expansion of commercial
practices through custom, usage and agreement of the parties;
        (c) to make uniform the law among the various
jurisdictions.
    (3) The effect of provisions of this Act may be varied by
agreement, except as otherwise provided in this Act and except
that the obligations of good faith, diligence, reasonableness
and care prescribed by this Act may not be disclaimed by
agreement but the parties may by agreement determine the
standards by which the performance of such obligations is to be
measured if such standards are not manifestly unreasonable.
    (4) The presence in certain provisions of this Act of the
words "unless otherwise agreed" or words of similar import does
not imply that the effect of other provisions may not be varied
by agreement under subsection (3).
    (5) In this Act unless the context otherwise requires
        (a) words in the singular number include the plural,
and in the plural include the singular;
        (b) words of the masculine gender include the feminine
and the neuter, and when the sense so indicates words of the
neuter gender may refer to any gender.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/1-103)  (from Ch. 26, par. 1-103)
    Sec. 1-103. Construction of Uniform Commercial Code to
promote its purposes and policies; applicability of
supplemental principles of law. Supplementary general
principles of law applicable.
    (a) The Uniform Commercial Code must be liberally construed
and applied to promote its underlying purposes and policies,
which are:
        (1) to simplify, clarify, and modernize the law
    governing commercial transactions;
        (2) to permit the continued expansion of commercial
    practices through custom, usage, and agreement of the
    parties; and
        (3) to make uniform the law among the various
    jurisdictions.
    (b) Unless displaced by the particular provisions of the
Uniform Commercial Code, the principles of law and equity,
including the law merchant and the law relative to capacity to
contract, principal and agent, estoppel, fraud,
misrepresentation, duress, coercion, mistake, bankruptcy, and
other validating or invalidating cause supplement its
provisions.
    Unless displaced by the particular provisions of this Act,
the principles of law and equity, including the law merchant
and the law relative to capacity to contract, principal and
agent, estoppel, fraud, misrepresentation, duress, coercion,
mistake, unjust enrichment, bankruptcy, or other validating or
invalidating cause shall supplement its provisions.
(Source: P.A. 88-123.)
 
    (810 ILCS 5/1-104)  (from Ch. 26, par. 1-104)
    Sec. 1-104. Construction against implied repeal.
Construction against implicit repeal. The Uniform Commercial
Code being a general Act intended as a unified coverage of its
subject matter, no part of it shall be deemed to be impliedly
repealed by subsequent legislation if such construction can
reasonably be avoided.
    This Act being a general act intended as a unified coverage
of its subject matter, no part of it shall be deemed to be
impliedly repealed by subsequent legislation if such
construction can reasonably be avoided.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/1-105)  (from Ch. 26, par. 1-105)
    Sec. 1-105. Severability. If any provision or clause of the
Uniform Commercial Code or its application to any person or
circumstance is held invalid, the invalidity does not affect
other provisions or applications of the Uniform Commercial Code
which can be given effect without the invalid provision or
application, and to this end the provisions of the Uniform
Commercial Code are severable.
Territorial application of the Act; parties' power to choose
applicable law.
    (1) Except as provided in this Section, when a transaction
bears a reasonable relation to this State and also to another
state or nation the parties may agree that the law either of
this State or of the other state or nation shall govern their
rights and duties. Failing an agreement, this Act applies to
transactions bearing an appropriate relation to this State.
    (2) Where one of the following provisions of this Act
specifies the applicable law, that provision governs and a
contrary agreement is effective only to the extent permitted by
the law (including the conflict of laws rules) so specified:
    Rights of creditors against sold goods. Section 2-402.
    Applicability of the Article on Leases. Sections 2A-105 and
        2A-106.
    Applicability of the Article on Bank Deposits and
        Collections. Section 4-102.
    Governing law in the Article on Funds Transfers. Section
        4A-507.
    Letters of Credit. Section 5-116.
    Applicability of the Article on Investment Securities.
        Section 8-110.
    Law governing perfection, the effect of perfection or
        nonperfection, and the priority of security interests
        and agricultural liens. Sections 9-301 through 9-307.
(Source: P.A. 91-893, eff. 7-1-01.)
 
    (810 ILCS 5/1-106)  (from Ch. 26, par. 1-106)
    Sec. 1-106. Use of singular and plural; gender. Remedies to
be liberally administered. In the Uniform Commercial Code,
unless the statutory context otherwise requires:
        (1) words in the singular number include the plural,
    and those in the plural include the singular; and
        (2) words of any gender also refer to any other gender.
    (1) The remedies provided by this Act shall be liberally
administered to the end that the aggrieved party may be put in
as good a position as if the other party had fully performed
but neither consequential or special nor penal damages may be
had except as specifically provided in this Act or by other
rule of law.
    (2) Any right or obligation declared by this Act is
enforceable by action unless the provision declaring it
specifies a different and limited effect.
(Source: Laws 1961, 1st SS., p. 7.)
 
    (810 ILCS 5/1-107)  (from Ch. 26, par. 1-107)
    Sec. 1-107. Section captions. Waiver or renunciation of
claim or right after breach. Section captions are part of the
Uniform Commercial Code.
    Any claim or right arising out of an alleged breach can be
discharged in whole or in part without consideration by a
written waiver or renunciation signed and delivered by the
aggrieved party.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/1-108)  (from Ch. 26, par. 1-108)
    Sec. 1-108. Relation to Electronic Signatures in Global and
National Commerce Act. Severability. This Article modifies,
limits, and supersedes the federal Electronic Signatures in
Global and National Commerce Act, 15 U.S.C. Section 7001 et
seq., except that nothing in this Article modifies, limits, or
supersedes 15 U.S.C. Section 7001(c) or authorizes electronic
delivery of any of the notices described in 15 U.S.C. Section
7003(b).
    If any provision or clause of this Act or application
thereof to any person or circumstances is held invalid, such
invalidity shall not affect other provisions or applications of
the Act which can be given effect without the invalid provision
or application, and to this end the provisions of this Act are
declared to be severable.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/1-109)  (from Ch. 26, par. 1-109)
    Sec. 1-109. (Blank). Section captions. Section captions
are parts of this Act.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/Art. 1 Pt. 2 heading)
PART 2 .
GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION

 
    (810 ILCS 5/1-201)  (from Ch. 26, par. 1-201)
    Sec. 1-201. General Definitions.
    (a) Unless the context otherwise requires, words or phrases
defined in this Section, or in the additional definitions
contained in other Articles of the Uniform Commercial Code that
apply to particular Articles or parts thereof, have the
meanings stated.
    (b) Subject to definitions contained in other Articles of
the Uniform Commercial Code that apply to particular Articles
or parts thereof:
        (1) "Action", in the sense of a judicial proceeding,
    includes recoupment, counterclaim, set-off, suit in
    equity, and any other proceeding in which rights are
    determined.
        (2) "Aggrieved party" means a party entitled to pursue
    a remedy.
        (3) "Agreement", as distinguished from "contract",
    means the bargain of the parties in fact, as found in their
    language or inferred from other circumstances, including
    course of performance, course of dealing, or usage of trade
    as provided in Section 1-303.
        (4) "Bank" means a person engaged in the business of
    banking and includes a savings bank, savings and loan
    association, credit union, and trust company.
        (5) "Bearer" means a person in possession of a
    negotiable instrument, document of title, or certificated
    security that is payable to bearer or indorsed in blank.
        (6) "Bill of lading" means a document evidencing the
    receipt of goods for shipment issued by a person engaged in
    the business of transporting or forwarding goods.
        (7) "Branch" includes a separately incorporated
    foreign branch of a bank.
        (8) "Burden of establishing" a fact means the burden of
    persuading the trier of fact that the existence of the fact
    is more probable than its nonexistence.
        (9) "Buyer in ordinary course of business" means a
    person that buys goods in good faith, without knowledge
    that the sale violates the rights of another person in the
    goods, and in the ordinary course from a person, other than
    a pawnbroker, in the business of selling goods of that
    kind. A person buys goods in the ordinary course if the
    sale to the person comports with the usual or customary
    practices in the kind of business in which the seller is
    engaged or with the seller's own usual or customary
    practices. A person that sells oil, gas, or other minerals
    at the wellhead or minehead is a person in the business of
    selling goods of that kind. A buyer in ordinary course of
    business may buy for cash, by exchange of other property,
    or on secured or unsecured credit, and may acquire goods or
    documents of title under a preexisting contract for sale.
    Only a buyer that takes possession of the goods or has a
    right to recover the goods from the seller under Article 2
    may be a buyer in ordinary course of business. "Buyer in
    ordinary course of business" does not include a person that
    acquires goods in a transfer in bulk or as security for or
    in total or partial satisfaction of a money debt.
        (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:
            (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; and
            (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.
        (11) "Consumer" means an individual who enters into a
    transaction primarily for personal, family, or household
    purposes.
        (12) "Contract", as distinguished from "agreement",
    means the total legal obligation that results from the
    parties' agreement as determined by the Uniform Commercial
    Code as supplemented by any other applicable laws.
        (13) "Creditor" includes a general creditor, a secured
    creditor, a lien creditor, and any representative of
    creditors, including an assignee for the benefit of
    creditors, a trustee in bankruptcy, a receiver in equity,
    and an executor or administrator of an insolvent debtor's
    or assignor's estate.
        (14) "Defendant" includes a person in the position of
    defendant in a counterclaim, cross-claim, or third-party
    claim.
        (15) "Delivery", with respect to an instrument,
    document of title, or chattel paper, means voluntary
    transfer of possession.
        (16) "Document of title" includes bill of lading, dock
    warrant, dock receipt, warehouse receipt or order for the
    delivery of goods, and also any other document which in the
    regular course of business or financing is treated as
    adequately evidencing that the person in possession of it
    is entitled to receive, hold, and dispose of the document
    and the goods it covers. To be a document of title, a
    document must purport to be issued by or addressed to a
    bailee and purport to cover goods in the bailee's
    possession which are either identified or are fungible
    portions of an identified mass.
        (17) "Fault" means a default, breach, or wrongful act
    or omission.
        (18) "Fungible goods" means:
            (A) goods of which any unit, by nature or usage of
        trade, is the equivalent of any other like unit; or
            (B) goods that by agreement are treated as
        equivalent.
        (19) "Genuine" means free of forgery or
    counterfeiting.
        (20) "Good faith" means honesty in fact in the conduct
    or transaction concerned.
        (21) "Holder" means:
            (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; or
            (B) the person in possession of a document of title
        if the goods are deliverable either to bearer or to the
        order of the person in possession.
        (22) "Insolvency proceeding" includes an assignment
    for the benefit of creditors or other proceeding intended
    to liquidate or rehabilitate the estate of the person
    involved.
        (23) "Insolvent" means:
            (A) having generally ceased to pay debts in the
        ordinary course of business other than as a result of
        bona fide dispute;
            (B) being unable to pay debts as they become due;
        or
            (C) being insolvent within the meaning of federal
        bankruptcy law.
        (24) "Money" means a medium of exchange currently
    authorized or adopted by a domestic or foreign government.
    The term includes a monetary unit of account established by
    an intergovernmental organization or by agreement between
    two or more countries.
        (25) "Organization" means a person other than an
    individual.
        (26) "Party", as distinguished from "third party",
    means a person that has engaged in a transaction or made an
    agreement subject to the Uniform Commercial Code.
        (27) "Person" means an individual, corporation,
    business trust, estate, trust, partnership, limited
    liability company, association, joint venture, government,
    governmental subdivision, agency, or instrumentality,
    public corporation, or any other legal or commercial
    entity.
        (28) "Present value" means the amount as of a date
    certain of one or more sums payable in the future,
    discounted to the date certain by use of either an interest
    rate specified by the parties if that rate is not
    manifestly unreasonable at the time the transaction is
    entered into or, if an interest rate is not so specified, a
    commercially reasonable rate that takes into account the
    facts and circumstances at the time the transaction is
    entered into.
        (29) "Purchase" means taking by sale, lease, discount,
    negotiation, mortgage, pledge, lien, security interest,
    issue or reissue, gift, or any other voluntary transaction
    creating an interest in property.
        (30) "Purchaser" means a person that takes by purchase.
        (31) "Record" means information that is inscribed on a
    tangible medium or that is stored in an electronic or other
    medium and is retrievable in perceivable form.
        (32) "Remedy" means any remedial right to which an
    aggrieved party is entitled with or without resort to a
    tribunal.
        (33) "Representative" means a person empowered to act
    for another, including an agent, an officer of a
    corporation or association, and a trustee, executor, or
    administrator of an estate.
        (34) "Right" includes remedy.
        (35) "Security interest" means an interest in personal
    property or fixtures which secures payment or performance
    of an obligation. "Security interest" includes any
    interest of a consignor and a buyer of accounts, chattel
    paper, a payment intangible, or a promissory note in a
    transaction that is subject to Article 9. "Security
    interest" does not include the special property interest of
    a buyer of goods on identification of those goods to a
    contract for sale under Section 2-401, but a buyer may also
    acquire a "security interest" by complying with Article 9.
    Except as otherwise provided in Section 2-505, the right of
    a seller or lessor of goods under Article 2 or 2A to retain
    or acquire possession of the goods is not a "security
    interest", but a seller or lessor may also acquire a
    "security interest" by complying with Article 9. The
    retention or reservation of title by a seller of goods
    notwithstanding shipment or delivery to the buyer under
    Section 2-401 is limited in effect to a reservation of a
    "security interest". Whether a transaction in the form of a
    lease creates a "security interest" is determined pursuant
    to Section 1-203.
        (36) "Send" in connection with a writing, record, or
    notice means:
            (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; or
            (B) in any other way to cause to be received any
        record or notice within the time it would have arrived
        if properly sent.
        (37) "Signed" includes using any symbol executed or
    adopted with present intention to adopt or accept a
    writing.
        (38) "State" means a State of the United States, the
    District of Columbia, Puerto Rico, the United States Virgin
    Islands, or any territory or insular possession subject to
    the jurisdiction of the United States.
        (39) "Surety" includes a guarantor or other secondary
    obligor.
        (40) "Term" means a portion of an agreement that
    relates to a particular matter.
        (41) "Unauthorized signature" means a signature made
    without actual, implied, or apparent authority. The term
    includes a forgery.
        (42) "Warehouse receipt" means a receipt issued by a
    person engaged in the business of storing goods for hire.
        (43) "Writing" includes printing, typewriting, or any
    other intentional reduction to tangible form. "Written"
    has a corresponding meaning.
Subject to additional definitions contained in the subsequent
Articles of this Act which are applicable to specific Articles
or Parts thereof, and unless the context otherwise requires, in
this Act:
    (1) "Action" in the sense of a judicial proceeding includes
recoupment, counterclaim, set-off, suit in equity and any other
proceedings in which rights are determined.
    (2) "Aggrieved party" means a party entitled to resort to a
remedy.
    (3) "Agreement" means the bargain of the parties in fact as
found in their language or by implication from other
circumstances including course of dealing or usage of trade or
course of performance as provided in this Act (Sections 1-205,
2-208, and 2A-207). Whether an agreement has legal consequences
is determined by the provisions of this Act, if applicable;
otherwise by the law of contracts (Section 1-103). (Compare
"Contract".)
    (4) "Bank" means any person engaged in the business of
banking.
    (5) "Bearer" means the person in possession of an
instrument, document of title, or certificated security
payable to bearer or indorsed in blank.
    (6) "Bill of lading" means a document evidencing the
receipt of goods for shipment issued by a person engaged in the
business of 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.
    (7) "Branch" includes a separately incorporated foreign
branch of a bank.
    (8) "Burden of establishing" a fact means the burden of
persuading the triers of fact that the existence of the fact is
more probable than its non-existence.
    (9) "Buyer in ordinary course of business" means a person
that buys goods in good faith, without knowledge that the sale
violates the rights of another person in the goods, and in the
ordinary course from a person, other than a pawnbroker, in the
business of selling goods of that kind. A person buys goods in
the ordinary course if the sale to the person comports with the
usual or customary practices in the kind of business in which
the seller is engaged or with the seller's own usual or
customary practices. A person that sells oil, gas, or other
minerals at the wellhead or minehead is a person in the
business of selling goods of that kind. A buyer in ordinary
course of business may buy for cash, by exchange of other
property, or on secured or unsecured credit, and may acquire
goods or documents of title under a pre-existing contract for
sale. Only a buyer that takes possession of the goods or has a
right to recover the goods from the seller under Article 2 may
be a buyer in ordinary course of business. A person that
acquires goods in a transfer in bulk or as security for or in
total or partial satisfaction of a money debt is not a buyer in
ordinary course of business.
    (10) "Conspicuous": A term or clause is conspicuous when it
is so written that a reasonable person against whom it is to
operate ought to have noticed it. A printed heading in capitals
(as: NON-NEGOTIABLE BILL OF LADING) is conspicuous. Language in
the body of a form is "conspicuous" if it is in larger or other
contrasting type or color. But in a telegram any stated term is
"conspicuous". Whether a term or clause is "conspicuous" or not
is for decision by the court.
    (11) "Contract" means the total legal obligation which
results from the parties' agreement as affected by this Act and
any other applicable rules of law. (Compare "Agreement".)
    (12) "Creditor" includes a general creditor, a secured
creditor, a lien creditor and any representative of creditors,
including an assignee for the benefit of creditors, a trustee
in bankruptcy, a receiver in equity and an executor or
administrator of an insolvent debtor's or assignor's estate.
    (13) "Defendant" includes a person in the position of
defendant in a cross-action or counterclaim.
    (14) "Delivery" with respect to instruments, documents of
title, chattel paper or certificated securities means
voluntary transfer of possession.
    (15) "Document of title" includes bill of lading, dock
warrant, dock receipt, warehouse receipt or order for the
delivery of goods, and also any other document which in the
regular course of business or financing is treated as
adequately evidencing that the person in possession of it is
entitled to receive, hold and dispose of the document and the
goods it covers. To be a document of title a document must
purport to be issued by or addressed to a bailee and purport to
cover goods in the bailee's possession which are either
identified or are fungible portions of an identified mass.
    (16) "Fault" means wrongful act, omission or breach.
    (17) "Fungible" with respect to goods or securities means
goods or securities of which any unit is, by nature or usage of
trade, the equivalent of any other like unit. Goods which are
not fungible shall be deemed fungible for the purposes of this
Act to the extent that under a particular agreement or document
unlike units are treated as equivalents.
    (18) "Genuine" means free of forgery or counterfeiting.
    (19) "Good faith" means honesty in fact in the conduct or
transaction concerned.
    (20) "Holder" with respect to a negotiable instrument means
the person in possession if the instrument is payable to bearer
or, in the case of an instrument payable to an identified
person, if the identified person is in possession. "Holder"
with respect to a document of title means the person in
possession if the goods are deliverable to bearer or to the
order of the person in possession.
    (21) To "honor" is to pay or accept and pay, or where a
credit so engages to purchase or discount a draft complying
with the terms of the credit.
    (22) "Insolvency proceedings" includes any assignment for
the benefit of creditors or other proceedings intended to
liquidate or rehabilitate the estate of the person involved.
    (23) A person is "insolvent" who either has ceased to pay
his debts in the ordinary course of business or cannot pay his
debts as they become due or is insolvent within the meaning of
the federal bankruptcy law.
    (24) "Money" means a medium of exchange authorized or
adopted by a domestic or foreign government and includes a
monetary unit of account established by an intergovernmental
organization or by agreement between 2 or more nations.
    (25) A person has "notice" of a fact when
        (a) he has actual knowledge of it; or
        (b) he has received a notice or notification of it; or
        (c) from all the facts and circumstances known to him
    at the time in question he has reason to know that it
    exists. A person "knows" or has "knowledge" of a fact when
    he has actual knowledge of it. "Discover" or "learn" or a
    word or phrase of similar import refers to knowledge rather
    than to reason to know. The time and circumstances under
    which a notice or notification may cease to be effective
    are not determined by this Act.
    (26) A person "notifies" or "gives" a notice or
notification to another by taking such steps as may be
reasonably required to inform the other in ordinary course
whether or not such other actually comes to know of it. A
person "receives" a notice or notification when
        (a) it comes to his attention; or
        (b) it is duly delivered at the place of business
    through which the contract was made or at any other place
    held out by him as the place for receipt of such
    communications.
    (27) Notice, knowledge or a notice or notification received
by an organization is effective for a particular transaction
from the time when it is brought to the attention of the
individual conducting that transaction, and in any event from
the time when it would have been brought to his attention if
the organization had exercised due diligence. An organization
exercises due diligence if it maintains reasonable routines for
communicating significant information to the person conducting
the transaction and there is reasonable compliance with the
routines. Due diligence does not require an individual acting
for the organization to communicate information unless such
communication is part of his regular duties or unless he has
reason to know of the transaction and that the transaction
would be materially affected by the information.
    (28) "Organization" includes a corporation, government or
governmental subdivision or agency, business trust, estate,
trust, partnership or association, two or more persons having a
joint or common interest, or any other legal or commercial
entity.
    (29) "Party", as distinct from "third party", means a
person who has engaged in a transaction or made an agreement
within this Act.
    (30) "Person" includes an individual or an organization
(see Section 1-102).
    (31) "Presumption" or "presumed" means that the trier of
fact must find the existence of the fact presumed unless and
until evidence is introduced which would support a finding of
its non-existence.
    (32) "Purchase" includes taking by sale, discount,
negotiation, mortgage, pledge, lien, security interest, issue
or reissue, gift or any other voluntary transaction creating an
interest in property.
    (33) "Purchaser" means a person who takes by purchase.
    (34) "Remedy" means any remedial right to which an
aggrieved party is entitled with or without resort to a
tribunal.
    (35) "Representative" includes an agent, an officer of a
corporation or association, and a trustee, executor or
administrator of an estate, or any other person empowered to
act for another.
    (36) "Rights" includes remedies.
    (37) "Security interest" means an interest in personal
property or fixtures which secures payment or performance of an
obligation. The term also includes any interest of a consignor
and a buyer of accounts, chattel paper, a payment intangible,
or a promissory note in a transaction that is subject to
Article 9. The special property interest of a buyer of goods on
identification of those goods to a contract for sale under
Section 2-401 is not a "security interest", but a buyer may
also acquire a "security interest", by complying with Article
9. Except as otherwise provided in Section 2-505, the right of
a seller or lessor of goods under Article 2 or 2A to retain or
acquire possession of the goods is not a "security interest",
but a seller or lessor may also acquire a "security interest"
by complying with Article 9. The retention or reservation of
title by a seller of goods notwithstanding shipment or delivery
to the buyer (Section 2-401) is limited in effect to a
reservation of a "security interest".
    Whether a transaction creates a lease or security interest
is determined by the facts of each case; however, a transaction
creates a security interest if the consideration the lessee is
to pay the lessor for the right to possession and use of the
goods is an obligation for the term of the lease not subject to
termination by the lessee; and
        (a) the original term of the lease is equal to or
    greater than the remaining economic life of the goods;
        (b) the lessee is bound to renew the lease for the
    remaining economic life of the goods or is bound to become
    the owner of the goods;
        (c) the lessee has an option to renew the lease for the
    remaining economic life of the goods for no additional
    consideration or nominal additional consideration upon
    compliance with the lease agreement; or
        (d) the lessee has an option to become the owner of the
    goods for no additional consideration or nominal
    additional consideration upon compliance with the lease
    agreement.
    A transaction does not create a security interest merely
because it provides that:
        (a) the present value of the consideration the lessee
    is obligated to pay the lessor for the right to possession
    and use of the goods is substantially equal to or is
    greater than the fair market value of the goods at the time
    the lease is entered into;
        (b) the lessee assumes risk of loss of the goods, or
    agrees to pay taxes, insurance, filing, recording, or
    registration fees, or service or maintenance costs with
    respect to the goods;
        (c) the lessee has an option to renew the lease or to
    become the owner of the goods;
        (d) the lessee has an option to renew the lease for a
    fixed rent that is equal to or greater than the reasonably
    predictable fair market rent for the use of the goods for
    the term of the renewal at the time the option is to be
    performed; or
        (e) the lessee has an option to become the owner of the
    goods for a fixed price that is equal to or greater than
    the reasonably predictable fair market value of the goods
    at the time the option is to be performed.
    For purposes of this subsection (37):
        (x) Additional consideration is not nominal if (i) when
    the option to renew the lease is granted to the lessee the
    rent is stated to be the fair market rent for the use of
    the goods for the term of the renewal determined at the
    time the option is to be performed, or (ii) when the option
    to become the owner of the goods is granted to the lessee
    the price is stated to be the fair market value of the
    goods determined at the time the option is to be performed.
    Additional consideration is nominal if it is less than the
    lessee's reasonably predictable cost of performing under
    the lease agreement if the option is not exercised;
        (y) "Reasonably predictable" and "remaining economic
    life of the goods" are to be determined with reference to
    the facts and circumstances at the time the transaction is
    entered into; and
        (z) "Present value" means the amount as of a date
    certain of one or more sums payable in the future,
    discounted to the date certain. The discount is determined
    by the interest rate specified by the parties if the rate
    is not manifestly unreasonable at the time the transaction
    is entered into; otherwise, the discount is determined by a
    commercially reasonable rate that takes into account the
    facts and circumstances as of each case at the time the
    transaction was entered into.
    (38) "Send" in connection with any writing or notice means
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. The receipt of any writing or notice
within the time at which it would have arrived if properly sent
has the effect of a proper sending.
    (39) "Signed" includes any symbol executed or adopted by a
party with present intention to authenticate a writing.
    (40) "Surety" includes guarantor.
    (41) "Telegram" includes a message transmitted by radio,
teletype, cable, any mechanical method of transmission, or the
like.
    (42) "Term" means that portion of an agreement which
relates to a particular matter.
    (43) "Unauthorized" signature means one made without
actual, implied, or apparent authority and includes a forgery.
    (44) "Value". Except as otherwise provided with respect to
negotiable instruments and bank collections (Sections 3-303,
4-210, and 4-211), a person gives "value" for rights if he
acquires them:
        (a) in return for a binding commitment to extend credit
    or for the extension of immediately available credit
    whether or not drawn upon and whether or not a charge-back
    is provided for in the event of difficulties in collection;
    or
        (b) as security for or in total or partial satisfaction
    of a pre-existing claim; or
        (c) by accepting delivery pursuant to a pre-existing
    contract for purchase; or
        (d) generally, in return for any consideration
    sufficient to support a simple contract.
    (45) "Warehouse receipt" means a receipt issued by a person
engaged in the business of storing goods for hire.
    (46) "Written" or "writing" includes printing, typewriting
or any other intentional reduction to tangible form.
(Source: P.A. 91-893, eff. 7-1-01.)
 
    (810 ILCS 5/1-202)  (from Ch. 26, par. 1-202)
    Sec. 1-202. Notice; knowledge. Prima facie evidence by
third party documents.
    (a) Subject to subsection (f), a person has "notice" of a
fact if the person:
        (1) has actual knowledge of it;
        (2) has received a notice or notification of it; or
        (3) from all the facts and circumstances known to the
    person at the time in question, has reason to know that it
    exists.
    (b) "Knowledge" means actual knowledge. "Knows" has a
corresponding meaning.
    (c) "Discover", "learn", or words of similar import refer
to knowledge rather than to reason to know.
    (d) 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 the other person actually comes to know of it.
    (e) Subject to subsection (f), a person "receives" a notice
or notification when:
        (1) it comes to that person's attention; or
        (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 another location held out by that
    person as the place for receipt of such communications.
    (f) Notice, knowledge, or a notice or notification received
by an organization is effective for a particular transaction
from the time it is brought to the attention of the individual
conducting that transaction and, in any event, from the time it
would have been brought to the individual's attention if the
organization had exercised due diligence. An organization
exercises due diligence if it maintains reasonable routines for
communicating significant information to the person conducting
the transaction and there is reasonable compliance with the
routines. Due diligence does not require an individual acting
for the organization to communicate information unless the
communication is part of the individual's regular duties or the
individual has reason to know of the transaction and that the
transaction would be materially affected by the information.
    A document in due form purporting to be a bill of lading,
policy or certificate of insurance, official weigher's or
inspector's certificate, consular invoice, or any other
document authorized or required by the contract to be issued by
a third party shall be prima facie evidence of its own
authenticity and genuineness and of the facts stated in the
document by the third party.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/1-203)  (from Ch. 26, par. 1-203)
    Sec. 1-203. Lease distinguished from security interest.
Obligation of good faith.
    (a) Whether a transaction in the form of a lease creates a
lease or security interest is determined by the facts of each
case.
    (b) A transaction in the form of a lease creates a security
interest if the consideration that the lessee is to pay the
lessor for the right to possession and use of the goods is an
obligation for the term of the lease and is not subject to
termination by the lessee, and:
        (1) the original term of the lease is equal to or
    greater than the remaining economic life of the goods;
        (2) the lessee is bound to renew the lease for the
    remaining economic life of the goods or is bound to become
    the owner of the goods;
        (3) the lessee has an option to renew the lease for the
    remaining economic life of the goods for no additional
    consideration or for nominal additional consideration upon
    compliance with the lease agreement; or
        (4) the lessee has an option to become the owner of the
    goods for no additional consideration or for nominal
    additional consideration upon compliance with the lease
    agreement.
    (c) A transaction in the form of a lease does not create a
security interest merely because:
        (1) the present value of the consideration the lessee
    is obligated to pay the lessor for the right to possession
    and use of the goods is substantially equal to or is
    greater than the fair market value of the goods at the time
    the lease is entered into;
        (2) the lessee assumes risk of loss of the goods;
        (3) the lessee agrees to pay, with respect to the
    goods, taxes, insurance, filing, recording, or
    registration fees, or service or maintenance costs;
        (4) the lessee has an option to renew the lease or to
    become the owner of the goods;
        (5) the lessee has an option to renew the lease for a
    fixed rent that is equal to or greater than the reasonably
    predictable fair market rent for the use of the goods for
    the term of the renewal at the time the option is to be
    performed; or
        (6) the lessee has an option to become the owner of the
    goods for a fixed price that is equal to or greater than
    the reasonably predictable fair market value of the goods
    at the time the option is to be performed.
    (d) Additional consideration is nominal if it is less than
the lessee's reasonably predictable cost of performing under
the lease agreement if the option is not exercised. Additional
consideration is not nominal if:
        (1) when the option to renew the lease is granted to
    the lessee, the rent is stated to be the fair market rent
    for the use of the goods for the term of the renewal
    determined at the time the option is to be performed; or
        (2) when the option to become the owner of the goods is
    granted to the lessee, the price is stated to be the fair
    market value of the goods determined at the time the option
    is to be performed.
    (e) The "remaining economic life of the goods" and
"reasonably predictable" fair market rent, fair market value,
or cost of performing under the lease agreement must be
determined with reference to the facts and circumstances at the
time the transaction is entered into.
    Every contract or duty within this Act imposes an
obligation of good faith in its performance or enforcement.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/1-204)  (from Ch. 26, par. 1-204)
    Sec. 1-204. Value. Time; reasonable time; "seasonably".
Except as otherwise provided in Articles 3, 4, 5, and 6, a
person gives value for rights if the person acquires them:
        (1) in return for a binding commitment to extend credit
    or for the extension of immediately available credit,
    whether or not drawn upon and whether or not a charge-back
    is provided for in the event of difficulties in collection;
        (2) as security for, or in total or partial
    satisfaction of, a preexisting claim;
        (3) by accepting delivery under a preexisting contract
    for purchase; or
        (4) in return for any consideration sufficient to
    support a simple contract.
    (1) Whenever this Act requires any action to be taken
within a reasonable time, any time which is not manifestly
unreasonable may be fixed by agreement.
    (2) What is a reasonable time for taking any action depends
on the nature, purpose and circumstances of such action.
    (3) An action is taken "seasonably" when it is taken at or
within the time agreed or if no time is agreed at or within
reasonable time.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/1-205)  (from Ch. 26, par. 1-205)
    Sec. 1-205. Reasonable time; seasonableness. Course of
dealing and usage of trade.
    (a) Whether a time for taking an action required by the
Uniform Commercial Code is reasonable depends on the nature,
purpose, and circumstances of the action.
    (b) An action is taken seasonably if it is taken at or
within the time agreed or, if no time is agreed, at or within a
reasonable time.
    (1) A course of dealing is a sequence of previous conduct
between the parties to a particular transaction which is fairly
to be regarded as establishing a common basis of understanding
for interpreting their expressions and other conduct.
    (2) A usage of trade is any practice or method of dealing
having such regularity of observance in a place, vocation or
trade as to justify an expectation that it will be observed
with respect to the transaction in question. The existence and
scope of such a usage are to be proved as facts. If it is
established that such a usage is embodied in a written trade
code or similar writing the interpretation of the writing is
for the court.
    (3) A course of dealing between parties and any usage of
trade in the vocation or trade in which they are engaged or of
which they are or should be aware give particular meaning to
and supplement or qualify terms of an agreement.
    (4) The express terms of an agreement and an applicable
course of dealing or usage of trade shall be construed wherever
reasonable as consistent with each other; but when such
construction is unreasonable express terms control both course
of dealing and usage of trade and course of dealing controls
usage of trade.
    (5) An applicable usage of trade in the place where any
part of performance is to occur shall be used in interpreting
the agreement as to that part of the performance.
    (6) Evidence of a relevant usage of trade offered by one
party is not admissible unless and until he has given the other
party such notice as the court finds sufficient to prevent
unfair surprise to the latter.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/1-206)  (from Ch. 26, par. 1-206)
    Sec. 1-206. Presumptions. Statute of frauds for kinds of
personal property not otherwise covered. Whenever the Uniform
Commercial Code creates a "presumption" with respect to a fact,
or provides that a fact is "presumed", the trier of fact must
find the existence of the fact unless and until evidence is
introduced that supports a finding of its nonexistence.
    (1) Except in the cases described in subsection (2) of this
Section a contract for the sale of personal property is not
enforceable by way of action or defense beyond $5,000 in amount
or value of remedy unless there is some writing which indicates
that a contract for sale has been made between the parties at a
defined or stated price, reasonably identifies the subject
matter, and is signed by the party against whom enforcement is
sought or by his authorized agent.
    (2) Subsection (1) of this Section does not apply to
contracts for the sale of goods (Section 2-201) nor of
securities (Section 8-113) nor to security agreements (Section
9-203).
(Source: P.A. 89-364, eff. 1-1-96.)
 
    (810 ILCS 5/1-207)  (from Ch. 26, par. 1-207)
    Sec. 1-207. (Blank). Performance or acceptance under
reservation of rights.
    (1) A party who, with explicit reservation of rights,
performs or promises performance or assents to performance in a
manner demanded or offered by the other party does not thereby
prejudice the rights reserved. Such words as "without
prejudice", "under protest" or the like are sufficient.
    (2) Subsection (1) does not apply to an accord and
satisfaction.
(Source: P.A. 87-582.)
 
    (810 ILCS 5/1-208)  (from Ch. 26, par. 1-208)
    Sec. 1-208. (Blank). Option to Accelerate at Will.
    A term providing that one party or his successor in
interest may accelerate payment or performance or require
collateral or additional collateral "at will" or "when he deems
himself insecure" or in words of similar import shall be
construed to mean that he shall have power to do so only if he
in good faith believes that the prospect of payment or
performance is impaired. The burden of establishing lack of
good faith is on the party against whom the power has been
exercised.
(Source: Laws 1961, 1st SS., p. 7.)
 
    (810 ILCS 5/1-209)  (from Ch. 26, par. 1-209)
    Sec. 1-209. (Blank). Subordinated Obligations.
    An obligation may be issued as subordinated to payment of
another obligation of the person obligated, or a creditor may
subordinate his right to payment of an obligation by agreement
with either the person obligated or another creditor of the
person obligated. Such a subordination does not create a
security interest as against either the common debtor or a
subordinated creditor. This Section shall be construed as
declaring the law as it existed prior to the enactment of this
Section and not as modifying it.
(Source: P.A. 77-2810.)
 
    (810 ILCS 5/Art. 1 Pt. 3 heading new)
PART 3
TERRITORIAL APPLICABILITY AND GENERAL RULES

 
    (810 ILCS 5/1-301 new)
    Sec. 1-301. Territorial applicability; parties' power to
choose applicable law.
    (a) Except as otherwise provided in this Section, when a
transaction bears a reasonable relation to this State and also
to another state or nation the parties may agree that the law
either of this State or of such other state or nation shall
govern their rights and duties.
    (b) In the absence of an agreement effective under
subsection (a), and except as provided in subsection (c), the
Uniform Commercial Code applies to transactions bearing an
appropriate relation to this State.
    (c) If one of the following provisions of the Uniform
Commercial Code specifies the applicable law, that provision
governs and a contrary agreement is effective only to the
extent permitted by the law so specified:
        (1) Section 2-402;
        (2) Sections 2A-105 and 2A-106;
        (3) Section 4-102;
        (4) Section 4A-507;
        (5) Section 5-116;
        (6) Section 8-110;
        (7) Sections 9-301 through 9-307.
 
    (810 ILCS 5/1-302 new)
    Sec. 1-302. Variation by agreement.
    (a) Except as otherwise provided in subsection (b) or
elsewhere in the Uniform Commercial Code, the effect of
provisions of the Uniform Commercial Code may be varied by
agreement.
    (b) The obligations of good faith, diligence,
reasonableness, and care prescribed by the Uniform Commercial
Code may not be disclaimed by agreement. The parties, by
agreement, may determine the standards by which the performance
of those obligations is to be measured if those standards are
not manifestly unreasonable. Whenever the Uniform Commercial
Code requires an action to be taken within a reasonable time, a
time that is not manifestly unreasonable may be fixed by
agreement.
    (c) The presence in certain provisions of the Uniform
Commercial Code of the phrase "unless otherwise agreed", or
words of similar import, does not imply that the effect of
other provisions may not be varied by agreement under this
Section.
 
    (810 ILCS 5/1-303 new)
    Sec. 1-303. Course of performance, course of dealing, and
usage of trade.
    (a) A "course of performance" is a sequence of conduct
between the parties to a particular transaction that exists if:
        (1) the agreement of the parties with respect to the
    transaction involves repeated occasions for performance by
    a party; and
        (2) the other party, with knowledge of the nature of
    the performance and opportunity for objection to it,
    accepts the performance or acquiesces in it without
    objection.
    (b) A "course of dealing" is a sequence of conduct
concerning previous transactions between the parties to a
particular transaction that is fairly to be regarded as
establishing a common basis of understanding for interpreting
their expressions and other conduct.
    (c) A "usage of trade" is any practice or method of dealing
having such regularity of observance in a place, vocation, or
trade as to justify an expectation that it will be observed
with respect to the transaction in question. The existence and
scope of such a usage must be proved as facts. If it is
established that such a usage is embodied in a trade code or
similar record, the interpretation of the record is a question
of law.
    (d) A course of performance or course of dealing between
the parties or usage of trade in the vocation or trade in which
they are engaged or of which they are or should be aware is
relevant in ascertaining the meaning of the parties' agreement,
may give particular meaning to specific terms of the agreement,
and may supplement or qualify the terms of the agreement. A
usage of trade applicable in the place in which part of the
performance under the agreement is to occur may be so utilized
as to that part of the performance.
    (e) Except as otherwise provided in subsection (f), the
express terms of an agreement and any applicable course of
performance, course of dealing, or usage of trade must be
construed whenever reasonable as consistent with each other. If
such a construction is unreasonable:
        (1) express terms prevail over course of performance,
    course of dealing, and usage of trade;
        (2) course of performance prevails over course of
    dealing and usage of trade; and
        (3) course of dealing prevails over usage of trade.
    (f) Subject to Section 2-209, a course of performance is
relevant to show a waiver or modification of any term
inconsistent with the course of performance.
    (g) Evidence of a relevant usage of trade offered by one
party is not admissible unless that party has given the other
party notice that the court finds sufficient to prevent unfair
surprise to the other party.
 
    (810 ILCS 5/1-304 new)
    Sec. 1-304. Obligation of good faith. Every contract or
duty within the Uniform Commercial Code imposes an obligation
of good faith in its performance and enforcement.
 
    (810 ILCS 5/1-305 new)
    Sec. 1-305. Remedies to be liberally administered.
    (a) The remedies provided by the Uniform Commercial Code
must be liberally administered to the end that the aggrieved
party may be put in as good a position as if the other party had
fully performed but neither consequential or special damages
nor penal damages may be had except as specifically provided in
the Uniform Commercial Code or by other rule of law.
    (b) Any right or obligation declared by the Uniform
Commercial Code is enforceable by action unless the provision
declaring it specifies a different and limited effect.
 
    (810 ILCS 5/1-306 new)
    Sec. 1-306. Waiver or renunciation of claim or right after
breach. A claim or right arising out of an alleged breach may
be discharged in whole or in part without consideration by
agreement of the aggrieved party in an authenticated record.
 
    (810 ILCS 5/1-307 new)
    Sec. 1-307. Prima facie evidence by third-party documents.
A document in due form purporting to be a bill of lading,
policy or certificate of insurance, official weigher's or
inspector's certificate, consular invoice, or any other
document authorized or required by the contract to be issued by
a third party is prima facie evidence of its own authenticity
and genuineness and of the facts stated in the document by the
third party.
 
    (810 ILCS 5/1-308 new)
    Sec. 1-308. Performance or acceptance under reservation of
rights.
    (a) A party that with explicit reservation of rights
performs or promises performance or assents to performance in a
manner demanded or offered by the other party does not thereby
prejudice the rights reserved. Such words as "without
prejudice", "under protest", or the like are sufficient.
    (b) Subsection (a) does not apply to an accord and
satisfaction.
 
    (810 ILCS 5/1-309 new)
    Sec. 1-309. Option to accelerate at will. A term providing
that one party or that party's successor in interest may
accelerate payment or performance or require collateral or
additional collateral "at will" or when the party "deems itself
insecure", or words of similar import, means that the party has
power to do so only if that party in good faith believes that
the prospect of payment or performance is impaired. The burden
of establishing lack of good faith is on the party against
which the power has been exercised.
 
    (810 ILCS 5/1-310 new)
    Sec. 1-310. Subordinated obligations. An obligation may be
issued as subordinated to performance of another obligation of
the person obligated, or a creditor may subordinate its right
to performance of an obligation by agreement with either the
person obligated or another creditor of the person obligated.
Subordination does not create a security interest as against
either the common debtor or a subordinated creditor.
 
    Section 10. The Uniform Commercial Code is amended by
changing the headings of Article 7 and Article 7, Part 1 and
Sections 7-101, 7-102, 7-103, 7-104, and 7-105, the heading of
Article 7, Part 2 and Sections 7-201, 7-202, 7-203, 7-204,
7-205, 7-206, 7-207, 7-208, 7-209, and 7-210, the heading of
Article 7, Part 3 and Sections 7-301, 7-302, 7-303, 7-304,
7-305, 7-307, 7-308, and 7-309, the heading of Article 7, Part
4 and Sections 7-401, 7-402, 7-403, and 7-404, the heading of
Article 7, Part 5 and Sections 7-501, 7-502, 7-503, 7-504,
7-505, 7-506, 7-507, 7-508, and 7-509, the heading of Article
7, Part 6 and Sections 7-601, 7-602, and 7-603 and adding
Section 7-106, the heading of Article 7, Part 7, and Sections
7-701, 7-702, 7-703, and 7-704 as follows:
 
    (810 ILCS 5/Art. 7 heading)
ARTICLE 7
DOCUMENTS OF TITLE WAREHOUSE RECEIPTS, BILLS OF LADING
AND OTHER DOCUMENTS OF TITLE

 
    (810 ILCS 5/Art. 7 Pt. 1 heading)
PART 1 .
GENERAL

 
    (810 ILCS 5/7-101)  (from Ch. 26, par. 7-101)
    Sec. 7-101. Short title. This Article may be cited as
Uniform Commercial Code-Documents of Title. This Article shall
be known and may be cited as Uniform Commercial Code--Documents
of Title.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-102)  (from Ch. 26, par. 7-102)
    Sec. 7-102. Definitions and index of definitions.
    (a) In this Article, unless the context otherwise requires:
        (1) "Bailee" means a person that by a warehouse
    receipt, bill of lading, or other document of title
    acknowledges possession of goods and contracts to deliver
    them.
        (2) "Carrier" means a person that issues a bill of
    lading.
        (3) "Consignee" means a person named in a bill of
    lading to which or to whose order the bill promises
    delivery.
        (4) "Consignor" means a person named in a bill of
    lading as the person from which the goods have been
    received for shipment.
        (5) "Delivery order" means a record that contains an
    order to deliver goods directed to a warehouse, carrier, or
    other person that in the ordinary course of business issues
    warehouse receipts or bills of lading.
        (6) "Good faith" means honesty in fact and the
    observance of reasonable commercial standards of fair
    dealing.
        (7) "Goods" means all things that are treated as
    movable for the purposes of a contract for storage or
    transportation.
        (8) "Issuer" means a bailee that issues a document of
    title or, in the case of an unaccepted delivery order, the
    person that orders the possessor of goods to deliver. The
    term includes a person for which an agent or employee
    purports to act in issuing a document if the agent or
    employee has real or apparent authority to issue documents,
    even if the issuer did not receive any goods, the goods
    were misdescribed, or in any other respect the agent or
    employee violated the issuer's instructions.
        (9) "Person entitled under the document" means the
    holder, in the case of a negotiable document of title, or
    the person to which delivery of the goods is to be made by
    the terms of, or pursuant to instructions in a record
    under, a nonnegotiable document of title.
        (10) "Record" means information that is inscribed on a
    tangible medium or that is stored in an electronic or other
    medium and is retrievable in perceivable form.
        (11) "Sign" means, with present intent to authenticate
    or adopt a record:
            (A) to execute or adopt a tangible symbol; or
            (B) to attach to or logically associate with the
        record an electronic sound, symbol, or process.
        (12) "Shipper" means a person that enters into a
    contract of transportation with a carrier.
        (13) "Warehouse" means a person engaged in the business
    of storing goods for hire. The owner of a self-service
    storage facility as defined in the Self-Service Storage
    Facility Act is not a warehouse for the purposes of this
    Article.
    (b) Definitions in other Articles applying to this Article
and the Sections in which they appear are:
        (1) "Contract for sale", Section 2-106.
        (2) "Lessee in the ordinary course of business",
    Section 2A-103.
        (3) "Receipt" of goods, Section 2-103.
    (c) In addition, Article 1 contains general definitions and
principles of construction and interpretation applicable
throughout this Article.
(1) In this Article, unless the context otherwise requires:
    (a) "Bailee" means the person who by a warehouse receipt,
bill of lading or other document of title acknowledges
possession of goods and contracts to deliver them.
    (b) "Consignee" means the person named in a bill to whom or
to whose order the bill promises delivery.
    (c) "Consignor" means the person named in a bill as the
person from whom the goods have been received for shipment.
    (d) "Delivery order" means a written order to deliver goods
directed to a warehouseman, carrier or other person who in the
ordinary course of business issues warehouse receipts or bills
of lading.
    (e) "Document" means document of title as defined in the
general definitions in Article 1 (Section 1--201).
    (f) "Goods" means all things which are treated as movable
for the purposes of a contract of storage or transportation.
    (g) "Issuer" means a bailee who issues a document except
that in relation to an unaccepted delivery order it means the
person who orders the possessor of goods to deliver. Issuer
includes any person for whom an agent or employee purports to
act in issuing a document if the agent or employee has real or
apparent authority to issue documents, notwithstanding that
the issuer received no goods or that the goods were
misdescribed or that in any other respect the agent or employee
violated his instructions.
    (h) "Warehouseman" is a person engaged in the business of
storing goods for hire. The owner of a self-service storage
facility as defined in the Self-Service Storage Facility Act,
enacted by the Eighty-Third General Assembly, is not a
warehouseman for the purposes of this Article.
    (2) Other definitions applying to this Article or to
specified Parts thereof, and the Sections in which they appear
are:
    "Duly negotiate". Section 7-501.
    "Person entitled under the document". Section 7-403(4).
    (3) Definitions in other Articles applying to this Article
and the Sections in which they appear are:
    "Contract for sale". Section 2-106.
    "Overseas". Section 2-323.
    "Receipt" of goods. Section 2-103.
    (4) In addition Article 1 contains general definitions and
principles of construction and interpretation applicable
throughout this Article.
(Source: P.A. 83-800.)
 
    (810 ILCS 5/7-103)  (from Ch. 26, par. 7-103)
    Sec. 7-103. Relation of Article to treaty or statute.
Relation of Article to treaty, statute, tariff, classification
or regulation.
    (a) This Article is subject to any treaty or statute of the
United States or regulatory statute of this State to the extent
the treaty, statute, or regulatory statute is applicable.
    (b) This Article does not modify or repeal any law
prescribing the form or content of a document of title or the
services or facilities to be afforded by a bailee, or otherwise
regulating a bailee's business in respects not specifically
treated in this Article. However, violation of such a law does
not affect the status of a document of title that otherwise is
within the definition of a document of title.
    (c) This Act modifies, limits, and supersedes the federal
Electronic Signatures in Global and National Commerce Act (15
U.S.C. Section 7001, et seq.) but does not modify, limit, or
supersede Section 101(c) of that Act (15 U.S.C. Section
7001(c)) or authorize electronic delivery of any of the notices
described in Section 103(b) of that Act (15 U.S.C. Section
7003(b)).
    (d) (Blank).
    To the extent that any treaty or statute of the United
States, regulatory statute of this State or tariff,
classification or regulation filed or issued pursuant thereto
is applicable, the provisions of this Article are subject
thereto.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-104)  (from Ch. 26, par. 7-104)
    Sec. 7-104. Negotiable and nonnegotiable document of
title. Negotiable and non-negotiable warehouse receipt, bill
of lading or other document of title.
    (a) Except as otherwise provided in subsection (c), a
document of title is negotiable if by its terms the goods are
to be delivered to bearer or to the order of a named person.
    (b) A document of title other than one described in
subsection (a) is nonnegotiable. A bill of lading that states
that the goods are consigned to a named person is not made
negotiable by a provision that the goods are to be delivered
only against an order in a record signed by the same or another
named person.
    (c) A document of title is nonnegotiable if, at the time it
is issued, the document has a conspicuous legend, however
expressed, that it is nonnegotiable.
    (1) A warehouse receipt, bill of lading or other document
of title is negotiable
        (a) if by its terms the goods are to be delivered to
bearer or to the order of a named person; or
        (b) where recognized in overseas trade, if it runs to a
named person or assigns.
    (2) Any other document is non-negotiable. A bill of lading
in which it is stated that the goods are consigned to a named
person is not made negotiable by a provision that the goods are
to be delivered only against a written order signed by the same
or another named person.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-105)  (from Ch. 26, par. 7-105)
    Sec. 7-105. Reissuance in alternative medium. Construction
against negative implication.
    (a) Upon request of a person entitled under an electronic
document of title, the issuer of the electronic document may
issue a tangible document of title as a substitute for the
electronic document if:
        (1) the person entitled under the electronic document
    surrenders control of the document to the issuer; and
        (2) the tangible document when issued contains a
    statement that it is issued in substitution for the
    electronic document.
    (b) Upon issuance of a tangible document of title in
substitution for an electronic document of title in accordance
with subsection (a):
        (1) the electronic document ceases to have any effect
    or validity; and
        (2) the person that procured issuance of the tangible
    document warrants to all subsequent persons entitled under
    the tangible document that the warrantor was a person
    entitled under the electronic document when the warrantor
    surrendered control of the electronic document to the
    issuer.
    (c) Upon request of a person entitled under a tangible
document of title, the issuer of the tangible document may
issue an electronic document of title as a substitute for the
tangible document if:
        (1) the person entitled under the tangible document
    surrenders possession of the document to the issuer; and
        (2) the electronic document when issued contains a
    statement that it is issued in substitution for the
    tangible document.
    (d) Upon issuance of an electronic document of title in
substitution for a tangible document of title in accordance
with subsection (c):
        (1) the tangible document ceases to have any effect or
    validity; and
        (2) the person that procured issuance of the electronic
    document warrants to all subsequent persons entitled under
    the electronic document that the warrantor was a person
    entitled under the tangible document when the warrantor
    surrendered possession of the tangible document to the
    issuer.
The omission from either Part 2 or Part 3 of this Article of a
provision corresponding to a provision made in the other Part
does not imply that a corresponding rule of law is not
applicable.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-106 new)
    Sec. 7-106. Control of electronic document of title.
    (a) A person has control of an electronic document of title
if a system employed for evidencing the transfer of interests
in the electronic document reliably establishes that person as
the person to which the electronic document was issued or
transferred.
    (b) A system satisfies subsection (a), and a person is
deemed to have control of an electronic document of title, if
the document is created, stored, and assigned in such a manner
that:
        (1) a single authoritative copy of the document exists
    which is unique, identifiable, and, except as otherwise
    provided in paragraphs (4), (5), and (6), unalterable;
        (2) the authoritative copy identifies the person
    asserting control as:
            (A) the person to which the document was issued; or
            (B) if the authoritative copy indicates that the
        document has been transferred, the person to which the
        document was most recently transferred;
        (3) the authoritative copy is communicated to and
    maintained by the person asserting control or its
    designated custodian;
        (4) copies or amendments that add or change an
    identified assignee of the authoritative copy can be made
    only with the consent of the person asserting control;
        (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
        (6) any amendment of the authoritative copy is readily
    identifiable as authorized or unauthorized.
 
    (810 ILCS 5/Art. 7 Pt. 2 heading)
PART 2 .
WAREHOUSE RECEIPTS: SPECIAL PROVISIONS

 
    (810 ILCS 5/7-201)  (from Ch. 26, par. 7-201)
    Sec. 7-201. Person that may issue a warehouse receipt;
storage under bond. Who may issue a warehouse receipt; storage
under government bond.
    (a) A warehouse receipt may be issued by any warehouse.
    (b) If goods, including distilled spirits and agricultural
commodities, are stored under a statute requiring a bond
against withdrawal or a license for the issuance of receipts in
the nature of warehouse receipts, a receipt issued for the
goods is deemed to be a warehouse receipt even if issued by a
person that is the owner of the goods and is not a warehouse.
    (1) A warehouse receipt may be issued by any warehouseman.
    (2) Where goods including distilled spirits and
agricultural commodities are stored under a statute requiring a
bond against withdrawal or a license for the issuance of
receipts in the nature of warehouse receipts, a receipt issued
for the goods has like effect as a warehouse receipt even
though issued by a person who is the owner of the goods and is
not a warehouseman.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-202)  (from Ch. 26, par. 7-202)
    Sec. 7-202. Form of warehouse receipt; effect of omission.
Form of warehouse receipt; essential terms; optional terms.
    (a) A warehouse receipt need not be in any particular form.
    (b) Unless a warehouse receipt provides for each of the
following, the warehouse is liable for damages caused to a
person injured by its omission:
        (1) a statement of the location of the warehouse
    facility where the goods are stored;
        (2) the date of issue of the receipt;
        (3) the unique identification code of the receipt;
        (4) a statement whether the goods received will be
    delivered to the bearer, to a named person, or to a named
    person or its order;
        (5) the rate of storage and handling charges, unless
    goods are stored under a field warehousing arrangement, in
    which case a statement of that fact is sufficient on a
    nonnegotiable receipt;
        (6) a description of the goods or the packages
    containing them;
        (7) the signature of the warehouse or its agent;
        (8) if the receipt is issued for goods that the
    warehouse owns, either solely, jointly, or in common with
    others, a statement of the fact of that ownership; and
        (9) a statement of the amount of advances made and of
    liabilities incurred for which the warehouse claims a lien
    or security interest, unless the precise amount of advances
    made or liabilities incurred, at the time of the issue of
    the receipt, is unknown to the warehouse or to its agent
    that issued the receipt, in which case a statement of the
    fact that advances have been made or liabilities incurred
    and the purpose of the advances or liabilities is
    sufficient.
    (c) A warehouse may insert in its receipt any terms that
are not contrary to the Uniform Commercial Code and do not
impair its obligation of delivery under Section 7-403 or its
duty of care under Section 7-204. Any contrary provision is
ineffective.
    (1) A warehouse receipt need not be in any particular form.
    (2) Unless a warehouse receipt embodies within its written
or printed terms each of the following, the warehouseman is
liable for damages caused by the omission to a person injured
thereby:
        (a) the location of the warehouse where the goods are
stored;
        (b) the date of issue of the receipt;
        (c) the consecutive number of the receipt;
        (d) a statement whether the goods received will be
delivered to the bearer, to a specified person, or to a
specified person or his order;
        (e) the rate of storage and handling charges, except
that where goods are stored under a field warehousing
arrangement a statement of that fact is sufficient on a
non-negotiable receipt;
        (f) a description of the goods or of the packages
containing them;
        (g) the signature of the warehouseman, which may be
made by his authorized agent;
        (h) if the receipt is issued for goods of which the
warehouseman is owner, either solely or jointly or in common
with others, the fact of such ownership; and
        (i) a statement of the amount of advances made and of
liabilities incurred for which the warehouseman claims a lien
or security interest (Section 7--209). If the precise amount of
such advances made or of such liabilities incurred is, at the
time of the issue of the receipt, unknown to the warehouseman
or to his agent who issues it, a statement of the fact that
advances have been made or liabilities incurred and the purpose
thereof is sufficient.
    (3) A warehouseman may insert in his receipt any other
terms which are not contrary to the provisions of this Act and
do not impair his obligation of delivery (Section 7--403) or
his duty of care (Section 7--204). Any contrary provisions
shall be ineffective.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-203)  (from Ch. 26, par. 7-203)
    Sec. 7-203. Liability for non-receipt or misdescription. A
party to or purchaser for value in good faith of a document of
title, other than a bill of lading, that relies upon the
description of the goods in the document may recover from the
issuer damages caused by the nonreceipt or misdescription of
the goods, except to the extent that:
        (1) the document conspicuously indicates that the
    issuer does not know whether all or part of the goods in
    fact were received or conform to the description, such as a
    case in which the description is in terms of marks or
    labels or kind, quantity, or condition, or the receipt or
    description is qualified by "contents, condition, and
    quality unknown", "said to contain", or words of similar
    import, if the indication is true; or
        (2) the party or purchaser otherwise has notice of the
    nonreceipt or misdescription.
    A party to or purchaser for value in good faith of a
document of title other than a bill of lading relying in either
case upon the description therein of the goods may recover from
the issuer damages caused by the non-receipt or misdescription
of the goods, except to the extent that the document
conspicuously indicates that the issuer does not know whether
any part or all of the goods in fact were received or conform
to the description as where the description is in terms of
marks or labels or kind, quantity or condition, or the receipt
or description is qualified by "contents, condition and quality
unknown", "said to contain" or the like, if such indication be
true, or the party or purchaser otherwise has notice.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-204)  (from Ch. 26, par. 7-204)
    Sec. 7-204. Duty of care; contractual limitation of
warehouse's liability. Duty of care; contractual limitation of
warehouseman's liability.
    (a) A warehouse is liable for damages for loss of or injury
to the goods caused by its failure to exercise care with regard
to the goods that a reasonably careful person would exercise
under similar circumstances. Unless otherwise agreed, the
warehouse is not liable for damages that could not have been
avoided by the exercise of that care.
    (b) Damages may be limited by a term in the warehouse
receipt or storage agreement limiting the amount of liability
in case of loss or damage beyond which the warehouse is not
liable. Such a limitation is not effective with respect to the
warehouse's liability for conversion to its own use. On request
of the bailor in a record at the time of signing the storage
agreement or within a reasonable time after receipt of the
warehouse receipt, the warehouse's liability may be increased
on part or all of the goods covered by the storage agreement or
the warehouse receipt. In this event, increased rates may be
charged based on an increased valuation of the goods.
    (c) Reasonable provisions as to the time and manner of
presenting claims and commencing actions based on the bailment
may be included in the warehouse receipt or storage agreement.
    (d) (Blank).
    (1) A warehouseman is liable for damages for loss of or
injury to the goods caused by his failure to exercise such care
in regard to them as a reasonably careful man would exercise
under like circumstances but unless otherwise agreed he is not
liable for damages which could not have been avoided by the
exercise of such care.
    (2) Damages may be limited by a term in the warehouse
receipt or storage agreement limiting the amount of liability
in case of loss or damage, and setting forth a specific
liability per article or item, or value per unit of weight,
beyond which the warehouseman shall not be liable; provided,
however, that such liability may on written request of the
bailor at the time of signing such storage agreement or within
a reasonable time after receipt of the warehouse receipt be
increased on part or all of the goods thereunder, in which
event increased rates may be charged based on such increased
valuation, but that no such increase shall be permitted
contrary to a lawful limitation of liability contained in the
warehouseman's tariff, if any. No such limitation is effective
with respect to the warehouseman's liability for conversion to
his own use.
    (3) Reasonable provisions as to the time and manner of
presenting claims and instituting actions based on the bailment
may be included in the warehouse receipt or tariff.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-205)  (from Ch. 26, par. 7-205)
    Sec. 7-205. Title under warehouse receipt defeated in
certain cases. A buyer in ordinary course of business of
fungible goods sold and delivered by a warehouse that is also
in the business of buying and selling such goods takes the
goods free of any claim under a warehouse receipt even if the
receipt is negotiable and has been duly negotiated.
    A buyer in the ordinary course of business of fungible
goods sold and delivered by a warehouseman who is also in the
business of buying and selling such goods takes free of any
claim under a warehouse receipt even though it has been duly
negotiated.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-206)  (from Ch. 26, par. 7-206)
    Sec. 7-206. Termination of storage at warehouse's option.
Termination of storage at warehouseman's option.
    (a) A warehouse, by giving notice to the person on whose
account the goods are held and any other person known to claim
an interest in the goods, may require payment of any charges
and removal of the goods from the warehouse at the termination
of the period of storage fixed by the document of title or, if
a period is not fixed, within a stated period not less than 30
days after the warehouse gives notice. If the goods are not
removed before the date specified in the notice, the warehouse
may sell them pursuant to Section 7-210.
    (b) If a warehouse in good faith believes that goods are
about to deteriorate or decline in value to less than the
amount of its lien within the time provided in subsection (a)
and Section 7-210, the warehouse may specify in the notice
given under subsection (a) any reasonable shorter time for
removal of the goods and, if the goods are not removed, may
sell them at public sale held not less than one week after a
single advertisement or posting.
    (c) If, as a result of a quality or condition of the goods
of which the warehouse did not have notice at the time of
deposit, the goods are a hazard to other property, the
warehouse facilities, or other persons, the warehouse may sell
the goods at public or private sale without advertisement or
posting on reasonable notification to all persons known to
claim an interest in the goods. If the warehouse, after a
reasonable effort, is unable to sell the goods, it may dispose
of them in any lawful manner and does not incur liability by
reason of that disposition.
    (d) A warehouse shall deliver the goods to any person
entitled to them under this Article upon due demand made at any
time before sale or other disposition under this Section.
    (e) A warehouse may satisfy its lien from the proceeds of
any sale or disposition under this Section but shall hold the
balance for delivery on the demand of any person to which the
warehouse would have been bound to deliver the goods.
    (1) A warehouseman may on notifying the person on whose
account the goods are held and any other person known to claim
an interest in the goods require payment of any charges and
removal of the goods from the warehouse at the termination of
the period of storage fixed by the document, or, if no period
is fixed, within a stated period not less than 30 days after
the notification. If the goods are not removed before the date
specified in the notification, the warehouseman may sell them
in accordance with the provisions of the Section on enforcement
of a warehouseman's lien (Section 7--210).
    (2) If a warehouseman in good faith believes that the goods
are about to deteriorate or decline in value to less than the
amount of his lien within the time prescribed in subsection (1)
for notification, advertisement and sale, the warehouseman may
specify in the notification any reasonable shorter time for
removal of the goods and in case the goods are not removed, may
sell them at public sale held not less than one week after a
single advertisement or posting.
    (3) If as a result of a quality or condition of the goods
of which the warehouseman had no notice at the time of deposit
the goods are a hazard to other property or to the warehouse or
to persons, the warehouseman may sell the goods at public or
private sale without advertisement on reasonable notification
to all persons known to claim an interest in the goods. If the
warehouseman after a reasonable effort is unable to sell the
goods he may dispose of them in any lawful manner and shall
incur no liability by reason of such disposition.
    (4) The warehouseman must deliver the goods to any person
entitled to them under this Article upon due demand made at any
time prior to sale or other disposition under this Section.
    (5) The warehouseman may satisfy his lien from the proceeds
of any sale or disposition under this Section but must hold the
balance for delivery on the demand of any person to whom he
would have been bound to deliver the goods.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-207)  (from Ch. 26, par. 7-207)
    Sec. 7-207. Goods must be kept separate; fungible goods.
    (a) Unless the warehouse receipt provides otherwise, a
warehouse shall keep separate the goods covered by each receipt
so as to permit at all times identification and delivery of
those goods. However, different lots of fungible goods may be
commingled.
    (b) If different lots of fungible goods are commingled, the
goods are owned in common by the persons entitled thereto and
the warehouse is severally liable to each owner for that
owner's share. If, because of overissue, a mass of fungible
goods is insufficient to meet all the receipts the warehouse
has issued against it, the persons entitled include all holders
to which overissued receipts have been duly negotiated.
    (1) Unless the warehouse receipt otherwise provides, a
warehouseman must keep separate the goods covered by each
receipt so as to permit at all times identification and
delivery of those goods except that different lots of fungible
goods may be commingled.
    (2) Fungible goods so commingled are owned in common by the
persons entitled thereto and the warehouseman is severally
liable to each owner for that owner's share. Where because of
overissue a mass of fungible goods is insufficient to meet all
the receipts which the warehouseman has issued against it, the
persons entitled include all holders to whom overissued
receipts have been duly negotiated.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-208)  (from Ch. 26, par. 7-208)
    Sec. 7-208. Altered warehouse receipts. If a blank in a
negotiable tangible warehouse receipt has been filled in
without authority, a good-faith purchaser for value and without
notice of the lack of authority may treat the insertion as
authorized. Any other unauthorized alteration leaves any
tangible or electronic warehouse receipt enforceable against
the issuer according to its original tenor.
    Where a blank in a negotiable warehouse receipt has been
filled in without authority, a purchaser for value and without
notice of the want of authority may treat the insertion as
authorized. Any other unauthorized alteration leaves any
receipt enforceable against the issuer according to its
original tenor.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-209)  (from Ch. 26, par. 7-209)
    Sec. 7-209. Lien of warehouse. Lien of warehouseman.
    (a) A warehouse has a lien against the bailor on the goods
covered by a warehouse receipt or storage agreement or on the
proceeds thereof in its possession for charges for storage or
transportation, including demurrage and terminal charges,
insurance, labor, or other charges, present or future, in
relation to the goods, and for expenses necessary for
preservation of the goods or reasonably incurred in their sale
pursuant to law. If the person on whose account the goods are
held is liable for similar charges or expenses in relation to
other goods whenever deposited and it is stated in the
warehouse receipt or storage agreement that a lien is claimed
for charges and expenses in relation to other goods, the
warehouse also has a lien against the goods covered by the
warehouse receipt or storage agreement or on the proceeds
thereof in its possession for those charges and expenses,
whether or not the other goods have been delivered by the
warehouse. However, as against a person to which a negotiable
warehouse receipt is duly negotiated, a warehouse's lien is
limited to charges in an amount or at a rate specified in the
warehouse receipt or, if no charges are so specified, to a
reasonable charge for storage of the specific goods covered by
the receipt subsequent to the date of the receipt.
    (b) A warehouse may also reserve a security interest
against the bailor for the maximum amount specified on the
receipt for charges other than those specified in subsection
(a), such as for money advanced and interest. The security
interest is governed by Article 9.
    (c) A warehouse's lien for charges and expenses under
subsection (a) or a security interest under subsection (b) is
also effective against any person that so entrusted the bailor
with possession of the goods that a pledge of them by the
bailor to a good-faith purchaser for value would have been
valid. However, the lien or security interest is not effective
against a person that before issuance of a document of title
had a legal interest or a perfected security interest in the
goods and that did not:
        (1) deliver or entrust the goods or any document of
    title covering the goods to the bailor or the bailor's
    nominee with:
            (A) actual or apparent authority to ship, store, or
        sell;
            (B) power to obtain delivery under Section 7-403;
        or
            (C) power of disposition under Sections 2-403,
        2A-304(2), 2A-305(2), 9-320, or 9-321(c) or other
        statute or rule of law; or
        (2) acquiesce in the procurement by the bailor or its
    nominee of any document.
    (d) A warehouse's lien on household goods for charges and
expenses in relation to the goods under subsection (a) is also
effective against all persons if the depositor was the legal
possessor of the goods at the time of deposit. In this
subsection, "household goods" means furniture, furnishings, or
personal effects used by the depositor in a dwelling.
    (e) A warehouse loses its lien on any goods that it
voluntarily delivers or unjustifiably refuses to deliver.
    (1) A warehouseman has a lien against the bailor on the
goods covered by a warehouse receipt or on the proceeds thereof
in his possession for charges for storage or transportation
(including demurrage and terminal charges), insurance, labor,
or charges present or future in relation to the goods, and for
expenses necessary for preservation of the goods or reasonably
incurred in their sale pursuant to law. If the person on whose
account the goods are held is liable for like charges or
expenses in relation to other goods whenever deposited and it
is stated in the receipt that a lien is claimed for charges and
expenses in relation to other goods, the warehouseman also has
a lien against him for such charges and expenses whether or not
the other goods have been delivered by the warehouseman. But
against a person to whom a negotiable warehouse receipt is duly
negotiated a warehouseman's lien is limited to charges in an
amount or at a rate specified on the receipt or if no charges
are so specified then to a reasonable charge for storage of the
goods covered by the receipt subsequent to the date of the
receipt.
    (2) The warehouseman may also reserve a security interest
against the bailor for a maximum amount specified on the
receipt for charges other than those specified in subsection
(1), such as for money advanced and interest. Such a security
interest is governed by the Article on Secured Transactions
(Article 9).
    (3) (a) A warehouseman's lien for charges and expenses
under subsection (1) or a security interest under subsection
(2) is also effective against any person who so entrusted the
bailor with possession of the goods that a pledge of them by
him to a good faith purchaser for value would have been valid
but is not effective against a person as to whom the document
confers no right in the goods covered by it under Section
7--503.
    (b) A warehouseman's lien on household goods for charges
and expenses in relation to the goods under subsection (1) is
also effective against all persons if the depositor was the
legal possessor of the goods at the time of deposit. "Household
goods" means furniture, furnishings and personal effects used
by the depositor in a dwelling.
    (4) A warehouseman loses his lien on any goods which he
voluntarily delivers or which he unjustifiably refuses to
deliver.
(Source: P.A. 77-2810.)
 
    (810 ILCS 5/7-210)  (from Ch. 26, par. 7-210)
    Sec. 7-210. Enforcement of warehouse's lien. Enforcement
of warehouseman's lien.
    (a) Except as otherwise provided in subsection (b), a
warehouse's lien may be enforced by public or private sale of
the goods, in bulk or in packages, at any time or place and on
any terms that are commercially reasonable, after notifying all
persons known to claim an interest in the goods. The
notification must include a statement of the amount due, the
nature of the proposed sale, and the time and place of any
public sale. The fact that a better price could have been
obtained by a sale at a different time or in a method different
from that selected by the warehouse is not of itself sufficient
to establish that the sale was not made in a commercially
reasonable manner. The warehouse sells in a commercially
reasonable manner if the warehouse sells the goods in the usual
manner in any recognized market therefore, sells at the price
current in that market at the time of the sale, or otherwise
sells in conformity with commercially reasonable practices
among dealers in the type of goods sold. A sale of more goods
than apparently necessary to be offered to ensure satisfaction
of the obligation is not commercially reasonable, except in
cases covered by the preceding sentence.
    (b) A warehouse may enforce its lien on goods, other than
goods stored by a merchant in the course of its business, only
if the following requirements are satisfied:
        (1) All persons known to claim an interest in the goods
    must be notified.
        (2) The notification must include an itemized
    statement of the claim, a description of the goods subject
    to the lien, a demand for payment within a specified time
    not less than 10 days after receipt of the notification,
    and a conspicuous statement that unless the claim is paid
    within that time the goods will be advertised for sale and
    sold by auction at a specified time and place.
        (3) The sale must conform to the terms of the
    notification.
        (4) The sale must be held at the nearest suitable place
    to where the goods are held or stored.
        (5) After the expiration of the time given in the
    notification, an advertisement of the sale must be
    published once a week for two weeks consecutively in a
    newspaper of general circulation where the sale is to be
    held. The advertisement must include a description of the
    goods, the name of the person on whose account the goods
    are being held, and the time and place of the sale. The
    sale must take place at least 15 days after the first
    publication. If there is no newspaper of general
    circulation where the sale is to be held, the advertisement
    must be posted at least 10 days before the sale in not
    fewer than six conspicuous places in the neighborhood of
    the proposed sale.
    (c) Before any sale pursuant to this Section, any person
claiming a right in the goods may pay the amount necessary to
satisfy the lien and the reasonable expenses incurred in
complying with this Section. In that event, the goods may not
be sold but must be retained by the warehouse subject to the
terms of the receipt and this Article.
    (d) A warehouse may buy at any public sale held pursuant to
this Section.
    (e) A purchaser in good faith of goods sold to enforce a
warehouse's lien takes the goods free of any rights of persons
against which the lien was valid, despite the warehouse's
noncompliance with this Section.
    (f) A warehouse may satisfy its lien from the proceeds of
any sale pursuant to this Section but shall hold the balance,
if any, for delivery on demand to any person to which the
warehouse would have been bound to deliver the goods.
    (g) The rights provided by this Section are in addition to
all other rights allowed by law to a creditor against a debtor.
    (h) If a lien is on goods stored by a merchant in the
course of its business, the lien may be enforced in accordance
with subsection (a) or (b).
    (i) A warehouse is liable for damages caused by failure to
comply with the requirements for sale under this Section and,
in case of willful violation, is liable for conversion.
    (1) Except as provided in subsection (2), a warehouseman's
lien may be enforced by public or private sale of the goods in
block or in parcels, at any time or place and on any terms
which are commercially reasonable, after notifying all persons
known to claim an interest in the goods. Such notification must
include a statement of the amount due, the nature of the
proposed sale and the time and place of any public sale. The
fact that a better price could have been obtained by a sale at
a different time or in a different method from that selected by
the warehouseman is not of itself sufficient to establish that
the sale was not made in a commercially reasonable manner. If
the warehouseman either sells the goods in the usual manner in
any recognized market therefor, or if he sells at the price
current in such market at the time of his sale, or if he has
otherwise sold in conformity with commercially reasonable
practices among dealers in the type of goods sold, he has sold
in a commercially reasonable manner. A sale of more goods than
apparently necessary to be offered to insure satisfaction of
the obligation is not commercially reasonable except in cases
covered by the preceding sentence.
    (2) A warehouseman's lien on goods other than goods stored
by a merchant in the course of his business may be enforced
only as follows:
        (a) All persons known to claim an interest in the goods
must be notified.
        (b) The notification must be delivered in person or
sent by registered or certified letter to the last known
address of any person to be notified.
        (c) The notification must include an itemized
statement of the claim, a description of the goods subject to
the lien, a demand for payment within a specified time not less
than 10 days after receipt of the notification, and a
conspicuous statement that unless the claim is paid within that
time the goods will be advertised for sale and sold by auction
at a specified time and place.
        (d) The sale must conform to the terms of the
notification.
        (e) The sale must be held at the nearest suitable place
to that where the goods are held or stored.
        (f) After the expiration of the time given in the
notification, an advertisement of the sale must be published
once a week for 2 weeks consecutively in a newspaper of general
circulation where the sale is to be held. The advertisement
must include a description of the goods, the name of the person
on whose account they are being held, and the time and place of
the sale. The sale must take place at least 15 days after the
first publication. If there is no newspaper of general
circulation where the sale is to be held, the advertisement
must be posted at least 10 days before the sale in not less
than 6 conspicuous places in the neighborhood of the proposed
sale.
    (3) Before any sale pursuant to this Section any person
claiming a right in the goods may pay the amount necessary to
satisfy the lien and the reasonable expenses incurred under
this Section. In that event the goods must not be sold, but
must be retained by the warehouseman subject to the terms of
the receipt and this Article.
    (4) The warehouseman may buy at any public sale pursuant to
this Section.
    (5) A purchaser in good faith of goods sold to enforce a
warehouseman's lien takes the goods free of any rights of
persons against whom the lien was valid, despite noncompliance
by the warehouseman with the requirements of this Section.
    (6) The warehouseman may satisfy his lien from the proceeds
of any sale pursuant to this Section but must hold the balance,
if any, for delivery on demand to any person to whom he would
have been bound to deliver the goods.
    (7) The rights provided by this Section shall be in
addition to all other rights allowed by law to a creditor
against his debtor.
    (8) Where a lien is on goods stored by a merchant in the
course of his business the lien may be enforced in accordance
with either subsection (1) or (2).
    (9) The warehouseman is liable for damages caused by
failure to comply with the requirements for sale under this
Section and in case of willful violation is liable for
conversion.
(Source: Laws 1965, p. 803.)
 
    (810 ILCS 5/Art. 7 Pt. 3 heading)
PART 3 .
BILLS OF LADING: SPECIAL PROVISIONS

 
    (810 ILCS 5/7-301)  (from Ch. 26, par. 7-301)
    Sec. 7-301. Liability for nonreceipt or misdescription;
"said to contain"; "shipper's weight, load, and count";
improper handling. Liability for non-receipt or
misdescription; "said to contain"; "shipper's load and count";
improper handling.
    (a) A consignee of a nonnegotiable bill of lading which has
given value in good faith, or a holder to which a negotiable
bill has been duly negotiated, relying upon the description of
the goods in the bill or upon the date shown in the bill, may
recover from the issuer damages caused by the misdating of the
bill or the nonreceipt or misdescription of the goods, except
to the extent that the bill indicates that the issuer does not
know whether any part or all of the goods in fact were received
or conform to the description, such as in a case in which the
description is in terms of marks or labels or kind, quantity,
or condition or the receipt or description is qualified by
"contents or condition of contents of packages unknown", "said
to contain", "shipper's weight, load, and count", or words of
similar import, if that indication is true.
    (b) If goods are loaded by the issuer of a bill of lading:
        (1) the issuer shall count the packages of goods if
    shipped in packages and ascertain the kind and quantity if
    shipped in bulk; and
        (2) words such as "shipper's weight, load, and count",
    or words of similar import indicating that the description
    was made by the shipper are ineffective except as to goods
    concealed in packages.
    (c) If bulk goods are loaded by a shipper that makes
available to the issuer of a bill of lading adequate facilities
for weighing those goods, the issuer shall ascertain the kind
and quantity within a reasonable time after receiving the
shipper's request in a record to do so. In that case,
"shipper's weight" or words of similar import are ineffective.
    (d) The issuer of a bill of lading, by including in the
bill the words "shipper's weight, load, and count", or words of
similar import, may indicate that the goods were loaded by the
shipper, and, if that statement is true, the issuer is not
liable for damages caused by the improper loading. However,
omission of such words does not imply liability for damages
caused by improper loading.
    (e) A shipper guarantees to an issuer the accuracy at the
time of shipment of the description, marks, labels, number,
kind, quantity, condition, and weight, as furnished by the
shipper, and the shipper shall indemnify the issuer against
damage caused by inaccuracies in those particulars. This right
of indemnity does not limit the issuer's responsibility or
liability under the contract of carriage to any person other
than the shipper.
    (1) A consignee of a non-negotiable bill who has given
value in good faith or a holder to whom a negotiable bill has
been duly negotiated relying in either case upon the
description therein of the goods, or upon the date therein
shown, may recover from the issuer damages caused by the
misdating of the bill or the non-receipt or misdescription of
the goods, except to the extent that the document indicates
that the issuer does not know whether any part or all of the
goods in fact were received or conform to the description, as
where the description is in terms of marks or labels or kind,
quantity, or condition or the receipt or description is
qualified by "contents or condition of contents of packages
unknown", "said to contain", "shipper's weight, load and count"
or the like, if such indication be true.
    (2) When goods are loaded by an issuer who is a common
carrier, the issuer must count the packages of goods if package
freight and ascertain the kind and quantity if bulk freight. In
such cases "shipper's weight, load and count" or other words
indicating that the description was made by the shipper are
ineffective except as to freight concealed by packages.
    (3) When bulk freight is loaded by a shipper who makes
available to the issuer adequate facilities for weighing such
freight, an issuer who is a common carrier must ascertain the
kind and quantity within a reasonable time after receiving the
written request of the shipper to do so. In such cases
"shipper's weight" or other words of like purport are
ineffective.
    (4) The issuer may by inserting in the bill the words
"shipper's weight, load and count" or other words of like
purport indicate that the goods were loaded by the shipper; and
if such statement be true the issuer shall not be liable for
damages caused by the improper loading. But their omission does
not imply liability for such damages.
    (5) The shipper shall be deemed to have guaranteed to the
issuer the accuracy at the time of shipment of the description,
marks, labels, number, kind, quantity, condition and weight, as
furnished by him; and the shipper shall indemnify the issuer
against damage caused by inaccuracies in such particulars. The
right of the issuer to such indemnity shall in no way limit his
responsibility and liability under the contract of carriage to
any person other than the shipper.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-302)  (from Ch. 26, par. 7-302)
    Sec. 7-302. Through bills of lading and similar documents
of title. Through bills of lading and similar documents.
    (a) The issuer of a through bill of lading, or other
document of title embodying an undertaking to be performed in
part by a person acting as its agent or by a performing
carrier, is liable to any person entitled to recover on the
bill or other document for any breach by the other person or
the performing carrier of its obligation under the bill or
other document. However, to the extent that the bill or other
document covers an undertaking to be performed overseas or in
territory not contiguous to the continental United States or an
undertaking including matters other than transportation, this
liability for breach by the other person or the performing
carrier may be varied by agreement of the parties.
    (b) If goods covered by a through bill of lading or other
document of title embodying an undertaking to be performed in
part by a person other than the issuer are received by that
person, the person is subject, with respect to its own
performance while the goods are in its possession, to the
obligation of the issuer. The person's obligation is discharged
by delivery of the goods to another person pursuant to the bill
or other document and does not include liability for breach by
any other person or by the issuer.
    (c) The issuer of a through bill of lading or other
document of title described in subsection (a) is entitled to
recover from the performing carrier, or other person in
possession of the goods when the breach of the obligation under
the bill or other document occurred:
        (1) the amount it may be required to pay to any person
    entitled to recover on the bill or other document for the
    breach, as may be evidenced by any receipt, judgment, or
    transcript of judgment; and
        (2) the amount of any expense reasonably incurred by
    the issuer in defending any action commenced by any person
    entitled to recover on the bill or other document for the
    breach.
    (1) The issuer of a through bill of lading or other
document embodying an undertaking to be performed in part by
persons acting as its agents or by connecting carriers is
liable to anyone entitled to recover on the document for any
breach by such other persons or by a connecting carrier of its
obligation under the document but to the extent that the bill
covers an undertaking to be performed overseas or in territory
not contiguous to the continental United States or an
undertaking including matters other than transportation this
liability may be varied by agreement of the parties.
    (2) Where goods covered by a through bill of lading or
other document embodying an undertaking to be performed in part
by persons other than the issuer are received by any such
person, he is subject with respect to his own performance while
the goods are in his possession to the obligation of the
issuer. His obligation is discharged by delivery of the goods
to another such person pursuant to the document, and does not
include liability for breach by any other such persons or by
the issuer.
    (3) The issuer of such through bill of lading or other
document shall be entitled to recover from the connecting
carrier or such other person in possession of the goods when
the breach of the obligation under the document occurred, the
amount it may be required to pay to anyone entitled to recover
on the document therefor, as may be evidenced by any receipt,
judgment, or transcript thereof, and the amount of any expense
reasonably incurred by it in defending any action brought by
anyone entitled to recover on the document therefor.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-303)  (from Ch. 26, par. 7-303)
    Sec. 7-303. Diversion; reconsignment; change of
instructions.
    (a) Unless the bill of lading otherwise provides, a carrier
may deliver the goods to a person or destination other than
that stated in the bill or may otherwise dispose of the goods,
without liability for misdelivery, on instructions from:
        (1) the holder of a negotiable bill;
        (2) the consignor on a nonnegotiable bill, even if the
    consignee has given contrary instructions;
        (3) the consignee on a nonnegotiable bill in the
    absence of contrary instructions from the consignor, if the
    goods have arrived at the billed destination or if the
    consignee is in possession of the tangible bill or in
    control of the electronic bill; or
        (4) the consignee on a nonnegotiable bill, if the
    consignee is entitled as against the consignor to dispose
    of the goods.
    (b) Unless instructions described in subsection (a) are
included in a negotiable bill of lading, a person to which the
bill is duly negotiated may hold the bailee according to the
original terms.
    (1) Unless the bill of lading otherwise provides, the
carrier may deliver the goods to a person or destination other
than that stated in the bill or may otherwise dispose of the
goods on instructions from
        (a) the holder of a negotiable bill; or
        (b) the consignor on a non-negotiable bill
notwithstanding contrary instructions from the consignee; or
        (c) the consignee on a non-negotiable bill in the
absence of contrary instructions from the consignor, if the
goods have arrived at the billed destination or if the
consignee is in possession of the bill; or
        (d) the consignee on a non-negotiable bill if he is
entitled as against the consignor to dispose of them.
    (2) Unless such instructions are noted on a negotiable bill
of lading, a person to whom the bill is duly negotiated can
hold the bailee according to the original terms.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-304)  (from Ch. 26, par. 7-304)
    Sec. 7-304. Tangible bills of lading in a set. Bills of
lading in a set.
    (a) Except as customary in international transportation, a
tangible bill of lading may not be issued in a set of parts.
The issuer is liable for damages caused by violation of this
subsection.
    (b) If a tangible bill of lading is lawfully issued in a
set of parts, each of which contains an identification code and
is expressed to be valid only if the goods have not been
delivered against any other part, the whole of the parts
constitutes one bill.
    (c) If a tangible negotiable bill of lading is lawfully
issued in a set of parts and different parts are negotiated to
different persons, the title of the holder to which the first
due negotiation is made prevails as to both the document of
title and the goods even if any later holder may have received
the goods from the carrier in good faith and discharged the
carrier's obligation by surrendering its part.
    (d) A person that negotiates or transfers a single part of
a tangible bill of lading issued in a set is liable to holders
of that part as if it were the whole set.
    (e) The bailee shall deliver in accordance with Part 4
against the first presented part of a tangible bill of lading
lawfully issued in a set. Delivery in this manner discharges
the bailee's obligation on the whole bill.
    (1) Except where customary in overseas transportation, a
bill of lading must not be issued in a set of parts. The issuer
is liable for damages caused by violation of this subsection.
    (2) Where a bill of lading is lawfully drawn in a set of
parts, each of which is numbered and expressed to be valid only
if the goods have not been delivered against any other part,
the whole of the parts constitute one bill.
    (3) Where a bill of lading is lawfully issued in a set of
parts and different parts are negotiated to different persons,
the title of the holder to whom the first due negotiation is
made prevails as to both the document and the goods even though
any later holder may have received the goods from the carrier
in good faith and discharged the carrier's obligation by
surrender of his part.
    (4) Any person who negotiates or transfers a single part of
a bill of lading drawn in a set is liable to holders of that
part as if it were the whole set.
    (5) The bailee is obliged to deliver in accordance with
Part 4 of this Article against the first presented part of a
bill of lading lawfully drawn in a set. Such delivery
discharges the bailee's obligation on the whole bill.
(Source: Laws 1961, 1st S.S., p. 7.)
 
    (810 ILCS 5/7-305)  (from Ch. 26, par. 7-305)
    Sec. 7-305. Destination bills.
    (a) Instead of issuing a bill of lading to the consignor at
the place of shipment, a carrier, at the request of the
consignor, may procure the bill to be issued at destination or
at any other place designated in the request.
    (b) Upon request of any person entitled as against a
carrier to control the goods while in transit and on surrender
of possession or control of any outstanding bill of lading or
other receipt covering the goods, the issuer, subject to
Section 7-105, may procure a substitute bill to be issued at
any place designated in the request.
    (1) Instead of issuing a bill of lading to the consignor at
the place of shipment a carrier may at the request of the
consignor procure the bill to be issued at destination or at
any other place designated in the request.
    (2) Upon request of anyone entitled as against the carrier
to control the goods while in transit and on surrender of any
outstanding bill of lading or other receipt covering such
goods, the issuer may procure a substitute bill to be issued at
any place designated in the request.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-307)  (from Ch. 26, par. 7-307)
    Sec. 7-307. Lien of carrier.
    (a) A carrier has a lien on the goods covered by a bill of
lading or on the proceeds thereof in its possession for charges
after the date of the carrier's receipt of the goods for
storage or transportation, including demurrage and terminal
charges, and for expenses necessary for preservation of the
goods incident to their transportation or reasonably incurred
in their sale pursuant to law. However, against a purchaser for
value of a negotiable bill of lading, a carrier's lien is
limited to charges stated in the bill or the applicable tariffs
or, if no charges are stated, a reasonable charge.
    (b) A lien for charges and expenses under subsection (a) on
goods that the carrier was required by law to receive for
transportation is effective against the consignor or any person
entitled to the goods unless the carrier had notice that the
consignor lacked authority to subject the goods to those
charges and expenses. Any other lien under subsection (a) is
effective against the consignor and any person that permitted
the bailor to have control or possession of the goods unless
the carrier had notice that the bailor lacked authority.
    (c) A carrier loses its lien on any goods that it
voluntarily delivers or unjustifiably refuses to deliver.
    (1) A carrier has a lien on the goods covered by a bill of
lading for charges subsequent to the date of its receipt of the
goods for storage or transportation (including demurrage and
terminal charges) and for expenses necessary for preservation
of the goods incident to their transportation or reasonably
incurred in their sale pursuant to law. But against a purchaser
for value of a negotiable bill of lading a carrier's lien is
limited to charges stated in the bill or the applicable
tariffs, or if no charges are stated then to a reasonable
charge.
    (2) A lien for charges and expenses under subsection (1) on
goods which the carrier was required by law to receive for
transportation is effective against the consignor or any person
entitled to the goods unless the carrier had notice that the
consignor lacked authority to subject the goods to such charges
and expenses. Any other lien under subsection (1) is effective
against the consignor and any person who permitted the bailor
to have control or possession of the goods unless the carrier
had notice that the bailor lacked such authority.
    (3) A carrier loses his lien on any goods which he
voluntarily delivers or which he unjustifiably refuses to
deliver.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-308)  (from Ch. 26, par. 7-308)
    Sec. 7-308. Enforcement of carrier's lien.
    (a) A carrier's lien on goods may be enforced by public or
private sale of the goods, in bulk or in packages, at any time
or place and on any terms that are commercially reasonable,
after notifying all persons known to claim an interest in the
goods. The notification must include a statement of the amount
due, the nature of the proposed sale, and the time and place of
any public sale. The fact that a better price could have been
obtained by a sale at a different time or in a method different
from that selected by the carrier is not of itself sufficient
to establish that the sale was not made in a commercially
reasonable manner. The carrier sells goods in a commercially
reasonable manner if the carrier sells the goods in the usual
manner in any recognized market therefor, sells at the price
current in that market at the time of the sale, or otherwise
sells in conformity with commercially reasonable practices
among dealers in the type of goods sold. A sale of more goods
than apparently necessary to be offered to ensure satisfaction
of the obligation is not commercially reasonable, except in
cases covered by the preceding sentence.
    (b) Before any sale pursuant to this Section, any person
claiming a right in the goods may pay the amount necessary to
satisfy the lien and the reasonable expenses incurred in
complying with this Section. In that event, the goods may not
be sold but must be retained by the carrier, subject to the
terms of the bill of lading and this Article.
    (c) A carrier may buy at any public sale pursuant to this
Section.
    (d) A purchaser in good faith of goods sold to enforce a
carrier's lien takes the goods free of any rights of persons
against which the lien was valid, despite the carrier's
noncompliance with this Section.
    (e) A carrier may satisfy its lien from the proceeds of any
sale pursuant to this Section but shall hold the balance, if
any, for delivery on demand to any person to which the carrier
would have been bound to deliver the goods.
    (f) The rights provided by this Section are in addition to
all other rights allowed by law to a creditor against a debtor.
    (g) A carrier's lien may be enforced pursuant to either
subsection (a) or the procedure set forth in Section 7-210(b).
    (h) A carrier is liable for damages caused by failure to
comply with the requirements for sale under this Section and,
in case of willful violation, is liable for conversion.
    (1) A carrier's lien may be enforced by public or private
sale of the goods, in block or in parcels, at any time or place
and on any terms which are commercially reasonable, after
notifying all persons known to claim an interest in the goods.
Such notification must include a statement of the amount due,
the nature of the proposed sale and the time and place of any
public sale. The fact that a better price could have been
obtained by a sale at a different time or in a different method
from that selected by the carrier is not of itself sufficient
to establish that the sale was not made in a commercially
reasonable manner. If the carrier either sells the goods in the
usual manner in any recognized market therefor or if he sells
at the price current in such market at the time of his sale or
if he has otherwise sold in conformity with commercially
reasonable practices among dealers in the type of goods sold he
has sold in a commercially reasonable manner. A sale of more
goods than apparently necessary to be offered to ensure
satisfaction of the obligation is not commercially reasonable
except in cases covered by the preceding sentence.
    (2) Before any sale pursuant to this Section any person
claiming a right in the goods may pay the amount necessary to
satisfy the lien and the reasonable expenses incurred under
this section. In that event the goods must not be sold, but
must be retained by the carrier subject to the terms of the
bill and this Article.
    (3) The carrier may buy at any public sale pursuant to this
Section.
    (4) A purchaser in good faith of goods sold to enforce a
carrier's lien takes the goods free of any rights of persons
against whom the lien was valid, despite noncompliance by the
carrier with the requirements of this Section.
    (5) The carrier may satisfy his lien from the proceeds of
any sale pursuant to this Section but must hold the balance, if
any, for delivery on demand to any person to whom he would have
been bound to deliver the goods.
    (6) The rights provided by this Section shall be in
addition to all other rights allowed by law to a creditor
against his debtor.
    (7) A carrier's lien may be enforced in accordance with
either subsection (1) or the procedure set forth in subsection
(2) of Section 7-210.
    (8) The carrier is liable for damages caused by failure to
comply with the requirements for sale under this Section and in
case of willful violation is liable for conversion.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-309)  (from Ch. 26, par. 7-309)
    Sec. 7-309. Duty of care; contractual limitation of
carrier's liability.
    (a) A carrier that issues a bill of lading, whether
negotiable or nonnegotiable, shall exercise the degree of care
in relation to the goods which a reasonably careful person
would exercise under similar circumstances. This subsection
does not affect any statute, regulation, or rule of law that
imposes liability upon a common carrier for damages not caused
by its negligence.
    (b) Damages may be limited by a term in the bill of lading
or in a transportation agreement that the carrier's liability
may not exceed a value stated in the bill or transportation
agreement if the carrier's rates are dependent upon value and
the consignor is afforded an opportunity to declare a higher
value and the consignor is advised of the opportunity. However,
such a limitation is not effective with respect to the
carrier's liability for conversion to its own use.
    (c) Reasonable provisions as to the time and manner of
presenting claims and commencing actions based on the shipment
may be included in a bill of lading or a transportation
agreement.
     (1) A carrier who issues a bill of lading whether
negotiable or non-negotiable must exercise the degree of care
in relation to the goods which a reasonably careful man would
exercise under like circumstances. This subsection does not
repeal or change any law or rule of law which imposes liability
upon a common carrier for damages not caused by its negligence.
    (2) Damages may be limited by a provision that the
carrier's liability shall not exceed a value stated in the
document if the carrier's rates are dependent upon value and
the consignor by the carrier's tariff is afforded an
opportunity to declare a higher value or a value as lawfully
provided in the tariff, or where no tariff is filed he is
otherwise advised of such opportunity; but no such limitation
is effective with respect to the carrier's liability for
conversion to its own use.
    (3) Reasonable provisions as to the time and manner of
presenting claims and instituting actions based on the shipment
may be included in a bill of lading or tariff.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/Art. 7 Pt. 4 heading)
PART 4 .
WAREHOUSE RECEIPTS AND BILLS OF LADING: GENERAL OBLIGATIONS

 
    (810 ILCS 5/7-401)  (from Ch. 26, par. 7-401)
    Sec. 7-401. Irregularities in issue of receipt or bill or
conduct of issuer. The obligations imposed by this Article on
an issuer apply to a document of title even if: The obligations
imposed by this Article on an issuer apply to a document of
title regardless of the fact that
        (1) the document does not comply with the requirements
    of this Article or of any other statute, rule, or
    regulation regarding its issuance, form, or content;
        (2) the issuer violated laws regulating the conduct of
    its business;
        (3) the goods covered by the document were owned by the
    bailee when the document was issued; or
        (4) the person issuing the document is not a warehouse
    but the document purports to be a warehouse receipt.
        (a) the document may not comply with the requirements
of this Article or of any other law or regulation regarding its
issue, form or content; or
        (b) the issuer may have violated laws regulating the
conduct of his business; or
        (c) the goods covered by the document were owned by the
bailee at the time the document was issued; or
        (d) the person issuing the document does not come
within the definition of warehouseman if it purports to be a
warehouse receipt.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-402)  (from Ch. 26, par. 7-402)
    Sec. 7-402. Duplicate document of title; overissue.
Duplicate receipt or bill; overissue. A duplicate or any other
document of title purporting to cover goods already represented
by an outstanding document of the same issuer does not confer
any right in the goods, except as provided in the case of
tangible bills of lading in a set of parts, overissue of
documents for fungible goods, substitutes for lost, stolen, or
destroyed documents, or substitute documents issued pursuant
to Section 7-105. The issuer is liable for damages caused by
its overissue or failure to identify a duplicate document by a
conspicuous notation.
    Neither a duplicate nor any other document of title
purporting to cover goods already represented by an outstanding
document of the same issuer confers any right in the goods,
except as provided in the case of bills in a set, overissue of
documents for fungible goods and substitutes for lost, stolen
or destroyed documents. But the issuer is liable for damages
caused by his overissue or failure to identify a duplicate
document as such by conspicuous notation on its face.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-403)  (from Ch. 26, par. 7-403)
    Sec. 7-403. Obligation of bailee to deliver; excuse.
Obligation of warehouseman or carrier to deliver; excuse.
    (a) A bailee shall deliver the goods to a person entitled
under a document of title if the person complies with
subsections (b) and (c), unless and to the extent that the
bailee establishes any of the following:
        (1) delivery of the goods to a person whose receipt was
    rightful as against the claimant;
        (2) damage to or delay, loss, or destruction of the
    goods for which the bailee is not liable;
        (3) previous sale or other disposition of the goods in
    lawful enforcement of a lien or on a warehouse's lawful
    termination of storage;
        (4) the exercise by a seller of its right to stop
    delivery pursuant to Section 2-705 or by a lessor of its
    right to stop delivery pursuant to Section 2A-526;
        (5) a diversion, reconsignment, or other disposition
    pursuant to Section 7-303;
        (6) release, satisfaction, or any other personal
    defense against the claimant; or
        (7) any other lawful excuse.
    (b) A person claiming goods covered by a document of title
shall satisfy the bailee's lien if the bailee so requests or if
the bailee is prohibited by law from delivering the goods until
the charges are paid.
    (c) Unless a person claiming the goods is a person against
which the document of title does not confer a right under
Section 7-503(a):
        (1) the person claiming under a document shall
    surrender possession or control of any outstanding
    negotiable document covering the goods for cancellation or
    indication of partial deliveries; and
        (2) the bailee shall cancel the document or
    conspicuously indicate in the document the partial
    delivery or the bailee is liable to any person to which the
    document is duly negotiated.
    (1) The bailee must deliver the goods to a person entitled
under the document who complies with subsections (2) and (3),
unless and to the extent that the bailee establishes any of the
following:
        (a) delivery of the goods to a person whose receipt was
rightful as against the claimant;
        (b) damage to or delay, loss or destruction of the
goods for which the bailee is not liable;
        (c) previous sale or other disposition of the goods in
lawful enforcement of a lien or on warehouseman's lawful
termination of storage;
        (d) the exercise by a seller of his right to stop
delivery pursuant to the provisions of the Article on Sales
(Section 2--705);
        (e) a diversion, reconsignment or other disposition
pursuant to the provisions of this Article (Section 7--303) or
tariff regulating such right;
        (f) release, satisfaction or any other fact affording a
personal defense against the claimant;
        (g) any other lawful excuse.
    (2) A person claiming goods covered by a document of title
must satisfy the bailee's lien where the bailee so requests or
where the bailee is prohibited by law from delivering the goods
until the charges are paid.
    (3) Unless the person claiming is one against whom the
document confers no right under Section 7--503(1), he must
surrender for cancellation or notation of partial deliveries
any outstanding negotiable document covering the goods, and the
bailee must cancel the document or conspicuously note the
partial delivery thereon or be liable to any person to whom the
document is duly negotiated.
    (4) "Person entitled under the document" means holder in
the case of a negotiable document, or the person to whom
delivery is to be made by the terms of or pursuant to written
instructions under a non-negotiable document.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-404)  (from Ch. 26, par. 7-404)
    Sec. 7-404. No liability for good-faith delivery pursuant
to document of title. No liability for good faith delivery
pursuant to receipt of bill. A bailee that in good faith has
received goods and delivered or otherwise disposed of the goods
according to the terms of a document of title or pursuant to
this Article is not liable for the goods even if:
        (1) the person from which the bailee received the goods
    did not have authority to procure the document or to
    dispose of the goods; or
        (2) the person to which the bailee delivered the goods
    did not have authority to receive the goods.
A bailee who in good faith including observance of reasonable
commercial standards has received goods and delivered or
otherwise disposed of them according to the terms of the
document of title or pursuant to this Article is not liable
therefor. This rule applies even though the person from whom he
received the goods had no authority to procure the document or
to dispose of the goods and even though the person to whom he
delivered the goods had no authority to receive them.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/Art. 7 Pt. 5 heading)
PART 5 .
WAREHOUSE RECEIPTS AND BILLS OF LADING: NEGOTIATION AND
TRANSFER

 
    (810 ILCS 5/7-501)  (from Ch. 26, par. 7-501)
    Sec. 7-501. Form of negotiation and requirements of due
negotiation. Form of negotiation and requirements of "due
negotiation".
    (a) The following rules apply to a negotiable tangible
document of title:
        (1) If the document's original terms run to the order
    of a named person, the document is negotiated by the named
    person's indorsement and delivery. After the named
    person's indorsement in blank or to bearer, any person may
    negotiate the document by delivery alone.
        (2) If the document's original terms run to bearer, it
    is negotiated by delivery alone.
        (3) If the document's original terms run to the order
    of a named person and it is delivered to the named person,
    the effect is the same as if the document had been
    negotiated.
        (4) Negotiation of the document after it has been
    indorsed to a named person requires indorsement by the
    named person and delivery.
        (5) A document is duly negotiated if it is negotiated
    in the manner stated in this subsection to a holder that
    purchases it in good faith, without notice of any defense
    against or claim to it on the part of any person, and for
    value, unless it is established that the negotiation is not
    in the regular course of business or financing or involves
    receiving the document in settlement or payment of a
    monetary obligation.
    (b) The following rules apply to a negotiable electronic
document of title:
        (1) If the document's original terms run to the order
    of a named person or to bearer, the document is negotiated
    by delivery of the document to another person. Indorsement
    by the named person is not required to negotiate the
    document.
        (2) If the document's original terms run to the order
    of a named person and the named person has control of the
    document, the effect is the same as if the document had
    been negotiated.
        (3) A document is duly negotiated if it is negotiated
    in the manner stated in this subsection to a holder that
    purchases it in good faith, without notice of any defense
    against or claim to it on the part of any person, and for
    value, unless it is established that the negotiation is not
    in the regular course of business or financing or involves
    taking delivery of the document in settlement or payment of
    a monetary obligation.
    (c) Indorsement of a nonnegotiable document of title
neither makes it negotiable nor adds to the transferee's
rights.
    (d) The naming in a negotiable bill of lading of a person
to be notified of the arrival of the goods does not limit the
negotiability of the bill or constitute notice to a purchaser
of the bill of any interest of that person in the goods.
    (1) A negotiable document of title running to the order of
a named person is negotiated by his indorsement and delivery.
After his indorsement in blank or to bearer any person can
negotiate it by delivery alone.
    (2) (a) A negotiable document of title is also negotiated
by delivery alone when by its original terms it runs to bearer;
        (b) when a document running to the order of a named
person is delivered to him the effect is the same as if the
document had been negotiated.
    (3) Negotiation of a negotiable document of title after it
has been indorsed to a specified person requires indorsement by
the special indorsee as well as delivery.
    (4) A negotiable document of title is "duly negotiated"
when it is negotiated in the manner stated in this Section to a
holder who purchases it in good faith without notice of any
defense against or claim to it on the part of any person and
for value, unless it is established that the negotiation is not
in the regular course of business or financing or involves
receiving the document in settlement or payment of a money
obligation.
    (5) Indorsement of a non-negotiable document neither makes
it negotiable nor adds to the transferee's rights.
    (6) The naming in a negotiable bill of a person to be
notified of the arrival of the goods does not limit the
negotiability of the bill nor constitute notice to a purchaser
thereof of any interest of such person in the goods.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-502)  (from Ch. 26, par. 7-502)
    Sec. 7-502. Rights acquired by due negotiation.
    (a) Subject to Sections 7-205 and 7-503, a holder to which
a negotiable document of title has been duly negotiated
acquires thereby:
        (1) title to the document;
        (2) title to the goods;
        (3) all rights accruing under the law of agency or
    estoppel, including rights to goods delivered to the bailee
    after the document was issued; and
        (4) the direct obligation of the issuer to hold or
    deliver the goods according to the terms of the document
    free of any defense or claim by the issuer except those
    arising under the terms of the document or under this
    Article, but in the case of a delivery order, the bailee's
    obligation accrues only upon the bailee's acceptance of the
    delivery order and the obligation acquired by the holder is
    that the issuer and any indorser will procure the
    acceptance of the bailee.
    (b) Subject to Section 7-503, title and rights acquired by
due negotiation are not defeated by any stoppage of the goods
represented by the document of title or by surrender of the
goods by the bailee and are not impaired even if:
        (1) the due negotiation or any prior due negotiation
    constituted a breach of duty;
        (2) any person has been deprived of possession of a
    negotiable tangible document or control of a negotiable
    electronic document by misrepresentation, fraud, accident,
    mistake, duress, loss, theft, or conversion; or
        (3) a previous sale or other transfer of the goods or
    document has been made to a third person.
    (1) Subject to the following section and to the provisions
of Section 7--205 on fungible goods, a holder to whom a
negotiable document of title has been duly negotiated acquires
thereby:
        (a) title to the document;
        (b) title to the goods;
        (c) all rights accruing under the law of agency or
estoppel, including rights to goods delivered to the bailee
after the document was issued; and
        (d) the direct obligation of the issuer to hold or
deliver the goods according to the terms of the document free
of any defense or claim by him except those arising under the
terms of the document or under this Article. In the case of a
delivery order the bailee's obligation accrues only upon
acceptance and the obligation acquired by the holder is that
the issuer and any indorser will procure the acceptance of the
bailee.
    (2) Subject to the following section, title and rights so
acquired are not defeated by any stoppage of the goods
represented by the document or by surrender of such goods by
the bailee, and are not impaired even though the negotiation or
any prior negotiation constituted a breach of duty or even
though any person has been deprived of possession of the
document by misrepresentation, fraud, accident, mistake,
duress, loss, theft or conversion, or even though a previous
sale or other transfer of the goods or document has been made
to a third person.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-503)  (from Ch. 26, par. 7-503)
    Sec. 7-503. Document of title to goods defeated in certain
cases.
    (a) A document of title confers no right in goods against a
person that before issuance of the document had a legal
interest or a perfected security interest in the goods and that
did not:
        (1) deliver or entrust the goods or any document of
    title covering the goods to the bailor or the bailor's
    nominee with:
            (A) actual or apparent authority to ship, store, or
        sell;
            (B) power to obtain delivery under Section 7-403;
        or
            (C) power of disposition under Section 2-403,
        2A-304(2), 2A-305(2), 9-320, or 9-321(c) or other
        statute or rule of law; or
        (2) acquiesce in the procurement by the bailor or its
    nominee of any document.
    (b) Title to goods based upon an unaccepted delivery order
is subject to the rights of any person to which a negotiable
warehouse receipt or bill of lading covering the goods has been
duly negotiated. That title may be defeated under Section 7-504
to the same extent as the rights of the issuer or a transferee
from the issuer.
    (c) Title to goods based upon a bill of lading issued to a
freight forwarder is subject to the rights of any person to
which a bill issued by the freight forwarder is duly
negotiated. However, delivery by the carrier in accordance with
Part 4 pursuant to its own bill of lading discharges the
carrier's obligation to deliver.
    (1) A document of title confers no right in goods against a
person who before issuance of the document had a legal interest
or a perfected security interest in them and who neither
        (a) delivered or entrusted them or any document of
    title covering them to the bailor or his nominee with
    actual or apparent authority to ship, store, or sell with
    power to obtain delivery under this Article (Section
    7--403) or with power of disposition under this Act
    (Sections 2--403 and 9-320) or other statute or rule of
    law; nor
        (b) acquiesced in the procurement by the bailor or his
    nominee of any document of title.
    (2) Title to goods based upon an unaccepted delivery order
is subject to the rights of anyone to whom a negotiable
warehouse receipt or bill of lading covering the goods has been
duly negotiated. Such a title may be defeated under the next
section to the same extent as the right of the issuer or a
transferee from the issuer.
    (3) Title to goods based upon a bill of lading issued to a
freight forwarder is subject to the rights of anyone to whom a
bill issued by the freight forwarder is duly negotiated; but
delivery by the carrier in accordance with Part 4 of this
Article pursuant to its own bill of lading discharges the
carrier's obligation to deliver.
(Source: P.A. 91-893, eff. 7-1-01.)
 
    (810 ILCS 5/7-504)  (from Ch. 26, par. 7-504)
    Sec. 7-504. Rights acquired in absence of due negotiation;
effect of diversion; stoppage of delivery. Rights acquired in
the absence of due negotiation; effect of diversion; seller's
stoppage of delivery.
    (a) A transferee of a document of title, whether negotiable
or nonnegotiable, to which the document has been delivered but
not duly negotiated, acquires the title and rights that its
transferor had or had actual authority to convey.
    (b) In the case of a transfer of a nonnegotiable document
of title, until but not after the bailee receives notice of the
transfer, the rights of the transferee may be defeated:
        (1) by those creditors of the transferor which could
    treat the transfer as void under Section 2-402 or 2A-308;
        (2) by a buyer from the transferor in ordinary course
    of business if the bailee has delivered the goods to the
    buyer or received notification of the buyer's rights;
        (3) by a lessee from the transferor in ordinary course
    of business if the bailee has delivered the goods to the
    lessee or received notification of the lessee's rights; or
        (4) as against the bailee, by good-faith dealings of
    the bailee with the transferor.
    (c) A diversion or other change of shipping instructions by
the consignor in a nonnegotiable bill of lading which causes
the bailee not to deliver the goods to the consignee defeats
the consignee's title to the goods if the goods have been
delivered to a buyer in ordinary course of business or a lessee
in ordinary course of business and, in any event, defeats the
consignee's rights against the bailee.
    (d) Delivery of the goods pursuant to a nonnegotiable
document of title may be stopped by a seller under Section
2-705 or a lessor under Section 2A-526, subject to the
requirements of due notification in those Sections. A bailee
that honors the seller's or lessor's instructions is entitled
to be indemnified by the seller or lessor against any resulting
loss or expense.
    (1) A transferee of a document, whether negotiable or
non-negotiable, to whom the document has been delivered but not
duly negotiated, acquires the title and rights which his
transferor had or had actual authority to convey.
    (2) In the case of a non-negotiable document, until but not
after the bailee receives notification of the transfer, the
rights of the transferee may be defeated
        (a) by those creditors of the transferor who could
treat the sale as void under Section 2--402; or
        (b) by a buyer from the transferor in ordinary course
of business if the bailee has delivered the goods to the buyer
or received notification of his rights; or
        (c) as against the bailee by good faith dealings of the
bailee with the transferor.
    (3) A diversion or other change of shipping instructions by
the consignor in a non-negotiable bill of lading which causes
the bailee not to deliver to the consignee defeats the
consignee's title to the goods if they have been delivered to a
buyer in ordinary course of business and in any event defeats
the consignee's rights against the bailee.
    (4) Delivery pursuant to a non-negotiable document may be
stopped by a seller under Section 2--705, and subject to the
requirement of due notification there provided. A bailee
honoring the seller's instructions is entitled to be
indemnified by the seller against any resulting loss or
expense.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-505)  (from Ch. 26, par. 7-505)
    Sec. 7-505. Indorser not a guarantor for other parties. The
indorsement of a tangible document of title issued by a bailee
does not make the indorser liable for any default by the bailee
or previous indorsers.
    The indorsement of a document of title issued by a bailee
does not make the indorser liable for any default by the bailee
or by previous indorsers.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-506)  (from Ch. 26, par. 7-506)
    Sec. 7-506. Delivery without indorsement: right to compel
indorsement. The transferee of a negotiable tangible document
of title has a specifically enforceable right to have its
transferor supply any necessary indorsement, but the transfer
becomes a negotiation only as of the time the indorsement is
supplied.
    The transferee of a negotiable document of title has a
specifically enforceable right to have his transferor supply
any necessary indorsement but the transfer becomes a
negotiation only as of the time the indorsement is supplied.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-507)  (from Ch. 26, par. 7-507)
    Sec. 7-507. Warranties on negotiation or delivery of
document of title. Warranties on negotiation or transfer of
receipt or bill. If a person negotiates or delivers a document
of title for value, otherwise than as a mere intermediary under
Section 7-508, unless otherwise agreed, the transferor, in
addition to any warranty made in selling or leasing the goods,
warrants to its immediate purchaser only that:
        (1) the document is genuine;
        (2) the transferor does not have knowledge of any fact
    that would impair the document's validity or worth; and
        (3) the negotiation or delivery is rightful and fully
    effective with respect to the title to the document and the
    goods it represents.
    Where a person negotiates or transfers a document of title
for value otherwise than as a mere intermediary under the next
following section, then unless otherwise agreed he warrants to
his immediate purchaser only in addition to any warranty made
in selling the goods
        (a) that the document is genuine; and
        (b) that he has no knowledge of any fact which would
impair its validity or worth; and
        (c) that his negotiation or transfer is rightful and
fully effective with respect to the title to the document and
the goods it represents.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-508)  (from Ch. 26, par. 7-508)
    Sec. 7-508. Warranties of collecting bank as to documents
of title. Warranties of collecting bank as to documents. A
collecting bank or other intermediary known to be entrusted
with documents of title on behalf of another or with collection
of a draft or other claim against delivery of documents
warrants by the delivery of the documents only its own good
faith and authority even if the collecting bank or other
intermediary has purchased or made advances against the claim
or draft to be collected.
    A collecting bank or other intermediary known to be
entrusted with documents on behalf of another or with
collection of a draft or other claim against delivery of
documents warrants by such delivery of the documents only its
own good faith and authority. This rule applies even though the
intermediary has purchased or made advances against the claim
or draft to be collected.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-509)  (from Ch. 26, par. 7-509)
    Sec. 7-509. Adequate compliance with commercial contract.
Receipt or bill: when adequate compliance with commercial
contract. Whether a document of title is adequate to fulfill
the obligations of a contract for sale, a contract for lease,
or the conditions of a letter of credit is determined by
Article 2, 2A, or 5.
    The question whether a document is adequate to fulfill the
obligations of a contract for sale or the conditions of a
credit is governed by the Articles on Sales (Article 2) and on
Letters of Credit (Article 5).
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/Art. 7 Pt. 6 heading)
PART 6 .
WAREHOUSE RECEIPTS AND BILLS OF
LADING: MISCELLANEOUS PROVISIONS

 
    (810 ILCS 5/7-601)  (from Ch. 26, par. 7-601)
    Sec. 7-601. Lost, stolen, or destroyed documents of title.
Lost and missing documents.
    (a) If a document of title is lost, stolen, or destroyed, a
court may order delivery of the goods or issuance of a
substitute document and the bailee may without liability to any
person comply with the order. If the document was negotiable, a
court may not order delivery of the goods or issuance of a
substitute document without the claimant's posting security
unless it finds that any person that may suffer loss as a
result of nonsurrender of possession or control of the document
is adequately protected against the loss. If the document was
nonnegotiable, the court may require security. The court may
also order payment of the bailee's reasonable costs and
attorney's fees in any action under this subsection.
    (b) A bailee that, without a court order, delivers goods to
a person claiming under a missing negotiable document of title
is liable to any person injured thereby. If the delivery is not
in good faith, the bailee is liable for conversion. Delivery in
good faith is not conversion if the claimant posts security
with the bailee in an amount at least double the value of the
goods at the time of posting to indemnify any person injured by
the delivery which files a notice of claim within one year
after the delivery.
    (1) If a document has been lost, stolen or destroyed, a
court may order delivery of the goods or issuance of a
substitute document and the bailee may without liability to any
person comply with such order. If the document was negotiable
the claimant must post security approved by the court to
indemnify any person who may suffer loss as a result of
non-surrender of the document. If the document was not
negotiable, such security may be required at the discretion of
the court. The court may also in its discretion order payment
of the bailee's reasonable costs and counsel fees.
    (2) A bailee who without court order delivers goods to a
person claiming under a missing negotiable document is liable
to any person injured thereby, and if the delivery is not in
good faith becomes liable for conversion. Delivery in good
faith is not conversion if made in accordance with a filed
classification or tariff or, where no classification or tariff
is filed, if the claimant posts security with the bailee in an
amount at least double the value of the goods at the time of
posting to indemnify any person injured by the delivery who
files a notice of claim within one year after the delivery.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-602)  (from Ch. 26, par. 7-602)
    Sec. 7-602. Judicial process against goods covered by
negotiable document of title. Attachment of goods covered by a
negotiable document. Unless a document of title was originally
issued upon delivery of the goods by a person that did not have
power to dispose of them, a lien does not attach by virtue of
any judicial process to goods in the possession of a bailee for
which a negotiable document of title is outstanding unless
possession or control of the document is first surrendered to
the bailee or the document's negotiation is enjoined. The
bailee may not be compelled to deliver the goods pursuant to
process until possession or control of the document is
surrendered to the bailee or to the court. A purchaser of the
document for value without notice of the process or injunction
takes free of the lien imposed by judicial process.
    Except where the document was originally issued upon
delivery of the goods by a person who had no power to dispose
of them, no lien attaches by virtue of any judicial process to
goods in the possession of a bailee for which a negotiable
document of title is outstanding unless the document be first
surrendered to the bailee or its negotiation enjoined, and the
bailee shall not be compelled to deliver the goods pursuant to
process until the document is surrendered to him or impounded
by the court. One who purchases the document for value without
notice of the process or injunction takes free of the lien
imposed by judicial process.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/7-603)  (from Ch. 26, par. 7-603)
    Sec. 7-603. Conflicting Claims; Interpleader. If more than
one person claims title to or possession of the goods, the
bailee is excused from delivery until the bailee has a
reasonable time to ascertain the validity of the adverse claims
or to commence an action for interpleader. The bailee may
assert an interpleader either in defending an action for
nondelivery of the goods or by original action.
    If more than one person claims title or possession of the
goods, the bailee is excused from delivery until he has had a
reasonable time to ascertain the validity of the adverse claims
or to bring an action to compel all claimants to interplead and
may compel such interpleader, either in defending an action for
non-delivery of the goods, or by original action, whichever is
appropriate.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/Art. 7 Pt. 7 heading new)
PART 7
MISCELLANEOUS PROVISIONS

 
    (810 ILCS 5/7-701 new)
    Sec. 7-701. Effective date. (Blank).
 
    (810 ILCS 5/7-702 new)
    Sec. 7-702. Repeals. Section 10-104 of the Uniform
Commercial Code is repealed.
 
    (810 ILCS 5/7-703 new)
    Sec. 7-703. Applicability. This amendatory Act of the 95th
General Assembly applies to a document of title that is issued
or a bailment that arises on or after the effective date of
this amendatory Act of the 95th General Assembly. This
amendatory Act of the 95th General Assembly does not apply to a
document of title that is issued or a bailment that arises
before the effective date of this amendatory Act of the 95th
General Assembly even if the document of title or bailment
would be subject to this amendatory Act of the 95th General
Assembly if the document of title had been issued or bailment
had arisen on or after the effective date of this amendatory
Act of the 95th General Assembly. This amendatory Act of the
95th General Assembly does not apply to a right of action that
has accrued before the effective date of this amendatory Act of
the 95th General Assembly.
 
    (810 ILCS 5/7-704 new)
    Sec. 7-704. Savings clause. A document of title issued or a
bailment that arises before the effective date of this
amendatory Act of the 95th General Assembly and the rights,
obligations, and interests flowing from that document or
bailment are governed by any statute or other rule amended or
repealed by this amendatory Act of the 95th General Assembly as
if amendment or repeal had not occurred and may be terminated,
completed, consummated, or enforced under that statute or other
rule.
 
    Section 15. The Uniform Commercial Code is amended by
changing Sections 2-202, 2-208, 2A-207, 2A-501, 2A-518,
2A-519, 2A-527, 2A-528, 3-103, 4A-105, 4A-106, 4A-204, and
5-103 as follows:
 
    (810 ILCS 5/2-202)  (from Ch. 26, par. 2-202)
    Sec. 2-202. Final written expression: parol or extrinsic
evidence.
    Terms with respect to which the confirmatory memoranda of
the parties agree or which are otherwise set forth in a writing
intended by the parties as a final expression of their
agreement with respect to such terms as are included therein
may not be contradicted by evidence of any prior agreement or
of a contemporaneous oral agreement but may be explained or
supplemented
        (a) by course of performance, course of dealing, or
    usage of trade (Section 1-303 1--205) or by course of
    performance (Section 2--208); and
        (b) by evidence of consistent additional terms unless
    the court finds the writing to have been intended also as a
    complete and exclusive statement of the terms of the
    agreement.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/2-208)  (from Ch. 26, par. 2-208)
    Sec. 2-208. (Blank). Course of performance or practical
construction.
    (1) Where the contract for sale involves repeated occasions
for performance by either party with knowledge of the nature of
the performance and opportunity for objection to it by the
other, any course of performance accepted or acquiesced in
without objection shall be relevant to determine the meaning of
the agreement.
    (2) The express terms of the agreement and any such course
of performance, as well as any course of dealing and usage of
trade, shall be construed whenever reasonable as consistent
with each other; but when such construction is unreasonable,
express terms shall control course of performance and course of
performance shall control both course of dealing and usage of
trade (Section 1--205).
    (3) Subject to the provisions of the next section on
modification and waiver, such course of performance shall be
relevant to show a waiver or modification of any term
inconsistent with such course of performance.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/2A-207)  (from Ch. 26, par. 2A-207)
    Sec. 2A-207. (Blank). Course of performance or practical
construction.
    (1) If a lease contract involves repeated occasions for
performance by either party with knowledge of the nature of the
performance and opportunity for objection to it by the other,
any course of performance accepted or acquiesced in without
objection is relevant to determine the meaning of the lease
agreement.
    (2) The express terms of a lease agreement and any course
of performance, as well as any course of dealing and usage of
trade, must be construed whenever reasonable as consistent with
each other; but if that construction is unreasonable, express
terms control course of performance, course of performance
controls both course of dealing and usage of trade, and course
of dealing controls usage of trade.
    (3) Subject to the provisions of Section 2A-208 on
modification and waiver, course of performance is relevant to
show a waiver or modification of any term inconsistent with the
course of performance.
(Source: P.A. 87-493.)
 
    (810 ILCS 5/2A-501)  (from Ch. 26, par. 2A-501)
    Sec. 2A-501. Default; procedure.
    (1) Whether the lessor or the lessee is in default under a
lease contract is determined by the lease agreement and this
Article.
    (2) If the lessor or the lessee is in default under the
lease contract, the party seeking enforcement has rights and
remedies as provided in this Article and, except as limited by
this Article, as provided in the lease agreement.
    (3) If the lessor or the lessee is in default under the
lease contract, the party seeking enforcement may reduce the
party's claim to judgment, or otherwise enforce the lease
contract by self-help or any available judicial procedure or
nonjudicial procedure, including administrative proceeding,
arbitration, or the like, in accordance with this Article.
    (4) Except as otherwise provided in Section 1-305(a)
1-106(1) or this Article or the lease agreement, the rights and
remedies referred to in subsections (2) and (3) are cumulative.
    (5) If the lease agreement covers both real property and
goods, the party seeking enforcement may proceed under this
Part as to the goods, or under other applicable law as to both
the real property and the goods in accordance with that party's
rights and remedies in respect of the real property, in which
case this Part does not apply.
(Source: P.A. 87-493.)
 
    (810 ILCS 5/2A-518)  (from Ch. 26, par. 2A-518)
    Sec. 2A-518. Cover; substitute goods.
    (1) After a default by a lessor under the lease contract of
the type described in Section 2A-508(1), or, if agreed, after
other default by the lessor, the lessee may cover by making any
purchase or lease of or contract to purchase or lease goods in
substitution for those due from the lessor.
    (2) Except as otherwise provided with respect to damages
liquidated in the lease agreement (Section 2A-504) or otherwise
determined pursuant to agreement of the parties (Sections 1-302
1-102(3) and 2A-503), if a lessee's cover is by a lease
agreement substantially similar to the original lease
agreement and the new lease agreement is made in good faith and
in a commercially reasonable manner, the lessee may recover
from the lessor as damages (i) the present value, as of the
date of the commencement of the term of the new lease
agreement, of the rent under the new lease agreement applicable
to that period of the new lease term which is comparable to the
then remaining term of the original lease agreement minus the
present value as of the same date of the total rent for the
then remaining lease term of the original lease agreement, and
(ii) any incidental or consequential damages, less expenses
saved in consequence of the lessor's default.
    (3) If a lessee's cover is by lease agreement that for any
reason does not qualify for treatment under subsection (2), or
is by purchase or otherwise, the lessee may recover from the
lessor as if the lessee had elected not to cover and Section
2A-519 governs.
(Source: P.A. 87-493.)
 
    (810 ILCS 5/2A-519)  (from Ch. 26, par. 2A-519)
    Sec. 2A-519. Lessee's damages for nondelivery,
repudiation, default, and breach of warranty in regard to
accepted goods.
    (1) Except as otherwise provided with respect to damages
liquidated in the lease agreement (Section 2A-504) or otherwise
determined pursuant to agreement of the parties (Sections 1-302
1-102(3) and 2A-503), if a lessee elects not to cover or a
lessee elects to cover and the cover is by lease agreement that
for any reason does not qualify for treatment under Section
2A-518(2), or is by purchase or otherwise, the measure of
damages for nondelivery or repudiation by the lessor or for
rejection or revocation of acceptance by the lessee is the
present value, as of the date of the default, of the then
market rent minus the present value as of the same date of the
original rent, computed for the remaining lease term of the
original lease agreement, together with incidental and
consequential damages, less expenses saved in consequence of
the lessor's default.
    (2) Market rent is to be determined as of the place for
tender or, in cases of rejection after arrival or revocation of
acceptance, as of the place of arrival.
    (3) Except as otherwise agreed, if the lessee has accepted
goods and given notification (Section 2A-516(3)), the measure
of damages for nonconforming tender or delivery or other
default by a lessor is the loss resulting in the ordinary
course of events from the lessor's default as determined in any
manner that is reasonable together with incidental and
consequential damages, less expenses saved in consequence of
the lessor's default.
    (4) Except as otherwise agreed, the measure of damages for
breach of warranty is the present value at the time and place
of acceptance of the difference between the value of the use of
the goods accepted and the value if they had been as warranted
for the lease term, unless special circumstances show proximate
damages of a different amount, together with incidental and
consequential damages, less expenses saved in consequence of
the lessor's default or breach of warranty.
(Source: P.A. 87-493.)
 
    (810 ILCS 5/2A-527)  (from Ch. 26, par. 2A-527)
    Sec. 2A-527. Lessor's rights to dispose of goods.
    (1) After a default by a lessee under the lease contract of
the type described in Section 2A-523(1) or 2A-523(3)(a) or
after the lessor refuses to deliver or takes possession of
goods (Section 2A-525 or 2A-526), or, if agreed, after other
default by a lessee, the lessor may dispose of the goods
concerned or the undelivered balance thereof by lease, sale, or
otherwise.
    (2) Except as otherwise provided with respect to damages
liquidated in the lease agreement (Section 2A-504) or otherwise
determined pursuant to agreement of the parties (Sections 1-302
1-102(3) and 2A-503), if the disposition is by lease agreement
substantially similar to the original lease agreement and the
new lease agreement is made in good faith and in a commercially
reasonable manner, the lessor may recover from the lessee as
damages (i) accrued and unpaid rent as of the date of the
commencement of the term of the new lease agreement, (ii) the
present value, as of the same date, of the total rent for the
then remaining lease term of the original lease agreement minus
the present value, as of the same date, of the rent under the
new lease agreement applicable to that period of the new lease
term which is comparable to the then remaining term of the
original lease agreement, and (iii) any incidental damages
allowed under Section 2A-530, less expenses saved in
consequence of the lessee's default.
    (3) If the lessor's disposition is by lease agreement that
for any reason does not qualify for treatment under subsection
(2), or is by sale or otherwise, the lessor may recover from
the lessee as if the lessor had elected not to dispose of the
goods and Section 2A-528 governs.
    (4) A subsequent buyer or lessee who buys or leases from
the lessor in good faith for value as a result of a disposition
under this Section takes the goods free of the original lease
contract and any rights of the original lessee even though the
lessor fails to comply with one or more of the requirements of
this Article.
    (5) The lessor is not accountable to the lessee for any
profit made on any disposition. A lessee who has rightfully
rejected or justifiably revoked acceptance shall account to the
lessor for any excess over the amount of the lessee's security
interest (Section 2A-508(5)).
(Source: P.A. 87-493.)
 
    (810 ILCS 5/2A-528)  (from Ch. 26, par. 2A-528)
    Sec. 2A-528. Lessor's damages for nonacceptance, failure
to pay, repudiation, or other default.
    (1) Except as otherwise provided with respect to damages
liquidated in the lease agreement (Section 2A-504) or otherwise
determined pursuant to agreement of the parties (Sections 1-302
1-102(3) and 2A-503), if a lessor elects to retain the goods or
a lessor elects to dispose of the goods and the disposition is
by lease agreement that for any reason does not qualify for
treatment under Section 2A-527(2), or is by sale or otherwise,
the lessor may recover from the lessee as damages for a default
of the type described in Section 2A-523(1) or 2A-523(3)(a) or,
if agreed, for other default of the lessee, (i) accrued and
unpaid rent as of the date of default if the lessee has never
taken possession of the goods, or, if the lessee has taken
possession of the goods, as of the date the lessor repossesses
the goods or an earlier date on which the lessee makes a tender
of the goods to the lessor, (ii) the present value as of the
date determined under clause (i) of the total rent for the then
remaining lease term of the original lease agreement minus the
present value as of the same date of the market rent at the
place where the goods are located computed for the same lease
term, and (iii) any incidental damages allowed under Section
2A-530, less expenses saved in consequence of the lessee's
default.
    (2) If the measure of damages provided in subsection (1) is
inadequate to put a lessor in as good a position as performance
would have, the measure of damages is the present value of the
profit, including reasonable overhead, the lessor would have
made from full performance by the lessee, together with any
incidental damages allowed under Section 2A-530, due allowance
for costs reasonably incurred and due credit for payments or
proceeds of disposition.
(Source: P.A. 87-493.)
 
    (810 ILCS 5/3-103)  (from Ch. 26, par. 3-103)
    Sec. 3-103. Definitions.
    (a) In this Article:
        (1) "Acceptor" means a drawee that has accepted a
    draft.
        (2) "Drawee" means a person ordered in a draft to make
    payment.
        (3) "Drawer" means a person who signs or is identified
    in a draft as a person ordering payment.
        (4) "Good faith" means honesty in fact and the
    observance of reasonable commercial standards of fair
    dealing.
        (5) "Maker" means a person who signs or is identified
    in a note as a person undertaking to pay.
        (6) "Order" means a written instruction to pay money
    signed by the person giving the instruction. The
    instruction may be addressed to any person, including the
    person giving the instruction, or to one or more persons
    jointly or in the alternative but not in succession. An
    authorization to pay is not an order unless the person
    authorized to pay is also instructed to pay.
        (7) "Ordinary care" in the case of a person engaged in
    business means observance of reasonable commercial
    standards, prevailing in the area in which the person is
    located with respect to the business in which the person is
    engaged. In the case of a bank that takes an instrument for
    processing for collection or payment by automated means,
    reasonable commercial standards do not require the bank to
    examine the instrument if the failure to examine does not
    violate the bank's prescribed procedures and the bank's
    procedures do not vary unreasonably from general banking
    usage not disapproved by this Article or Article 4.
        (8) "Party" means a party to an instrument.
        (9) "Promise" means a written undertaking to pay money
    signed by the person undertaking to pay. An acknowledgment
    of an obligation by the obligor is not a promise unless the
    obligor also undertakes to pay the obligation.
        (10) "Prove" with respect to a fact means to meet the
    burden of establishing the fact (Section 1-201(b)(8)).
        (11) "Remitter" means a person that purchases an
    instrument from its issuer if the instrument is payable to
    an identified person other than the purchaser.
    (b) Other definitions applying to this Article and the
Sections in which they appear are:
    "Acceptance"Section 3-409
    "Accommodated party"Section 3-419
    "Accommodation party"Section 3-419
    "Alteration"Section 3-407
    "Anomalous indorsement"Section 3-205
    "Blank indorsement"Section 3-205
    "Cashier's check"Section 3-104
    "Certificate of deposit"Section 3-104
    "Certified check"Section 3-409
    "Check"Section 3-104
    "Consideration"Section 3-303
    "Draft"Section 3-104
    "Holder in due course"Section 3-302
    "Incomplete instrument"Section 3-115
    "Indorsement"Section 3-204
    "Indorser"Section 3-204
    "Instrument"Section 3-104
    "Issue"Section 3-105
    "Issuer"Section 3-105
    "Negotiable instrument"Section 3-104
    "Negotiation"Section 3-201
    "Note"Section 3-104
    "Payable at a definite time"Section 3-108
    "Payable on demand"Section 3-108
    "Payable to bearer"Section 3-109
    "Payable to order"Section 3-109
    "Payment"Section 3-602
    "Person entitled to enforce"Section 3-301
    "Presentment"Section 3-501
    "Reacquisition"Section 3-207
    "Special indorsement"Section 3-205
    "Teller's check"Section 3-104
    "Transfer of instrument"Section 3-203
    "Traveler's check"Section 3-104
    "Value"Section 3-303
    (c) The following definitions in other Articles apply to
this Article:
    "Bank"Section 4-105
    "Banking day"Section 4-104
    "Clearing house"Section 4-104
    "Collecting bank"Section 4-105
    "Depositary bank"Section 4-105
    "Documentary draft"Section 4-104
    "Intermediary bank"Section 4-105
    "Item"Section 4-104
    "Payor bank"Section 4-105
    "Suspends payments"Section 4-104.
    (d) In addition, Article 1 contains general definitions and
principles of construction and interpretation applicable
throughout this Article.
(Source: P.A. 87-582; 87-1135.)
 
    (810 ILCS 5/4A-105)  (from Ch. 26, par. 4A-105)
    Sec. 4A-105. Other definitions.
    (a) In this Article:
        (1) "Authorized account" means a deposit account of a
    customer in a bank designated by the customer as a source
    of payment of payment orders issued by the customer to the
    bank. If a customer does not so designate an account, any
    account of the customer is an authorized account if payment
    of a payment order from that account is not inconsistent
    with a restriction on the use of that account.
        (2) "Bank" means a person engaged in the business of
    banking and includes a savings bank, savings and loan
    association, credit union, and trust company. A branch or
    separate office of a bank is a separate bank for purposes
    of this Article.
        (3) "Customer" means a person, including a bank, having
    an account with a bank or from whom a bank has agreed to
    receive payment orders.
        (4) "Funds transfer business day" of a receiving bank
    means the part of a day during which the receiving bank is
    open for the receipt, processing, and transmittal of
    payment orders and cancellations and amendments of payment
    orders.
        (5) "Funds transfer system" means a wire transfer
    network, automated clearinghouse, or other communication
    system of a clearing house or other association of banks
    through which a payment order by a bank may be transmitted
    to the bank to which the order is addressed.
        (6) "Good faith" means honesty in fact and the
    observance of reasonable commercial standards of fair
    dealing.
        (7) "Prove" with respect to a fact means to meet the
    burden of establishing the fact (Section 1-201(b)(8)).
    (b) Other definitions applying to this Article and the
Sections in which they appear are:
    "Acceptance"Section 4A-209
    "Beneficiary"Section 4A-103
    "Beneficiary's bank"Section 4A-103
    "Executed"Section 4A-301
    "Execution date"Section 4A-301
    "Funds transfer"Section 4A-104
    "Funds transfer system rule"Section 4A-501
    "Intermediary bank"Section 4A-104
    "Originator"Section 4A-104
    "Originator's bank"Section 4A-104
    "Payment by beneficiary's bank
        to beneficiary"Section 4A-405
    "Payment by originator to
        beneficiary"Section 4A-406
    "Payment by sender
        to receiving bank"Section 4A-403
    "Payment date"Section 4A-401
    "Payment order"Section 4A-103
    "Receiving bank"Section 4A-103
    "Security procedure"Section 4A-201
    "Sender"Section 4A-103
    (c) The following definitions in Article 4 apply to this
Article:
    "Clearing house"Section 4-104
    "Item"Section 4-104
    "Suspends payments"Section 4-104
    (d) In addition, Article 1 contains general definitions and
principles of construction and interpretation applicable
throughout this Article.
(Source: P.A. 86-1291.)
 
    (810 ILCS 5/4A-106)  (from Ch. 26, par. 4A-106)
    Sec. 4A-106. Time payment order is received.
    (a) The time of receipt of a payment order or communication
cancelling or amending a payment order is determined by the
rules applicable to receipt of a notice stated in Section 1-202
1-201(27). A receiving bank may fix a cut-off time or times on
a funds transfer business day for the receipt and processing of
payment orders and communications cancelling or amending
payment orders. Different cut-off times may apply to payment
orders, cancellations, or amendments, or to different
categories of payment orders, cancellations, or amendments. A
cut-off time may apply to senders generally or different
cut-off times may apply to different senders or categories of
payment orders. If a payment order or communication cancelling
or amending a payment order is received after the close of a
funds transfer business day or after the appropriate cut-off
time on a funds transfer business day, the receiving bank may
treat the payment order or communication as received at the
opening of the next funds transfer business day.
    (b) If this Article refers to an execution date or payment
date or states a day on which a receiving bank is required to
take action, and the date or day does not fall on a funds
transfer business day, the next day that is a funds transfer
business day is treated as the date or day stated, unless the
contrary is stated in this Article.
(Source: P.A. 86-1291.)
 
    (810 ILCS 5/4A-204)  (from Ch. 26, par. 4A-204)
    Sec. 4A-204. Refund of payment and duty of customer to
report with respect to an unauthorized payment order.
    (a) If a receiving bank accepts a payment order issued in
the name of its customer as sender which is (i) not authorized
and not effective as the order of the customer under Section
4A-202, or (ii) not enforceable, in whole or in part, against
the customer under Section 4A-203, the bank shall refund any
payment of the payment order received from the customer to the
extent the bank is not entitled to enforce payment and shall
pay interest on the refundable amount calculated from the date
the bank received payment to the date of the refund. However,
the customer is not entitled to interest from the bank on the
amount to be refunded if the customer fails to exercise
ordinary care to determine that the order was not authorized by
the customer and to notify the bank of the relevant facts
within a reasonable time not exceeding 90 days after the date
the customer received notification from the bank that the order
was accepted or that the customer's account was debited with
respect to the order. The bank is not entitled to any recovery
from the customer on account of a failure by the customer to
give notification as stated in this Section.
    (b) Reasonable time under subsection (a) may be fixed by
agreement as stated in Section 1-302(b) 1-204(1), but the
obligation of a receiving bank to refund payment as stated in
subsection (a) may not otherwise be varied by agreement.
(Source: P.A. 90-655, eff. 7-30-98.)
 
    (810 ILCS 5/5-103)  (from Ch. 26, par. 5-103)
    Sec. 5-103. Scope.
    (a) This Article applies to letters of credit and to
certain rights and obligations arising out of transactions
involving letters of credit.
    (b) The statement of a rule in this Article does not by
itself require, imply, or negate application of the same or a
different rule to a situation not provided for, or to a person
not specified, in this Article.
    (c) With the exception of this subsection, subsections (a)
and (d), Sections 5-102(a)(9) and (10), 5-106(d), and 5-114(d),
and except to the extent prohibited in Sections 1-302 1-102(3)
and 5-117(d), the effect of this Article may be varied by
agreement or by a provision stated or incorporated by reference
in an undertaking. A term in an agreement or undertaking
generally excusing liability or generally limiting remedies
for failure to perform obligations is not sufficient to vary
obligations prescribed by this Article.
    (d) Rights and obligations of an issuer to a beneficiary or
a nominated person under a letter of credit are independent of
the existence, performance, or nonperformance of a contract or
arrangement out of which the letter of credit arises or which
underlies it, including contracts or arrangements between the
issuer and the applicant and between the applicant and the
beneficiary.
(Source: P.A. 89-534, eff. 1-1-97.)
 
    Section 20. The Uniform Commercial Code is amended by
changing Sections 2-103, 2-104, 2-310, 2-323, 2-401, 2-503,
2-505, 2-506, 2-509, 2-605, 2-705, 2A-103, 2A-514, 2A-526,
4-104, 4-210, 8-103, 9-102, 9-203, 9-207, 9-208, 9-301, 9-310,
9-312, 9-313, 9-314, 9-317, 9-338, and 9-601 as follows:
 
    (810 ILCS 5/2-103)  (from Ch. 26, par. 2-103)
    Sec. 2-103. Definitions and index of definitions.
    (1) In this Article unless the context otherwise requires
        (a) "Buyer" means a person who buys or contracts to buy
goods.
        (b) "Good faith" in the case of a merchant means
honesty in fact and the observance of reasonable commercial
standards of fair dealing in the trade.
        (c) "Receipt" of goods means taking physical
possession of them.
        (d) "Seller" means a person who sells or contracts to
sell goods.
    (2) Other definitions applying to this Article or to
specified Parts thereof, and the sections in which they appear
are:
        "Acceptance". Section 2--606.
        "Banker's credit". Section 2--325.
        "Between merchants". Section 2--104.
        "Cancellation". Section 2--106(4).
        "Commercial unit". Section 2--105.
        "Confirmed credit". Section 2--325.
        "Conforming to contract". Section 2--106.
        "Contract for sale". Section 2--106.
        "Cover". Section 2--712.
        "Entrusting". Section 2--403.
        "Financing agency". Section 2--104.
        "Future goods". Section 2--105.
        "Goods". Section 2--105.
        "Identification". Section 2--501.
        "Installment contract". Section 2--612.
        "Letter of Credit". Section 2--325.
        "Lot". Section 2--105.
        "Merchant". Section 2--104.
        "Overseas". Section 2--323.
        "Person in position of seller". Section 2--707.
        "Present sale". Section 2--106.
        "Sale". Section 2--106.
        "Sale on approval". Section 2--326.
        "Sale or return". Section 2--326.
        "Termination". Section 2--106.
    (3) "Control" as provided in Section 7-106 and the The
following definitions in other Articles apply to this Article:
        "Check". Section 3--104.
        "Consignee". Section 7--102.
        "Consignor". Section 7--102.
        "Consumer goods". Section 9-102.
        "Dishonor". Section 3-502.
        "Draft". Section 3--104.
    (4) In addition Article 1 contains general definitions and
principles of construction and interpretation applicable
throughout this Article.
(Source: P.A. 91-893, eff. 7-1-01.)
 
    (810 ILCS 5/2-104)  (from Ch. 26, par. 2-104)
    Sec. 2-104. Definitions. "merchant"; "between merchants";
"financing agency".
    (1) "Merchant" means a person who deals in goods of the
kind or otherwise by his occupation holds himself out as having
knowledge or skill peculiar to the practices or goods involved
in the transaction or to whom such knowledge or skill may be
attributed by his employment of an agent or broker or other
intermediary who by his occupation holds himself out as having
such knowledge or skill.
    (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 (Section 2--707).
    (3) "Between merchants" means in any transaction with
respect to which both parties are chargeable with the knowledge
or skill of merchants.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/2-310)  (from Ch. 26, par. 2-310)
    Sec. 2-310. Open time for payment or running of credit
authority to ship under reservation.
    Unless otherwise agreed
        (a) payment is due at the time and place at which the
buyer is to receive the goods even though the place of shipment
is the place of delivery; and
        (b) if the seller is authorized to send the goods he
may ship them under reservation, and may tender the documents
of title, but the buyer may inspect the goods after their
arrival before payment is due unless such inspection is
inconsistent with the terms of the contract (Section 2--513);
and
        (c) if delivery is authorized and made by way of
documents of title otherwise than by subsection (b) then
payment is due regardless of where the goods are to be received
(i) at the time and place at which the buyer is to receive
delivery of the tangible documents or (ii) 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 regardless of where the goods are to be received; and
        (d) where the seller is required or authorized to ship
the goods on credit the credit period runs from the time of
shipment but post-dating the invoice or delaying its dispatch
will correspondingly delay the starting of the credit period.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/2-323)  (from Ch. 26, par. 2-323)
    Sec. 2-323. Form of bill of lading required in overseas
shipment; "overseas."
    (1) Where the contract contemplates overseas shipment and
contains a term C.I.F. or C. & F. or F.O.B. vessel, the seller
unless otherwise agreed must obtain a negotiable bill of lading
stating that the goods have been loaded on board or, in the
case of a term C.I.F. or C. & F., received for shipment.
    (2) Where in a case within subsection (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
        (a) due tender of a single part is acceptable within
    the provisions of this Article on cure of improper delivery
    (subsection (1) of Section 2-508; and
        (b) even though the full set is demanded, if the
    documents are sent from abroad the person tendering an
    incomplete set may nevertheless require payment upon
    furnishing an indemnity which the buyer in good faith deems
    adequate.
    (3) A shipment by water or by air or a contract
contemplating such shipment is "overseas" insofar as by usage
of trade or agreement it is subject to the commercial,
financing or shipping practices characteristic of
international deep water commerce.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/2-401)  (from Ch. 26, par. 2-401)
    Sec. 2-401. Passing of title; reservation for security;
limited application of this section.
    Each provision of this Article with regard to the rights,
obligations and remedies of the seller, the buyer, purchasers
or other third parties applies irrespective of title to the
goods except where the provision refers to such title. Insofar
as situations are not covered by the other provisions of this
Article and matters concerning title become material the
following rules apply:
    (1) Title to goods cannot pass under a contract for sale
prior to their identification to the contract (Section 2--501),
and unless otherwise explicitly agreed the buyer acquires by
their identification a special property as limited by this Act.
Any retention or reservation by the seller of the title
(property) in goods shipped or delivered to the buyer is
limited in effect to a reservation of a security interest.
Subject to these provisions and to the provisions of the
Article on Secured Transactions (Article 9), title to goods
passes from the seller to the buyer in any manner and on any
conditions explicitly agreed on by the parties.
    (2) Unless otherwise explicitly agreed title passes to the
buyer at the time and place at which the seller completes his
performance with reference to the physical delivery of the
goods, despite any reservation of a security interest and even
though a document of title is to be delivered at a different
time or place; and in particular and despite any reservation of
a security interest by the bill of lading
        (a) if the contract requires or authorizes the seller
to send the goods to the buyer but does not require him to
deliver them at destination, title passes to the buyer at the
time and place of shipment; and
        (b) if the contract requires delivery at destination,
title passes on tender there.
    (3) Unless otherwise explicitly agreed where delivery is to
be made without moving the goods,
        (a) if the seller is to deliver a tangible document of
title, title passes at the time when and the place where he
delivers such documents and if the seller is to deliver an
electronic document of title, title passes when the seller
delivers the document; or
        (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.
    (4) A rejection or other refusal by the buyer to receive or
retain the goods, whether or not justified, or a justified
revocation of acceptance revests title to the goods in the
seller. Such revesting occurs by operation of law and is not a
"sale".
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/2-503)  (from Ch. 26, par. 2-503)
    Sec. 2-503. Manner of seller's tender of delivery.
    (1) Tender of delivery requires that the seller put and
hold conforming goods at the buyer's disposition and give the
buyer any notification reasonably necessary to enable him to
take delivery. The manner, time and place for tender are
determined by the agreement and this Article, and in particular
        (a) tender must be at a reasonable hour, and if it is
of goods they must be kept available for the period reasonably
necessary to enable the buyer to take possession; but
        (b) unless otherwise agreed the buyer must furnish
facilities reasonably suited to the receipt of the goods.
    (2) Where the case is within the next section respecting
shipment tender requires that the seller comply with its
provisions.
    (3) Where the seller is required to deliver at a particular
destination tender requires that he comply with subsection (1)
and also in any appropriate case tender documents as described
in subsections (4) and (5) of this Section.
    (4) Where goods are in the possession of a bailee and are
to be delivered without being moved
        (a) tender requires that the seller either tender a
negotiable document of title covering such goods or procure
acknowledgment by the bailee of the buyer's right to possession
of the goods; but
        (b) tender to the buyer of a non-negotiable document of
title or of a record directing written direction to the bailee
to deliver is sufficient tender unless the buyer seasonably
objects, and except as otherwise provided in Article 9 receipt
by the bailee of notification of the buyer's rights fixes those
rights as against the bailee and all third persons; but risk of
loss of the goods and of any failure by the bailee to honor the
non-negotiable 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.
    (5) Where the contract requires the seller to deliver
documents
        (a) he must tender all such documents in correct form,
except as provided in this Article with respect to bills of
lading in a set (subsection (2) of Section 2--323; and
        (b) tender through customary banking channels is
sufficient and dishonor of a draft accompanying or associated
with the documents constitutes non-acceptance or rejection.
(Source: Laws 1961, 1st SS., p. 7.)
 
    (810 ILCS 5/2-505)  (from Ch. 26, par. 2-505)
    Sec. 2-505. Seller's shipment under reservation.
    (1) Where the seller has identified goods to the contract
by or before shipment:
        (a) his procurement of a negotiable bill of lading to
his own order or otherwise reserves in him a security interest
in the goods. His procurement of the bill to the order of a
financing agency or of the buyer indicates in addition only the
seller's expectation of transferring that interest to the
person named.
        (b) a non-negotiable bill of lading to himself or his
nominee reserves possession of the goods as security but except
in a case of conditional delivery (subsection (2) of Section
2--507 a non-negotiable 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.
    (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 the
preceding section 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.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/2-506)  (from Ch. 26, par. 2-506)
    Sec. 2-506. Rights of financing agency.
    (1) A financing agency by paying or purchasing for value a
draft which relates to a shipment of goods acquires to the
extent of the payment or purchase and in addition to its own
rights under the draft and any document of title securing it
any rights of the shipper in the goods including the right to
stop delivery and the shipper's right to have the draft honored
by the buyer.
    (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.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/2-509)  (from Ch. 26, par. 2-509)
    Sec. 2-509. Risk of loss in the absence of breach.
    (1) Where the contract requires or authorizes the seller to
ship the goods by carrier
        (a) if it does not require him to deliver them at a
particular destination, the risk of loss passes to the buyer
when the goods are duly delivered to the carrier even though
the shipment is under reservation (Section 2--505); but
        (b) if it does require him to deliver them at a
particular destination and the goods are there duly tendered
while in the possession of the carrier, the risk of loss passes
to the buyer when the goods are there duly so tendered as to
enable the buyer to take delivery.
    (2) Where the goods are held by a bailee to be delivered
without being moved, the risk of loss passes to the buyer
        (a) on his receipt of possession or control of a
negotiable document of title covering the goods; or
        (b) on acknowledgment by the bailee of the buyer's
right to possession of the goods; or
        (c) after his receipt of possession or control of a
non-negotiable document of title or other written direction to
deliver in a record, as provided in subsection (4) (b) of
Section 2--503.
    (3) In any case not within subsection (1) or (2), the risk
of loss passes to the buyer on his receipt of the goods if the
seller is a merchant; otherwise the risk passes to the buyer on
tender of delivery.
    (4) The provisions of this Section are subject to contrary
agreement of the parties and to the provisions of this Article
on sale on approval (Section 2--327) and on effect of breach on
risk of loss (Section 2--510).
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/2-605)  (from Ch. 26, par. 2-605)
    Sec. 2-605. Waiver of buyer's objections by failure to
particularize.
    (1) The buyer's failure to state in connection with
rejection a particular defect which is ascertainable by
reasonable inspection precludes him from relying on the
unstated defect to justify rejection or to establish breach
        (a) where the seller could have cured it if stated
seasonably; or
        (b) between merchants when the seller has after
rejection made a request in writing for a full and final
written statement of all defects on which the buyer proposes to
rely.
    (2) Payment against documents made without reservation of
rights precludes recovery of the payment for defects apparent
in on the face of the documents.
(Source: Laws 1961, p. 2101.)
 
    (810 ILCS 5/2-705)  (from Ch. 26, par. 2-705)
    Sec. 2-705. Seller's stoppage of delivery in transit or
otherwise.
    (1) The seller may stop delivery of goods in the possession
of a carrier or other bailee when he discovers the buyer to be
insolvent (Section 2-702) and may stop delivery of carload,
truckload, planeload or larger shipments of express or freight
when the buyer repudiates or fails to make a payment due before
delivery or if for any other reason the seller has a right to
withhold or reclaim the goods.
    (2) As against such buyer the seller may stop delivery
until
        (a) receipt of the goods by the buyer; or
        (b) acknowledgment to the buyer by any bailee of the
goods except a carrier that the bailee holds the goods for the
buyer; or
        (c) such acknowledgment to the buyer by a carrier by
reshipment or as a warehouse warehouseman; or
        (d) negotiation to the buyer of any negotiable document
of title covering the goods.
    (3) (a) To stop delivery the seller must so notify as to
enable the bailee by reasonable diligence to prevent delivery
of the goods.
        (b) After such notification the bailee must hold and
deliver the goods according to the directions of the seller but
the seller is liable to the bailee for any ensuing charges or
damages.
        (c) If a negotiable document of title has been issued
for goods the bailee is not obliged to obey a notification to
stop until surrender of possession or control of the document.
        (d) A carrier who has issued a non-negotiable bill of
lading is not obliged to obey a notification to stop received
from a person other than the consignor.
(Source: Laws 1961, 1st SS., p. 7.)
 
    (810 ILCS 5/2A-103)  (from Ch. 26, par. 2A-103)
    Sec. 2A-103. Definitions and index of definitions.
    (1) In this Article unless the context otherwise requires:
        (a) "Buyer in ordinary course of business" means a
    person who, in good faith and without knowledge that the
    sale to him or her is in violation of the ownership rights
    or security interest or leasehold interest of a third party
    in the goods, buys in ordinary course from a person in the
    business of selling goods of that kind but does not include
    a pawnbroker. "Buying" may be for cash or by exchange of
    other property or on secured or unsecured credit and
    includes acquiring receiving goods or documents of title
    under a pre-existing contract for sale but does not include
    a transfer in bulk or as security for or in total or
    partial satisfaction of a money debt.
        (b) "Cancellation" occurs when either party puts an end
    to the lease contract for default by the other party.
        (c) "Commercial unit" means such a unit of goods as by
    commercial usage is a single whole for purposes of lease
    and division of which materially impairs its character or
    value on the market or in use. A commercial unit may be a
    single article, as a machine, or a set of articles, as a
    suite of furniture or a line of machinery, or a quantity,
    as a gross or carload, or any other unit treated in use or
    in the relevant market as a single whole.
        (d) "Conforming" goods or performance under a lease
    contract means goods or performance that are in accordance
    with the obligations under the lease contract.
        (e) "Consumer lease" means a lease that a lessor
    regularly engaged in the business of leasing or selling
    makes to a lessee who is an individual and who takes under
    the lease primarily for a personal, family, or household
    purpose, if the total payments to be made under the lease
    contract, excluding payments for options to renew or buy,
    do not exceed $40,000.
        (f) "Fault" means wrongful act, omission, breach, or
    default.
        (g) "Finance lease" means a lease with respect to
    which:
            (i) the lessor does not select, manufacture, or
        supply the goods;
            (ii) the lessor acquires the goods or the right to
        possession and use of the goods in connection with the
        lease; and
            (iii) one of the following occurs:
                (A) the lessee receives a copy of the contract
            by which the lessor acquired the goods or the right
            to possession and use of the goods before signing
            the lease contract;
                (B) the lessee's approval of the contract by
            which the lessor acquired the goods or the right to
            possession and use of the goods is a condition to
            effectiveness of the lease contract;
                (C) the lessee, before signing the lease
            contract, receives an accurate and complete
            statement designating the promises and warranties,
            and any disclaimers of warranties, limitations or
            modifications of remedies, or liquidated damages,
            including those of a third party, such as the
            manufacturer of the goods, provided to the lessor
            by the person supplying the goods in connection
            with or as part of the contract by which the lessor
            acquired the goods or the right to possession and
            use of the goods; or
                (D) if the lease is not a consumer lease, the
            lessor, before the lessee signs the lease
            contract, informs the lessee in writing (a) of the
            identity of the person supplying the goods to the
            lessor, unless the lessee has selected that person
            and directed the lessor to acquire the goods or the
            right to possession and use of the goods from that
            person, (b) that the lessee is entitled under this
            Article to the promises and warranties, including
            those of any third party, provided to the lessor by
            the person supplying the goods in connection with
            or as part of the contract by which the lessor
            acquired the goods or the right to possession and
            use of the goods, and (c) that the lessee may
            communicate with the person supplying the goods to
            the lessor and receive an accurate and complete
            statement of those promises and warranties,
            including any disclaimers and limitations of them
            or of remedies.
        (h) "Goods" means all things that are movable at the
    time of identification to the lease contract, or are
    fixtures (Section 2A-309), but the term does not include
    money, documents, instruments, accounts, chattel paper,
    general intangibles, or minerals or the like, including oil
    and gas, before extraction. The term also includes the
    unborn young of animals.
        (i) "Installment lease contract" means a lease
    contract that authorizes or requires the delivery of goods
    in separate lots to be separately accepted, even though the
    lease contract contains a clause "each delivery is a
    separate lease" or its equivalent.
        (j) "Lease" means a transfer of the right to possession
    and use of goods for a term in return for consideration,
    but a sale, including a sale on approval or a sale or
    return, or retention or creation of a security interest is
    not a lease. Unless the context clearly indicates
    otherwise, the term includes a sublease.
        (k) "Lease agreement" means the bargain, with respect
    to the lease, of the lessor and the lessee in fact as found
    in their language or by implication from other
    circumstances including course of dealing or usage of trade
    or course of performance as provided in this Article.
    Unless the context clearly indicates otherwise, the term
    includes a sublease agreement.
        (l) "Lease contract" means the total legal obligation
    that results from the lease agreement as affected by this
    Article and any other applicable rules of law. Unless the
    context clearly indicates otherwise, the term includes a
    sublease contract.
        (m) "Leasehold interest" means the interest of the
    lessor or the lessee under a lease contract.
        (n) "Lessee" means a person who acquires the right to
    possession and use of goods under a lease. Unless the
    context clearly indicates otherwise, the term includes a
    sublessee.
        (o) "Lessee in ordinary course of business" means a
    person who in good faith and without knowledge that the
    lease to him or her is in violation of the ownership rights
    or security interest or leasehold interest of a third party
    in the goods leases in ordinary course from a person in the
    business of selling or leasing goods of that kind but does
    not include a pawnbroker. "Leasing" may be for cash or by
    exchange of other property or on secured or unsecured
    credit and includes acquiring receiving goods or documents
    of title under a pre-existing lease contract but does not
    include a transfer in bulk or as security for or in total
    or partial satisfaction of a money debt.
        (p) "Lessor" means a person who transfers the right to
    possession and use of goods under a lease. Unless the
    context clearly indicates otherwise, the term includes a
    sublessor.
        (q) "Lessor's residual interest" means the lessor's
    interest in the goods after expiration, termination, or
    cancellation of the lease contract.
        (r) "Lien" means a charge against or interest in goods
    to secure payment of a debt or performance of an
    obligation, but the term does not include a security
    interest.
        (s) "Lot" means a parcel or a single article that is
    the subject matter of a separate lease or delivery, whether
    or not it is sufficient to perform the lease contract.
        (t) "Merchant lessee" means a lessee that is a merchant
    with respect to goods of the kind subject to the lease.
        (u) "Present value" means the amount as of a date
    certain of one or more sums payable in the future,
    discounted to the date certain. The discount is determined
    by the interest rate specified by the parties if the rate
    was not manifestly unreasonable at the time the transaction
    was entered into; otherwise, the discount is determined by
    a commercially reasonable rate that takes into account the
    facts and circumstances of each case at the time the
    transaction was entered into.
        (v) "Purchase" includes taking by sale, lease,
    mortgage, security interest, pledge, gift, or any other
    voluntary transaction creating an interest in goods.
        (w) "Sublease" means a lease of goods the right to
    possession and use of which was acquired by the lessor as a
    lessee under an existing lease.
        (x) "Supplier" means a person from whom a lessor buys
    or leases goods to be leased under a finance lease.
        (y) "Supply contract" means a contract under which a
    lessor buys or leases goods to be leased.
        (z) "Termination" occurs when either party pursuant to
    a power created by agreement or law puts an end to the
    lease contract otherwise than for default.
    (2) Other definitions applying to this Article and the
Sections in which they appear are:
    "Accessions". Section 2A-310(1).
    "Construction mortgage". Section 2A-309(1)(d).
    "Encumbrance". Section 2A-309(1)(e).
    "Fixtures". Section 2A-309(1)(a).
    "Fixture filing". Section 2A-309(1)(b).
    "Purchase money lease". Section 2A-309(1)(c).
    (3) The following definitions in other Articles apply to
this Article:
    "Account". Section 9-102(a)(2).
    "Between merchants". Section 2-104(3).
    "Buyer". Section 2-103(1)(a).
    "Chattel paper". Section 9-102(a)(11).
    "Consumer goods". Section 9-102(a)(23).
    "Document". Section 9-102(a)(30).
    "Entrusting". Section 2-403(3).
    "General intangible". Section 9-102(a)(42).
    "Good faith". Section 2-103(1)(b).
    "Instrument". Section 9-102(a)(47).
    "Merchant". Section 2-104(1).
    "Mortgage". Section 9-102(a)(55).
    "Pursuant to commitment". Section 9-102(a)(68).
    "Receipt". Section 2-103(1)(c).
    "Sale". Section 2-106(1).
    "Sale on approval". Section 2-326.
    "Sale or return". Section 2-326.
    "Seller". Section 2-103(1)(d).
    (4) In addition, Article 1 contains general definitions and
principles of construction and interpretation applicable
throughout this Article.
(Source: P.A. 91-893, eff. 7-1-01; 92-651, eff. 7-11-02.)
 
    (810 ILCS 5/2A-514)  (from Ch. 26, par. 2A-514)
    Sec. 2A-514. Waiver of lessee's objections.
    (1) In rejecting goods, a lessee's failure to state a
particular defect that is ascertainable by reasonable
inspection precludes the lessee from relying on the defect to
justify rejection or to establish default:
        (a) if, stated seasonably, the lessor or the supplier
    could have cured it (Section 2A-513); or
        (b) between merchants if the lessor or the supplier
    after rejection has made a request in writing for a full
    and final written statement of all defects on which the
    lessee proposes to rely.
    (2) A lessee's failure to reserve rights when paying rent
or other consideration against documents precludes recovery of
the payment for defects apparent in on the face of the
documents.
(Source: P.A. 87-493.)
 
    (810 ILCS 5/2A-526)  (from Ch. 26, par. 2A-526)
    Sec. 2A-526. Lessor's stoppage of delivery in transit or
otherwise.
    (1) A lessor may stop delivery of goods in the possession
of a carrier or other bailee if the lessor discovers the lessee
to be insolvent and may stop delivery of carload, truckload,
planeload, or larger shipments of express or freight if the
lessee repudiates or fails to make a payment due before
delivery, whether for rent, security or otherwise under the
lease contract, or for any other reason the lessor has a right
to withhold or take possession of the goods.
    (2) In pursuing its remedies under subsection (1), the
lessor may stop delivery until:
        (a) receipt of the goods by the lessee;
        (b) acknowledgment to the lessee by any bailee of the
    goods, except a carrier, that the bailee holds the goods
    for the lessee; or
        (c) such an acknowledgment to the lessee by a carrier
    via reshipment or as a warehouse warehouseman.
    (3) (a) To stop delivery, a lessor shall so notify as to
    enable the bailee by reasonable diligence to prevent
    delivery of the goods.
        (b) After notification, the bailee shall hold and
    deliver the goods according to the directions of the
    lessor, but the lessor is liable to the bailee for any
    ensuing charges or damages.
        (c) A carrier who has issued a nonnegotiable bill of
    lading is not obliged to obey a notification to stop
    received from a person other than the consignor.
(Source: P.A. 87-493.)
 
    (810 ILCS 5/4-104)  (from Ch. 26, par. 4-104)
    Sec. 4-104. Definitions and index of definitions.
    (a) In this Article, unless the context otherwise requires:
        (1) "Account" means any deposit or credit account with
    a bank, including a demand, time, savings, passbook, share
    draft, or like account, other than an account evidenced by
    a certificate of deposit;
        (2) "Afternoon" means the period of a day between noon
    and midnight;
        (3) "Banking day" means the part of a day on which a
    bank is open to the public for carrying on substantially
    all of its banking functions, except that any day that is
    not a banking day for purposes of Federal Reserve
    Regulation CC (as may be amended from time to time) shall
    not be a banking day for purposes of this Article or
    Article 3;
        (4) "Clearing house" means an association of banks or
    other payors regularly clearing items;
        (5) "Customer" means a person having an account with a
    bank or for whom a bank has agreed to collect items,
    including a bank that maintains an account at another bank;
        (6) "Documentary draft" means a draft to be presented
    for acceptance or payment if specified documents,
    certificated securities (Section 8-102) or instructions
    for uncertificated securities (Section 8-102), or other
    certificates, statements, or the like are to be received by
    the drawee or other payor before acceptance or payment of
    the draft;
        (7) "Draft" means a draft as defined in Section 3-104
    or an item, other than an instrument, that is an order;
        (8) "Drawee" means a person ordered in a draft to make
    payment;
        (9) "Item" means an instrument or a promise or order to
    pay money handled by a bank for collection or payment. The
    term does not include a payment order governed by Article
    4A or a credit or debit card slip;
        (10) "Midnight deadline" with respect to a bank is
    midnight on its next banking day following the banking day
    on which it receives the relevant item or notice or from
    which the time for taking action commences to run,
    whichever is later;
        (11) "Settle" means to pay in cash, by clearing-house
    settlement, in a charge or credit or by remittance, or
    otherwise as agreed. A settlement may be either provisional
    or final;
        (12) "Suspends payments" with respect to a bank means
    that it has been closed by order of the supervisory
    authorities, that a public officer has been appointed to
    take it over, or that it ceases or refuses to make payments
    in the ordinary course of business.
    (b) Other definitions applying to this Article and the
Sections in which they appear are:
        "Agreement for electronic
            presentment"Section 4-110.
        "Bank"Section 4-105.
        "Collecting bank"Section 4-105.
        "Depositary bank"Section 4-105.
        "Intermediary bank"Section 4-105.
        "Payor bank"Section 4-105.
        "Presenting bank"Section 4-105.
        "Presentment notice"Section 4-110.
    (c) "Control" as provided in Section 7-106 and the The
following definitions in other Articles apply to this Article:
        "Acceptance"Section 3-409.
        "Alteration"Section 3-407.
        "Cashier's check"Section 3-104.
        "Certificate of deposit"Section 3-104.
        "Certified check"Section 3-409.
        "Check"Section 3-104.
        "Good faith"Section 3-103.
        "Holder in due course"Section 3-302.
        "Instrument"Section 3-104.
        "Notice of dishonor"Section 3-503.
        "Order"Section 3-103.
        "Ordinary care"Section 3-103.
        "Person entitled to enforce"Section 3-301.
        "Presentment"Section 3-501.
        "Promise"Section 3-103.
        "Prove"Section 3-103.
        "Teller's check"Section 3-104.
        "Unauthorized signature"Section 3-403.
    (d) In addition Article 1 contains general definitions and
principles of construction and interpretation applicable
throughout this Article.
(Source: P.A. 88-45; 89-364, eff. 1-1-96.)
 
    (810 ILCS 5/4-210)  (from Ch. 26, par. 4-210)
    Sec. 4-210. Security interest of collecting bank in items,
accompanying documents and proceeds.
    (a) A collecting bank has a security interest in an item
and any accompanying documents or the proceeds of either:
        (1) in case of an item deposited in an account, to the
    extent to which credit given for the item has been
    withdrawn or applied;
        (2) in case of an item for which it has given credit
    available for withdrawal as of right, to the extent of the
    credit given, whether or not the credit is drawn upon or
    there is a right of charge-back; or
        (3) if it makes an advance on or against the item.
    (b) If credit given for several items received at one time
or pursuant to a single agreement is withdrawn or applied in
part, the security interest remains upon all the items, any
accompanying documents or the proceeds of either. For the
purpose of this Section, credits first given are first
withdrawn.
    (c) Receipt by a collecting bank of a final settlement for
an item is a realization on its security interest in the item,
accompanying documents, and proceeds. So long as the bank does
not receive final settlement for the item or give up possession
of the item or possession or control of the accompanying
documents for purposes other than collection, the security
interest continues to that extent and is subject to Article 9,
but:
        (1) no security agreement is necessary to make the
    security interest enforceable Section 9-203(b)(3)(A);
        (2) no filing is required to perfect the security
    interest; and
        (3) the security interest has priority over
    conflicting perfected security interests in the item,
    accompanying documents, or proceeds.
(Source: P.A. 91-893, eff. 7-1-01.)
 
    (810 ILCS 5/8-103)  (from Ch. 26, par. 8-103)
    Sec. 8-103. Rules for determining whether certain
obligations and interests are securities or financial assets.
    (a) A share or similar equity interest issued by a
corporation, business trust, joint stock company, or similar
entity is a security.
    (b) An "investment company security" is a security.
"Investment company security" means a share or similar equity
interest issued by an entity that is registered as an
investment company under the federal investment company laws,
an interest in a unit investment trust that is so registered,
or a face-amount certificate issued by a face-amount
certificate company that is so registered. Investment company
security does not include an insurance policy or endowment
policy or annuity contract issued by an insurance company.
    (c) An interest in a partnership or limited liability
company is not a security unless it is dealt in or traded on
securities exchanges or in securities markets, its terms
expressly provide that it is a security governed by this
Article, or it is an investment company security. However, an
interest in a partnership or limited liability company is a
financial asset if it is held in a securities account.
    (d) A writing that is a security certificate is governed by
this Article and not by Article 3, even though it also meets
the requirements of that Article. However, a negotiable
instrument governed by Article 3 is a financial asset if it is
held in a securities account.
    (e) An option or similar obligation issued by a clearing
corporation to its participants is not a security, but is a
financial asset.
    (f) A commodity contract, as defined in Section
9-102(a)(15), is not a security or a financial asset.
    (g) A document of title is not a financial asset unless
Section 8-102(a)(9)(iii) applies.
(Source: P.A. 91-893, eff. 7-1-01.)
 
    (810 ILCS 5/9-102)  (from Ch. 26, par. 9-102)
    Sec. 9-102. Definitions and index of definitions.
    (a) Article 9 definitions. In this Article:
        (1) "Accession" means goods that are physically united
    with other goods in such a manner that the identity of the
    original goods is not lost.
        (2) "Account", except as used in "account for", means a
    right to payment of a monetary obligation, whether or not
    earned by performance, (i) for property that has been or is
    to be sold, leased, licensed, assigned, or otherwise
    disposed of, (ii) for services rendered or to be rendered,
    (iii) for a policy of insurance issued or to be issued,
    (iv) for a secondary obligation incurred or to be incurred,
    (v) for energy provided or to be provided, (vi) for the use
    or hire of a vessel under a charter or other contract,
    (vii) arising out of the use of a credit or charge card or
    information contained on or for use with the card, or
    (viii) as winnings in a lottery or other game of chance
    operated or sponsored by a State, governmental unit of a
    State, or person licensed or authorized to operate the game
    by a State or governmental unit of a State. The term
    includes health-care-insurance receivables. The term does
    not include (i) rights to payment evidenced by chattel
    paper or an instrument, (ii) commercial tort claims, (iii)
    deposit accounts, (iv) investment property, (v)
    letter-of-credit rights or letters of credit, or (vi)
    rights to payment for money or funds advanced or sold,
    other than rights arising out of the use of a credit or
    charge card or information contained on or for use with the
    card.
        (3) "Account debtor" means a person obligated on an
    account, chattel paper, or general intangible. The term
    does not include persons obligated to pay a negotiable
    instrument, even if the instrument constitutes part of
    chattel paper.
        (4) "Accounting", except as used in "accounting for",
    means a record:
            (A) authenticated by a secured party;
            (B) indicating the aggregate unpaid secured
        obligations as of a date not more than 35 days earlier
        or 35 days later than the date of the record; and
            (C) identifying the components of the obligations
        in reasonable detail.
        (5) "Agricultural lien" means an interest, other than a
    security interest, in farm products:
            (A) which secures payment or performance of an
        obligation for goods or services furnished in
        connection with a debtor's farming operation;
            (B) which is created by statute in favor of a
        person that in the ordinary course of its business
        furnished goods or services to a debtor in connection
        with a debtor's farming operation; and
            (C) whose effectiveness does not depend on the
        person's possession of the personal property.
        (6) "As-extracted collateral" means:
            (A) oil, gas, or other minerals that are subject to
        a security interest that:
                (i) is created by a debtor having an interest
            in the minerals before extraction; and
                (ii) attaches to the minerals as extracted; or
            (B) accounts arising out of the sale at the
        wellhead or minehead of oil, gas, or other minerals in
        which the debtor had an interest before extraction.
        (7) "Authenticate" means:
            (A) to sign; or
            (B) to execute or otherwise adopt a symbol, or
        encrypt or similarly process a record in whole or in
        part, with the present intent of the authenticating
        person to identify the person and adopt or accept a
        record.
        (8) "Bank" means an organization that is engaged in the
    business of banking. The term includes savings banks,
    savings and loan associations, credit unions, and trust
    companies.
        (9) "Cash proceeds" means proceeds that are money,
    checks, deposit accounts, or the like.
        (10) "Certificate of title" means a certificate of
    title with respect to which a statute provides for the
    security interest in question to be indicated on the
    certificate as a condition or result of the security
    interest's obtaining priority over the rights of a lien
    creditor with respect to the collateral.
        (11) "Chattel paper" means a record or records that
    evidence both a monetary obligation and a security interest
    in specific goods, a security interest in specific goods
    and software used in the goods, a security interest in
    specific goods and license of software used in the goods, a
    lease of specific goods, or a lease of specified goods and
    a license of software used in the goods. In this paragraph,
    "monetary obligation" means a monetary obligation secured
    by the goods or owed under a lease of the goods and
    includes a monetary obligation with respect to software
    used in the goods. The term does not include (i) charters
    or other contracts involving the use or hire of a vessel or
    (ii) records that evidence a right to payment arising out
    of the use of a credit or charge card or information
    contained on or for use with the card. If a transaction is
    evidenced by records that include an instrument or series
    of instruments, the group of records taken together
    constitutes chattel paper.
        (12) "Collateral" means the property subject to a
    security interest or agricultural lien. The term includes:
            (A) proceeds to which a security interest
        attaches;
            (B) accounts, chattel paper, payment intangibles,
        and promissory notes that have been sold; and
            (C) goods that are the subject of a consignment.
        (13) "Commercial tort claim" means a claim arising in
    tort with respect to which:
            (A) the claimant is an organization; or
            (B) the claimant is an individual and the claim:
                (i) arose in the course of the claimant's
            business or profession; and
                (ii) does not include damages arising out of
            personal injury to or the death of an individual.
        (14) "Commodity account" means an account maintained
    by a commodity intermediary in which a commodity contract
    is carried for a commodity customer.
        (15) "Commodity contract" means a commodity futures
    contract, an option on a commodity futures contract, a
    commodity option, or another contract if the contract or
    option is:
            (A) traded on or subject to the rules of a board of
        trade that has been designated as a contract market for
        such a contract pursuant to federal commodities laws;
        or
            (B) traded on a foreign commodity board of trade,
        exchange, or market, and is carried on the books of a
        commodity intermediary for a commodity customer.
        (16) "Commodity customer" means a person for which a
    commodity intermediary carries a commodity contract on its
    books.
        (17) "Commodity intermediary" means a person that:
            (A) is registered as a futures commission merchant
        under federal commodities law; or
            (B) in the ordinary course of its business provides
        clearance or settlement services for a board of trade
        that has been designated as a contract market pursuant
        to federal commodities law.
        (18) "Communicate" means:
            (A) to send a written or other tangible record;
            (B) to transmit a record by any means agreed upon
        by the persons sending and receiving the record; or
            (C) in the case of transmission of a record to or
        by a filing office, to transmit a record by any means
        prescribed by filing-office rule.
        (19) "Consignee" means a merchant to which goods are
    delivered in a consignment.
        (20) "Consignment" means a transaction, regardless of
    its form, in which a person delivers goods to a merchant
    for the purpose of sale and:
            (A) the merchant:
                (i) deals in goods of that kind under a name
            other than the name of the person making delivery;
                (ii) is not an auctioneer; and
                (iii) is not generally known by its creditors
            to be substantially engaged in selling the goods of
            others;
            (B) with respect to each delivery, the aggregate
        value of the goods is $1,000 or more at the time of
        delivery;
            (C) the goods are not consumer goods immediately
        before delivery; and
            (D) the transaction does not create a security
        interest that secures an obligation.
        (21) "Consignor" means a person that delivers goods to
    a consignee in a consignment.
        (22) "Consumer debtor" means a debtor in a consumer
    transaction.
        (23) "Consumer goods" means goods that are used or
    bought for use primarily for personal, family, or household
    purposes.
        (24) "Consumer-goods transaction" means a consumer
    transaction in which:
            (A) an individual incurs an obligation primarily
        for personal, family, or household purposes; and
            (B) a security interest in consumer goods secures
        the obligation.
        (25) "Consumer obligor" means an obligor who is an
    individual and who incurred the obligation as part of a
    transaction entered into primarily for personal, family,
    or household purposes.
        (26) "Consumer transaction" means a transaction in
    which (i) an individual incurs an obligation primarily for
    personal, family, or household purposes, (ii) a security
    interest secures the obligation, and (iii) the collateral
    is held or acquired primarily for personal, family, or
    household purposes. The term includes consumer-goods
    transactions.
        (27) "Continuation statement" means an amendment of a
    financing statement which:
            (A) identifies, by its file number, the initial
        financing statement to which it relates; and
            (B) indicates that it is a continuation statement
        for, or that it is filed to continue the effectiveness
        of, the identified financing statement.
        (28) "Debtor" means:
            (A) a person having an interest, other than a
        security interest or other lien, in the collateral,
        whether or not the person is an obligor;
            (B) a seller of accounts, chattel paper, payment
        intangibles, or promissory notes; or
            (C) a consignee.
        (29) "Deposit account" means a demand, time, savings,
    passbook, nonnegotiable certificates of deposit,
    uncertificated certificates of deposit, nontransferrable
    certificates of deposit, or similar account maintained
    with a bank. The term does not include investment property
    or accounts evidenced by an instrument.
        (30) "Document" means a document of title or a receipt
    of the type described in Section 7-201(b) 7-201(2).
        (31) "Electronic chattel paper" means chattel paper
    evidenced by a record or records consisting of information
    stored in an electronic medium.
        (32) "Encumbrance" means a right, other than an
    ownership interest, in real property. The term includes
    mortgages and other liens on real property.
        (33) "Equipment" means goods other than inventory,
    farm products, or consumer goods.
        (34) "Farm products" means goods, other than standing
    timber, with respect to which the debtor is engaged in a
    farming operation and which are:
            (A) crops grown, growing, or to be grown,
        including:
                (i) crops produced on trees, vines, and
            bushes; and
                (ii) aquatic goods produced in aquacultural
            operations;
            (B) livestock, born or unborn, including aquatic
        goods produced in aquacultural operations;
            (C) supplies used or produced in a farming
        operation; or
            (D) products of crops or livestock in their
        unmanufactured states.
        (35) "Farming operation" means raising, cultivating,
    propagating, fattening, grazing, or any other farming,
    livestock, or aquacultural operation.
        (36) "File number" means the number assigned to an
    initial financing statement pursuant to Section 9-519(a).
        (37) "Filing office" means an office designated in
    Section 9-501 as the place to file a financing statement.
        (38) "Filing-office rule" means a rule adopted
    pursuant to Section 9-526.
        (39) "Financing statement" means a record or records
    composed of an initial financing statement and any filed
    record relating to the initial financing statement.
        (40) "Fixture filing" means the filing of a financing
    statement covering goods that are or are to become fixtures
    and satisfying Section 9-502(a) and (b). The term includes
    the filing of a financing statement covering goods of a
    transmitting utility which are or are to become fixtures.
        (41) "Fixtures" means goods that have become so related
    to particular real property that an interest in them arises
    under real property law.
        (42) "General intangible" means any personal property,
    including things in action, other than accounts, chattel
    paper, commercial tort claims, deposit accounts,
    documents, goods, instruments, investment property,
    letter-of-credit rights, letters of credit, money, and
    oil, gas, or other minerals before extraction. The term
    includes payment intangibles and software.
        (43) "Good faith" means honesty in fact and the
    observance of reasonable commercial standards of fair
    dealing.
        (44) "Goods" means all things that are movable when a
    security interest attaches. The term includes (i)
    fixtures, (ii) standing timber that is to be cut and
    removed under a conveyance or contract for sale, (iii) the
    unborn young of animals, (iv) crops grown, growing, or to
    be grown, even if the crops are produced on trees, vines,
    or bushes, and (v) manufactured homes. The term also
    includes a computer program embedded in goods and any
    supporting information provided in connection with a
    transaction relating to the program if (i) the program is
    associated with the goods in such a manner that it
    customarily is considered part of the goods, or (ii) by
    becoming the owner of the goods, a person acquires a right
    to use the program in connection with the goods. The term
    does not include a computer program embedded in goods that
    consist solely of the medium in which the program is
    embedded. The term also does not include accounts, chattel
    paper, commercial tort claims, deposit accounts,
    documents, general intangibles, instruments, investment
    property, letter-of-credit rights, letters of credit,
    money, or oil, gas, or other minerals before extraction.
        (45) "Governmental unit" means a subdivision, agency,
    department, county, parish, municipality, or other unit of
    the government of the United States, a State, or a foreign
    country. The term includes an organization having a
    separate corporate existence if the organization is
    eligible to issue debt on which interest is exempt from
    income taxation under the laws of the United States.
        (46) "Health-care-insurance receivable" means an
    interest in or claim under a policy of insurance which is a
    right to payment of a monetary obligation for health-care
    goods or services provided.
        (47) "Instrument" means a negotiable instrument or any
    other writing that evidences a right to the payment of a
    monetary obligation, is not itself a security agreement or
    lease, and is of a type that in ordinary course of business
    is transferred by delivery with any necessary indorsement
    or assignment. The term does not include (i) investment
    property, (ii) letters of credit, (iii) nonnegotiable
    certificates of deposit, (iv) uncertificated certificates
    of deposit, (v) nontransferrable certificates of deposit,
    or (vi) writings that evidence a right to payment arising
    out of the use of a credit or charge card or information
    contained on or for use with the card.
        (48) "Inventory" means goods, other than farm
    products, which:
            (A) are leased by a person as lessor;
            (B) are held by a person for sale or lease or to be
        furnished under a contract of service;
            (C) are furnished by a person under a contract of
        service; or
            (D) consist of raw materials, work in process, or
        materials used or consumed in a business.
        (49) "Investment property" means a security, whether
    certificated or uncertificated, security entitlement,
    securities account, commodity contract, or commodity
    account.
        (50) "Jurisdiction of organization", with respect to a
    registered organization, means the jurisdiction under
    whose law the organization is organized.
        (51) "Letter-of-credit right" means a right to payment
    or performance under a letter of credit, whether or not the
    beneficiary has demanded or is at the time entitled to
    demand payment or performance. The term does not include
    the right of a beneficiary to demand payment or performance
    under a letter of credit.
        (52) "Lien creditor" means:
            (A) a creditor that has acquired a lien on the
        property involved by attachment, levy, or the like;
            (B) an assignee for benefit of creditors from the
        time of assignment;
            (C) a trustee in bankruptcy from the date of the
        filing of the petition; or
            (D) a receiver in equity from the time of
        appointment.
        (53) "Manufactured home" means a structure,
    transportable in one or more sections, which, in the
    traveling mode, is eight body feet or more in width or 40
    body feet or more in length, or, when erected on site, is
    320 or more square feet, and which is built on a permanent
    chassis and designed to be used as a dwelling with or
    without a permanent foundation when connected to the
    required utilities, and includes the plumbing, heating,
    air-conditioning, and electrical systems contained
    therein. The term includes any structure that meets all of
    the requirements of this paragraph except the size
    requirements and with respect to which the manufacturer
    voluntarily files a certification required by the United
    States Secretary of Housing and Urban Development and
    complies with the standards established under Title 42 of
    the United States Code.
        (54) "Manufactured-home transaction" means a secured
    transaction:
            (A) that creates a purchase-money security
        interest in a manufactured home, other than a
        manufactured home held as inventory; or
            (B) in which a manufactured home, other than a
        manufactured home held as inventory, is the primary
        collateral.
        (55) "Mortgage" means a consensual interest in real
    property, including fixtures, which secures payment or
    performance of an obligation.
        (56) "New debtor" means a person that becomes bound as
    debtor under Section 9-203(d) by a security agreement
    previously entered into by another person.
        (57) "New value" means (i) money, (ii) money's worth in
    property, services, or new credit, or (iii) release by a
    transferee of an interest in property previously
    transferred to the transferee. The term does not include an
    obligation substituted for another obligation.
        (58) "Noncash proceeds" means proceeds other than cash
    proceeds.
        (59) "Obligor" means a person that, with respect to an
    obligation secured by a security interest in or an
    agricultural lien on the collateral, (i) owes payment or
    other performance of the obligation, (ii) has provided
    property other than the collateral to secure payment or
    other performance of the obligation, or (iii) is otherwise
    accountable in whole or in part for payment or other
    performance of the obligation. The term does not include
    issuers or nominated persons under a letter of credit.
        (60) "Original debtor", except as used in Section
    9-310(c), means a person that, as debtor, entered into a
    security agreement to which a new debtor has become bound
    under Section 9-203(d).
        (61) "Payment intangible" means a general intangible
    under which the account debtor's principal obligation is a
    monetary obligation.
        (62) "Person related to", with respect to an
    individual, means:
            (A) the spouse of the individual;
            (B) a brother, brother-in-law, sister, or
        sister-in-law of the individual;
            (C) an ancestor or lineal descendant of the
        individual or the individual's spouse; or
            (D) any other relative, by blood or marriage, of
        the individual or the individual's spouse who shares
        the same home with the individual.
        (63) "Person related to", with respect to an
    organization, means:
            (A) a person directly or indirectly controlling,
        controlled by, or under common control with the
        organization;
            (B) an officer or director of, or a person
        performing similar functions with respect to, the
        organization;
            (C) an officer or director of, or a person
        performing similar functions with respect to, a person
        described in subparagraph (A);
            (D) the spouse of an individual described in
        subparagraph (A), (B), or (C); or
            (E) an individual who is related by blood or
        marriage to an individual described in subparagraph
        (A), (B), (C), or (D) and shares the same home with the
        individual.
        (64) "Proceeds", except as used in Section 9-609(b),
    means the following property:
            (A) whatever is acquired upon the sale, lease,
        license, exchange, or other disposition of collateral;
            (B) whatever is collected on, or distributed on
        account of, collateral;
            (C) rights arising out of collateral;
            (D) to the extent of the value of collateral,
        claims arising out of the loss, nonconformity, or
        interference with the use of, defects or infringement
        of rights in, or damage to, the collateral; or
            (E) to the extent of the value of collateral and to
        the extent payable to the debtor or the secured party,
        insurance payable by reason of the loss or
        nonconformity of, defects or infringement of rights
        in, or damage to, the collateral.
        (65) "Promissory note" means an instrument that
    evidences a promise to pay a monetary obligation, does not
    evidence an order to pay, and does not contain an
    acknowledgment by a bank that the bank has received for
    deposit a sum of money or funds.
        (66) "Proposal" means a record authenticated by a
    secured party which includes the terms on which the secured
    party is willing to accept collateral in full or partial
    satisfaction of the obligation it secures pursuant to
    Sections 9-620, 9-621, and 9-622.
        (67) "Public-finance transaction" means a secured
    transaction in connection with which:
            (A) debt securities are issued;
            (B) all or a portion of the securities issued have
        an initial stated maturity of at least 20 years; and
            (C) the debtor, obligor, secured party, account
        debtor or other person obligated on collateral,
        assignor or assignee of a secured obligation, or
        assignor or assignee of a security interest is a State
        or a governmental unit of a State.
        (68) "Pursuant to commitment", with respect to an
    advance made or other value given by a secured party, means
    pursuant to the secured party's obligation, whether or not
    a subsequent event of default or other event not within the
    secured party's control has relieved or may relieve the
    secured party from its obligation.
        (69) "Record", except as used in "for record", "of
    record", "record or legal title", and "record owner", means
    information that is inscribed on a tangible medium or which
    is stored in an electronic or other medium and is
    retrievable in perceivable form.
        (70) "Registered organization" means an organization
    organized solely under the law of a single State or the
    United States and as to which the State or the United
    States must maintain a public record showing the
    organization to have been organized.
        (71) "Secondary obligor" means an obligor to the extent
    that:
            (A) the obligor's obligation is secondary; or
            (B) the obligor has a right of recourse with
        respect to an obligation secured by collateral against
        the debtor, another obligor, or property of either.
        (72) "Secured party" means:
            (A) a person in whose favor a security interest is
        created or provided for under a security agreement,
        whether or not any obligation to be secured is
        outstanding;
            (B) a person that holds an agricultural lien;
            (C) a consignor;
            (D) a person to which accounts, chattel paper,
        payment intangibles, or promissory notes have been
        sold;
            (E) a trustee, indenture trustee, agent,
        collateral agent, or other representative in whose
        favor a security interest or agricultural lien is
        created or provided for; or
            (F) a person that holds a security interest arising
        under Section 2-401, 2-505, 2-711(3), 2A-508(5),
        4-210, or 5-118.
        (73) "Security agreement" means an agreement that
    creates or provides for a security interest.
        (74) "Send", in connection with a record or
    notification, means:
            (A) to deposit in the mail, deliver for
        transmission, or transmit by any other usual means of
        communication, with postage or cost of transmission
        provided for, addressed to any address reasonable
        under the circumstances; or
            (B) to cause the record or notification to be
        received within the time that it would have been
        received if properly sent under subparagraph (A).
        (75) "Software" means a computer program and any
    supporting information provided in connection with a
    transaction relating to the program. The term does not
    include a computer program that is included in the
    definition of goods.
        (76) "State" means a State of the United States, the
    District of Columbia, Puerto Rico, the United States Virgin
    Islands, or any territory or insular possession subject to
    the jurisdiction of the United States.
        (77) "Supporting obligation" means a letter-of-credit
    right or secondary obligation that supports the payment or
    performance of an account, chattel paper, a document, a
    general intangible, an instrument, or investment property.
        (78) "Tangible chattel paper" means chattel paper
    evidenced by a record or records consisting of information
    that is inscribed on a tangible medium.
        (79) "Termination statement" means an amendment of a
    financing statement which:
            (A) identifies, by its file number, the initial
        financing statement to which it relates; and
            (B) indicates either that it is a termination
        statement or that the identified financing statement
        is no longer effective.
        (80) "Transmitting utility" means a person primarily
    engaged in the business of:
            (A) operating a railroad, subway, street railway,
        or trolley bus;
            (B) transmitting communications electrically,
        electromagnetically, or by light;
            (C) transmitting goods by pipeline or sewer; or
            (D) transmitting or producing and transmitting
        electricity, steam, gas, or water.
    (b) Definitions in other Articles. "Control" as provided in
Section 7-106 and the The following definitions in other
Articles apply to this Article:
    "Applicant". Section 5-102.
    "Beneficiary". Section 5-102.
    "Broker". Section 8-102.
    "Certificated security". Section 8-102.
    "Check". Section 3-104.
    "Clearing corporation". Section 8-102.
    "Contract for sale". Section 2-106.
    "Customer". Section 4-104.
    "Entitlement holder". Section 8-102.
    "Financial asset". Section 8-102.
    "Holder in due course". Section 3-302.
    "Issuer" (with respect to a letter of credit or
letter-of-credit right). Section 5-102.
    "Issuer" (with respect to a security). Section 8-201.
    "Issuer" (with respect to documents of title). Section
7-102.
    "Lease". Section 2A-103.
    "Lease agreement". Section 2A-103.
    "Lease contract". Section 2A-103.
    "Leasehold interest". Section 2A-103.
    "Lessee". Section 2A-103.
    "Lessee in ordinary course of business". Section 2A-103.
    "Lessor". Section 2A-103.
    "Lessor's residual interest". Section 2A-103.
    "Letter of credit". Section 5-102.
    "Merchant". Section 2-104.
    "Negotiable instrument". Section 3-104.
    "Nominated person". Section 5-102.
    "Note". Section 3-104.
    "Proceeds of a letter of credit". Section 5-114.
    "Prove". Section 3-103.
    "Sale". Section 2-106.
    "Securities account". Section 8-501.
    "Securities intermediary". Section 8-102.
    "Security". Section 8-102.
    "Security certificate". Section 8-102.
    "Security entitlement". Section 8-102.
    "Uncertificated security". Section 8-102.
    (c) Article 1 definitions and principles. Article 1
contains general definitions and principles of construction
and interpretation applicable throughout this Article.
(Source: P.A. 91-893, eff. 7-1-01; 92-819, eff. 8-21-02.)
 
    (810 ILCS 5/9-203)  (from Ch. 26, par. 9-203)
    Sec. 9-203. Attachment and enforceability of security
interest; proceeds; supporting obligations; formal requisites.
    (a) Attachment. A security interest attaches to collateral
when it becomes enforceable against the debtor with respect to
the collateral, unless an agreement expressly postpones the
time of attachment.
    (b) Enforceability. Except as otherwise provided in
subsections (c) through (i), a security interest is enforceable
against the debtor and third parties with respect to the
collateral only if:
        (1) value has been given;
        (2) the debtor has rights in the collateral or the
    power to transfer rights in the collateral to a secured
    party; and
        (3) one of the following conditions is met:
            (A) the debtor has authenticated a security
        agreement that provides a description of the
        collateral and, if the security interest covers timber
        to be cut, a description of the land concerned;
            (B) the collateral is not a certificated security
        and is in the possession of the secured party under
        Section 9-313 pursuant to the debtor's security
        agreement;
            (C) the collateral is a certificated security in
        registered form and the security certificate has been
        delivered to the secured party under Section 8-301
        pursuant to the debtor's security agreement; or
            (D) the collateral is deposit accounts, electronic
        chattel paper, investment property, or
        letter-of-credit rights, or electronic documents, and
        the secured party has control under Section 7-106,
        9-104, 9-105, 9-106, or 9-107 pursuant to the debtor's
        security agreement.
    (c) Other UCC provisions. Subsection (b) is subject to
Section 4-210 on the security interest of a collecting bank,
Section 5-118 on the security interest of a letter-of-credit
issuer or nominated person, Section 9-110 on a security
interest arising under Article 2 or 2A, and Section 9-206 on
security interests in investment property.
    (d) When person becomes bound by another person's security
agreement. A person becomes bound as debtor by a security
agreement entered into by another person if, by operation of
law other than this Article or by contract:
        (1) the security agreement becomes effective to create
    a security interest in the person's property; or
        (2) the person becomes generally obligated for the
    obligations of the other person, including the obligation
    secured under the security agreement, and acquires or
    succeeds to all or substantially all of the assets of the
    other person.
    (e) Effect of new debtor becoming bound. If a new debtor
becomes bound as debtor by a security agreement entered into by
another person:
        (1) the agreement satisfies subsection (b)(3) with
    respect to existing or after-acquired property of the new
    debtor to the extent the property is described in the
    agreement; and
        (2) another agreement is not necessary to make a
    security interest in the property enforceable.
    (f) Proceeds and supporting obligations. The attachment of
a security interest in collateral gives the secured party the
rights to proceeds provided by Section 9-315 and is also
attachment of a security interest in a supporting obligation
for the collateral.
    (g) Lien securing right to payment. The attachment of a
security interest in a right to payment or performance secured
by a security interest or other lien on personal or real
property is also attachment of a security interest in the
security interest, mortgage, or other lien.
    (h) Security entitlement carried in securities account.
The attachment of a security interest in a securities account
is also attachment of a security interest in the security
entitlements carried in the securities account.
    (i) Commodity contracts carried in commodity account. The
attachment of a security interest in a commodity account is
also attachment of a security interest in the commodity
contracts carried in the commodity account.
(Source: P.A. 91-893, eff. 7-1-01.)
 
    (810 ILCS 5/9-207)  (from Ch. 26, par. 9-207)
    Sec. 9-207. Rights and duties of secured party having
possession or control of collateral.
    (a) Duty of care when secured party in possession. Except
as otherwise provided in subsection (d), a secured party shall
use reasonable care in the custody and preservation of
collateral in the secured party's possession. In the case of
chattel paper or an instrument, reasonable care includes taking
necessary steps to preserve rights against prior parties unless
otherwise agreed.
    (b) Expenses, risks, duties, and rights when secured party
in possession. Except as otherwise provided in subsection (d),
if a secured party has possession of collateral:
        (1) reasonable expenses, including the cost of
    insurance and payment of taxes or other charges, incurred
    in the custody, preservation, use, or operation of the
    collateral are chargeable to the debtor and are secured by
    the collateral;
        (2) the risk of accidental loss or damage is on the
    debtor to the extent of a deficiency in any effective
    insurance coverage;
        (3) the secured party shall keep the collateral
    identifiable, but fungible collateral may be commingled;
    and
        (4) the secured party may use or operate the
    collateral:
            (A) for the purpose of preserving the collateral or
        its value;
            (B) as permitted by an order of a court having
        competent jurisdiction; or
            (C) except in the case of consumer goods, in the
        manner and to the extent agreed by the debtor.
    (c) Duties and rights when secured party in possession or
control. Except as otherwise provided in subsection (d), a
secured party having possession of collateral or control of
collateral under Section 7-106, 9-104, 9-105, 9-106, or 9-107:
        (1) may hold as additional security any proceeds,
    except money or funds, received from the collateral;
        (2) shall apply money or funds received from the
    collateral to reduce the secured obligation, unless
    remitted to the debtor; and
        (3) may create a security interest in the collateral.
    (d) Buyer of certain rights to payment. If the secured
party is a buyer of accounts, chattel paper, payment
intangibles, or promissory notes or a consignor:
        (1) subsection (a) does not apply unless the secured
    party is entitled under an agreement:
            (A) to charge back uncollected collateral; or
            (B) otherwise to full or limited recourse against
        the debtor or a secondary obligor based on the
        nonpayment or other default of an account debtor or
        other obligor on the collateral; and
        (2) subsections (b) and (c) do not apply.
(Source: P.A. 91-893, eff. 7-1-01.)
 
    (810 ILCS 5/9-208)  (from Ch. 26, par. 9-208)
    Sec. 9-208. Additional duties of secured party having
control of collateral.
    (a) Applicability of Section. This Section applies to cases
in which there is no outstanding secured obligation and the
secured party is not committed to make advances, incur
obligations, or otherwise give value.
    (b) Duties of secured party after receiving demand from
debtor. Within 10 days after receiving an authenticated demand
by the debtor:
        (1) a secured party having control of a deposit account
    under Section 9-104(a)(2) shall send to the bank with which
    the deposit account is maintained an authenticated
    statement that releases the bank from any further
    obligation to comply with instructions originated by the
    secured party;
        (2) a secured party having control of a deposit account
    under Section 9-104(a)(3) shall:
            (A) pay the debtor the balance on deposit in the
        deposit account; or
            (B) transfer the balance on deposit into a deposit
        account in the debtor's name;
        (3) a secured party, other than a buyer, having control
    of electronic chattel paper under Section 9-105 shall:
            (A) communicate the authoritative copy of the
        electronic chattel paper to the debtor or its
        designated custodian;
            (B) if the debtor designates a custodian that is
        the designated custodian with which the authoritative
        copy of the electronic chattel paper is maintained for
        the secured party, communicate to the custodian an
        authenticated record releasing the designated
        custodian from any further obligation to comply with
        instructions originated by the secured party and
        instructing the custodian to comply with instructions
        originated by the debtor; and
            (C) take appropriate action to enable the debtor or
        its designated custodian to make copies of or revisions
        to the authoritative copy which add or change an
        identified assignee of the authoritative copy without
        the consent of the secured party;
        (4) a secured party having control of investment
    property under Section 8-106(d)(2) or 9-106(b) shall send
    to the securities intermediary or commodity intermediary
    with which the security entitlement or commodity contract
    is maintained an authenticated record that releases the
    securities intermediary or commodity intermediary from any
    further obligation to comply with entitlement orders or
    directions originated by the secured party; and
        (5) a secured party having control of a
    letter-of-credit right under Section 9-107 shall send to
    each person having an unfulfilled obligation to pay or
    deliver proceeds of the letter of credit to the secured
    party an authenticated release from any further obligation
    to pay or deliver proceeds of the letter of credit to the
    secured party; and .
        (6) a secured party having control of an electronic
    document shall:
            (A) give control of the electronic document to the
        debtor or its designated custodian;
            (B) if the debtor designates a custodian that is
        the designated custodian with which the authoritative
        copy of the electronic document is maintained for the
        secured party, communicate to the custodian an
        authenticated record releasing the designated
        custodian from any further obligation to comply with
        instructions originated by the secured party and
        instructing the custodian to comply with instructions
        originated by the debtor; and
            (C) take appropriate action to enable the debtor or
        its designated custodian to make copies of or revisions
        to the authoritative copy which add or change an
        identified assignee of the authoritative copy without
        the consent of the secured party.
(Source: P.A. 91-893, eff. 7-1-01.)
 
    (810 ILCS 5/9-301)  (from Ch. 26, par. 9-301)
    Sec. 9-301. Law governing perfection and priority of
security interests. Except as otherwise provided in Sections
9-303 through 9-306.1, the following rules determine the law
governing perfection, the effect of perfection or
nonperfection, and the priority of a security interest in
collateral:
        (1) Except as otherwise provided in this Section, while
    a debtor is located in a jurisdiction, the local law of
    that jurisdiction governs perfection, the effect of
    perfection or nonperfection, and the priority of a security
    interest in collateral.
        (2) While collateral is located in a jurisdiction, the
    local law of that jurisdiction governs perfection, the
    effect of perfection or nonperfection, and the priority of
    a possessory security interest in that collateral.
        (3) Except as otherwise provided in paragraph (4),
    while tangible negotiable documents, goods, instruments,
    money, or tangible chattel paper is located in a
    jurisdiction, the local law of that jurisdiction governs:
            (A) perfection of a security interest in the goods
        by filing a fixture filing;
            (B) perfection of a security interest in timber to
        be cut; and
            (C) the effect of perfection or nonperfection and
        the priority of a nonpossessory security interest in
        the collateral.
        (4) The local law of the jurisdiction in which the
    wellhead or minehead is located governs perfection, the
    effect of perfection or nonperfection, and the priority of
    a security interest in as-extracted collateral.
(Source: P.A. 91-893, eff. 7-1-01; 92-234, eff. 1-1-02.)
 
    (810 ILCS 5/9-310)  (from Ch. 26, par. 9-310)
    Sec. 9-310. When filing required to perfect security
interest or agricultural lien; security interests and
agricultural liens to which filing provisions do not apply.
    (a) General rule: perfection by filing. Except as otherwise
provided in subsection (b) and Section 9-312(b), a financing
statement must be filed to perfect all security interests and
agricultural liens.
    (b) Exceptions: filing not necessary. The filing of a
financing statement is not necessary to perfect a security
interest:
        (1) that is perfected under Section 9-308(d), (e), (f),
    or (g);
        (2) that is perfected under Section 9-309 when it
    attaches;
        (3) in property subject to a statute, regulation, or
    treaty described in Section 9-311(a);
        (4) in goods in possession of a bailee which is
    perfected under Section 9-312(d)(1) or (2);
        (5) in certificated securities, documents, goods, or
    instruments which is perfected without filing, control, or
    possession under Section 9-312(e), (f), or (g);
        (6) in collateral in the secured party's possession
    under Section 9-313;
        (7) in a certificated security which is perfected by
    delivery of the security certificate to the secured party
    under Section 9-313;
        (8) in deposit accounts, electronic chattel paper,
    electronic documents, investment property,
    letter-of-credit rights, or beneficial interests in
    Illinois land trusts which is perfected by control under
    Section 9-314;
        (9) in proceeds which is perfected under Section 9-315;
    or
        (10) that is perfected under Section 9-316.
    (c) Assignment of perfected security interest. If a secured
party assigns a perfected security interest or agricultural
lien, a filing under this Article is not required to continue
the perfected status of the security interest against creditors
of and transferees from the original debtor.
(Source: P.A. 91-893, eff. 7-1-01; 92-234, eff. 1-1-02.)
 
    (810 ILCS 5/9-312)  (from Ch. 26, par. 9-312)
    Sec. 9-312. Perfection of security interests in chattel
paper, deposit accounts, documents, goods covered by
documents, instruments, investment property, letter-of-credit
rights, and money; perfection by permissive filing; temporary
perfection without filing or transfer of possession.
    (a) Perfection by filing permitted. A security interest in
chattel paper, negotiable documents, instruments, beneficial
interests in Illinois land trusts, or investment property may
be perfected by filing.
    (b) Control or possession of certain collateral. Except as
otherwise provided in Section 9-315(c) and (d) for proceeds:
        (1) a security interest in a deposit account may be
    perfected only by control under Section 9-314;
        (2) and except as otherwise provided in Section
    9-308(d), a security interest in a letter-of-credit right
    may be perfected only by control under Section 9-314; and
        (3) a security interest in money may be perfected only
    by the secured party's taking possession under Section
    9-313.
    (c) Goods covered by negotiable document. While goods are
in the possession of a bailee that has issued a negotiable
document covering the goods:
        (1) a security interest in the goods may be perfected
    by perfecting a security interest in the document; and
        (2) a security interest perfected in the document has
    priority over any security interest that becomes perfected
    in the goods by another method during that time.
    (d) Goods covered by nonnegotiable document. While goods
are in the possession of a bailee that has issued a
nonnegotiable document covering the goods, a security interest
in the goods may be perfected by:
        (1) issuance of a document in the name of the secured
    party;
        (2) the bailee's receipt of notification of the secured
    party's interest; or
        (3) filing as to the goods.
    (e) Temporary perfection: new value. A security interest in
certificated securities, negotiable documents, or instruments
is perfected without filing or the taking of possession or
control for a period of 20 days from the time it attaches to
the extent that it arises for new value given under an
authenticated security agreement.
    (f) Temporary perfection: goods or documents made
available to debtor. A perfected security interest in a
negotiable document or goods in possession of a bailee, other
than one that has issued a negotiable document for the goods,
remains perfected for 20 days without filing if the secured
party makes available to the debtor the goods or documents
representing the goods for the purpose of:
        (1) ultimate sale or exchange; or
        (2) loading, unloading, storing, shipping,
    transshipping, manufacturing, processing, or otherwise
    dealing with them in a manner preliminary to their sale or
    exchange.
    (g) Temporary perfection: delivery of security certificate
or instrument to debtor. A perfected security interest in a
certificated security or instrument remains perfected for 20
days without filing if the secured party delivers the security
certificate or instrument to the debtor for the purpose of:
        (1) ultimate sale or exchange; or
        (2) presentation, collection, enforcement, renewal, or
    registration of transfer.
    (h) Expiration of temporary perfection. After the 20-day
period specified in subsection (e), (f), or (g) expires,
perfection depends upon compliance with this Article.
(Source: P.A. 91-893, eff. 7-1-01; 92-234, eff. 1-1-02.)
 
    (810 ILCS 5/9-313)  (from Ch. 26, par. 9-313)
    Sec. 9-313. When possession by or delivery to secured party
perfects security interest without filing.
    (a) Perfection by possession or delivery. Except as
otherwise provided in subsection (b), a secured party may
perfect a security interest in tangible negotiable documents,
goods, instruments, money, or tangible chattel paper by taking
possession of the collateral. A secured party may perfect a
security interest in certificated securities by taking
delivery of the certificated securities under Section 8-301.
    (b) Goods covered by certificate of title. With respect to
goods covered by a certificate of title issued by this State, a
secured party may perfect a security interest in the goods by
taking possession of the goods only in the circumstances
described in Section 9-316(d).
    (c) Collateral in possession of person other than debtor.
With respect to collateral other than certificated securities
and goods covered by a document, a secured party takes
possession of collateral in the possession of a person other
than the debtor, the secured party, or a lessee of the
collateral from the debtor in the ordinary course of the
debtor's business, when:
        (1) the person in possession authenticates a record
    acknowledging that it holds possession of the collateral
    for the secured party's benefit; or
        (2) the person takes possession of the collateral after
    having authenticated a record acknowledging that it will
    hold possession of collateral for the secured party's
    benefit.
    (d) Time of perfection by possession; continuation of
perfection. If perfection of a security interest depends upon
possession of the collateral by a secured party, perfection
occurs no earlier than the time the secured party takes
possession and continues only while the secured party retains
possession.
    (e) Time of perfection by delivery; continuation of
perfection. A security interest in a certificated security in
registered form is perfected by delivery when delivery of the
certificated security occurs under Section 8-301 and remains
perfected by delivery until the debtor obtains possession of
the security certificate.
    (f) Acknowledgment not required. A person in possession of
collateral is not required to acknowledge that it holds
possession for a secured party's benefit.
    (g) Effectiveness of acknowledgment; no duties or
confirmation. If a person acknowledges that it holds possession
for the secured party's benefit:
        (1) the acknowledgment is effective under subsection
    (c) or Section 8-301(a), even if the acknowledgment
    violates the rights of a debtor; and
        (2) unless the person otherwise agrees or law other
    than this Article otherwise provides, the person does not
    owe any duty to the secured party and is not required to
    confirm the acknowledgment to another person.
    (h) Secured party's delivery to person other than debtor. A
secured party having possession of collateral does not
relinquish possession by delivering the collateral to a person
other than the debtor or a lessee of the collateral from the
debtor in the ordinary course of the debtor's business if the
person was instructed before the delivery or is instructed
contemporaneously with the delivery:
        (1) to hold possession of the collateral for the
    secured party's benefit; or
        (2) to redeliver the collateral to the secured party.
    (i) Effect of delivery under subsection (h); no duties or
confirmation. A secured party does not relinquish possession,
even if a delivery under subsection (h) violates the rights of
a debtor. A person to which collateral is delivered under
subsection (h) does not owe any duty to the secured party and
is not required to confirm the delivery to another person
unless the person otherwise agrees or law other than this
Article otherwise provides.
(Source: P.A. 91-357, eff. 7-29-99; 91-893, eff. 7-1-01.)
 
    (810 ILCS 5/9-314)  (from Ch. 26, par. 9-314)
    Sec. 9-314. Perfection by control.
    (a) Perfection by control. A security interest in
investment property, deposit accounts, electronic chattel
paper, letter-of-credit rights, electronic documents, or
beneficial interests in Illinois land trusts may be perfected
by control of the collateral under Section 7-106, 9-104, 9-105,
9-106, 9-107, or 9-107.1.
    (b) Specified collateral: time of perfection by control;
continuation of perfection. A security interest in deposit
accounts, electronic chattel paper, letter-of-credit rights,
electronic documents, or beneficial interests in Illinois land
trusts is perfected by control under Section 7-106, 9-104,
9-105, 9-107, or 9-107.1 when the secured party obtains control
and remains perfected by control only while the secured party
retains control.
    (c) Investment property: time of perfection by control;
continuation of perfection. A security interest in investment
property is perfected by control under Section 9-106 from the
time the secured party obtains control and remains perfected by
control until:
        (1) the secured party does not have control; and
        (2) one of the following occurs:
            (A) if the collateral is a certificated security,
        the debtor has or acquires possession of the security
        certificate;
            (B) if the collateral is an uncertificated
        security, the issuer has registered or registers the
        debtor as the registered owner; or
            (C) if the collateral is a security entitlement,
        the debtor is or becomes the entitlement holder.
(Source: P.A. 91-893, eff. 7-1-01; 92-234, eff. 1-1-02.)
 
    (810 ILCS 5/9-317)  (from Ch. 26, par. 9-317)
    Sec. 9-317. Interests that take priority over or take free
of security interest or agricultural lien.
    (a) Conflicting security interests and rights of lien
creditors. A security interest or agricultural lien is
subordinate to the rights of:
        (1) a person entitled to priority under Section 9-322;
    and
        (2) except as otherwise provided in subsection (e) or
    (f), a person that becomes a lien creditor before the
    earlier of the time:
            (A) the security interest or agricultural lien is
        perfected; or
            (B) one of the conditions specified in Section
        9-203(b)(3) is met and a financing statement covering
        the collateral is filed.
    (b) Buyers that receive delivery. Except as otherwise
provided in subsection (e), a buyer, other than a secured
party, of tangible chattel paper, tangible documents, goods,
instruments, or a security certificate takes free of a security
interest or agricultural lien if the buyer gives value and
receives delivery of the collateral without knowledge of the
security interest or agricultural lien and before it is
perfected.
    (c) Lessees that receive delivery. Except as otherwise
provided in subsection (e), a lessee of goods takes free of a
security interest or agricultural lien if the lessee gives
value and receives delivery of the collateral without knowledge
of the security interest or agricultural lien and before it is
perfected.
    (d) Licensees and buyers of certain collateral. A licensee
of a general intangible or a buyer, other than a secured party,
of accounts, electronic chattel paper, electronic documents,
general intangibles, or investment property other than a
certificated security takes free of a security interest if the
licensee or buyer gives value without knowledge of the security
interest and before it is perfected.
    (e) Purchase-money security interest. Except as otherwise
provided in Sections 9-320 and 9-321, if a person files a
financing statement with respect to a purchase-money security
interest before or within 20 days after the debtor receives
delivery of the collateral, the security interest takes
priority over the rights of a buyer, lessee, or lien creditor
which arise between the time the security interest attaches and
the time of filing.
    (f) Public deposits. An unperfected security interest
shall take priority over the rights of a lien creditor if (i)
the lien creditor is a trustee or receiver of a bank or acting
in furtherance of its supervisory authority over such bank and
(ii) a security interest is granted by the bank to secure a
deposit of public funds with the bank or a repurchase agreement
with the bank pursuant to the Government Securities Act of
1986, as amended.
(Source: P.A. 91-893, eff. 7-1-01.)
 
    (810 ILCS 5/9-338)
    Sec. 9-338. Priority of security interest or agricultural
lien perfected by filed financing statement providing certain
incorrect information. If a security interest or agricultural
lien is perfected by a filed financing statement providing
information described in Section 9-516(b)(5) which is
incorrect at the time the financing statement is filed:
        (1) the security interest or agricultural lien is
    subordinate to a conflicting perfected security interest
    in the collateral to the extent that the holder of the
    conflicting security interest gives value in reasonable
    reliance upon the incorrect information; and
        (2) a purchaser, other than a secured party, of the
    collateral takes free of the security interest or
    agricultural lien to the extent that, in reasonable
    reliance upon the incorrect information, the purchaser
    gives value and, in the case of tangible chattel paper,
    tangible documents, goods, instruments, or a security
    certificate, receives delivery of the collateral.
(Source: P.A. 91-893, eff. 7-1-01.)
 
    (810 ILCS 5/9-601)
    Sec. 9-601. Rights after default; judicial enforcement;
consignor or buyer of accounts, chattel paper, payment
intangibles, or promissory notes.
    (a) Rights of secured party after default. After default, a
secured party has the rights provided in this Part and, except
as otherwise provided in Section 9-602, those provided by
agreement of the parties. A secured party:
        (1) may reduce a claim to judgment, foreclose, or
    otherwise enforce the claim, security interest, or
    agricultural lien by any available judicial procedure; and
        (2) if the collateral is documents, may proceed either
    as to the documents or as to the goods they cover.
    (b) Rights and duties of secured party in possession or
control. A secured party in possession of collateral or control
of collateral under Section 7-106, 9-104, 9-105, 9-106, or
9-107 has the rights and duties provided in Section 9-207.
    (c) Rights cumulative; simultaneous exercise. The rights
under subsections (a) and (b) are cumulative and may be
exercised simultaneously.
    (d) Rights of debtor and obligor. Except as otherwise
provided in subsection (g) and Section 9-605, after default, a
debtor and an obligor have the rights provided in this Part and
by agreement of the parties.
    (e) Lien of levy after judgment. If a secured party has
reduced its claim to judgment, the lien of any levy that may be
made upon the collateral by virtue of a judgment relates back
to the earliest of:
        (1) the date of perfection of the security interest or
    agricultural lien in the collateral;
        (2) the date of filing a financing statement covering
    the collateral; or
        (3) any date specified in a statute under which the
    agricultural lien was created.
    (f) Execution sale. A sale pursuant to a judgment is a
foreclosure of the security interest or agricultural lien by
judicial procedure within the meaning of this Section. A
secured party may purchase at the sale and thereafter hold the
collateral free of any other requirements of this Article.
    (g) Consignor or buyer of certain rights to payment. Except
as otherwise provided in Section 9-607(c), this Part imposes no
duties upon a secured party that is a consignor or is a buyer
of accounts, chattel paper, payment intangibles, or promissory
notes.
(Source: P.A. 91-893, eff. 7-1-01.)
INDEX
Statutes amended in order of appearance
    810 ILCS 5/Art. 1 Pt. 1
    heading
    810 ILCS 5/1-101 from Ch. 26, par. 1-101
    810 ILCS 5/1-102 from Ch. 26, par. 1-102
    810 ILCS 5/1-103 from Ch. 26, par. 1-103
    810 ILCS 5/1-104 from Ch. 26, par. 1-104
    810 ILCS 5/1-105 from Ch. 26, par. 1-105
    810 ILCS 5/1-106 from Ch. 26, par. 1-106
    810 ILCS 5/1-107 from Ch. 26, par. 1-107
    810 ILCS 5/1-108 from Ch. 26, par. 1-108
    810 ILCS 5/1-109 from Ch. 26, par. 1-109
    810 ILCS 5/Art. 1 Pt. 2
    heading
    810 ILCS 5/1-201 from Ch. 26, par. 1-201
    810 ILCS 5/1-202 from Ch. 26, par. 1-202
    810 ILCS 5/1-203 from Ch. 26, par. 1-203
    810 ILCS 5/1-204 from Ch. 26, par. 1-204
    810 ILCS 5/1-205 from Ch. 26, par. 1-205
    810 ILCS 5/1-206 from Ch. 26, par. 1-206
    810 ILCS 5/1-207 from Ch. 26, par. 1-207
    810 ILCS 5/1-208 from Ch. 26, par. 1-208
    810 ILCS 5/1-209 from Ch. 26, par. 1-209
    810 ILCS 5/Art. 1 Pt. 3
    heading new
    810 ILCS 5/1-301 new
    810 ILCS 5/1-302 new
    810 ILCS 5/1-303 new
    810 ILCS 5/1-304 new
    810 ILCS 5/1-305 new
    810 ILCS 5/1-306 new
    810 ILCS 5/1-307 new
    810 ILCS 5/1-308 new
    810 ILCS 5/1-309 new
    810 ILCS 5/1-310 new
    810 ILCS 5/Art. 7 heading
    810 ILCS 5/Art. 7 Pt. 1
    heading
    810 ILCS 5/7-101 from Ch. 26, par. 7-101
    810 ILCS 5/7-102 from Ch. 26, par. 7-102
    810 ILCS 5/7-103 from Ch. 26, par. 7-103
    810 ILCS 5/7-104 from Ch. 26, par. 7-104
    810 ILCS 5/7-105 from Ch. 26, par. 7-105
    810 ILCS 5/7-106 new
    810 ILCS 5/Art. 7 Pt. 2
    heading
    810 ILCS 5/7-201 from Ch. 26, par. 7-201
    810 ILCS 5/7-202 from Ch. 26, par. 7-202
    810 ILCS 5/7-203 from Ch. 26, par. 7-203
    810 ILCS 5/7-204 from Ch. 26, par. 7-204
    810 ILCS 5/7-205 from Ch. 26, par. 7-205
    810 ILCS 5/7-206 from Ch. 26, par. 7-206
    810 ILCS 5/7-207 from Ch. 26, par. 7-207
    810 ILCS 5/7-208 from Ch. 26, par. 7-208
    810 ILCS 5/7-209 from Ch. 26, par. 7-209
    810 ILCS 5/7-210 from Ch. 26, par. 7-210
    810 ILCS 5/Art. 7 Pt. 3
    heading
    810 ILCS 5/7-301 from Ch. 26, par. 7-301
    810 ILCS 5/7-302 from Ch. 26, par. 7-302
    810 ILCS 5/7-303 from Ch. 26, par. 7-303
    810 ILCS 5/7-304 from Ch. 26, par. 7-304
    810 ILCS 5/7-305 from Ch. 26, par. 7-305
    810 ILCS 5/7-307 from Ch. 26, par. 7-307
    810 ILCS 5/7-308 from Ch. 26, par. 7-308
    810 ILCS 5/7-309 from Ch. 26, par. 7-309
    810 ILCS 5/Art. 7 Pt. 4
    heading
    810 ILCS 5/7-401 from Ch. 26, par. 7-401
    810 ILCS 5/7-402 from Ch. 26, par. 7-402
    810 ILCS 5/7-403 from Ch. 26, par. 7-403
    810 ILCS 5/7-404 from Ch. 26, par. 7-404
    810 ILCS 5/Art. 7 Pt. 5
    heading
    810 ILCS 5/7-501 from Ch. 26, par. 7-501
    810 ILCS 5/7-502 from Ch. 26, par. 7-502
    810 ILCS 5/7-503 from Ch. 26, par. 7-503
    810 ILCS 5/7-504 from Ch. 26, par. 7-504
    810 ILCS 5/7-505 from Ch. 26, par. 7-505
    810 ILCS 5/7-506 from Ch. 26, par. 7-506
    810 ILCS 5/7-507 from Ch. 26, par. 7-507
    810 ILCS 5/7-508 from Ch. 26, par. 7-508
    810 ILCS 5/7-509 from Ch. 26, par. 7-509
    810 ILCS 5/Art. 7 Pt. 6
    heading
    810 ILCS 5/7-601 from Ch. 26, par. 7-601
    810 ILCS 5/7-602 from Ch. 26, par. 7-602
    810 ILCS 5/7-603 from Ch. 26, par. 7-603
    810 ILCS 5/Art. 7 Pt. 7
    heading new
    810 ILCS 5/7-701 new
    810 ILCS 5/7-702 new
    810 ILCS 5/7-703 new
    810 ILCS 5/7-704 new
    810 ILCS 5/2-202 from Ch. 26, par. 2-202
    810 ILCS 5/2-208 from Ch. 26, par. 2-208
    810 ILCS 5/2A-207 from Ch. 26, par. 2A-207
    810 ILCS 5/2A-501 from Ch. 26, par. 2A-501
    810 ILCS 5/2A-518 from Ch. 26, par. 2A-518
    810 ILCS 5/2A-519 from Ch. 26, par. 2A-519
    810 ILCS 5/2A-527 from Ch. 26, par. 2A-527
    810 ILCS 5/2A-528 from Ch. 26, par. 2A-528
    810 ILCS 5/3-103 from Ch. 26, par. 3-103
    810 ILCS 5/4A-105 from Ch. 26, par. 4A-105
    810 ILCS 5/4A-106 from Ch. 26, par. 4A-106
    810 ILCS 5/4A-204 from Ch. 26, par. 4A-204
    810 ILCS 5/5-103 from Ch. 26, par. 5-103
    810 ILCS 5/2-103 from Ch. 26, par. 2-103
    810 ILCS 5/2-104 from Ch. 26, par. 2-104
    810 ILCS 5/2-310 from Ch. 26, par. 2-310
    810 ILCS 5/2-323 from Ch. 26, par. 2-323
    810 ILCS 5/2-401 from Ch. 26, par. 2-401
    810 ILCS 5/2-503 from Ch. 26, par. 2-503
    810 ILCS 5/2-505 from Ch. 26, par. 2-505
    810 ILCS 5/2-506 from Ch. 26, par. 2-506
    810 ILCS 5/2-509 from Ch. 26, par. 2-509
    810 ILCS 5/2-605 from Ch. 26, par. 2-605
    810 ILCS 5/2-705 from Ch. 26, par. 2-705
    810 ILCS 5/2A-103 from Ch. 26, par. 2A-103
    810 ILCS 5/2A-514 from Ch. 26, par. 2A-514
    810 ILCS 5/2A-526 from Ch. 26, par. 2A-526
    810 ILCS 5/4-104 from Ch. 26, par. 4-104
    810 ILCS 5/4-210 from Ch. 26, par. 4-210
    810 ILCS 5/8-103 from Ch. 26, par. 8-103
    810 ILCS 5/9-102 from Ch. 26, par. 9-102
    810 ILCS 5/9-203 from Ch. 26, par. 9-203
    810 ILCS 5/9-207 from Ch. 26, par. 9-207
    810 ILCS 5/9-208 from Ch. 26, par. 9-208
    810 ILCS 5/9-301 from Ch. 26, par. 9-301
    810 ILCS 5/9-310 from Ch. 26, par. 9-310
    810 ILCS 5/9-312 from Ch. 26, par. 9-312
    810 ILCS 5/9-313 from Ch. 26, par. 9-313
    810 ILCS 5/9-314 from Ch. 26, par. 9-314
    810 ILCS 5/9-317 from Ch. 26, par. 9-317
    810 ILCS 5/9-338
    810 ILCS 5/9-601