SB3696 EnrolledLRB103 37687 SPS 67814 b

1    AN ACT concerning commercial transactions.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Uniform Commercial Code is amended by
5renumbering and changing Article 12 as added by Public Act
685-997, by changing Sections 1-201, 1-204, 1-301, 1-306,
72-102, 2-106, 2-201, 2-202, 2-203, 2-205, 2-209, 2A-102,
82A-103, 2A-107, 2A-201, 2A-202, 2A-203, 2A-205, 2A-208, 3-104,
93-105, 3-312, 3-401, 3-604, 4A-103, 4A-201, 4A-202, 4A-203,
104A-207, 4A-208, 4A-210, 4A-211, 4A-305, 5-104, 5-116, 7-102,
117-106, 8-102, 8-103, 8-106, 8-110, 8-303, 9-102, 9-104, 9-105,
129-201, 9-203, 9-204, 9-207, 9-208, 9-209, 9-210, 9-301, 9-304,
139-305, 9-310, 9-312, 9-313, 9-314, 9-316, 9-317, 9-323, 9-324,
149-330, 9-331, 9-332, 9-334, 9-341, 9-404, 9-406, 9-408, 9-509,
159-513, 9-601, 9-605, 9-608, 9-611, 9-613, 9-614, 9-615, 9-616,
169-619, 9-620, 9-621, 9-624, and 9-628, and by adding Articles
1712 and 12A and Sections 9-105A, 9-107A, 9-107B, 9-306A,
189-306B, 9-314A, and 9-326A as follows:
 
19    (810 ILCS 5/1-201)  (from Ch. 26, par. 1-201)
20    Sec. 1-201. General Definitions.
21    (a) Unless the context otherwise requires, words or
22phrases defined in this Section, or in the additional
23definitions contained in other Articles of the Uniform

 

 

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1Commercial Code that apply to particular Articles or parts
2thereof, have the meanings stated.
3    (b) Subject to definitions contained in other Articles of
4the Uniform Commercial Code that apply to particular Articles
5or parts thereof:
6        (1) "Action", in the sense of a judicial proceeding,
7    includes recoupment, counterclaim, set-off, suit in
8    equity, and any other proceeding in which rights are
9    determined.
10        (2) "Aggrieved party" means a party entitled to pursue
11    a remedy.
12        (3) "Agreement", as distinguished from "contract",
13    means the bargain of the parties in fact, as found in their
14    language or inferred from other circumstances, including
15    course of performance, course of dealing, or usage of
16    trade as provided in Section 1-303.
17        (4) "Bank" means a person engaged in the business of
18    banking and includes a savings bank, savings and loan
19    association, credit union, and trust company.
20        (5) "Bearer" means a person in possession of a
21    negotiable instrument, document of title, or certificated
22    security that is payable to bearer or indorsed in blank.
23        (6) "Bill of lading" means a document evidencing the
24    receipt of goods for shipment issued by a person engaged
25    in the business of transporting or forwarding goods.
26        (7) "Branch" includes a separately incorporated

 

 

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1    foreign branch of a bank.
2        (8) "Burden of establishing" a fact means the burden
3    of persuading the trier of fact that the existence of the
4    fact is more probable than its nonexistence.
5        (9) "Buyer in ordinary course of business" means a
6    person that buys goods in good faith, without knowledge
7    that the sale violates the rights of another person in the
8    goods, and in the ordinary course from a person, other
9    than a pawnbroker, in the business of selling goods of
10    that kind. A person buys goods in the ordinary course if
11    the sale to the person comports with the usual or
12    customary practices in the kind of business in which the
13    seller is engaged or with the seller's own usual or
14    customary practices. A person that sells oil, gas, or
15    other minerals at the wellhead or minehead is a person in
16    the business of selling goods of that kind. A buyer in
17    ordinary course of business may buy for cash, by exchange
18    of other property, or on secured or unsecured credit, and
19    may acquire goods or documents of title under a
20    preexisting contract for sale. Only a buyer that takes
21    possession of the goods or has a right to recover the goods
22    from the seller under Article 2 may be a buyer in ordinary
23    course of business. "Buyer in ordinary course of business"
24    does not include a person that acquires goods in a
25    transfer in bulk or as security for or in total or partial
26    satisfaction of a money debt.

 

 

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1        (10) "Conspicuous", with reference to a term, means so
2    written, displayed, or presented that, based on the
3    totality of the circumstances, a reasonable person against
4    which it is to operate ought to have noticed it. Whether a
5    term is "conspicuous" or not is a decision for the court.
6    Conspicuous terms include the following:
7            (A) a heading in capitals equal to or greater in
8        size than the surrounding text, or in contrasting
9        type, font, or color to the surrounding text of the
10        same or lesser size; and
11            (B) language in the body of a record or display in
12        larger type than the surrounding text, or in
13        contrasting type, font, or color to the surrounding
14        text of the same size, or set off from surrounding text
15        of the same size by symbols or other marks that call
16        attention to the language.
17        (11) "Consumer" means an individual who enters into a
18    transaction primarily for personal, family, or household
19    purposes.
20        (12) "Contract", as distinguished from "agreement",
21    means the total legal obligation that results from the
22    parties' agreement as determined by the Uniform Commercial
23    Code as supplemented by any other applicable laws.
24        (13) "Creditor" includes a general creditor, a secured
25    creditor, a lien creditor, and any representative of
26    creditors, including an assignee for the benefit of

 

 

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1    creditors, a trustee in bankruptcy, a receiver in equity,
2    and an executor or administrator of an insolvent debtor's
3    or assignor's estate.
4        (14) "Defendant" includes a person in the position of
5    defendant in a counterclaim, cross-claim, or third-party
6    claim.
7        (15) "Delivery", with respect to an electronic
8    document of title, means voluntary transfer of control
9    and, with respect to an instrument, document of title, or
10    an authoritative tangible copy of a record evidencing
11    chattel paper, means voluntary transfer of possession.
12        (16) "Document of title" includes bill of lading, dock
13    warrant, dock receipt, warehouse receipt or order for the
14    delivery of goods, and also any other document which in
15    the regular course of business or financing is treated as
16    adequately evidencing that the person in possession of it
17    is entitled to receive, hold, and dispose of the document
18    and the goods it covers. To be a document of title, a
19    document must purport to be issued by or addressed to a
20    bailee and purport to cover goods in the bailee's
21    possession which are either identified or are fungible
22    portions of an identified mass.
23        (16A) "Electronic" means relating to technology having
24    electrical, digital, magnetic, wireless, optical,
25    electromagnetic, or similar capabilities.
26        (17) "Fault" means a default, breach, or wrongful act

 

 

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1    or omission.
2        (18) "Fungible goods" means:
3            (A) goods of which any unit, by nature or usage of
4        trade, is the equivalent of any other like unit; or
5            (B) goods that by agreement are treated as
6        equivalent.
7        (19) "Genuine" means free of forgery or
8    counterfeiting.
9        (20) "Good faith" means honesty in fact in the conduct
10    or transaction concerned.
11        (21) "Holder" means:
12            (A) the person in possession of a negotiable
13        instrument that is payable either to bearer or to an
14        identified person that is the person in possession; or
15            (B) the person in possession of a document of
16        title if the goods are deliverable either to bearer or
17        to the order of the person in possession; or .
18            (C) the person in control, other than pursuant to
19        Section 7-106(g), of a negotiable electronic document
20        of title.
21        (22) "Insolvency proceeding" includes an assignment
22    for the benefit of creditors or other proceeding intended
23    to liquidate or rehabilitate the estate of the person
24    involved.
25        (23) "Insolvent" means:
26            (A) having generally ceased to pay debts in the

 

 

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1        ordinary course of business other than as a result of
2        bona fide dispute;
3            (B) being unable to pay debts as they become due;
4        or
5            (C) being insolvent within the meaning of federal
6        bankruptcy law.
7        (24) "Money" means a medium of exchange that is
8    currently authorized or adopted by a domestic or foreign
9    government. The term includes a monetary unit of account
10    established by an intergovernmental organization or by
11    agreement between two or more countries. The term does not
12    include an electronic record that is a medium of exchange
13    recorded and transferable in a system that existed and
14    operated for the medium of exchange before the medium of
15    exchange was authorized or adopted by the government.
16        (25) "Organization" means a person other than an
17    individual.
18        (26) "Party", as distinguished from "third party",
19    means a person that has engaged in a transaction or made an
20    agreement subject to the Uniform Commercial Code.
21        (27) "Person" means an individual, corporation,
22    business trust, estate, trust, partnership, limited
23    liability company, association, joint venture, government,
24    governmental subdivision, agency, or instrumentality,
25    public corporation, or any other legal or commercial
26    entity. The term includes a protected series, however

 

 

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1    denominated, of an entity if the protected series is
2    established under law other than the Uniform Commercial
3    Code that limits, or limits if conditions specified under
4    the law are satisfied, the ability of a creditor of the
5    entity or of any other protected series of the entity to
6    satisfy a claim from assets of the protected series.
7        (28) "Present value" means the amount as of a date
8    certain of one or more sums payable in the future,
9    discounted to the date certain by use of either an
10    interest rate specified by the parties if that rate is not
11    manifestly unreasonable at the time the transaction is
12    entered into or, if an interest rate is not so specified, a
13    commercially reasonable rate that takes into account the
14    facts and circumstances at the time the transaction is
15    entered into.
16        (29) "Purchase" means taking by sale, lease, discount,
17    negotiation, mortgage, pledge, lien, security interest,
18    issue or reissue, gift, or any other voluntary transaction
19    creating an interest in property.
20        (30) "Purchaser" means a person that takes by
21    purchase.
22        (31) "Record" means information that is inscribed on a
23    tangible medium or that is stored in an electronic or
24    other medium and is retrievable in perceivable form.
25        (32) "Remedy" means any remedial right to which an
26    aggrieved party is entitled with or without resort to a

 

 

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1    tribunal.
2        (33) "Representative" means a person empowered to act
3    for another, including an agent, an officer of a
4    corporation or association, and a trustee, executor, or
5    administrator of an estate.
6        (34) "Right" includes remedy.
7        (35) "Security interest" means an interest in personal
8    property or fixtures which secures payment or performance
9    of an obligation. "Security interest" includes any
10    interest of a consignor and a buyer of accounts, chattel
11    paper, a payment intangible, or a promissory note in a
12    transaction that is subject to Article 9. "Security
13    interest" does not include the special property interest
14    of a buyer of goods on identification of those goods to a
15    contract for sale under Section 2-401, but a buyer may
16    also acquire a "security interest" by complying with
17    Article 9. Except as otherwise provided in Section 2-505,
18    the right of a seller or lessor of goods under Article 2 or
19    2A to retain or acquire possession of the goods is not a
20    "security interest", but a seller or lessor may also
21    acquire a "security interest" by complying with Article 9.
22    The retention or reservation of title by a seller of goods
23    notwithstanding shipment or delivery to the buyer under
24    Section 2-401 is limited in effect to a reservation of a
25    "security interest". Whether a transaction in the form of
26    a lease creates a "security interest" is determined

 

 

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1    pursuant to Section 1-203.
2        (36) "Send", in connection with a writing, record, or
3    notification, notice means:
4            (A) to deposit in the mail, or deliver for
5        transmission, or transmit by any other usual means of
6        communication, with postage or cost of transmission
7        provided for, addressed and properly addressed and, in
8        the case of an instrument, to an address specified
9        thereon or otherwise agreed, or if there be none to any
10        address reasonable under the circumstances; or
11            (B) to cause the record or notification to be
12        received within the time it would have been received
13        if properly sent under subparagraph (A) in any other
14        way to cause to be received any record or notice within
15        the time it would have arrived if properly sent.
16        (37) "Sign" means, with present intent to authenticate
17    or adopt a record: "Signed" includes using any symbol
18    executed or adopted with present intention to adopt or
19    accept a writing.
20            (A) execute or adopt a tangible symbol; or
21            (B) attach to or logically associate with the
22        record an electronic symbol, sound, or process.
23        "Signed", "signing", and "signature" have
24    corresponding meanings.
25        (38) "State" means a State of the United States, the
26    District of Columbia, Puerto Rico, the United States

 

 

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1    Virgin Islands, or any territory or insular possession
2    subject to the jurisdiction of the United States.
3        (39) "Surety" includes a guarantor or other secondary
4    obligor.
5        (40) "Term" means a portion of an agreement that
6    relates to a particular matter.
7        (41) "Unauthorized signature" means a signature made
8    without actual, implied, or apparent authority. The term
9    includes a forgery.
10        (42) "Warehouse receipt" means a receipt issued by a
11    person engaged in the business of storing goods for hire.
12        (43) "Writing" includes printing, typewriting, or any
13    other intentional reduction to tangible form. "Written"
14    has a corresponding meaning.
15(Source: P.A. 95-895, eff. 1-1-09.)
 
16    (810 ILCS 5/1-204)  (from Ch. 26, par. 1-204)
17    Sec. 1-204. Value. Except as otherwise provided in
18Articles 3, 4, 5, and 6, and 12, a person gives value for
19rights if the person acquires them:
20        (1) in return for a binding commitment to extend
21    credit or for the extension of immediately available
22    credit, whether or not drawn upon and whether or not a
23    charge-back is provided for in the event of difficulties
24    in collection;
25        (2) as security for, or in total or partial

 

 

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1    satisfaction of, a preexisting claim;
2        (3) by accepting delivery under a preexisting contract
3    for purchase; or
4        (4) in return for any consideration sufficient to
5    support a simple contract.
6(Source: P.A. 95-895, eff. 1-1-09.)
 
7    (810 ILCS 5/1-301)
8    Sec. 1-301. Territorial applicability; parties' power to
9choose applicable law.
10    (a) Except as otherwise provided in this Section, when a
11transaction bears a reasonable relation to this State and also
12to another state or nation the parties may agree that the law
13either of this State or of such other state or nation shall
14govern their rights and duties.
15    (b) In the absence of an agreement effective under
16subsection (a), and except as provided in subsection (c), the
17Uniform Commercial Code applies to transactions bearing an
18appropriate relation to this State.
19    (c) If one of the following provisions of the Uniform
20Commercial Code specifies the applicable law, that provision
21governs and a contrary agreement is effective only to the
22extent permitted by the law so specified:
23        (1) Section 2-402;
24        (2) Sections 2A-105 and 2A-106;
25        (3) Section 4-102;

 

 

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1        (4) Section 4A-507;
2        (5) Section 5-116;
3        (6) Section 8-110;
4        (7) Sections 9-301 through 9-307; .
5        (8) Section 12-107.
6(Source: P.A. 95-895, eff. 1-1-09.)
 
7    (810 ILCS 5/1-306)
8    Sec. 1-306. Waiver or renunciation of claim or right after
9breach. A claim or right arising out of an alleged breach may
10be discharged in whole or in part without consideration by
11agreement of the aggrieved party in a signed an authenticated
12record.
13(Source: P.A. 95-895, eff. 1-1-09.)
 
14    (810 ILCS 5/2-102)  (from Ch. 26, par. 2-102)
15    Sec. 2-102. Scope; certain security and other transactions
16excluded from this Article.
17    (1) Unless the context otherwise requires, and except as
18provided in subsection (3), this Article applies to
19transactions in goods and, in the case of a hybrid
20transaction, it applies to the extent provided in subsection
21(2).
22    (2) In a hybrid transaction:
23        (a) If the sale-of-goods aspects do not predominate,
24    only the provisions of this Article which relate primarily

 

 

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1    to the sale-of-goods aspects of the transaction apply, and
2    the provisions that relate primarily to the transaction as
3    a whole do not apply.
4        (b) If the sale-of-goods aspects predominate, this
5    Article applies to the transaction but does not preclude
6    application in appropriate circumstances of other law to
7    aspects of the transaction which do not relate to the sale
8    of goods.
9    (3) This Article does not:
10        (a) apply to a transaction that, even though in the
11    form of an unconditional contract to sell or present sale,
12    operates only to create a security interest; or
13        (b) impair or repeal a statute regulating sales to
14    consumers, farmers, or other specified classes of buyers.
15    Unless the context otherwise requires, this Article
16applies to transactions in goods; it does not apply to any
17transaction which although in the form of an unconditional
18contract to sell or present sale is intended to operate only as
19a security transaction nor does this Article impair or repeal
20any statute regulating sales to consumers, farmers or other
21specified classes of buyers.
22(Source: Laws 1961, p. 2101.)
 
23    (810 ILCS 5/2-106)  (from Ch. 26, par. 2-106)
24    Sec. 2-106. Definitions: "contract"; "agreement";
25"contract for sale"; "sale"; "present sale"; "conforming" to

 

 

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1contract; "termination"; "cancellation"; "hybrid
2transaction".
3    (1) In this Article unless the context otherwise requires
4"contract" and "agreement" are limited to those relating to
5the present or future sale of goods. "Contract for sale"
6includes both a present sale of goods and a contract to sell
7goods at a future time. A "sale" consists in the passing of
8title from the seller to the buyer for a price (Section 2-401).
9A "present sale" means a sale which is accomplished by the
10making of the contract.
11    (2) Goods or conduct including any part of a performance
12are "conforming" or conform to the contract when they are in
13accordance with the obligations under the contract.
14    (3) "Termination" occurs when either party pursuant to a
15power created by agreement or law puts an end to the contract
16otherwise than for its breach. On "termination" all
17obligations which are still executory on both sides are
18discharged but any right based on prior breach or performance
19survives.
20    (4) "Cancellation" occurs when either party puts an end to
21the contract for breach by the other and its effect is the same
22as that of "termination" except that the cancelling party also
23retains any remedy for breach of the whole contract or any
24unperformed balance.
25    (5) "Hybrid transaction" means a single transaction
26involving a sale of goods and:

 

 

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1        (a) the provision of services;
2        (b) a lease of other goods; or
3        (c) a sale, lease, or license of property other than
4    goods.
5(Source: Laws 1961, 1st SS., p. 7.)
 
6    (810 ILCS 5/2-201)  (from Ch. 26, par. 2-201)
7    Sec. 2-201. Formal requirements; statute of frauds.
8    (1) Except as otherwise provided in this Section a
9contract for the sale of goods for the price of $500 or more is
10not enforceable by way of action or defense unless there is a
11record some writing sufficient to indicate that a contract for
12sale has been made between the parties and signed by the party
13against whom enforcement is sought or by the party's his
14authorized agent or broker. A record writing is not
15insufficient because it omits or incorrectly states a term
16agreed upon but the contract is not enforceable under this
17subsection paragraph beyond the quantity of goods shown in the
18record such writing.
19    (2) Between merchants if within a reasonable time a record
20writing in confirmation of the contract and sufficient against
21the sender is received and the party receiving it has reason to
22know its contents, it satisfies the requirements of subsection
23(1) against the such party unless written notice in a record of
24objection to its contents is given within 10 days after it is
25received.

 

 

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1    (3) A contract which does not satisfy the requirements of
2subsection (1) but which is valid in other respects is
3enforceable
4        (a) if the goods are to be specially manufactured for
5    the buyer and are not suitable for sale to others in the
6    ordinary course of the seller's business and the seller,
7    before notice of repudiation is received and under
8    circumstances which reasonably indicate that the goods are
9    for the buyer, has made either a substantial beginning of
10    their manufacture or commitments for their procurement; or
11        (b) if the party against whom enforcement is sought
12    admits in his pleading, testimony or otherwise in court
13    that a contract for sale was made, but the contract is not
14    enforceable under this provision beyond the quantity of
15    goods admitted; or
16        (c) with respect to goods for which payment has been
17    made and accepted or which have been received and accepted
18    (Section 2-606).
19(Source: Laws 1961, 1st SS., p. 7.)
 
20    (810 ILCS 5/2-202)  (from Ch. 26, par. 2-202)
21    Sec. 2-202. Final written expression: parol or extrinsic
22evidence. Terms with respect to which the confirmatory
23memoranda of the parties agree or which are otherwise set
24forth in a record writing intended by the parties as a final
25expression of their agreement with respect to such terms as

 

 

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1are included therein may not be contradicted by evidence of
2any prior agreement or of a contemporaneous oral agreement but
3may be explained or supplemented:
4        (a) by course of performance, course of dealing, or
5    usage of trade (Section 1-303); and
6        (b) by evidence of consistent additional terms unless
7    the court finds the record writing to have been intended
8    also as a complete and exclusive statement of the terms of
9    the agreement.
10(Source: P.A. 95-895, eff. 1-1-09.)
 
11    (810 ILCS 5/2-203)  (from Ch. 26, par. 2-203)
12    Sec. 2-203. Seals inoperative. The affixing of a seal to a
13record writing evidencing a contract for sale or an offer to
14buy or sell goods does not constitute the record writing a
15sealed instrument and the law with respect to sealed
16instruments does not apply to such a contract or offer.
17(Source: Laws 1961, p. 2101.)
 
18    (810 ILCS 5/2-205)  (from Ch. 26, par. 2-205)
19    Sec. 2-205. Firm offers. An offer by a merchant to buy or
20sell goods in a signed record writing which by its terms gives
21assurance that it will be held open is not revocable, for lack
22of consideration, during the time stated or if no time is
23stated for a reasonable time, but in no event may such period
24of irrevocability exceed 3 months; but any such term of

 

 

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1assurance on a form supplied by the offeree must be separately
2signed by the offeror.
3(Source: Laws 1961, 1st SS., p. 7.)
 
4    (810 ILCS 5/2-209)  (from Ch. 26, par. 2-209)
5    Sec. 2-209. Modification, rescission, and waiver.
6    (1) An agreement modifying a contract within this Article
7needs no consideration to be binding.
8    (2) A signed agreement which excludes modification or
9rescission except by a signed writing or other signed record
10cannot be otherwise modified or rescinded, but except as
11between merchants such a requirement on a form supplied by the
12merchant must be separately signed by the other party.
13    (3) The requirements of the statute of frauds section of
14this Article (Section 2-201) must be satisfied if the contract
15as modified is within its provisions.
16    (4) Although an attempt at modification or rescission does
17not satisfy the requirements of subsection (2) or (3) it can
18operate as a waiver.
19    (5) A party who has made a waiver affecting an executory
20portion of the contract may retract the waiver by reasonable
21notification received by the other party that strict
22performance will be required of any term waived, unless the
23retraction would be unjust in view of a material change of
24position in reliance on the waiver.
25(Source: Laws 1961, 1st SS., p. 7.)
 

 

 

SB3696 Enrolled- 20 -LRB103 37687 SPS 67814 b

1    (810 ILCS 5/2A-102)  (from Ch. 26, par. 2A-102)
2    Sec. 2A-102. Scope.
3    (1) This Article applies to any transaction, regardless of
4form, that creates a lease and, in the case of a hybrid lease,
5it applies to the extent provided in subsection (2).
6    (2) In a hybrid lease:
7        (a) if the lease-of-goods aspects do not predominate:
8            (i) only the provisions of this Article which
9        relate primarily to the lease-of-goods aspects of the
10        transaction apply, and the provisions that relate
11        primarily to the transaction as a whole do not apply;
12            (ii) Section 2A-209 applies if the lease is a
13        finance lease; and
14            (iii) Section 2A-407 applies to the promises of
15        the lessee in a finance lease to the extent the
16        promises are consideration for the right to possession
17        and use of the leased goods; and
18        (b) if the lease-of-goods aspects predominate, this
19    Article applies to the transaction, but does not preclude
20    application in appropriate circumstances of other law to
21    aspects of the lease which do not relate to the lease of
22    goods.
23(Source: P.A. 87-493.)
 
24    (810 ILCS 5/2A-103)  (from Ch. 26, par. 2A-103)

 

 

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1    Sec. 2A-103. Definitions and index of definitions.
2    (1) In this Article unless the context otherwise requires:
3        (a) "Buyer in ordinary course of business" means a
4    person who, in good faith and without knowledge that the
5    sale to him or her is in violation of the ownership rights
6    or security interest or leasehold interest of a third
7    party in the goods, buys in ordinary course from a person
8    in the business of selling goods of that kind but does not
9    include a pawnbroker. "Buying" may be for cash or by
10    exchange of other property or on secured or unsecured
11    credit and includes acquiring goods or documents of title
12    under a pre-existing contract for sale but does not
13    include a transfer in bulk or as security for or in total
14    or partial satisfaction of a money debt.
15        (b) "Cancellation" occurs when either party puts an
16    end to the lease contract for default by the other party.
17        (c) "Commercial unit" means such a unit of goods as by
18    commercial usage is a single whole for purposes of lease
19    and division of which materially impairs its character or
20    value on the market or in use. A commercial unit may be a
21    single article, as a machine, or a set of articles, as a
22    suite of furniture or a line of machinery, or a quantity,
23    as a gross or carload, or any other unit treated in use or
24    in the relevant market as a single whole.
25        (d) "Conforming" goods or performance under a lease
26    contract means goods or performance that are in accordance

 

 

SB3696 Enrolled- 22 -LRB103 37687 SPS 67814 b

1    with the obligations under the lease contract.
2        (e) "Consumer lease" means a lease that a lessor
3    regularly engaged in the business of leasing or selling
4    makes to a lessee who is an individual and who takes under
5    the lease primarily for a personal, family, or household
6    purpose, if the total payments to be made under the lease
7    contract, excluding payments for options to renew or buy,
8    do not exceed $40,000.
9        (f) "Fault" means wrongful act, omission, breach, or
10    default.
11        (g) "Finance lease" means a lease with respect to
12    which:
13            (i) the lessor does not select, manufacture, or
14        supply the goods;
15            (ii) the lessor acquires the goods or the right to
16        possession and use of the goods in connection with the
17        lease; and
18            (iii) one of the following occurs:
19                (A) the lessee receives a copy of the contract
20            by which the lessor acquired the goods or the
21            right to possession and use of the goods before
22            signing the lease contract;
23                (B) the lessee's approval of the contract by
24            which the lessor acquired the goods or the right
25            to possession and use of the goods is a condition
26            to effectiveness of the lease contract;

 

 

SB3696 Enrolled- 23 -LRB103 37687 SPS 67814 b

1                (C) the lessee, before signing the lease
2            contract, receives an accurate and complete
3            statement designating the promises and warranties,
4            and any disclaimers of warranties, limitations or
5            modifications of remedies, or liquidated damages,
6            including those of a third party, such as the
7            manufacturer of the goods, provided to the lessor
8            by the person supplying the goods in connection
9            with or as part of the contract by which the lessor
10            acquired the goods or the right to possession and
11            use of the goods; or
12                (D) if the lease is not a consumer lease, the
13            lessor, before the lessee signs the lease
14            contract, informs the lessee in writing (a) of the
15            identity of the person supplying the goods to the
16            lessor, unless the lessee has selected that person
17            and directed the lessor to acquire the goods or
18            the right to possession and use of the goods from
19            that person, (b) that the lessee is entitled under
20            this Article to the promises and warranties,
21            including those of any third party, provided to
22            the lessor by the person supplying the goods in
23            connection with or as part of the contract by
24            which the lessor acquired the goods or the right
25            to possession and use of the goods, and (c) that
26            the lessee may communicate with the person

 

 

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1            supplying the goods to the lessor and receive an
2            accurate and complete statement of those promises
3            and warranties, including any disclaimers and
4            limitations of them or of remedies.
5        (h) "Goods" means all things that are movable at the
6    time of identification to the lease contract, or are
7    fixtures (Section 2A-309), but the term does not include
8    money, documents, instruments, accounts, chattel paper,
9    general intangibles, or minerals or the like, including
10    oil and gas, before extraction. The term also includes the
11    unborn young of animals.
12        (h.1) "Hybrid lease" means a single transaction
13    involving a lease of goods and:
14            (i) the provision of services;
15            (ii) a sale of other goods; or
16            (iii) a sale, lease, or license of property other
17        than goods.
18        (i) "Installment lease contract" means a lease
19    contract that authorizes or requires the delivery of goods
20    in separate lots to be separately accepted, even though
21    the lease contract contains a clause "each delivery is a
22    separate lease" or its equivalent.
23        (j) "Lease" means a transfer of the right to
24    possession and use of goods for a term in return for
25    consideration, but a sale, including a sale on approval or
26    a sale or return, or retention or creation of a security

 

 

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1    interest is not a lease. Unless the context clearly
2    indicates otherwise, the term includes a sublease.
3        (k) "Lease agreement" means the bargain, with respect
4    to the lease, of the lessor and the lessee in fact as found
5    in their language or by implication from other
6    circumstances including course of dealing or usage of
7    trade or course of performance as provided in this
8    Article. Unless the context clearly indicates otherwise,
9    the term includes a sublease agreement.
10        (l) "Lease contract" means the total legal obligation
11    that results from the lease agreement as affected by this
12    Article and any other applicable rules of law. Unless the
13    context clearly indicates otherwise, the term includes a
14    sublease contract.
15        (m) "Leasehold interest" means the interest of the
16    lessor or the lessee under a lease contract.
17        (n) "Lessee" means a person who acquires the right to
18    possession and use of goods under a lease. Unless the
19    context clearly indicates otherwise, the term includes a
20    sublessee.
21        (o) "Lessee in ordinary course of business" means a
22    person who in good faith and without knowledge that the
23    lease to him or her is in violation of the ownership rights
24    or security interest or leasehold interest of a third
25    party in the goods leases in ordinary course from a person
26    in the business of selling or leasing goods of that kind

 

 

SB3696 Enrolled- 26 -LRB103 37687 SPS 67814 b

1    but does not include a pawnbroker. "Leasing" may be for
2    cash or by exchange of other property or on secured or
3    unsecured credit and includes acquiring goods or documents
4    of title under a pre-existing lease contract but does not
5    include a transfer in bulk or as security for or in total
6    or partial satisfaction of a money debt.
7        (p) "Lessor" means a person who transfers the right to
8    possession and use of goods under a lease. Unless the
9    context clearly indicates otherwise, the term includes a
10    sublessor.
11        (q) "Lessor's residual interest" means the lessor's
12    interest in the goods after expiration, termination, or
13    cancellation of the lease contract.
14        (r) "Lien" means a charge against or interest in goods
15    to secure payment of a debt or performance of an
16    obligation, but the term does not include a security
17    interest.
18        (s) "Lot" means a parcel or a single article that is
19    the subject matter of a separate lease or delivery,
20    whether or not it is sufficient to perform the lease
21    contract.
22        (t) "Merchant lessee" means a lessee that is a
23    merchant with respect to goods of the kind subject to the
24    lease.
25        (u) "Present value" means the amount as of a date
26    certain of one or more sums payable in the future,

 

 

SB3696 Enrolled- 27 -LRB103 37687 SPS 67814 b

1    discounted to the date certain. The discount is determined
2    by the interest rate specified by the parties if the rate
3    was not manifestly unreasonable at the time the
4    transaction was entered into; otherwise, the discount is
5    determined by a commercially reasonable rate that takes
6    into account the facts and circumstances of each case at
7    the time the transaction was entered into.
8        (v) "Purchase" includes taking by sale, lease,
9    mortgage, security interest, pledge, gift, or any other
10    voluntary transaction creating an interest in goods.
11        (w) "Sublease" means a lease of goods the right to
12    possession and use of which was acquired by the lessor as a
13    lessee under an existing lease.
14        (x) "Supplier" means a person from whom a lessor buys
15    or leases goods to be leased under a finance lease.
16        (y) "Supply contract" means a contract under which a
17    lessor buys or leases goods to be leased.
18        (z) "Termination" occurs when either party pursuant to
19    a power created by agreement or law puts an end to the
20    lease contract otherwise than for default.
21    (2) Other definitions applying to this Article and the
22Sections in which they appear are:
23        "Accessions". Section 2A-310(1).
24        "Construction mortgage". Section 2A-309(1)(d).
25        "Encumbrance". Section 2A-309(1)(e).
26        "Fixtures". Section 2A-309(1)(a).

 

 

SB3696 Enrolled- 28 -LRB103 37687 SPS 67814 b

1        "Fixture filing". Section 2A-309(1)(b).
2        "Purchase money lease". Section 2A-309(1)(c).
3    (3) The following definitions in other Articles apply to
4this Article:
5        "Account". Section 9-102(a)(2).
6        "Between merchants". Section 2-104(3).
7        "Buyer". Section 2-103(1)(a).
8        "Chattel paper". Section 9-102(a)(11).
9        "Consumer goods". Section 9-102(a)(23).
10        "Document". Section 9-102(a)(30).
11        "Entrusting". Section 2-403(3).
12        "General intangible". Section 9-102(a)(42).
13        "Good faith". Section 2-103(1)(b).
14        "Instrument". Section 9-102(a)(47).
15        "Merchant". Section 2-104(1).
16        "Mortgage". Section 9-102(a)(55).
17        "Pursuant to commitment". Section 9-102(a)(69).
18        "Receipt". Section 2-103(1)(c).
19        "Sale". Section 2-106(1).
20        "Sale on approval". Section 2-326.
21        "Sale or return". Section 2-326.
22        "Seller". Section 2-103(1)(d).
23    (4) In addition, Article 1 contains general definitions
24and principles of construction and interpretation applicable
25throughout this Article.
26(Source: P.A. 97-1034, eff. 7-1-13.)
 

 

 

SB3696 Enrolled- 29 -LRB103 37687 SPS 67814 b

1    (810 ILCS 5/2A-107)  (from Ch. 26, par. 2A-107)
2    Sec. 2A-107. Waiver or renunciation of claim or right
3after default. Any claim or right arising out of an alleged
4default or breach of warranty may be discharged in whole or in
5part without consideration by a written waiver or renunciation
6in a signed record and delivered by the aggrieved party.
7(Source: P.A. 87-493.)
 
8    (810 ILCS 5/2A-201)  (from Ch. 26, par. 2A-201)
9    Sec. 2A-201. Statute of frauds.
10    (1) A lease contract is not enforceable by way of action or
11defense unless:
12        (a) the total payments to be made under the lease
13    contract, excluding payments for options to renew or buy,
14    are less than $1,000; or
15        (b) there is a record writing, signed by the party
16    against whom enforcement is sought or by that party's
17    authorized agent, sufficient to indicate that a lease
18    contract has been made between the parties and to describe
19    the goods leased and the lease term.
20    (2) Any description of leased goods or of the lease term is
21sufficient and satisfies subsection (1)(b), whether or not it
22is specific, if it reasonably identifies what is described.
23    (3) A record writing is not insufficient because it omits
24or incorrectly states a term agreed upon, but the lease

 

 

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1contract is not enforceable under subsection (1)(b) beyond the
2lease term and the quantity of goods shown in the record
3writing.
4    (4) A lease contract that does not satisfy the
5requirements of subsection (1), but which is valid in other
6respects, is enforceable:
7        (a) if the goods are to be specially manufactured or
8    obtained for the lessee and are not suitable for lease or
9    sale to others in the ordinary course of the lessor's
10    business, and the lessor, before notice of repudiation is
11    received and under circumstances that reasonably indicate
12    that the goods are for the lessee, has made either a
13    substantial beginning of their manufacture or commitments
14    for their procurement;
15        (b) if the party against whom enforcement is sought
16    admits in that party's pleading, testimony, or otherwise
17    in court that a lease contract was made, but the lease
18    contract is not enforceable under this provision beyond
19    the quantity of goods admitted; or
20        (c) with respect to goods that have been received and
21    accepted by the lessee.
22    (5) The lease term under a lease contract referred to in
23subsection (4) is:
24        (a) if there is a record writing signed by the party
25    against whom enforcement is sought or by that party's
26    authorized agent specifying the lease term, the term so

 

 

SB3696 Enrolled- 31 -LRB103 37687 SPS 67814 b

1    specified;
2        (b) if the party against whom enforcement is sought
3    admits in that party's pleading, testimony, or otherwise
4    in court a lease term, the term so admitted; or
5        (c) a reasonable lease term.
6(Source: P.A. 87-493.)
 
7    (810 ILCS 5/2A-202)  (from Ch. 26, par. 2A-202)
8    Sec. 2A-202. Final written expression; parol or extrinsic
9evidence. Terms with respect to which the confirmatory
10memoranda of the parties agree or which are otherwise set
11forth in a record writing intended by the parties as a final
12expression of their agreement with respect to such terms as
13are included therein may not be contradicted by evidence of
14any prior agreement or of a contemporaneous oral agreement but
15may be explained or supplemented:
16        (a) by course of dealing or usage of trade or by course
17    of performance; and
18        (b) by evidence of consistent additional terms unless
19    the court finds the record writing to have been intended
20    also as a complete and exclusive statement of the terms of
21    the agreement.
22(Source: P.A. 87-493.)
 
23    (810 ILCS 5/2A-203)  (from Ch. 26, par. 2A-203)
24    Sec. 2A-203. Seals inoperative. The affixing of a seal to

 

 

SB3696 Enrolled- 32 -LRB103 37687 SPS 67814 b

1a record writing evidencing a lease contract or an offer to
2enter into a lease contract does not render the record writing
3a sealed instrument and the law with respect to sealed
4instruments does not apply to the lease contract or offer.
5(Source: P.A. 87-493.)
 
6    (810 ILCS 5/2A-205)  (from Ch. 26, par. 2A-205)
7    Sec. 2A-205. Firm offers. An offer by a merchant to lease
8goods to or from another person in a signed record writing that
9by its terms gives assurance it will be held open is not
10revocable, for lack of consideration, during the time stated
11or, if no time is stated, for a reasonable time, but in no
12event may the period of irrevocability exceed 3 months. Any
13such term of assurance on a form supplied by the offeree must
14be separately signed by the offeror.
15(Source: P.A. 87-493.)
 
16    (810 ILCS 5/2A-208)  (from Ch. 26, par. 2A-208)
17    Sec. 2A-208. Modification, rescission, and waiver.
18    (1) An agreement modifying a lease contract needs no
19consideration to be binding.
20    (2) A signed lease agreement that excludes modification or
21rescission except by a signed record writing may not be
22otherwise modified or rescinded, but, except as between
23merchants, such a requirement on a form supplied by a merchant
24must be separately signed by the other party.

 

 

SB3696 Enrolled- 33 -LRB103 37687 SPS 67814 b

1    (3) Although an attempt at modification or rescission does
2not satisfy the requirements of subsection (2), it may operate
3as a waiver.
4    (4) A party who has made a waiver affecting an executory
5portion of a lease contract may retract the waiver by
6reasonable notification received by the other party that
7strict performance will be required of any term waived, unless
8the retraction would be unjust in view of a material change of
9position in reliance on the waiver.
10(Source: P.A. 87-493.)
 
11    (810 ILCS 5/3-104)  (from Ch. 26, par. 3-104)
12    Sec. 3-104. Negotiable instrument.
13    (a) Except as provided in subsections (c) and (d),
14"negotiable instrument" means an unconditional promise or
15order to pay a fixed amount of money, with or without interest
16or other charges described in the promise or order, if it:
17        (1) is payable to bearer or to order at the time it is
18    issued or first comes into possession of a holder;
19        (2) is payable on demand or at a definite time; and
20        (3) does not state any other undertaking or
21    instruction by the person promising or ordering payment to
22    do any act in addition to the payment of money, but the
23    promise or order may contain (i) an undertaking or power
24    to give, maintain, or protect collateral to secure
25    payment, (ii) an authorization or power to the holder to

 

 

SB3696 Enrolled- 34 -LRB103 37687 SPS 67814 b

1    confess judgment or realize on or dispose of collateral,
2    or (iii) a waiver of the benefit of any law intended for
3    the advantage or protection of any obligor, (iv) a term
4    that specifies the law that governs the promise or order,
5    or (v) an undertaking to resolve in a specified forum a
6    dispute concerning the promise or order.
7    (b) "Instrument" means a negotiable instrument.
8    (c) An order that meets all of the requirements of
9subsection (a), except paragraph (1), and otherwise falls
10within the definition of "check" in subsection (f) is a
11negotiable instrument and a check.
12    (d) A promise or order other than a check is not an
13instrument if, at the time it is issued or first comes into
14possession of a holder, it contains a conspicuous statement,
15however expressed, to the effect that the promise or order is
16not negotiable or is not an instrument governed by this
17Article.
18    (e) An instrument is a "note" if it is a promise and is a
19"draft" if it is an order. If an instrument falls within the
20definition of both "note" and "draft", a person entitled to
21enforce the instrument may treat it as either.
22    (f) "Check" means (i) a draft, other than a documentary
23draft, payable on demand and drawn on a bank or (ii) a
24cashier's check or teller's check. An instrument may be a
25check even though it is described on its face by another term,
26such as "money order".

 

 

SB3696 Enrolled- 35 -LRB103 37687 SPS 67814 b

1    (g) "Cashier's check" means a draft with respect to which
2the drawer and drawee are the same bank or branches of the same
3bank.
4    (h) "Teller's check" means a draft drawn by a bank (i) on
5another bank, or (ii) payable at or through a bank.
6    (i) "Traveler's check" means an instrument that (i) is
7payable on demand, (ii) is drawn on or payable at or through a
8bank, (iii) is designated by the term "traveler's check" or by
9a substantially similar term, and (iv) requires, as a
10condition to payment, a countersignature by a person whose
11specimen signature appears on the instrument.
12    (j) "Certificate of deposit" means an instrument
13containing an acknowledgment by a bank that a sum of money has
14been received by the bank and a promise by the bank to repay
15the sum of money. A certificate of deposit is a note of the
16bank.
17(Source: P.A. 87-582; 87-1135.)
 
18    (810 ILCS 5/3-105)  (from Ch. 26, par. 3-105)
19    Sec. 3-105. Issue of instrument.
20    (a) "Issue" means:
21        (1) the first delivery of an instrument by the maker
22    or drawer, whether to a holder or nonholder, for the
23    purpose of giving rights on the instrument to any person;
24    or
25        (2) if agreed by the payee, the first transmission by

 

 

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1    the drawer to the payee of an image of an item and
2    information derived from the item that enables the
3    depositary bank to collect the item by transferring or
4    presenting under federal law an electronic check.
5    (b) An unissued instrument, or an unissued incomplete
6instrument that is completed, is binding on the maker or
7drawer, but nonissuance is a defense. An instrument that is
8conditionally issued or is issued for a special purpose is
9binding on the maker or drawer, but failure of the condition or
10special purpose to be fulfilled is a defense.
11    (c) "Issuer" applies to issued and unissued instruments
12and means a maker or drawer of an instrument.
13(Source: P.A. 87-582; 87-1135.)
 
14    (810 ILCS 5/3-312)  (from Ch. 26, par. 3-312)
15    Sec. 3-312. Lost, destroyed, or stolen cashier's check,
16teller's check, or certified check.
17    (a) In this Section:
18        (1) "Check" means a cashier's check, teller's check,
19    or certified check.
20        (2) "Claimant" means a person who claims the right to
21    receive the amount of a cashier's check, teller's check,
22    or certified check that was lost, destroyed, or stolen.
23        (3) "Declaration of loss" means a written statement,
24    made under penalty of perjury, to the effect that (i) the
25    declarer lost possession of a check, (ii) the declarer is

 

 

SB3696 Enrolled- 37 -LRB103 37687 SPS 67814 b

1    the drawer or payee of the check, in the case of a
2    certified check, or the remitter or payee of the check, in
3    the case of a cashier's check or teller's check, (iii) the
4    loss of possession was not the result of a transfer by the
5    declarer or of a lawful seizure, and (iv) the declarer
6    cannot reasonably obtain possession of the check because
7    the check was destroyed, its whereabouts cannot be
8    determined, or it is in the wrongful possession of an
9    unknown person or a person that cannot be found or is not
10    amenable to service of process.
11        (4) "Obligated bank" means the issuer of a cashier's
12    check or teller's check or the acceptor of a certified
13    check.
14    (b) A claimant may assert a claim to the amount of a check
15by a communication to the obligated bank describing the check
16with reasonable certainty and requesting payment of the amount
17of the check, if (i) the claimant is the drawer or payee of a
18certified check or the remitter or payee of a cashier's check
19or teller's check, (ii) the communication contains or is
20accompanied by a declaration of loss of the claimant with
21respect to the check, (iii) the communication is received at a
22time and in a manner affording the bank a reasonable time to
23act on it before the check is paid, and (iv) the claimant
24provides reasonable identification if requested by the
25obligated bank. Delivery of a declaration of loss is a
26warranty of the truth of the statements made in the

 

 

SB3696 Enrolled- 38 -LRB103 37687 SPS 67814 b

1declaration. If a claim is asserted in compliance with this
2subsection, the following rules apply:
3        (1) The claim becomes enforceable at the later of (i)
4    the time the claim is asserted, or (ii) the 90th day
5    following the date of the check, in the case of a cashier's
6    check or teller's check, or the 90th day following the
7    date of the acceptance, in the case of a certified check.
8        (2) Until the claim becomes enforceable, it has no
9    legal effect and the obligated bank may pay the check or,
10    in the case of a teller's check, may permit the drawee to
11    pay the check. Payment to a person entitled to enforce the
12    check discharges all liability of the obligated bank with
13    respect to the check.
14        (3) If the claim becomes enforceable before the check
15    is presented for payment, the obligated bank is not
16    obliged to pay the check.
17        (4) When the claim becomes enforceable, the obligated
18    bank becomes obliged to pay the amount of the check to the
19    claimant if payment of the check has not been made to a
20    person entitled to enforce the check. Subject to Section
21    4-302(a)(1), payment to the claimant discharges all
22    liability of the obligated bank with respect to the check.
23    (c) If the obligated bank pays the amount of a check to a
24claimant under subsection (b)(4) and the check is presented
25for payment by a person having rights of a holder in due
26course, the claimant is obliged to (i) refund the payment to

 

 

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1the obligated bank if the check is paid, or (ii) pay the amount
2of the check to the person having rights of a holder in due
3course if the check is dishonored.
4    (d) If a claimant has the right to assert a claim under
5subsection (b) and is also a person entitled to enforce a
6cashier's check, teller's check, or certified check that is
7lost, destroyed, or stolen, the claimant may assert rights
8with respect to the check either under this Section or Section
93-309.
10(Source: P.A. 87-582; 87-895; 87-1135.)
 
11    (810 ILCS 5/3-401)  (from Ch. 26, par. 3-401)
12    Sec. 3-401. Signature necessary for liability on
13instrument. (a) A person is not liable on an instrument unless
14(i) the person signed the instrument, or (ii) the person is
15represented by an agent or representative who signed the
16instrument and the signature is binding on the represented
17person under Section 3-402.
18    (b) A signature may be made (i) manually or by means of a
19device or machine, and (ii) by the use of any name, including
20any trade or assumed name, or by a word, mark, or symbol
21executed or adopted by a person with present intention to
22authenticate a writing.
23(Source: P.A. 87-582; 87-1135.)
 
24    (810 ILCS 5/3-604)  (from Ch. 26, par. 3-604)

 

 

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1    Sec. 3-604. Discharge by cancellation or renunciation.
2    (a) A person entitled to enforce an instrument, with or
3without consideration, may discharge the obligation of a party
4to pay the instrument (i) by an intentional voluntary act,
5such as surrender of the instrument to the party, destruction,
6mutilation, or cancellation of the instrument, cancellation or
7striking out of the party's signature, or the addition of
8words to the instrument indicating discharge, or (ii) by
9agreeing not to sue or otherwise renouncing rights against the
10party by a signed record writing. The obligation of a party to
11pay a check is not discharged solely by destruction of the
12check in connection with a process in which information is
13extracted from the check and an image of the check is made and,
14subsequently, the information and image are transmitted for
15payment.
16    (b) Cancellation or striking out of an indorsement
17pursuant to subsection (a) does not affect the status and
18rights of a party derived from the indorsement.
19(Source: P.A. 87-582; 87-1135.)
 
20    (810 ILCS 5/4A-103)  (from Ch. 26, par. 4A-103)
21    Sec. 4A-103. Payment order; definitions.
22    (a) In this Article:
23        (1) "Payment order" means an instruction of a sender
24    to a receiving bank, transmitted orally or in a record,
25    electronically, or in writing, to pay, or to cause another

 

 

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1    bank to pay, a fixed or determinable amount of money to a
2    beneficiary if:
3            (i) the instruction does not state a condition to
4        payment to the beneficiary other than time of payment,
5            (ii) the receiving bank is to be reimbursed by
6        debiting an account of, or otherwise receiving payment
7        from, the sender, and
8            (iii) the instruction is transmitted by the sender
9        directly to the receiving bank or to an agent, funds
10        transfer system, or communication system for
11        transmittal to the receiving bank.
12        (2) "Beneficiary" means the person to be paid by the
13    beneficiary's bank.
14        (3) "Beneficiary's bank" means the bank identified in
15    a payment order in which an account of the beneficiary is
16    to be credited pursuant to the order or which otherwise is
17    to make payment to the beneficiary if the order does not
18    provide for payment to an account.
19        (4) "Receiving bank" means the bank to which the
20    sender's instruction is addressed.
21        (5) "Sender" means the person giving the instruction
22    to the receiving bank.
23    (b) If an instruction complying with subsection (a)(1) is
24to make more than one payment to a beneficiary, the
25instruction is a separate payment order with respect to each
26payment.

 

 

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1    (c) A payment order is issued when it is sent to the
2receiving bank.
3(Source: P.A. 86-1291.)
 
4    (810 ILCS 5/4A-201)  (from Ch. 26, par. 4A-201)
5    Sec. 4A-201. Security procedure. "Security procedure"
6means a procedure established by agreement of a customer and a
7receiving bank for the purpose of (i) verifying that a payment
8order or communication amending or cancelling a payment order
9is that of the customer, or (ii) detecting error in the
10transmission or the content of the payment order or
11communication. A security procedure may impose an obligation
12on the receiving bank or the customer and may require the use
13of algorithms or other codes, identifying words, or numbers,
14symbols, sounds, biometrics, encryption, callback procedures,
15or similar security devices. Comparison of a signature on a
16payment order or communication with an authorized specimen
17signature of the customer or requiring a payment order to be
18sent from a known email address, IP address, or telephone
19number is not by itself a security procedure.
20(Source: P.A. 86-1291.)
 
21    (810 ILCS 5/4A-202)  (from Ch. 26, par. 4A-202)
22    Sec. 4A-202. Authorized and verified payment orders.
23    (a) A payment order received by the receiving bank is the
24authorized order of the person identified as sender if that

 

 

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1person authorized the order or is otherwise bound by it under
2the law of agency.
3    (b) If a bank and its customer have agreed that the
4authenticity of payment orders issued to the bank in the name
5of the customer as sender will be verified pursuant to a
6security procedure, a payment order received by the receiving
7bank is effective as the order of the customer, whether or not
8authorized, if (i) the security procedure is a commercially
9reasonable method of providing security against unauthorized
10payment orders, and (ii) the bank proves that it accepted the
11payment order in good faith and in compliance with the bank's
12obligations under the security procedure and any written
13agreement or instruction of the customer, evidenced by a
14record, restricting acceptance of payment orders issued in the
15name of the customer. The bank is not required to follow an
16instruction that violates an a written agreement with the
17customer, evidenced by a record, or notice of which is not
18received at a time and in a manner affording the bank a
19reasonable opportunity to act on it before the payment order
20is accepted.
21    (c) Commercial reasonableness of a security procedure is a
22question of law to be determined by considering the wishes of
23the customer expressed to the bank, the circumstances of the
24customer known to the bank, including the size, type, and
25frequency of payment orders normally issued by the customer to
26the bank, alternative security procedures offered to the

 

 

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1customer, and security procedures in general use by customers
2and receiving banks similarly situated. A security procedure
3is deemed to be commercially reasonable if (i) the security
4procedure was chosen by the customer after the bank offered,
5and the customer refused, a security procedure that was
6commercially reasonable for that customer, and (ii) the
7customer expressly agreed in a record writing to be bound by
8any payment order, whether or not authorized, issued in its
9name and accepted by the bank in compliance with the bank's
10obligations under the security procedure chosen by the
11customer.
12    (d) The term "sender" in this Article includes the
13customer in whose name a payment order is issued if the order
14is the authorized order of the customer under subsection (a),
15or it is effective as the order of the customer under
16subsection (b).
17    (e) This Section applies to amendments and cancellations
18of payment orders to the same extent it applies to payment
19orders.
20    (f) Except as provided in this Section and in Section
214A-203(a)(1), rights and obligations arising under this
22Section or Section 4A-203 may not be varied by agreement.
23(Source: P.A. 86-1291.)
 
24    (810 ILCS 5/4A-203)  (from Ch. 26, par. 4A-203)
25    Sec. 4A-203. Unenforceability of certain verified payment

 

 

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1orders.
2    (a) If an accepted payment order is not, under Section
34A-202(a), an authorized order of a customer identified as
4sender, but is effective as an order of the customer pursuant
5to Section 4A-202(b), the following rules apply:
6        (1) By express written agreement evidenced by a
7    record, the receiving bank may limit the extent to which
8    it is entitled to enforce or retain payment of the payment
9    order.
10        (2) The receiving bank is not entitled to enforce or
11    retain payment of the payment order if the customer proves
12    that the order was not caused, directly or indirectly, by
13    a person (i) entrusted at any time with duties to act for
14    the customer with respect to payment orders or the
15    security procedure, or (ii) who obtained access to
16    transmitting facilities of the customer or who obtained,
17    from a source controlled by the customer and without
18    authority of the receiving bank, information facilitating
19    breach of the security procedure, regardless of how the
20    information was obtained or whether the customer was at
21    fault. Information includes any access device, computer
22    software, or the like.
23    (b) This Section applies to amendments of payment orders
24to the same extent it applies to payment orders.
25(Source: P.A. 86-1291.)
 

 

 

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1    (810 ILCS 5/4A-207)  (from Ch. 26, par. 4A-207)
2    Sec. 4A-207. Misdescription of beneficiary.
3    (a) Subject to subsection (b), if, in a payment order
4received by the beneficiary's bank, the name, bank account
5number, or other identification of the beneficiary refers to a
6nonexistent or unidentifiable person or account, no person has
7rights as a beneficiary of the order and acceptance of the
8order cannot occur.
9    (b) If a payment order received by the beneficiary's bank
10identifies the beneficiary both by name and by an identifying
11or bank account number and the name and number identify
12different persons, the following rules apply:
13        (1) Except as otherwise provided in subsection (c), if
14    the beneficiary's bank does not know that the name and
15    number refer to different persons, it may rely on the
16    number as the proper identification of the beneficiary of
17    the order. The beneficiary's bank need not determine
18    whether the name and number refer to the same person.
19        (2) If the beneficiary's bank pays the person
20    identified by name or knows that the name and number
21    identify different persons, no person has rights as
22    beneficiary except the person paid by the beneficiary's
23    bank if that person was entitled to receive payment from
24    the originator of the funds transfer. If no person has
25    rights as beneficiary, acceptance of the order cannot
26    occur.

 

 

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1    (c) If (i) a payment order described in subsection (b) is
2accepted, (ii) the originator's payment order described the
3beneficiary inconsistently by name and number, and (iii) the
4beneficiary's bank pays the person identified by number as
5permitted by subsection (b)(1), the following rules apply:
6        (1) If the originator is a bank, the originator is
7    obligated to pay its order.
8        (2) If the originator is not a bank and proves that the
9    person identified by number was not entitled to receive
10    payment from the originator, the originator is not obliged
11    to pay its order unless the originator's bank proves that
12    the originator, before acceptance of the originator's
13    order, had notice that payment of a payment order issued
14    by the originator might be made by the beneficiary's bank
15    on the basis of an identifying or bank account number
16    event if it identifies a person different from the named
17    beneficiary. Proof of notice may be made by any admissible
18    evidence. The originator's bank satisfies the burden of as
19    proof if it proves that the originator, before the payment
20    order was accepted, signed a record writing stating the
21    information to which the notice relates.
22    (d) In a case governed by subsection (b)(1), if the
23beneficiary's bank rightfully pays the person identified by
24number and that person was not entitled to receive payment
25from the originator, the amount paid may be recovered from
26that person to the extent allowed by the law governing mistake

 

 

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1and restitution as follows:
2        (1) If the originator is obligated to pay its payment
3    order as stated in subsection (c), the originator has the
4    right to recover.
5        (2) If the originator is not a bank and is not
6    obligated to pay its payment order, the originator's bank
7    has the right to recover.
8(Source: P.A. 86-1291.)
 
9    (810 ILCS 5/4A-208)  (from Ch. 26, par. 4A-208)
10    Sec. 4A-208. Misdescription of intermediary bank or
11beneficiary's bank.
12    (a) This subsection applies to a payment order identifying
13an intermediary bank or the beneficiary's bank only by an
14identifying number.
15        (1) The receiving bank may rely on the number as the
16    proper identification of the intermediary or beneficiary's
17    bank and need not determine whether the number identifies
18    a bank.
19        (2) The sender is obliged to compensate the receiving
20    bank for any loss and expenses incurred by the receiving
21    bank as a result of its reliance on the number in executing
22    or attempting to execute the order.
23    (b) This subsection applies to a payment order identifying
24an intermediary bank or the beneficiary's bank both by name
25and an identifying number if the name and number identify

 

 

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1different persons.
2        (1) If the sender is a bank, the receiving bank may
3    rely on the number as the proper identification of the
4    intermediary or beneficiary's bank if the receiving bank,
5    when it executes the sender's order, does not know that
6    the name and number identify different persons. The
7    receiving bank need not determine whether the name and
8    number refer to the same person or whether the number
9    refers to a bank. The sender is obliged to compensate the
10    receiving bank for any loss and expenses incurred by the
11    receiving bank as a result of its reliance on the number in
12    executing or attempting to execute the order.
13        (2) If the sender is not a bank and the receiving bank
14    proves that the sender, before the payment order was
15    accepted, had notice that the receiving bank might rely on
16    the number as the proper identification of the
17    intermediary or beneficiary's bank even if it identifies a
18    person different from the bank identified by name, the
19    rights and obligations of the sender and the receiving
20    bank are governed by subsection (b)(1), as though the
21    sender were a bank. Proof of notice may be made by any
22    admissible evidence. The receiving bank satisfies the
23    burden of proof if it proves that the sender, before the
24    payment order was accepted, signed a record writing
25    stating the information to which the notice relates.
26        (3) Regardless of whether the sender is a bank, the

 

 

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1    receiving bank may rely on the name as the proper
2    identification of the intermediary or beneficiary's bank
3    if the receiving bank, at the time it executes the
4    sender's order, does not know that the name and number
5    identify different persons. The receiving bank need not
6    determine whether the name and number refer to the same
7    person.
8        (4) If the receiving bank knows that the name and
9    number identify different persons, reliance on either the
10    name or the number in executing the sender's payment order
11    is a breach of the obligation stated in Section
12    4A-302(a)(1).
13(Source: P.A. 86-1291.)
 
14    (810 ILCS 5/4A-210)  (from Ch. 26, par. 4A-210)
15    Sec. 4A-210. Rejection of payment order.
16    (a) A payment order is rejected by the receiving bank by a
17notice of rejection transmitted to the sender orally,
18electronically, or in a record writing. A notice of rejection
19need not use any particular words and is sufficient if it
20indicates that the receiving bank is rejecting the order or
21will not execute or pay the order. Rejection is effective when
22the notice is given if transmission is by a means that is
23reasonable in the circumstances. If notice of rejection is
24given by a means that is not reasonable, rejection is
25effective when the notice is received. If an agreement of the

 

 

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1sender and receiving bank establishes the means to be used to
2reject a payment order, (i) any means complying with the
3agreement is reasonable and (ii) any means not complying is
4not reasonable unless no significant delay in receipt of the
5notice resulted from the use of the noncomplying means.
6    (b) This subsection applies if a receiving bank other than
7the beneficiary's bank fails to execute a payment order
8despite the existence on the execution date of a withdrawable
9credit balance in an authorized account of the sender
10sufficient to cover the order. If the sender does not receive
11notice of rejection of the order on the execution date and the
12authorized account of the sender does not bear interest, the
13bank is obliged to pay interest to the sender on the amount of
14the order for the number of days elapsing after the execution
15date to the earlier of the day the order is canceled pursuant
16to Section 4A-211(d) or the day the sender receives notice or
17learns that the order was not executed, counting the final day
18of the period as an elapsed day. If the withdrawable credit
19balance during that period falls below the amount of the
20order, the amount of interest is reduced accordingly.
21    (c) If a receiving bank suspends payments, all unaccepted
22payment orders issued to it are deemed rejected at the time the
23bank suspends payments.
24    (d) Acceptance of a payment order precludes a later
25rejection of the order. Rejection of a payment order precludes
26a later acceptance of the order.

 

 

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1(Source: P.A. 86-1291.)
 
2    (810 ILCS 5/4A-211)  (from Ch. 26, par. 4A-211)
3    Sec. 4A-211. Cancellation and amendment of payment order.
4    (a) A communication of the sender of a payment order
5cancelling or amending the order may be transmitted to the
6receiving bank orally, electronically, or in a record writing.
7If a security procedure is in effect between the sender and the
8receiving bank, the communication is not effective to cancel
9or amend the order unless the communication is verified
10pursuant to the security procedure or the bank agrees to the
11cancellation or amendment.
12    (b) Subject to subsection (a), a communication by the
13sender cancelling or amending a payment order is effective to
14cancel or amend the order if notice of the communication is
15received at a time and in a manner affording the receiving bank
16a reasonable opportunity to act on the communication before
17the bank accepts the payment order.
18    (c) After a payment order has been accepted, cancellation
19or amendment of the order is not effective unless the
20receiving bank agrees or a funds transfer system rule allows
21cancellation or amendment without agreement of the bank.
22        (1) With respect to a payment order accepted by a
23    receiving bank other than the beneficiary's bank,
24    cancellation or amendment is not effective unless a
25    conforming cancellation or amendment of the payment order

 

 

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1    issued by the receiving bank is also made.
2        (2) With respect to a payment order accepted by the
3    beneficiary's bank, cancellation or amendment is not
4    effective unless the order was issued in execution of an
5    unauthorized payment order, or because of a mistake by a
6    sender in the funds transfer which resulted in the
7    issuance of a payment order (i) that is a duplicate of a
8    payment order previously issued by the sender, (ii) that
9    orders payment to a beneficiary not entitled to receive
10    payment from the originator, or (iii) that orders payment
11    in an amount greater than the amount the beneficiary was
12    entitled to receive from the originator. If the payment
13    order is canceled or amended, the beneficiary's bank is
14    entitled to recover from the beneficiary any amount paid
15    to the beneficiary to the extent allowed by the law
16    governing mistake and restitution.
17    (d) An unaccepted payment order is canceled by operation
18of law at the close of the fifth funds transfer business day of
19the receiving bank after the execution date or payment date of
20the order.
21    (e) A canceled payment order cannot be accepted. If an
22accepted payment order is canceled, the acceptance is
23nullified and no person has any right or obligation based on
24the acceptance. Amendment of a payment order is deemed to be
25cancellation of the original order at the time of amendment
26and issue of a new payment order in the amended form at the

 

 

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1same time.
2    (f) Unless otherwise provided in an agreement of the
3parties or in a funds transfer system rule, if the receiving
4bank, after accepting a payment order, agrees to cancellation
5or amendment of the order by the sender or is bound by a funds
6transfer system rule allowing cancellation or amendment
7without the bank's agreement, the sender, whether or not
8cancellation or amendment is effective, is liable to the bank
9for any loss and expenses, including reasonable attorney's
10fees, incurred by the bank as a result of the cancellation or
11amendment or attempted cancellation or amendment.
12    (g) A payment order is not revoked by the death or legal
13incapacity of the sender unless the receiving bank knows of
14the death or of an adjudication of incapacity by a court of
15competent jurisdiction and has reasonable opportunity to act
16before acceptance of the order.
17    (h) A funds transfer system rule is not effective to the
18extent it conflicts with subsection (c)(2).
19(Source: P.A. 97-813, eff. 7-13-12.)
 
20    (810 ILCS 5/4A-305)  (from Ch. 26, par. 4A-305)
21    Sec. 4A-305. Liability for late or improper execution or
22failure to execute payment order.
23    (a) If a funds transfer is completed but execution of a
24payment order by the receiving bank in breach of Section
254A-302 results in delay in payment to the beneficiary, the

 

 

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1bank is obliged to pay interest to either the originator or the
2beneficiary of the funds transfer for the period of delay
3caused by the improper execution. Except as provided in
4subsection (c), additional damages are not recoverable.
5    (b) If execution of a payment order by a receiving bank in
6breach of Section 4A-302 results in (i) noncompletion of the
7funds transfer, (ii) failure to use an intermediary bank
8designated by the originator, or (iii) issuance of a payment
9order that does not comply with the terms of the payment order
10of the originator, the bank is liable to the originator for its
11expenses in the funds transfer and for incidental expenses and
12interest losses, to the extent not covered by subsection (a),
13resulting from the improper execution. Except as provided in
14subsection (c), additional damages are not recoverable.
15    (c) In addition to the amounts payable under subsections
16(a) and (b), damages, including consequential damages, are
17recoverable to the extent provided in an express written
18agreement of the receiving bank, evidenced by a record.
19    (d) If a receiving bank fails to execute a payment order it
20was obliged by express agreement to execute, the receiving
21bank is liable to the sender for its expenses in the
22transaction and for incidental expenses and interest losses
23resulting from the failure to execute. Additional damages,
24including consequential damages, are recoverable to the extent
25provided in an express written agreement of the receiving
26bank, evidenced by a record, but are not otherwise

 

 

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1recoverable.
2    (e) Reasonable attorney's fees are recoverable if demand
3for compensation under subsection (a) or (b) is made and
4refused before an action is brought on the claim. If a claim is
5made for breach of an agreement under subsection (d) and the
6agreement does not provide for damages, reasonable attorney's
7fees are recoverable if demand for compensation under
8subsection (d) is made and refused before an action is brought
9on the claim.
10    (f) Except as stated in this Section, the liability of a
11receiving bank under subsections (a) and (b) may not be varied
12by agreement.
13(Source: P.A. 86-1291.)
 
14    (810 ILCS 5/5-104)  (from Ch. 26, par. 5-104)
15    Sec. 5-104. Formal requirements. A letter of credit,
16confirmation, advice, transfer, amendment, or cancellation may
17be issued in any form that is a signed record and is
18authenticated (i) by a signature or (ii) in accordance with
19the agreement of the parties or the standard practice referred
20to in Section 5-108(e).
21(Source: P.A. 89-534, eff. 1-1-97.)
 
22    (810 ILCS 5/5-116)  (from Ch. 26, par. 5-116)
23    Sec. 5-116. Choice of law and forum.
24    (a) The liability of an issuer, nominated person, or

 

 

SB3696 Enrolled- 57 -LRB103 37687 SPS 67814 b

1adviser for action or omission is governed by the law of the
2jurisdiction chosen by an agreement in the form of a record
3signed or otherwise authenticated by the affected parties in
4the manner provided in Section 5-104 or by a provision in the
5person's letter of credit, confirmation, or other undertaking.
6The jurisdiction whose law is chosen need not bear any
7relation to the transaction.
8    (b) Unless subsection (a) applies, the liability of an
9issuer, nominated person, or adviser for action or omission is
10governed by the law of the jurisdiction in which the person is
11located. The person is considered to be located at the address
12indicated in the person's undertaking. If more than one
13address is indicated, the person is considered to be located
14at the address from which the person's undertaking was issued.
15    (c) For the purpose of jurisdiction, choice of law, and
16recognition of interbranch letters of credit, but not
17enforcement of a judgment, all branches of a bank are
18considered separate juridical entities and a bank is
19considered to be located at the place where its relevant
20branch is considered to be located under this subsection (d).
21    (d) A branch of a bank is considered to be located at the
22address indicated in the branch's undertaking. If more than
23one address is indicated, the branch is considered to be
24located at the address from which the undertaking was issued.
25    (e) (c) Except as otherwise provided in this subsection,
26the liability of an issuer, nominated person, or adviser is

 

 

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1governed by any rules of custom or practice, such as the
2Uniform Customs and Practice for Documentary Credits, to which
3the letter of credit, confirmation, or other undertaking is
4expressly made subject. If (i) this Article would govern the
5liability of an issuer, nominated person, or adviser under
6subsection (a) or (b), (ii) the relevant undertaking
7incorporates rules of custom or practice, and (iii) there is
8conflict between this Article and those rules as applied to
9that undertaking, those rules govern except to the extent of
10any conflict with the nonvariable provisions specified in
11Section 5-103(c).
12    (f) (d) If there is conflict between this Article and
13Article 3, 4, 4A, or 9, this Article governs.
14    (g) (e) The forum for settling disputes arising out of an
15undertaking within this Article may be chosen in the manner
16and with the binding effect that governing law may be chosen in
17accordance with subsection (a).
18(Source: P.A. 89-534, eff. 1-1-97.)
 
19    (810 ILCS 5/7-102)  (from Ch. 26, par. 7-102)
20    Sec. 7-102. Definitions and index of definitions.
21    (a) In this Article, unless the context otherwise
22requires:
23        (1) "Bailee" means a person that by a warehouse
24    receipt, bill of lading, or other document of title
25    acknowledges possession of goods and contracts to deliver

 

 

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1    them.
2        (2) "Carrier" means a person that issues a bill of
3    lading.
4        (3) "Consignee" means a person named in a bill of
5    lading to which or to whose order the bill promises
6    delivery.
7        (4) "Consignor" means a person named in a bill of
8    lading as the person from which the goods have been
9    received for shipment.
10        (5) "Delivery order" means a record that contains an
11    order to deliver goods directed to a warehouse, carrier,
12    or other person that in the ordinary course of business
13    issues warehouse receipts or bills of lading.
14        (6) "Good faith" means honesty in fact and the
15    observance of reasonable commercial standards of fair
16    dealing.
17        (7) "Goods" means all things that are treated as
18    movable for the purposes of a contract for storage or
19    transportation.
20        (8) "Issuer" means a bailee that issues a document of
21    title or, in the case of an unaccepted delivery order, the
22    person that orders the possessor of goods to deliver. The
23    term includes a person for which an agent or employee
24    purports to act in issuing a document if the agent or
25    employee has real or apparent authority to issue
26    documents, even if the issuer did not receive any goods,

 

 

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1    the goods were misdescribed, or in any other respect the
2    agent or employee violated the issuer's instructions.
3        (9) "Person entitled under the document" means the
4    holder, in the case of a negotiable document of title, or
5    the person to which delivery of the goods is to be made by
6    the terms of, or pursuant to instructions in a record
7    under, a nonnegotiable document of title.
8        (10) (Reserved). "Record" means information that is
9    inscribed on a tangible medium or that is stored in an
10    electronic or other medium and is retrievable in
11    perceivable form.
12        (11) (Reserved). "Sign" means, with present intent to
13    authenticate or adopt a record:
14            (A) to execute or adopt a tangible symbol; or
15            (B) to attach to or logically associate with the
16        record an electronic sound, symbol, or process.
17        (12) "Shipper" means a person that enters into a
18    contract of transportation with a carrier.
19        (13) "Warehouse" means a person engaged in the
20    business of storing goods for hire. The owner of a
21    self-service storage facility as defined in the
22    Self-Service Storage Facility Act is not a warehouse for
23    the purposes of this Article.
24    (b) Definitions in other Articles applying to this Article
25and the Sections in which they appear are:
26        (1) "Contract for sale", Section 2-106.

 

 

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1        (2) "Lessee in the ordinary course of business",
2    Section 2A-103.
3        (3) "Receipt" of goods, Section 2-103.
4    (c) In addition, Article 1 contains general definitions
5and principles of construction and interpretation applicable
6throughout this Article.
7(Source: P.A. 95-895, eff. 1-1-09.)
 
8    (810 ILCS 5/7-106)
9    Sec. 7-106. Control of electronic document of title.
10    (a) A person has control of an electronic document of
11title if a system employed for evidencing the transfer of
12interests in the electronic document reliably establishes that
13person as the person to which the electronic document was
14issued or transferred.
15    (b) A system satisfies subsection (a), and a person has is
16deemed to have control of an electronic document of title, if
17the document is created, stored, and transferred assigned in
18such a manner that:
19        (1) a single authoritative copy of the document exists
20    which is unique, identifiable, and, except as otherwise
21    provided in paragraphs (4), (5), and (6), unalterable;
22        (2) the authoritative copy identifies the person
23    asserting control as:
24            (A) the person to which the document was issued;
25        or

 

 

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1            (B) if the authoritative copy indicates that the
2        document has been transferred, the person to which the
3        document was most recently transferred;
4        (3) the authoritative copy is communicated to and
5    maintained by the person asserting control or its
6    designated custodian;
7        (4) copies or amendments that add or change an
8    identified transferee assignee of the authoritative copy
9    can be made only with the consent of the person asserting
10    control;
11        (5) each copy of the authoritative copy and any copy
12    of a copy is readily identifiable as a copy that is not the
13    authoritative copy; and
14        (6) any amendment of the authoritative copy is readily
15    identifiable as authorized or unauthorized.
16    (c) A system satisfies subsection (a), and a person has
17control of an electronic document of title, if an
18authoritative electronic copy of the document, a record
19attached to or logically associated with the electronic copy,
20or a system in which the electronic copy is recorded:
21        (1) enables the person readily to identify each
22    electronic copy as either an authoritative copy or a
23    nonauthoritative copy;
24        (2) enables the person readily to identify itself in
25    any way, including by name, identifying number,
26    cryptographic key, office, or account number, as the

 

 

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1    person to which each authoritative electronic copy was
2    issued or transferred; and
3        (3) gives the person exclusive power, subject to
4    subsection (d), to:
5            (A) prevent others from adding or changing the
6        person to which each authoritative electronic copy has
7        been issued or transferred; and
8            (B) transfer control of each authoritative
9        electronic copy.
10    (d) Subject to subsection (e), a power is exclusive under
11subsection (c)(3)(A) and (B) even if:
12        (1) the authoritative electronic copy, a record
13    attached to or logically associated with the authoritative
14    electronic copy, or a system in which the authoritative
15    electronic copy is recorded limits the use of the document
16    of title or has a protocol that is programmed to cause a
17    change, including a transfer or loss of control; or
18        (2) the power is shared with another person.
19    (e) A power of a person is not shared with another person
20under subsection (d)(2) and the person's power is not
21exclusive if:
22        (1) the person can exercise the power only if the
23    power also is exercised by the other person; and
24        (2) the other person:
25            (A) can exercise the power without exercise of the
26        power by the person; or

 

 

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1            (B) is the transferor to the person of an interest
2        in the document of title.
3    (f) If a person has the powers specified in subsection
4(c)(3)(A) and (B), the powers are presumed to be exclusive.
5    (g) A person has control of an electronic document of
6title if another person, other than the transferor to the
7person of an interest in the document:
8        (1) has control of the document and acknowledges that
9    it has control on behalf of the person; or
10        (2) obtains control of the document after having
11    acknowledged that it will obtain control of the document
12    on behalf of the person.
13    (h) A person that has control under this Section is not
14required to acknowledge that it has control on behalf of
15another person.
16    (i) If a person acknowledges that it has or will obtain
17control on behalf of another person, unless the person
18otherwise agrees or law other than this Article or Article 9
19otherwise provides, the person does not owe any duty to the
20other person and is not required to confirm the acknowledgment
21to any other person.
22(Source: P.A. 95-895, eff. 1-1-09.)
 
23    (810 ILCS 5/8-102)  (from Ch. 26, par. 8-102)
24    Sec. 8-102. Definitions.
25    (a) In this Article:

 

 

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1        (1) "Adverse claim" means a claim that a claimant has
2    a property interest in a financial asset and that it is a
3    violation of the rights of the claimant for another person
4    to hold, transfer, or deal with the financial asset.
5        (2) "Bearer form," as applied to a certificated
6    security, means a form in which the security is payable to
7    the bearer of the security certificate according to its
8    terms but not by reason of an indorsement.
9        (3) "Broker" means a person defined as a broker or
10    dealer under the federal securities laws, but without
11    excluding a bank acting in that capacity.
12        (4) "Certificated security" means a security that is
13    represented by a certificate.
14        (5) "Clearing corporation" means:
15            (i) a person that is registered as a "clearing
16        agency" under the federal securities laws;
17            (ii) a federal reserve bank; or
18            (iii) any other person that provides clearance or
19        settlement services with respect to financial assets
20        that would require it to register as a clearing agency
21        under the federal securities laws but for an exclusion
22        or exemption from the registration requirement, if its
23        activities as a clearing corporation, including
24        promulgation of rules, are subject to regulation by a
25        federal or state governmental authority.
26        (6) "Communicate" means to:

 

 

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1            (i) send a signed record writing; or
2            (ii) transmit information by any mechanism agreed
3        upon by the persons transmitting and receiving the
4        information.
5        (7) "Entitlement holder" means a person identified in
6    the records of a securities intermediary as the person
7    having a security entitlement against the securities
8    intermediary. If a person acquires a security entitlement
9    by virtue of Section 8-501(b)(2) or (3), that person is
10    the entitlement holder.
11        (8) "Entitlement order" means a notification
12    communicated to a securities intermediary directing
13    transfer or redemption of a financial asset to which the
14    entitlement holder has a security entitlement.
15        (9) "Financial asset," except as otherwise provided in
16    Section 8-103, means:
17            (i) a security;
18            (ii) an obligation of a person or a share,
19        participation, or other interest in a person or in
20        property or an enterprise of a person, which is, or is
21        of a type, dealt in or traded on financial markets, or
22        which is recognized in any area in which it is issued
23        or dealt in as a medium for investment; or
24            (iii) any property that is held by a securities
25        intermediary for another person in a securities
26        account if the securities intermediary has expressly

 

 

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1        agreed with the other person that the property is to be
2        treated as a financial asset under this Article. As
3        context requires, the term means either the interest
4        itself or the means by which a person's claim to it is
5        evidenced, including a certificated or uncertificated
6        security, a security certificate, or a security
7        entitlement.
8        (10) "Good faith," for purposes of the obligation of
9    good faith in the performance or enforcement of contracts
10    or duties within this Article, means honesty in fact and
11    the observance of reasonable commercial standards of fair
12    dealing.
13        (11) "Indorsement" means a signature that alone or
14    accompanied by other words is made on a security
15    certificate in registered form or on a separate document
16    for the purpose of assigning, transferring, or redeeming
17    the security or granting a power to assign, transfer, or
18    redeem it.
19        (12) "Instruction" means a notification communicated
20    to the issuer of an uncertificated security which directs
21    that the transfer of the security be registered or that
22    the security be redeemed.
23        (13) "Registered form," as applied to a certificated
24    security, means a form in which:
25            (i) the security certificate specifies a person
26        entitled to the security; and

 

 

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1            (ii) a transfer of the security may be registered
2        upon books maintained for that purpose by or on behalf
3        of the issuer, or the security certificate so states.
4        (14) "Securities intermediary" means:
5            (i) a clearing corporation; or
6            (ii) a person, including a bank or broker, that in
7        the ordinary course of its business maintains
8        securities accounts for others and is acting in that
9        capacity.
10        (15) "Security," except as otherwise provided in
11    Section 8-103, means an obligation of an issuer or a
12    share, participation, or other interest in an issuer or in
13    property or an enterprise of an issuer:
14            (i) which is represented by a security certificate
15        in bearer or registered form, or the transfer of which
16        may be registered upon books maintained for that
17        purpose by or on behalf of the issuer;
18            (ii) which is one of a class or series or by its
19        terms is divisible into a class or series of shares,
20        participations, interests, or obligations; and
21            (iii) which:
22                (A) is, or is of a type, dealt in or traded on
23            securities exchanges or securities markets; or
24                (B) is a medium for investment and by its
25            terms expressly provides that it is a security
26            governed by this Article.

 

 

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1        (16) "Security certificate" means a certificate
2    representing a security.
3        (17) "Security entitlement" means the rights and
4    property interest of an entitlement holder with respect to
5    a financial asset specified in Part 5.
6        (18) "Uncertificated security" means a security that
7    is not represented by a certificate.
8    (b) The following Other definitions in applying to this
9Article and other Articles apply to this Article the Sections
10in which they appear are:
 
11    Appropriate person            Section 8-107
12    Control                       Section 8-106
13    Controllable account          Section 9-102
14    Controllable electronic
15        record                    Section 12-102
16    Controllable payment
17        intangible                Section 9-102
18    Delivery                      Section 8-301
19    Investment company security   Section 8-103
20    Issuer                        Section 8-201
21    Overissue                     Section 8-210
22    Protected purchaser           Section 8-303
23    Securities account            Section 8-501
 
24    (c) In addition, Article 1 contains general definitions

 

 

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1and principles of construction and interpretation applicable
2throughout this Article.
3    (d) The characterization of a person, business, or
4transaction for purposes of this Article does not determine
5the characterization of the person, business, or transaction
6for purposes of any other law, regulation, or rule.
7(Source: P.A. 89-364, eff. 1-1-96.)
 
8    (810 ILCS 5/8-103)  (from Ch. 26, par. 8-103)
9    Sec. 8-103. Rules for determining whether certain
10obligations and interests are securities or financial assets.
11    (a) A share or similar equity interest issued by a
12corporation, business trust, joint stock company, or similar
13entity is a security.
14    (b) An "investment company security" is a security.
15"Investment company security" means a share or similar equity
16interest issued by an entity that is registered as an
17investment company under the federal investment company laws,
18an interest in a unit investment trust that is so registered,
19or a face-amount certificate issued by a face-amount
20certificate company that is so registered. Investment company
21security does not include an insurance policy or endowment
22policy or annuity contract issued by an insurance company.
23    (c) An interest in a partnership or limited liability
24company is not a security unless it is dealt in or traded on
25securities exchanges or in securities markets, its terms

 

 

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1expressly provide that it is a security governed by this
2Article, or it is an investment company security. However, an
3interest in a partnership or limited liability company is a
4financial asset if it is held in a securities account.
5    (d) A writing that is a security certificate is governed
6by this Article and not by Article 3, even though it also meets
7the requirements of that Article. However, a negotiable
8instrument governed by Article 3 is a financial asset if it is
9held in a securities account.
10    (e) An option or similar obligation issued by a clearing
11corporation to its participants is not a security, but is a
12financial asset.
13    (f) A commodity contract, as defined in Section
149-102(a)(15), is not a security or a financial asset.
15    (g) A document of title is not a financial asset unless
16Section 8-102(a)(9)(iii) applies.
17    (h) A controllable account, controllable electronic
18record, or controllable payment intangible is not a financial
19asset unless Section 8-102(a)(9)(iii) applies.
20(Source: P.A. 95-895, eff. 1-1-09.)
 
21    (810 ILCS 5/8-106)  (from Ch. 26, par. 8-106)
22    Sec. 8-106. Control.
23    (a) A purchaser has "control" of a certificated security
24in bearer form if the certificated security is delivered to
25the purchaser.

 

 

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1    (b) A purchaser has "control" of a certificated security
2in registered form if the certificated security is delivered
3to the purchaser, and:
4        (1) the certificate is indorsed to the purchaser or in
5    blank by an effective indorsement; or
6        (2) the certificate is registered in the name of the
7    purchaser, upon original issue or registration of transfer
8    by the issuer.
9    (c) A purchaser has "control" of an uncertificated
10security if:
11        (1) the uncertificated security is delivered to the
12    purchaser; or
13        (2) the issuer has agreed that it will comply with
14    instructions originated by the purchaser without further
15    consent by the registered owner.
16    (d) A purchaser has "control" of a security entitlement
17if:
18        (1) the purchaser becomes the entitlement holder;
19        (2) the securities intermediary has agreed that it
20    will comply with entitlement orders originated by the
21    purchaser without further consent by the entitlement
22    holder; or
23        (3) another person, other than the transferor to the
24    purchaser of an interest in the security entitlement: has
25    control of the security entitlement on behalf of the
26    purchaser or, having previously acquired control of the

 

 

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1    security entitlement, acknowledges that it has control on
2    behalf of the purchaser.
3            (A) has control of the security entitlement and
4        acknowledges that it has control on behalf of the
5        purchaser; or
6            (B) obtains control of the security entitlement
7        after having acknowledged that it will obtain control
8        of the security entitlement on behalf of the
9        purchaser.
10    (e) If an interest in a security entitlement is granted by
11the entitlement holder to the entitlement holder's own
12securities intermediary, the securities intermediary has
13control.
14    (f) A purchaser who has satisfied the requirements of
15subsection (c) or (d) has control even if the registered owner
16in the case of subsection (c) or the entitlement holder in the
17case of subsection (d) retains the right to make substitutions
18for the uncertificated security or security entitlement, to
19originate instructions or entitlement orders to the issuer or
20securities intermediary, or otherwise to deal with the
21uncertificated security or security entitlement.
22    (g) An issuer or a securities intermediary may not enter
23into an agreement of the kind described in subsection (c)(2)
24or (d)(2) without the consent of the registered owner or
25entitlement holder, but an issuer or a securities intermediary
26is not required to enter into such an agreement even though the

 

 

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1registered owner or entitlement holder so directs. An issuer
2or securities intermediary that has entered into such an
3agreement is not required to confirm the existence of the
4agreement to another party unless requested to do so by the
5registered owner or entitlement holder.
6    (h) A person that has control under this Section is not
7required to acknowledge that it has control on behalf of a
8purchaser.
9    (i) If a person acknowledges that it has or will obtain
10control on behalf of a purchaser, unless the person otherwise
11agrees or law other than this Article or Article 9 otherwise
12provides, the person does not owe any duty to the purchaser and
13is not required to confirm the acknowledgment to any other
14person.
15(Source: P.A. 95-331, eff. 8-21-07.)
 
16    (810 ILCS 5/8-110)
17    Sec. 8-110. Applicability; choice of law.
18    (a) The local law of the issuer's jurisdiction, as
19specified in subsection (d), governs:
20        (1) the validity of a security;
21        (2) the rights and duties of the issuer with respect
22    to registration of transfer;
23        (3) the effectiveness of registration of transfer by
24    the issuer;
25        (4) whether the issuer owes any duties to an adverse

 

 

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1    claimant to a security; and
2        (5) whether an adverse claim can be asserted against a
3    person to whom transfer of a certificated or
4    uncertificated security is registered or a person who
5    obtains control of an uncertificated security.
6    (b) The local law of the securities intermediary's
7jurisdiction, as specified in subsection (e), governs:
8        (1) acquisition of a security entitlement from the
9    securities intermediary;
10        (2) the rights and duties of the securities
11    intermediary and entitlement holder arising out of a
12    security entitlement;
13        (3) whether the securities intermediary owes any
14    duties to an adverse claimant to a security entitlement;
15    and
16        (4) whether an adverse claim can be asserted against a
17    person who acquires a security entitlement from the
18    securities intermediary or a person who purchases a
19    security entitlement or interest therein from an
20    entitlement holder.
21    (c) The local law of the jurisdiction in which a security
22certificate is located at the time of delivery governs whether
23an adverse claim can be asserted against a person to whom the
24security certificate is delivered.
25    (d) "Issuer's jurisdiction" means the jurisdiction under
26which the issuer of the security is organized or, if permitted

 

 

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1by the law of that jurisdiction, the law of another
2jurisdiction specified by the issuer. An issuer organized
3under the law of this State may specify the law of another
4jurisdiction as the law governing the matters specified in
5subsection (a)(2) through (5).
6    (e) The following rules determine a "securities
7intermediary's jurisdiction" for purposes of this Section:
8        (1) If an agreement between the securities
9    intermediary and its entitlement holder governing the
10    securities account expressly provides that a particular
11    jurisdiction is the securities intermediary's jurisdiction
12    for purposes of this Part, this Article, or this Act, that
13    jurisdiction is the securities intermediary's
14    jurisdiction.
15        (2) If paragraph (1) does not apply and an agreement
16    between the securities intermediary and its entitlement
17    holder governing the securities account expressly provides
18    that the agreement is governed by the law of a particular
19    jurisdiction, that jurisdiction is the securities
20    intermediary's jurisdiction.
21        (3) If neither paragraph (1) nor paragraph (2) applies
22    and an agreement between the securities intermediary and
23    its entitlement holder governing the securities account
24    expressly provides that the securities account is
25    maintained at an office in a particular jurisdiction, that
26    jurisdiction is the securities intermediary's

 

 

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1    jurisdiction.
2        (4) If none of the preceding paragraphs applies, the
3    securities intermediary's jurisdiction is the jurisdiction
4    in which the office identified in an account statement as
5    the office serving the entitlement holder's account is
6    located.
7        (5) If none of the preceding paragraphs applies, the
8    securities intermediary's jurisdiction is the jurisdiction
9    in which the chief executive office of the securities
10    intermediary is located.
11    (f) A securities intermediary's jurisdiction is not
12determined by the physical location of certificates
13representing financial assets, or by the jurisdiction in which
14is organized the issuer of the financial asset with respect to
15which an entitlement holder has a security entitlement, or by
16the location of facilities for data processing or other record
17keeping concerning the account.
18    (g) The local law of the issuer's jurisdiction or the
19securities intermediary's jurisdiction governs a matter or
20transaction specified in subsection (a) or (b) even if the
21matter or transaction does not bear any relation to the
22jurisdiction.
23(Source: P.A. 91-893, eff. 7-1-01.)
 
24    (810 ILCS 5/8-303)  (from Ch. 26, par. 8-303)
25    Sec. 8-303. Protected purchaser.

 

 

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1    (a) "Protected purchaser" means a purchaser of a
2certificated or uncertificated security, or of an interest
3therein, who:
4        (1) gives value;
5        (2) does not have notice of any adverse claim to the
6    security; and
7        (3) obtains control of the certificated or
8    uncertificated security.
9    (b) A In addition to acquiring the rights of a purchaser, a
10protected purchaser also acquires its interest in the security
11free of any adverse claim.
12(Source: P.A. 89-364, eff. 1-1-96.)
 
13    (810 ILCS 5/9-102)  (from Ch. 26, par. 9-102)
14    Sec. 9-102. Definitions and index of definitions.
15    (a) Article 9 definitions. In this Article:
16        (1) "Accession" means goods that are physically united
17    with other goods in such a manner that the identity of the
18    original goods is not lost.
19        (2) "Account", except as used in "account for",
20    "account statement", "account to", "commodity account" in
21    paragraph (14), "customer's account", "deposit account" in
22    paragraph (29), "on account of", and "statement of
23    account", means a right to payment of a monetary
24    obligation, whether or not earned by performance, (i) for
25    property that has been or is to be sold, leased, licensed,

 

 

SB3696 Enrolled- 79 -LRB103 37687 SPS 67814 b

1    assigned, or otherwise disposed of, (ii) for services
2    rendered or to be rendered, (iii) for a policy of
3    insurance issued or to be issued, (iv) for a secondary
4    obligation incurred or to be incurred, (v) for energy
5    provided or to be provided, (vi) for the use or hire of a
6    vessel under a charter or other contract, (vii) arising
7    out of the use of a credit or charge card or information
8    contained on or for use with the card, or (viii) as
9    winnings in a lottery or other game of chance operated or
10    sponsored by a State, governmental unit of a State, or
11    person licensed or authorized to operate the game by a
12    State or governmental unit of a State. The term includes
13    controllable accounts and health-care-insurance
14    receivables. The term does not include (i) rights to
15    payment evidenced by chattel paper or an instrument, (ii)
16    commercial tort claims, (iii) deposit accounts, (iv)
17    investment property, (v) letter-of-credit rights or
18    letters of credit, or (vi) rights to payment for money or
19    funds advanced or sold, other than rights arising out of
20    the use of a credit or charge card or information
21    contained on or for use with the card, or (vii) rights to
22    payment evidenced by an instrument.
23        (3) "Account debtor" means a person obligated on an
24    account, chattel paper, or general intangible. The term
25    does not include persons obligated to pay a negotiable
26    instrument, even if the negotiable instrument evidences

 

 

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1    constitutes part of chattel paper.
2        (4) "Accounting", except as used in "accounting for",
3    means a record:
4            (A) signed authenticated by a secured party;
5            (B) indicating the aggregate unpaid secured
6        obligations as of a date not more than 35 days earlier
7        or 35 days later than the date of the record; and
8            (C) identifying the components of the obligations
9        in reasonable detail.
10        (5) "Agricultural lien" means an interest, other than
11    a security interest, in farm products:
12            (A) which secures payment or performance of an
13        obligation for goods or services furnished in
14        connection with a debtor's farming operation;
15            (B) which is created by statute in favor of a
16        person that in the ordinary course of its business
17        furnished goods or services to a debtor in connection
18        with a debtor's farming operation; and
19            (C) whose effectiveness does not depend on the
20        person's possession of the personal property.
21        (6) "As-extracted collateral" means:
22            (A) oil, gas, or other minerals that are subject
23        to a security interest that:
24                (i) is created by a debtor having an interest
25            in the minerals before extraction; and
26                (ii) attaches to the minerals as extracted; or

 

 

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1            (B) accounts arising out of the sale at the
2        wellhead or minehead of oil, gas, or other minerals in
3        which the debtor had an interest before extraction.
4        (7) (Reserved). "Authenticate" means:
5            (A) to sign; or
6            (B) with present intent to adopt or accept a
7        record, to attach to or logically associate with the
8        record an electronic sound, symbol, or process.
9        (7A) "Assignee", except as used in "assignee for
10    benefit of creditors", means a person (i) in whose favor a
11    security interest that secures an obligation is created or
12    provided for under a security agreement, whether or not
13    the obligation is outstanding or (ii) to which an account,
14    chattel paper, payment intangible, or promissory note has
15    been sold. The term includes a person to which a security
16    interest has been transferred by a secured party.
17        (7B) "Assignor" means a person that (i) under a
18    security agreement creates or provides for a security
19    interest that secures an obligation or (ii) sells an
20    account, chattel paper, payment intangible, or promissory
21    note. The term includes a secured party that has
22    transferred a security interest to another person.
23        (8) "Bank" means an organization that is engaged in
24    the business of banking. The term includes savings banks,
25    savings and loan associations, credit unions, and trust
26    companies.

 

 

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1        (9) "Cash proceeds" means proceeds that are money,
2    checks, deposit accounts, or the like.
3        (10) "Certificate of title" means a certificate of
4    title with respect to which a statute provides for the
5    security interest in question to be indicated on the
6    certificate as a condition or result of the security
7    interest's obtaining priority over the rights of a lien
8    creditor with respect to the collateral. The term includes
9    another record maintained as an alternative to a
10    certificate of title by the governmental unit that issues
11    certificates of title if a statute permits the security
12    interest in question to be indicated on the record as a
13    condition or result of the security interest's obtaining
14    priority over the rights of a lien creditor with respect
15    to the collateral.
16        (11) "Chattel paper" means:
17            (A) a right to payment of a monetary obligation
18        secured by specific goods, if the right to payment and
19        security agreement are evidenced by a record; or
20            (B) a right to payment of a monetary obligation
21        owed by a lessee under a lease agreement with respect
22        to specific goods and a monetary obligation owed by
23        the lessee in connection with the transaction giving
24        rise to the lease, if:
25                (i) the right to payment and lease agreement
26            are evidenced by a record; and

 

 

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1                (ii) the predominant purpose of the
2            transaction giving rise to the lease was to give
3            the lessee the right to possession and use of the
4            goods.
5    The term does not include a right to payment arising out of a
6    charter or other contract involving the use or hire of a
7    vessel or a right to payment arising out of the use of a
8    credit or charge card or information contained on or for
9    use with the card.
10    a record or records that evidence both a monetary obligation
11    and a security interest in specific goods, a security
12    interest in specific goods and software used in the goods,
13    a security interest in specific goods and license of
14    software used in the goods, a lease of specific goods, or a
15    lease of specified goods and a license of software used in
16    the goods. In this paragraph, "monetary obligation" means
17    a monetary obligation secured by the goods or owed under a
18    lease of the goods and includes a monetary obligation with
19    respect to software used in the goods. The term does not
20    include (i) charters or other contracts involving the use
21    or hire of a vessel or (ii) records that evidence a right
22    to payment arising out of the use of a credit or charge
23    card or information contained on or for use with the card.
24    If a transaction is evidenced by records that include an
25    instrument or series of instruments, the group of records
26    taken together constitutes chattel paper.

 

 

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1        (12) "Collateral" means the property subject to a
2    security interest or agricultural lien. The term includes:
3            (A) proceeds to which a security interest
4        attaches;
5            (B) accounts, chattel paper, payment intangibles,
6        and promissory notes that have been sold; and
7            (C) goods that are the subject of a consignment.
8        (13) "Commercial tort claim" means a claim arising in
9    tort with respect to which:
10            (A) the claimant is an organization; or
11            (B) the claimant is an individual and the claim:
12                (i) arose in the course of the claimant's
13            business or profession; and
14                (ii) does not include damages arising out of
15            personal injury to or the death of an individual.
16        (14) "Commodity account" means an account maintained
17    by a commodity intermediary in which a commodity contract
18    is carried for a commodity customer.
19        (15) "Commodity contract" means a commodity futures
20    contract, an option on a commodity futures contract, a
21    commodity option, or another contract if the contract or
22    option is:
23            (A) traded on or subject to the rules of a board of
24        trade that has been designated as a contract market
25        for such a contract pursuant to federal commodities
26        laws; or

 

 

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1            (B) traded on a foreign commodity board of trade,
2        exchange, or market, and is carried on the books of a
3        commodity intermediary for a commodity customer.
4        (16) "Commodity customer" means a person for which a
5    commodity intermediary carries a commodity contract on its
6    books.
7        (17) "Commodity intermediary" means a person that:
8            (A) is registered as a futures commission merchant
9        under federal commodities law; or
10            (B) in the ordinary course of its business
11        provides clearance or settlement services for a board
12        of trade that has been designated as a contract market
13        pursuant to federal commodities law.
14        (18) "Communicate" means:
15            (A) to send a written or other tangible record;
16            (B) to transmit a record by any means agreed upon
17        by the persons sending and receiving the record; or
18            (C) in the case of transmission of a record to or
19        by a filing office, to transmit a record by any means
20        prescribed by filing-office rule.
21        (19) "Consignee" means a merchant to which goods are
22    delivered in a consignment.
23        (20) "Consignment" means a transaction, regardless of
24    its form, in which a person delivers goods to a merchant
25    for the purpose of sale and:
26            (A) the merchant:

 

 

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1                (i) deals in goods of that kind under a name
2            other than the name of the person making delivery;
3                (ii) is not an auctioneer; and
4                (iii) is not generally known by its creditors
5            to be substantially engaged in selling the goods
6            of others;
7            (B) with respect to each delivery, the aggregate
8        value of the goods is $1,000 or more at the time of
9        delivery;
10            (C) the goods are not consumer goods immediately
11        before delivery; and
12            (D) the transaction does not create a security
13        interest that secures an obligation.
14        (21) "Consignor" means a person that delivers goods to
15    a consignee in a consignment.
16        (22) "Consumer debtor" means a debtor in a consumer
17    transaction.
18        (23) "Consumer goods" means goods that are used or
19    bought for use primarily for personal, family, or
20    household purposes.
21        (24) "Consumer-goods transaction" means a consumer
22    transaction in which:
23            (A) an individual incurs an obligation primarily
24        for personal, family, or household purposes; and
25            (B) a security interest in consumer goods secures
26        the obligation.

 

 

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1        (25) "Consumer obligor" means an obligor who is an
2    individual and who incurred the obligation as part of a
3    transaction entered into primarily for personal, family,
4    or household purposes.
5        (26) "Consumer transaction" means a transaction in
6    which (i) an individual incurs an obligation primarily for
7    personal, family, or household purposes, (ii) a security
8    interest secures the obligation, and (iii) the collateral
9    is held or acquired primarily for personal, family, or
10    household purposes. The term includes consumer-goods
11    transactions.
12        (27) "Continuation statement" means an amendment of a
13    financing statement which:
14            (A) identifies, by its file number, the initial
15        financing statement to which it relates; and
16            (B) indicates that it is a continuation statement
17        for, or that it is filed to continue the effectiveness
18        of, the identified financing statement.
19        (27A) "Controllable account" means an account
20    evidenced by a controllable electronic record that
21    provides that the account debtor undertakes to pay the
22    person that has control under Section 12-105 of the
23    controllable electronic record.
24        (27B) "Controllable payment intangible" means a
25    payment intangible evidenced by a controllable electronic
26    record that provides that the account debtor undertakes to

 

 

SB3696 Enrolled- 88 -LRB103 37687 SPS 67814 b

1    pay the person that has control under Section 12-105 of
2    the controllable electronic record.
3        (28) "Debtor" means:
4            (A) a person having an interest, other than a
5        security interest or other lien, in the collateral,
6        whether or not the person is an obligor;
7            (B) a seller of accounts, chattel paper, payment
8        intangibles, or promissory notes; or
9            (C) a consignee.
10        (29) "Deposit account" means a demand, time, savings,
11    passbook, nonnegotiable certificates of deposit,
12    uncertificated certificates of deposit, nontransferable
13    nontransferrable certificates of deposit, or similar
14    account maintained with a bank. The term does not include
15    investment property or accounts evidenced by an
16    instrument.
17        (30) "Document" means a document of title or a receipt
18    of the type described in Section 7-201(b).
19        (31) (Reserved). "Electronic chattel paper" means
20    chattel paper evidenced by a record or records consisting
21    of information stored in an electronic medium.
22        (31A) "Electronic money" means money in an electronic
23    form.
24        (32) "Encumbrance" means a right, other than an
25    ownership interest, in real property. The term includes
26    mortgages and other liens on real property.

 

 

SB3696 Enrolled- 89 -LRB103 37687 SPS 67814 b

1        (33) "Equipment" means goods other than inventory,
2    farm products, or consumer goods.
3        (34) "Farm products" means goods, other than standing
4    timber, with respect to which the debtor is engaged in a
5    farming operation and which are:
6            (A) crops grown, growing, or to be grown,
7        including:
8                (i) crops produced on trees, vines, and
9            bushes; and
10                (ii) aquatic goods produced in aquacultural
11            operations;
12            (B) livestock, born or unborn, including aquatic
13        goods produced in aquacultural operations;
14            (C) supplies used or produced in a farming
15        operation; or
16            (D) products of crops or livestock in their
17        unmanufactured states.
18        (35) "Farming operation" means raising, cultivating,
19    propagating, fattening, grazing, or any other farming,
20    livestock, or aquacultural operation.
21        (36) "File number" means the number assigned to an
22    initial financing statement pursuant to Section 9-519(a).
23        (37) "Filing office" means an office designated in
24    Section 9-501 as the place to file a financing statement.
25        (38) "Filing-office rule" means a rule adopted
26    pursuant to Section 9-526.

 

 

SB3696 Enrolled- 90 -LRB103 37687 SPS 67814 b

1        (39) "Financing statement" means a record or records
2    composed of an initial financing statement and any filed
3    record relating to the initial financing statement.
4        (40) "Fixture filing" means the filing of a financing
5    statement covering goods that are or are to become
6    fixtures and satisfying Section 9-502(a) and (b). The term
7    includes the filing of a financing statement covering
8    goods of a transmitting utility which are or are to become
9    fixtures.
10        (41) "Fixtures" means goods that have become so
11    related to particular real property that an interest in
12    them arises under real property law.
13        (42) "General intangible" means any personal property,
14    including things in action, other than accounts, chattel
15    paper, commercial tort claims, deposit accounts,
16    documents, goods, instruments, investment property,
17    letter-of-credit rights, letters of credit, money, and
18    oil, gas, or other minerals before extraction. The term
19    includes controllable electronic records, payment
20    intangibles, and software.
21        (43) "Good faith" means honesty in fact and the
22    observance of reasonable commercial standards of fair
23    dealing.
24        (44) "Goods" means all things that are movable when a
25    security interest attaches. The term includes (i)
26    fixtures, (ii) standing timber that is to be cut and

 

 

SB3696 Enrolled- 91 -LRB103 37687 SPS 67814 b

1    removed under a conveyance or contract for sale, (iii) the
2    unborn young of animals, (iv) crops grown, growing, or to
3    be grown, even if the crops are produced on trees, vines,
4    or bushes, and (v) manufactured homes. The term also
5    includes a computer program embedded in goods and any
6    supporting information provided in connection with a
7    transaction relating to the program if (i) the program is
8    associated with the goods in such a manner that it
9    customarily is considered part of the goods, or (ii) by
10    becoming the owner of the goods, a person acquires a right
11    to use the program in connection with the goods. The term
12    does not include a computer program embedded in goods that
13    consist solely of the medium in which the program is
14    embedded. The term also does not include accounts, chattel
15    paper, commercial tort claims, deposit accounts,
16    documents, general intangibles, instruments, investment
17    property, letter-of-credit rights, letters of credit,
18    money, or oil, gas, or other minerals before extraction.
19        (45) "Governmental unit" means a subdivision, agency,
20    department, county, parish, municipality, or other unit of
21    the government of the United States, a State, or a foreign
22    country. The term includes an organization having a
23    separate corporate existence if the organization is
24    eligible to issue debt on which interest is exempt from
25    income taxation under the laws of the United States.
26        (46) "Health-care-insurance receivable" means an

 

 

SB3696 Enrolled- 92 -LRB103 37687 SPS 67814 b

1    interest in or claim under a policy of insurance which is a
2    right to payment of a monetary obligation for health-care
3    goods or services provided.
4        (47) "Instrument" means a negotiable instrument or any
5    other writing that evidences a right to the payment of a
6    monetary obligation, is not itself a security agreement or
7    lease, and is of a type that in ordinary course of business
8    is transferred by delivery with any necessary indorsement
9    or assignment. The term does not include (i) investment
10    property, (ii) letters of credit, (iii) nonnegotiable
11    certificates of deposit, (iv) uncertificated certificates
12    of deposit, (v) nontransferable nontransferrable
13    certificates of deposit, or (vi) writings that evidence a
14    right to payment arising out of the use of a credit or
15    charge card or information contained on or for use with
16    the card, or (vii) writings that evidence chattel paper.
17        (48) "Inventory" means goods, other than farm
18    products, which:
19            (A) are leased by a person as lessor;
20            (B) are held by a person for sale or lease or to be
21        furnished under a contract of service;
22            (C) are furnished by a person under a contract of
23        service; or
24            (D) consist of raw materials, work in process, or
25        materials used or consumed in a business.
26        (49) "Investment property" means a security, whether

 

 

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1    certificated or uncertificated, security entitlement,
2    securities account, commodity contract, or commodity
3    account.
4        (50) "Jurisdiction of organization", with respect to a
5    registered organization, means the jurisdiction under
6    whose law the organization is formed or organized.
7        (51) "Letter-of-credit right" means a right to payment
8    or performance under a letter of credit, whether or not
9    the beneficiary has demanded or is at the time entitled to
10    demand payment or performance. The term does not include
11    the right of a beneficiary to demand payment or
12    performance under a letter of credit.
13        (52) "Lien creditor" means:
14            (A) a creditor that has acquired a lien on the
15        property involved by attachment, levy, or the like;
16            (B) an assignee for benefit of creditors from the
17        time of assignment;
18            (C) a trustee in bankruptcy from the date of the
19        filing of the petition; or
20            (D) a receiver in equity from the time of
21        appointment.
22        (53) "Manufactured home" means a structure,
23    transportable in one or more sections, which, in the
24    traveling mode, is eight body feet or more in width or 40
25    body feet or more in length, or, when erected on site, is
26    320 or more square feet, and which is built on a permanent

 

 

SB3696 Enrolled- 94 -LRB103 37687 SPS 67814 b

1    chassis and designed to be used as a dwelling with or
2    without a permanent foundation when connected to the
3    required utilities, and includes the plumbing, heating,
4    air-conditioning, and electrical systems contained
5    therein. The term includes any structure that meets all of
6    the requirements of this paragraph except the size
7    requirements and with respect to which the manufacturer
8    voluntarily files a certification required by the United
9    States Secretary of Housing and Urban Development and
10    complies with the standards established under Title 42 of
11    the United States Code. The term "manufactured home" does
12    not include campers and recreational vehicles.
13        (54) "Manufactured-home transaction" means a secured
14    transaction:
15            (A) that creates a purchase-money security
16        interest in a manufactured home, other than a
17        manufactured home held as inventory; or
18            (B) in which a manufactured home, other than a
19        manufactured home held as inventory, is the primary
20        collateral.
21        (54A) "Money" has the meaning in Section 1-201(b)(24),
22    but does not include (i) a deposit account or (ii) money in
23    an electronic form that cannot be subjected to control
24    under Section 9-105A.
25        (55) "Mortgage" means a consensual interest in real
26    property, including fixtures, which secures payment or

 

 

SB3696 Enrolled- 95 -LRB103 37687 SPS 67814 b

1    performance of an obligation.
2        (56) "New debtor" means a person that becomes bound as
3    debtor under Section 9-203(d) by a security agreement
4    previously entered into by another person.
5        (57) "New value" means (i) money, (ii) money's worth
6    in property, services, or new credit, or (iii) release by
7    a transferee of an interest in property previously
8    transferred to the transferee. The term does not include
9    an obligation substituted for another obligation.
10        (58) "Noncash proceeds" means proceeds other than cash
11    proceeds.
12        (59) "Obligor" means a person that, with respect to an
13    obligation secured by a security interest in or an
14    agricultural lien on the collateral, (i) owes payment or
15    other performance of the obligation, (ii) has provided
16    property other than the collateral to secure payment or
17    other performance of the obligation, or (iii) is otherwise
18    accountable in whole or in part for payment or other
19    performance of the obligation. The term does not include
20    issuers or nominated persons under a letter of credit.
21        (60) "Original debtor", except as used in Section
22    9-310(c), means a person that, as debtor, entered into a
23    security agreement to which a new debtor has become bound
24    under Section 9-203(d).
25        (61) "Payment intangible" means a general intangible
26    under which the account debtor's principal obligation is a

 

 

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1    monetary obligation. The term includes a controllable
2    payment intangible.
3        (62) "Person related to", with respect to an
4    individual, means:
5            (A) the spouse of the individual;
6            (B) a brother, brother-in-law, sister, or
7        sister-in-law of the individual;
8            (C) an ancestor or lineal descendant of the
9        individual or the individual's spouse; or
10            (D) any other relative, by blood or marriage, of
11        the individual or the individual's spouse who shares
12        the same home with the individual.
13        (63) "Person related to", with respect to an
14    organization, means:
15            (A) a person directly or indirectly controlling,
16        controlled by, or under common control with the
17        organization;
18            (B) an officer or director of, or a person
19        performing similar functions with respect to, the
20        organization;
21            (C) an officer or director of, or a person
22        performing similar functions with respect to, a person
23        described in subparagraph (A);
24            (D) the spouse of an individual described in
25        subparagraph (A), (B), or (C); or
26            (E) an individual who is related by blood or

 

 

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1        marriage to an individual described in subparagraph
2        (A), (B), (C), or (D) and shares the same home with the
3        individual.
4        (64) "Proceeds", except as used in Section 9-609(b),
5    means the following property:
6            (A) whatever is acquired upon the sale, lease,
7        license, exchange, or other disposition of collateral;
8            (B) whatever is collected on, or distributed on
9        account of, collateral;
10            (C) rights arising out of collateral;
11            (D) to the extent of the value of collateral,
12        claims arising out of the loss, nonconformity, or
13        interference with the use of, defects or infringement
14        of rights in, or damage to, the collateral; or
15            (E) to the extent of the value of collateral and to
16        the extent payable to the debtor or the secured party,
17        insurance payable by reason of the loss or
18        nonconformity of, defects or infringement of rights
19        in, or damage to, the collateral.
20        (65) "Promissory note" means an instrument that
21    evidences a promise to pay a monetary obligation, does not
22    evidence an order to pay, and does not contain an
23    acknowledgment by a bank that the bank has received for
24    deposit a sum of money or funds.
25        (66) "Proposal" means a record signed authenticated by
26    a secured party which includes the terms on which the

 

 

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1    secured party is willing to accept collateral in full or
2    partial satisfaction of the obligation it secures pursuant
3    to Sections 9-620, 9-621, and 9-622.
4        (67) "Public-finance transaction" means a secured
5    transaction in connection with which:
6            (A) debt securities are issued;
7            (B) all or a portion of the securities issued have
8        an initial stated maturity of at least 20 years; and
9            (C) the debtor, obligor, secured party, account
10        debtor or other person obligated on collateral,
11        assignor or assignee of a secured obligation, or
12        assignor or assignee of a security interest is a State
13        or a governmental unit of a State.
14        (68) "Public organic record" means a record that is
15    available to the public for inspection and is:
16            (A) a record consisting of the record initially
17        filed with or issued by a State or the United States to
18        form or organize an organization and any record filed
19        with or issued by the State or the United States which
20        amends or restates the initial record;
21            (B) an organic record of a business trust
22        consisting of the record initially filed with a State
23        and any record filed with the State which amends or
24        restates the initial record, if a statute of the State
25        governing business trusts requires that the record be
26        filed with the State; or

 

 

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1            (C) a record consisting of legislation enacted by
2        the legislature of a State or the Congress of the
3        United States which forms or organizes an
4        organization, any record amending the legislation, and
5        any record filed with or issued by the State or the
6        United States which amends or restates the name of the
7        organization.
8        (69) "Pursuant to commitment", with respect to an
9    advance made or other value given by a secured party,
10    means pursuant to the secured party's obligation, whether
11    or not a subsequent event of default or other event not
12    within the secured party's control has relieved or may
13    relieve the secured party from its obligation.
14        (70) "Record", except as used in "for record", "of
15    record", "record or legal title", and "record owner",
16    means information that is inscribed on a tangible medium
17    or which is stored in an electronic or other medium and is
18    retrievable in perceivable form.
19        (71) "Registered organization" means an organization
20    formed or organized solely under the law of a single State
21    or the United States by the filing of a public organic
22    record with, the issuance of a public organic record by,
23    or the enactment of legislation by the State or the United
24    States. The term includes a business trust that is formed
25    or organized under the law of a single State if a statute
26    of the State governing business trusts requires that the

 

 

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1    business trust's organic record be filed with the State.
2        (72) "Secondary obligor" means an obligor to the
3    extent that:
4            (A) the obligor's obligation is secondary; or
5            (B) the obligor has a right of recourse with
6        respect to an obligation secured by collateral against
7        the debtor, another obligor, or property of either.
8        (73) "Secured party" means:
9            (A) a person in whose favor a security interest is
10        created or provided for under a security agreement,
11        whether or not any obligation to be secured is
12        outstanding;
13            (B) a person that holds an agricultural lien;
14            (C) a consignor;
15            (D) a person to which accounts, chattel paper,
16        payment intangibles, or promissory notes have been
17        sold;
18            (E) a trustee, indenture trustee, agent,
19        collateral agent, or other representative in whose
20        favor a security interest or agricultural lien is
21        created or provided for; or
22            (F) a person that holds a security interest
23        arising under Section 2-401, 2-505, 2-711(3),
24        2A-508(5), 4-210, or 5-118.
25        (74) "Security agreement" means an agreement that
26    creates or provides for a security interest.

 

 

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1        (75) (Reserved). "Send", in connection with a record
2    or notification, means:
3            (A) to deposit in the mail, deliver for
4        transmission, or transmit by any other usual means of
5        communication, with postage or cost of transmission
6        provided for, addressed to any address reasonable
7        under the circumstances; or
8            (B) to cause the record or notification to be
9        received within the time that it would have been
10        received if properly sent under subparagraph (A).
11        (76) "Software" means a computer program and any
12    supporting information provided in connection with a
13    transaction relating to the program. The term does not
14    include a computer program that is included in the
15    definition of goods.
16        (77) "State" means a State of the United States, the
17    District of Columbia, Puerto Rico, the United States
18    Virgin Islands, or any territory or insular possession
19    subject to the jurisdiction of the United States.
20        (78) "Supporting obligation" means a letter-of-credit
21    right or secondary obligation that supports the payment or
22    performance of an account, chattel paper, a document, a
23    general intangible, an instrument, or investment property.
24        (79) (Reserved). "Tangible chattel paper" means
25    chattel paper evidenced by a record or records consisting
26    of information that is inscribed on a tangible medium.

 

 

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1        (79A) "Tangible money" means money in a tangible form.
2        (80) "Termination statement" means an amendment of a
3    financing statement which:
4            (A) identifies, by its file number, the initial
5        financing statement to which it relates; and
6            (B) indicates either that it is a termination
7        statement or that the identified financing statement
8        is no longer effective.
9        (81) "Transmitting utility" means a person primarily
10    engaged in the business of:
11            (A) operating a railroad, subway, street railway,
12        or trolley bus;
13            (B) transmitting communications electrically,
14        electromagnetically, or by light;
15            (C) transmitting goods by pipeline or sewer; or
16            (D) transmitting or producing and transmitting
17        electricity, steam, gas, or water.
18    (b) Definitions in other Articles. "Control" as provided
19in Section 7-106 and the following definitions in other
20Articles apply to this Article:
21    "Applicant". Section 5-102.
22    "Beneficiary". Section 5-102.
23    "Broker". Section 8-102.
24    "Certificated security". Section 8-102.
25    "Check". Section 3-104.
26    "Clearing corporation". Section 8-102.

 

 

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1    "Contract for sale". Section 2-106.
2    "Controllable electronic record". Section 12-102.
3    "Customer". Section 4-104.
4    "Entitlement holder". Section 8-102.
5    "Financial asset". Section 8-102.
6    "Holder in due course". Section 3-302.
7    "Issuer" (with respect to a letter of credit or
8letter-of-credit right). Section 5-102.
9    "Issuer" (with respect to a security). Section 8-201.
10    "Issuer" (with respect to documents of title). Section
117-102.
12    "Lease". Section 2A-103.
13    "Lease agreement". Section 2A-103.
14    "Lease contract". Section 2A-103.
15    "Leasehold interest". Section 2A-103.
16    "Lessee". Section 2A-103.
17    "Lessee in ordinary course of business". Section 2A-103.
18    "Lessor". Section 2A-103.
19    "Lessor's residual interest". Section 2A-103.
20    "Letter of credit". Section 5-102.
21    "Merchant". Section 2-104.
22    "Negotiable instrument". Section 3-104.
23    "Nominated person". Section 5-102.
24    "Note". Section 3-104.
25    "Proceeds of a letter of credit". Section 5-114.
26    "Protected purchaser". Section 8-303.

 

 

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1    "Prove". Section 3-103.
2    "Qualifying purchaser". Section 12-102.
3    "Sale". Section 2-106.
4    "Securities account". Section 8-501.
5    "Securities intermediary". Section 8-102.
6    "Security". Section 8-102.
7    "Security certificate". Section 8-102.
8    "Security entitlement". Section 8-102.
9    "Uncertificated security". Section 8-102.
10    (c) Article 1 definitions and principles. Article 1
11contains general definitions and principles of construction
12and interpretation applicable throughout this Article.
13(Source: P.A. 97-1034, eff. 7-1-13; 98-749, eff. 7-16-14.)
 
14    (810 ILCS 5/9-104)  (from Ch. 26, par. 9-104)
15    Sec. 9-104. Control of deposit account.
16    (a) Requirements for control. A secured party has control
17of a deposit account if:
18        (1) the secured party is the bank with which the
19    deposit account is maintained;
20        (2) the debtor, secured party, and bank have agreed in
21    a signed an authenticated record that the bank will comply
22    with instructions originated by the secured party
23    directing disposition of the funds in the deposit account
24    without further consent by the debtor; or
25        (3) the secured party becomes the bank's customer with

 

 

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1    respect to the deposit account; or .
2        (4) another person, other than the debtor:
3            (A) has control of the deposit account and
4        acknowledges that it has control on behalf of the
5        secured party; or
6            (B) obtains control of the deposit account after
7        having acknowledged that it will obtain control of the
8        deposit account on behalf of the secured party.
9    (b) Debtor's right to direct disposition. A secured party
10that has satisfied subsection (a) has control, even if the
11debtor retains the right to direct the disposition of funds
12from the deposit account.
13(Source: P.A. 91-893, eff. 7-1-01.)
 
14    (810 ILCS 5/9-105)  (from Ch. 26, par. 9-105)
15    Sec. 9-105. Control of electronic copy of record
16evidencing chattel paper.
17    (a) General rule: control of electronic copy of record
18evidencing chattel paper. A purchaser has control of an
19authoritative electronic copy of a record evidencing chattel
20paper if a system employed for evidencing the assignment of
21interests in the chattel paper reliably establishes the
22purchaser as the person to which the authoritative electronic
23copy was assigned.
24    (b) Single authoritative copy. A system satisfies
25subsection (a) if the record or records evidencing the chattel

 

 

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1paper are created, stored, and assigned in a manner that:
2        (1) a single authoritative copy of the record or
3    records exists which is unique, identifiable, and, except
4    as otherwise provided in paragraphs (4), (5), and (6),
5    unalterable;
6        (2) the authoritative copy identifies the purchaser as
7    the assignee of the record or records;
8        (3) the authoritative copy is communicated to and
9    maintained by the purchaser or its designated custodian;
10        (4) copies or amendments that add or change an
11    identified assignee of the authoritative copy can be made
12    only with the consent of the purchaser;
13        (5) each copy of the authoritative copy and any copy
14    of a copy is readily identifiable as a copy that is not the
15    authoritative copy; and
16        (6) any amendment of the authoritative copy is readily
17    identifiable as authorized or unauthorized.
18    (c) One or more authoritative copies. A system satisfies
19subsection (a), and a purchaser has control of an
20authoritative electronic copy of a record evidencing chattel
21paper, if the electronic copy, a record attached to or
22logically associated with the electronic copy, or a system in
23which the electronic copy is recorded:
24        (1) enables the purchaser readily to identify each
25    electronic copy as either an authoritative copy or a
26    nonauthoritative copy;

 

 

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1        (2) enables the purchaser readily to identify itself
2    in any way, including by name, identifying number,
3    cryptographic key, office, or account number, as the
4    assignee of the authoritative electronic copy; and
5        (3) gives the purchaser exclusive power, subject to
6    subsection (d), to:
7            (A) prevent others from adding or changing an
8        identified assignee of the authoritative electronic
9        copy; and
10            (B) transfer control of the authoritative
11        electronic copy.
12    (d) Meaning of exclusive. Subject to subsection (e), a
13power is exclusive under subsection (c)(3)(A) and (B) even if:
14        (1) the authoritative electronic copy, a record
15    attached to or logically associated with the authoritative
16    electronic copy, or a system in which the authoritative
17    electronic copy is recorded limits the use of the
18    authoritative electronic copy or has a protocol programmed
19    to cause a change, including a transfer or loss of
20    control; or
21        (2) the power is shared with another person.
22    (e) When power not shared with another person. A power of a
23purchaser is not shared with another person under subsection
24(d)(2) and the purchaser's power is not exclusive if:
25        (1) the purchaser can exercise the power only if the
26    power also is exercised by the other person; and

 

 

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1        (2) the other person:
2            (A) can exercise the power without exercise of the
3        power by the purchaser; or
4            (B) is the transferor to the purchaser of an
5        interest in the chattel paper.
6    (f) Presumption of exclusivity of certain powers. If a
7purchaser has the powers specified in subsection (c)(3)(A) and
8(B), the powers are presumed to be exclusive.
9    (g) Obtaining control through another person. A purchaser
10has control of an authoritative electronic copy of a record
11evidencing chattel paper if another person, other than the
12transferor to the purchaser of an interest in the chattel
13paper:
14        (1) has control of the authoritative electronic copy
15    and acknowledges that it has control on behalf of the
16    purchaser; or
17        (2) obtains control of the authoritative electronic
18    copy after having acknowledged that it will obtain control
19    of the electronic copy on behalf of the purchaser.
20    (a) General rule: Control of electronic chattel paper. A
21secured party has control of electronic chattel paper if a
22system employed for evidencing the transfer of interests in
23the chattel paper reliably establishes the secured party as
24the person to which the chattel paper was assigned.
25    (b) Specific facts giving control. A system satisfies
26subsection (a) if the record or records comprising the chattel

 

 

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1paper are created, stored, and assigned in such a manner that:
2        (1) a single authoritative copy of the record or
3    records exists which is unique, identifiable and, except
4    as otherwise provided in paragraphs (4), (5), and (6),
5    unalterable;
6        (2) the authoritative copy identifies the secured
7    party as the assignee of the record or records;
8        (3) the authoritative copy is communicated to and
9    maintained by the secured party or its designated
10    custodian;
11        (4) copies or amendments that add or change an
12    identified assignee of the authoritative copy can be made
13    only with the consent of the secured party;
14        (5) each copy of the authoritative copy and any copy
15    of a copy is readily identifiable as a copy that is not the
16    authoritative copy; and
17        (6) any amendment of the authoritative copy is readily
18    identifiable as authorized or unauthorized.
19(Source: P.A. 97-1034, eff. 7-1-13.)
 
20    (810 ILCS 5/9-105A new)
21    Sec. 9-105A. Control of electronic money.
22    (a) General rule: control of electronic money. A person
23has control of electronic money if:
24        (1) the electronic money, a record attached to or
25    logically associated with the electronic money, or a

 

 

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1    system in which the electronic money is recorded gives the
2    person:
3            (A) power to avail itself of substantially all the
4        benefit from the electronic money; and
5            (B) exclusive power, subject to subsection (b),
6        to:
7                (i) prevent others from availing themselves of
8            substantially all the benefit from the electronic
9            money; and
10                (ii) transfer control of the electronic money
11            to another person or cause another person to
12            obtain control of other electronic money as a
13            result of the transfer of the electronic money;
14            and
15        (2) the electronic money, a record attached to or
16    logically associated with the electronic money, or a
17    system in which the electronic money is recorded enables
18    the person readily to identify itself in any way,
19    including by name, identifying number, cryptographic key,
20    office, or account number, as having the powers under
21    paragraph (1).
22    (b) Meaning of exclusive. Subject to subsection (c), a
23power is exclusive under subsection (a)(1)(B)(i) and (ii) even
24if:
25        (1) the electronic money, a record attached to or
26    logically associated with the electronic money, or a

 

 

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1    system in which the electronic money is recorded limits
2    the use of the electronic money or has a protocol
3    programmed to cause a change, including a transfer or loss
4    of control; or
5        (2) the power is shared with another person.
6    (c) When power not shared with another person. A power of a
7person is not shared with another person under subsection
8(b)(2) and the person's power is not exclusive if:
9        (1) the person can exercise the power only if the
10    power also is exercised by the other person; and
11        (2) the other person:
12            (A) can exercise the power without exercise of the
13        power by the person; or
14            (B) is the transferor to the person of an interest
15        in the electronic money.
16    (d) Presumption of exclusivity of certain powers. If a
17person has the powers specified in subsection (a)(1)(B)(i) and
18(ii), the powers are presumed to be exclusive.
19    (e) Control through another person. A person has control
20of electronic money if another person, other than the
21transferor to the person of an interest in the electronic
22money:
23        (1) has control of the electronic money and
24    acknowledges that it has control on behalf of the person;
25    or
26        (2) obtains control of the electronic money after

 

 

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1    having acknowledged that it will obtain control of the
2    electronic money on behalf of the person.
 
3    (810 ILCS 5/9-107A new)
4    Sec. 9-107A. Control of controllable electronic record,
5controllable account, or controllable payment intangible.
6    (a) Control under Section 12-105. A secured party has
7control of a controllable electronic record as provided in
8Section 12-105.
9    (b) Control of controllable account and controllable
10payment intangible. A secured party has control of a
11controllable account or controllable payment intangible if the
12secured party has control of the controllable electronic
13record that evidences the controllable account or controllable
14payment intangible.
 
15    (810 ILCS 5/9-107B new)
16    Sec. 9-107B. No requirement to acknowledge or confirm; no
17duties.
18    (a) No requirement to acknowledge. A person that has
19control under Section 9-104, 9-105, or 9-105A is not required
20to acknowledge that it has control on behalf of another
21person.
22    (b) No duties or confirmation. If a person acknowledges
23that it has or will obtain control on behalf of another person,
24unless the person otherwise agrees or law other than this

 

 

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1Article otherwise provides, the person does not owe any duty
2to the other person and is not required to confirm the
3acknowledgment to any other person.
 
4    (810 ILCS 5/9-201)  (from Ch. 26, par. 9-201)
5    Sec. 9-201. General effectiveness of security agreement.
6    (a) General effectiveness. Except as otherwise provided in
7the Uniform Commercial Code, a security agreement is effective
8according to its terms between the parties, against purchasers
9of the collateral, and against creditors.
10    (b) Applicable consumer laws and other law. A transaction
11subject to this Article is subject to any applicable rule of
12law, statute, or regulation which establishes a different rule
13for consumers, including, without limitation:
14        (1) the Retail Installment Sales Act;
15        (2) the Motor Vehicle Retail Installment Sales Act;
16        (3) Article II of Chapter 3 of the Illinois Vehicle
17    Code;
18        (4) Article IIIB of the Boat Registration and Safety
19    Act;
20        (5) the Pawnbroker Regulation Act of 2023;
21        (6) the Motor Vehicle Leasing Act;
22        (7) the Consumer Installment Loan Act; and
23        (8) the Consumer Deposit Security Act of 1987; .
24        (9) the Predatory Loan Prevention Act;
25        (10) the Consumer Fraud and Deceptive Business

 

 

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1    Practices Act;
2        (11) any other statute or regulation that regulates
3    the rates, charges, agreements, and practices for loans,
4    credit sales, or other extensions of credit; and
5        (12) any consumer protection statute or regulation.
6    (c) Other applicable law controls. In case of conflict
7between this Article and a rule of law, statute, or regulation
8described in subsection (b), the rule of law, statute, or
9regulation controls. Failure to comply with a rule of law,
10statute, or regulation described in subsection (b) has only
11the effect such rule of law, statute, or regulation specifies.
12    (d) Further deference to other applicable law. This
13Article does not:
14        (1) validate any rate, charge, agreement, or practice
15    that violates a rule of law, statute, or regulation
16    described in subsection (b); or
17        (2) extend the application of the rule of law,
18    statute, or regulation to a transaction not otherwise
19    subject to it.
20(Source: P.A. 103-585, eff. 3-22-24.)
 
21    (810 ILCS 5/9-203)  (from Ch. 26, par. 9-203)
22    Sec. 9-203. Attachment and enforceability of security
23interest; proceeds; supporting obligations; formal requisites.
24    (a) Attachment. A security interest attaches to collateral
25when it becomes enforceable against the debtor with respect to

 

 

SB3696 Enrolled- 115 -LRB103 37687 SPS 67814 b

1the collateral, unless an agreement expressly postpones the
2time of attachment.
3    (b) Enforceability. Except as otherwise provided in
4subsections (c) through (i), a security interest is
5enforceable against the debtor and third parties with respect
6to the collateral only if:
7        (1) value has been given;
8        (2) the debtor has rights in the collateral or the
9    power to transfer rights in the collateral to a secured
10    party; and
11        (3) one of the following conditions is met:
12            (A) the debtor has signed authenticated a security
13        agreement that provides a description of the
14        collateral and, if the security interest covers timber
15        to be cut, a description of the land concerned;
16            (B) the collateral is not a certificated security
17        and is in the possession of the secured party under
18        Section 9-313 pursuant to the debtor's security
19        agreement;
20            (C) the collateral is a certificated security in
21        registered form and the security certificate has been
22        delivered to the secured party under Section 8-301
23        pursuant to the debtor's security agreement; or
24            (D) the collateral is controllable accounts,
25        controllable electronic records, controllable payment
26        intangibles, deposit accounts, electronic documents,

 

 

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1        electronic money, electronic chattel paper, investment
2        property, or letter-of-credit rights, or electronic
3        documents, and the secured party has control under
4        Section 7-106, 9-104, 9-105A, 9-105, 9-106, or 9-107,
5        or 9-107A pursuant to the debtor's security agreement;
6        or .
7            (E) the collateral is chattel paper and the
8        secured party has possession and control under Section
9        9-314A pursuant to the debtor's security agreement.
10    (c) Other UCC provisions. Subsection (b) is subject to
11Section 4-210 on the security interest of a collecting bank,
12Section 5-118 on the security interest of a letter-of-credit
13issuer or nominated person, Section 9-110 on a security
14interest arising under Article 2 or 2A, and Section 9-206 on
15security interests in investment property.
16    (d) When person becomes bound by another person's security
17agreement. A person becomes bound as debtor by a security
18agreement entered into by another person if, by operation of
19law other than this Article or by contract:
20        (1) the security agreement becomes effective to create
21    a security interest in the person's property; or
22        (2) the person becomes generally obligated for the
23    obligations of the other person, including the obligation
24    secured under the security agreement, and acquires or
25    succeeds to all or substantially all of the assets of the
26    other person.

 

 

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1    (e) Effect of new debtor becoming bound. If a new debtor
2becomes bound as debtor by a security agreement entered into
3by another person:
4        (1) the agreement satisfies subsection (b)(3) with
5    respect to existing or after-acquired property of the new
6    debtor to the extent the property is described in the
7    agreement; and
8        (2) another agreement is not necessary to make a
9    security interest in the property enforceable.
10    (f) Proceeds and supporting obligations. The attachment of
11a security interest in collateral gives the secured party the
12rights to proceeds provided by Section 9-315 and is also
13attachment of a security interest in a supporting obligation
14for the collateral.
15    (g) Lien securing right to payment. The attachment of a
16security interest in a right to payment or performance secured
17by a security interest or other lien on personal or real
18property is also attachment of a security interest in the
19security interest, mortgage, or other lien.
20    (h) Security entitlement carried in securities account.
21The attachment of a security interest in a securities account
22is also attachment of a security interest in the security
23entitlements carried in the securities account.
24    (i) Commodity contracts carried in commodity account. The
25attachment of a security interest in a commodity account is
26also attachment of a security interest in the commodity

 

 

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1contracts carried in the commodity account.
2(Source: P.A. 95-895, eff. 1-1-09.)
 
3    (810 ILCS 5/9-204)  (from Ch. 26, par. 9-204)
4    Sec. 9-204. After-acquired property; future advances.
5    (a) After-acquired collateral. Except as otherwise
6provided in subsection (b), a security agreement may create or
7provide for a security interest in after-acquired collateral.
8    (b) When after-acquired property clause not effective.
9Subject to subsection (b.1), a A security interest does not
10attach under a term constituting an after-acquired property
11clause to:
12        (1) consumer goods, other than an accession when given
13    as additional security, unless the debtor acquires rights
14    in them within 10 days after the secured party gives
15    value; or
16        (2) a commercial tort claim.
17    (b.1) Limitation on subsection (b). Subsection (b) does
18not prevent a security interest from attaching:
19        (1) to consumer goods as proceeds under Section
20    9-315(a) or commingled goods under Section 9-336(c);
21        (2) to a commercial tort claim as proceeds under
22    Section 9-315(a); or
23        (3) under an after-acquired property clause to
24    property that is proceeds of consumer goods or a
25    commercial tort claim.

 

 

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1    (c) Future advances and other value. A security agreement
2may provide that collateral secures, or that accounts, chattel
3paper, payment intangibles, or promissory notes are sold in
4connection with, future advances or other value, whether or
5not the advances or value are given pursuant to commitment.
6(Source: P.A. 91-893, eff. 7-1-01.)
 
7    (810 ILCS 5/9-207)  (from Ch. 26, par. 9-207)
8    Sec. 9-207. Rights and duties of secured party having
9possession or control of collateral.
10    (a) Duty of care when secured party in possession. Except
11as otherwise provided in subsection (d), a secured party shall
12use reasonable care in the custody and preservation of
13collateral in the secured party's possession. In the case of
14chattel paper or an instrument, reasonable care includes
15taking necessary steps to preserve rights against prior
16parties unless otherwise agreed.
17    (b) Expenses, risks, duties, and rights when secured party
18in possession. Except as otherwise provided in subsection (d),
19if a secured party has possession of collateral:
20        (1) reasonable expenses, including the cost of
21    insurance and payment of taxes or other charges, incurred
22    in the custody, preservation, use, or operation of the
23    collateral are chargeable to the debtor and are secured by
24    the collateral;
25        (2) the risk of accidental loss or damage is on the

 

 

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1    debtor to the extent of a deficiency in any effective
2    insurance coverage;
3        (3) the secured party shall keep the collateral
4    identifiable, but fungible collateral may be commingled;
5    and
6        (4) the secured party may use or operate the
7    collateral:
8            (A) for the purpose of preserving the collateral
9        or its value;
10            (B) as permitted by an order of a court having
11        competent jurisdiction; or
12            (C) except in the case of consumer goods, in the
13        manner and to the extent agreed by the debtor.
14    (c) Duties and rights when secured party in possession or
15control. Except as otherwise provided in subsection (d), a
16secured party having possession of collateral or control of
17collateral under Section 7-106, 9-104, 9-105, 9-105A, 9-106,
18or 9-107, or 9-107A:
19        (1) may hold as additional security any proceeds,
20    except money or funds, received from the collateral;
21        (2) shall apply money or funds received from the
22    collateral to reduce the secured obligation, unless
23    remitted to the debtor; and
24        (3) may create a security interest in the collateral.
25    (d) Buyer of certain rights to payment. If the secured
26party is a buyer of accounts, chattel paper, payment

 

 

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1intangibles, or promissory notes or a consignor:
2        (1) subsection (a) does not apply unless the secured
3    party is entitled under an agreement:
4            (A) to charge back uncollected collateral; or
5            (B) otherwise to full or limited recourse against
6        the debtor or a secondary obligor based on the
7        nonpayment or other default of an account debtor or
8        other obligor on the collateral; and
9        (2) subsections (b) and (c) do not apply.
10(Source: P.A. 95-895, eff. 1-1-09.)
 
11    (810 ILCS 5/9-208)  (from Ch. 26, par. 9-208)
12    Sec. 9-208. Additional duties of secured party having
13control of collateral.
14    (a) Applicability of Section. This Section applies to
15cases in which there is no outstanding secured obligation and
16the secured party is not committed to make advances, incur
17obligations, or otherwise give value.
18    (b) Duties of secured party after receiving demand from
19debtor. Within 10 days after receiving a signed an
20authenticated demand by the debtor:
21        (1) a secured party having control of a deposit
22    account under Section 9-104(a)(2) shall send to the bank
23    with which the deposit account is maintained a signed
24    record an authenticated statement that releases the bank
25    from any further obligation to comply with instructions

 

 

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1    originated by the secured party;
2        (2) a secured party having control of a deposit
3    account under Section 9-104(a)(3) shall:
4            (A) pay the debtor the balance on deposit in the
5        deposit account; or
6            (B) transfer the balance on deposit into a deposit
7        account in the debtor's name;
8        (3) a secured party, other than a buyer, having
9    control under Section 9-105 of an authoritative electronic
10    copy of a record evidencing chattel paper shall transfer
11    control of the electronic copy to the debtor or a person
12    designated by the debtor; a secured party, other than a
13    buyer, having control of electronic chattel paper under
14    Section 9-105 shall:
15            (A) communicate the authoritative copy of the
16        electronic chattel paper to the debtor or its
17        designated custodian;
18            (B) if the debtor designates a custodian that is
19        the designated custodian with which the authoritative
20        copy of the electronic chattel paper is maintained for
21        the secured party, communicate to the custodian an
22        authenticated record releasing the designated
23        custodian from any further obligation to comply with
24        instructions originated by the secured party and
25        instructing the custodian to comply with instructions
26        originated by the debtor; and

 

 

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1            (C) take appropriate action to enable the debtor
2        or its designated custodian to make copies of or
3        revisions to the authoritative copy which add or
4        change an identified assignee of the authoritative
5        copy without the consent of the secured party;
6        (4) a secured party having control of investment
7    property under Section 8-106(d)(2) or 9-106(b) shall send
8    to the securities intermediary or commodity intermediary
9    with which the security entitlement or commodity contract
10    is maintained a signed an authenticated record that
11    releases the securities intermediary or commodity
12    intermediary from any further obligation to comply with
13    entitlement orders or directions originated by the secured
14    party;
15        (5) a secured party having control of a
16    letter-of-credit right under Section 9-107 shall send to
17    each person having an unfulfilled obligation to pay or
18    deliver proceeds of the letter of credit to the secured
19    party a signed an authenticated release from any further
20    obligation to pay or deliver proceeds of the letter of
21    credit to the secured party; and
22        (6) a secured party having control under Section 7-106
23    of an authoritative electronic copy of an electronic
24    document shall transfer control of the electronic copy to
25    the debtor or a person designated by the debtor; a secured
26    party having control of an electronic document shall:

 

 

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1        (7) a secured party having control under Section
2    9-105A of electronic money shall transfer control of the
3    electronic money to the debtor or a person designated by
4    the debtor; and
5        (8) a secured party having control under Section
6    12-105 of a controllable electronic record, other than a
7    buyer of a controllable account or controllable payment
8    intangible evidenced by the controllable electronic
9    record, shall transfer control of the controllable
10    electronic record to the debtor or a person designated by
11    the debtor.
12            (A) give control of the electronic document to the
13        debtor or its designated custodian;
14            (B) if the debtor designates a custodian that is
15        the designated custodian with which the authoritative
16        copy of the electronic document is maintained for the
17        secured party, communicate to the custodian an
18        authenticated record releasing the designated
19        custodian from any further obligation to comply with
20        instructions originated by the secured party and
21        instructing the custodian to comply with instructions
22        originated by the debtor; and
23            (C) take appropriate action to enable the debtor
24        or its designated custodian to make copies of or
25        revisions to the authoritative copy which add or
26        change an identified assignee of the authoritative

 

 

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1        copy without the consent of the secured party.
2(Source: P.A. 95-895, eff. 1-1-09.)
 
3    (810 ILCS 5/9-209)
4    Sec. 9-209. Duties of secured party if account debtor has
5been notified of assignment.
6    (a) Applicability of Section. Except as otherwise provided
7in subsection (c), this Section applies if:
8        (1) there is no outstanding secured obligation; and
9        (2) the secured party is not committed to make
10    advances, incur obligations, or otherwise give value.
11    (b) Duties of secured party after receiving demand from
12debtor. Within 10 days after receiving a signed an
13authenticated demand by the debtor, a secured party shall send
14to an account debtor that has received notification under
15Section 9-406(a) or 12-106(b) of an assignment to the secured
16party as assignee a signed under Section 9-406(a) an
17authenticated record that releases the account debtor from any
18further obligation to the secured party.
19    (c) Inapplicability to sales. This Section does not apply
20to an assignment constituting the sale of an account, chattel
21paper, or payment intangible.
22(Source: P.A. 91-893, eff. 7-1-01.)
 
23    (810 ILCS 5/9-210)
24    Sec. 9-210. Request for accounting; request regarding list

 

 

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1of collateral or statement of account.
2    (a) Definitions. In this Section:
3        (1) "Request" means a record of a type described in
4    paragraph (2), (3), or (4).
5        (2) "Request for an accounting" means a record signed
6    authenticated by a debtor requesting that the recipient
7    provide an accounting of the unpaid obligations secured by
8    collateral and reasonably identifying the transaction or
9    relationship that is the subject of the request.
10        (3) "Request regarding a list of collateral" means a
11    record signed authenticated by a debtor requesting that
12    the recipient approve or correct a list of what the debtor
13    believes to be the collateral securing an obligation and
14    reasonably identifying the transaction or relationship
15    that is the subject of the request.
16        (4) "Request regarding a statement of account" means a
17    record signed authenticated by a debtor requesting that
18    the recipient approve or correct a statement indicating
19    what the debtor believes to be the aggregate amount of
20    unpaid obligations secured by collateral as of a specified
21    date and reasonably identifying the transaction or
22    relationship that is the subject of the request.
23    (b) Duty to respond to requests. Subject to subsections
24(c), (d), (e), and (f), a secured party, other than a buyer of
25accounts, chattel paper, payment intangibles, or promissory
26notes or a consignor, shall comply with a request within 14

 

 

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1days after receipt:
2        (1) in the case of a request for an accounting, by
3    signing authenticating and sending to the debtor an
4    accounting; and
5        (2) in the case of a request regarding a list of
6    collateral or a request regarding a statement of account,
7    by signing authenticating and sending to the debtor an
8    approval or correction.
9    (c) Request regarding list of collateral; statement
10concerning type of collateral. A secured party that claims a
11security interest in all of a particular type of collateral
12owned by the debtor may comply with a request regarding a list
13of collateral by sending to the debtor a signed an
14authenticated record including a statement to that effect
15within 14 days after receipt.
16    (d) Request regarding list of collateral; no interest
17claimed. A person that receives a request regarding a list of
18collateral, claims no interest in the collateral when it
19receives the request, and claimed an interest in the
20collateral at an earlier time shall comply with the request
21within 14 days after receipt by sending to the debtor a signed
22an authenticated record:
23        (1) disclaiming any interest in the collateral; and
24        (2) if known to the recipient, providing the name and
25    mailing address of any assignee of or successor to the
26    recipient's interest in the collateral.

 

 

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1    (e) Request for accounting or regarding statement of
2account; no interest in obligation claimed. A person that
3receives a request for an accounting or a request regarding a
4statement of account, claims no interest in the obligations
5when it receives the request, and claimed an interest in the
6obligations at an earlier time shall comply with the request
7within 14 days after receipt by sending to the debtor a signed
8an authenticated record:
9        (1) disclaiming any interest in the obligations; and
10        (2) if known to the recipient, providing the name and
11    mailing address of any assignee of or successor to the
12    recipient's interest in the obligations.
13    (f) Charges for responses. A debtor is entitled without
14charge to one response to a request under this Section during
15any six-month period. The secured party may require payment of
16a charge not exceeding $25 for each additional response.
17(Source: P.A. 91-893, eff. 7-1-01.)
 
18    (810 ILCS 5/9-301)  (from Ch. 26, par. 9-301)
19    Sec. 9-301. Law governing perfection and priority of
20security interests. Except as otherwise provided in Sections
219-303 through 9-306B 9-306.1, the following rules determine
22the law governing perfection, the effect of perfection or
23nonperfection, and the priority of a security interest in
24collateral:
25        (1) Except as otherwise provided in this Section,

 

 

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1    while a debtor is located in a jurisdiction, the local law
2    of that jurisdiction governs perfection, the effect of
3    perfection or nonperfection, and the priority of a
4    security interest in collateral.
5        (2) While collateral is located in a jurisdiction, the
6    local law of that jurisdiction governs perfection, the
7    effect of perfection or nonperfection, and the priority of
8    a possessory security interest in that collateral.
9        (3) Except as otherwise provided in paragraph (4),
10    while tangible negotiable documents, goods, instruments,
11    or tangible money, or tangible chattel paper is located in
12    a jurisdiction, the local law of that jurisdiction
13    governs:
14            (A) perfection of a security interest in the goods
15        by filing a fixture filing;
16            (B) perfection of a security interest in timber to
17        be cut; and
18            (C) the effect of perfection or nonperfection and
19        the priority of a nonpossessory security interest in
20        the collateral.
21        (4) The local law of the jurisdiction in which the
22    wellhead or minehead is located governs perfection, the
23    effect of perfection or nonperfection, and the priority of
24    a security interest in as-extracted collateral.
25(Source: P.A. 95-895, eff. 1-1-09.)
 

 

 

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1    (810 ILCS 5/9-304)  (from Ch. 26, par. 9-304)
2    Sec. 9-304. Law governing perfection and priority of
3security interests in deposit accounts.
4    (a) Law of bank's jurisdiction governs. The local law of a
5bank's jurisdiction governs perfection, the effect of
6perfection or nonperfection, and the priority of a security
7interest in a deposit account maintained with that bank even
8if the transaction does not bear any relation to the bank's
9jurisdiction.
10    (b) Bank's jurisdiction. The following rules determine a
11bank's jurisdiction for purposes of this Part:
12        (1) If an agreement between the bank and the debtor
13    governing the deposit account expressly provides that a
14    particular jurisdiction is the bank's jurisdiction for
15    purposes of this Part, this Article, or the Uniform
16    Commercial Code, that jurisdiction is the bank's
17    jurisdiction.
18        (2) If paragraph (1) does not apply and an agreement
19    between the bank and its customer governing the deposit
20    account expressly provides that the agreement is governed
21    by the law of a particular jurisdiction, that jurisdiction
22    is the bank's jurisdiction.
23        (3) If neither paragraph (1) nor paragraph (2) applies
24    and an agreement between the bank and its customer
25    governing the deposit account expressly provides that the
26    deposit account is maintained at an office in a particular

 

 

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1    jurisdiction, that jurisdiction is the bank's
2    jurisdiction.
3        (4) If none of the preceding paragraphs applies, the
4    bank's jurisdiction is the jurisdiction in which the
5    office identified in an account statement as the office
6    serving the customer's account is located.
7        (5) If none of the preceding paragraphs applies, the
8    bank's jurisdiction is the jurisdiction in which the chief
9    executive office of the bank is located.
10(Source: P.A. 91-893, eff. 7-1-01.)
 
11    (810 ILCS 5/9-305)  (from Ch. 26, par. 9-305)
12    Sec. 9-305. Law governing perfection and priority of
13security interests in investment property.
14    (a) Governing law: general rules. Except as otherwise
15provided in subsection (c), the following rules apply:
16        (1) While a security certificate is located in a
17    jurisdiction, the local law of that jurisdiction governs
18    perfection, the effect of perfection or nonperfection, and
19    the priority of a security interest in the certificated
20    security represented thereby.
21        (2) The local law of the issuer's jurisdiction as
22    specified in Section 8-110(d) governs perfection, the
23    effect of perfection or nonperfection, and the priority of
24    a security interest in an uncertificated security.
25        (3) The local law of the securities intermediary's

 

 

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1    jurisdiction as specified in Section 8-110(e) governs
2    perfection, the effect of perfection or nonperfection, and
3    the priority of a security interest in a security
4    entitlement or securities account.
5        (4) The local law of the commodity intermediary's
6    jurisdiction governs perfection, the effect of perfection
7    or nonperfection, and the priority of a security interest
8    in a commodity contract or commodity account.
9        (5) Paragraphs (2), (3), and (4) apply even if the
10    transaction does not bear any relation to the
11    jurisdiction.
12    (b) Commodity intermediary's jurisdiction. The following
13rules determine a commodity intermediary's jurisdiction for
14purposes of this Part:
15        (1) If an agreement between the commodity intermediary
16    and commodity customer governing the commodity account
17    expressly provides that a particular jurisdiction is the
18    commodity intermediary's jurisdiction for purposes of this
19    Part, this Article, or the Uniform Commercial Code, that
20    jurisdiction is the commodity intermediary's jurisdiction.
21        (2) If paragraph (1) does not apply and an agreement
22    between the commodity intermediary and commodity customer
23    governing the commodity account expressly provides that
24    the agreement is governed by the law of a particular
25    jurisdiction, that jurisdiction is the commodity
26    intermediary's jurisdiction.

 

 

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1        (3) If neither paragraph (1) nor paragraph (2) applies
2    and an agreement between the commodity intermediary and
3    commodity customer governing the commodity account
4    expressly provides that the commodity account is
5    maintained at an office in a particular jurisdiction, that
6    jurisdiction is the commodity intermediary's jurisdiction.
7        (4) If none of the preceding paragraphs applies, the
8    commodity intermediary's jurisdiction is the jurisdiction
9    in which the office identified in an account statement as
10    the office serving the commodity customer's account is
11    located.
12        (5) If none of the preceding paragraphs applies, the
13    commodity intermediary's jurisdiction is the jurisdiction
14    in which the chief executive office of the commodity
15    intermediary is located.
16    (c) When perfection governed by law of jurisdiction where
17debtor located. The local law of the jurisdiction in which the
18debtor is located governs:
19        (1) perfection of a security interest in investment
20    property by filing;
21        (2) automatic perfection of a security interest in
22    investment property created by a broker or securities
23    intermediary; and
24        (3) automatic perfection of a security interest in a
25    commodity contract or commodity account created by a
26    commodity intermediary.

 

 

SB3696 Enrolled- 134 -LRB103 37687 SPS 67814 b

1(Source: P.A. 91-893, eff. 7-1-01.)
 
2    (810 ILCS 5/9-306A new)
3    Sec. 9-306A. Law governing perfection and priority of
4security interests in chattel paper.
5    (a) Chattel paper evidenced by authoritative electronic
6copy. Except as provided in subsection (d), if chattel paper
7is evidenced only by an authoritative electronic copy of the
8chattel paper or is evidenced by an authoritative electronic
9copy and an authoritative tangible copy, the local law of the
10chattel paper's jurisdiction governs perfection, the effect of
11perfection or nonperfection, and the priority of a security
12interest in the chattel paper, even if the transaction does
13not bear any relation to the chattel paper's jurisdiction.
14    (b) Chattel paper's jurisdiction. The following rules
15determine the chattel paper's jurisdiction under this Section:
16        (1) If the authoritative electronic copy of the record
17    evidencing chattel paper, or a record attached to or
18    logically associated with the electronic copy and readily
19    available for review, expressly provides that a particular
20    jurisdiction is the chattel paper's jurisdiction for
21    purposes of this part, this Article, or the Uniform
22    Commercial Code, that jurisdiction is the chattel paper's
23    jurisdiction.
24        (2) If paragraph (1) does not apply and the rules of
25    the system in which the authoritative electronic copy is

 

 

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1    recorded are readily available for review and expressly
2    provide that a particular jurisdiction is the chattel
3    paper's jurisdiction for purposes of this part, this
4    Article, or the Uniform Commercial Code, that jurisdiction
5    is the chattel paper's jurisdiction.
6        (3) If paragraphs (1) and (2) do not apply and the
7    authoritative electronic copy, or a record attached to or
8    logically associated with the electronic copy and readily
9    available for review, expressly provides that the chattel
10    paper is governed by the law of a particular jurisdiction,
11    that jurisdiction is the chattel paper's jurisdiction.
12        (4) If paragraphs (1), (2), and (3) do not apply and
13    the rules of the system in which the authoritative
14    electronic copy is recorded are readily available for
15    review and expressly provide that the chattel paper or the
16    system is governed by the law of a particular
17    jurisdiction, that jurisdiction is the chattel paper's
18    jurisdiction.
19        (5) If paragraphs (1) through (4) do not apply, the
20    chattel paper's jurisdiction is the jurisdiction in which
21    the debtor is located.
22    (c) Chattel paper evidenced by authoritative tangible
23copy. If an authoritative tangible copy of a record evidences
24chattel paper and the chattel paper is not evidenced by an
25authoritative electronic copy, while the authoritative
26tangible copy of the record evidencing chattel paper is

 

 

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1located in a jurisdiction, the local law of that jurisdiction
2governs:
3        (1) perfection of a security interest in the chattel
4    paper by possession under Section 9-314A; and
5        (2) the effect of perfection or nonperfection and the
6    priority of a security interest in the chattel paper.
7    (d) When perfection governed by law of jurisdiction where
8debtor located. The local law of the jurisdiction in which the
9debtor is located governs perfection of a security interest in
10chattel paper by filing.
 
11    (810 ILCS 5/9-306B new)
12    Sec. 9-306B. Law governing perfection and priority of
13security interests in controllable accounts, controllable
14electronic records, and controllable payment intangibles.
15    (a) Governing law: general rules. Except as provided in
16subsection (b), the local law of the controllable electronic
17record's jurisdiction specified in Section 12-107(c) and (d)
18governs perfection, the effect of perfection or nonperfection,
19and the priority of a security interest in a controllable
20electronic record and a security interest in a controllable
21account or controllable payment intangible evidenced by the
22controllable electronic record.
23    (b) When perfection governed by law of jurisdiction where
24debtor located. The local law of the jurisdiction in which the
25debtor is located governs:

 

 

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1        (1) perfection of a security interest in a
2    controllable account, controllable electronic record, or
3    controllable payment intangible by filing; and
4        (2) automatic perfection of a security interest in a
5    controllable payment intangible created by a sale of the
6    controllable payment intangible.
 
7    (810 ILCS 5/9-310)  (from Ch. 26, par. 9-310)
8    Sec. 9-310. When filing required to perfect security
9interest or agricultural lien; security interests and
10agricultural liens to which filing provisions do not apply.
11    (a) General rule: perfection by filing. Except as
12otherwise provided in subsection (b) and Section 9-312(b), a
13financing statement must be filed to perfect all security
14interests and agricultural liens.
15    (b) Exceptions: filing not necessary. The filing of a
16financing statement is not necessary to perfect a security
17interest:
18        (1) that is perfected under Section 9-308(d), (e),
19    (f), or (g);
20        (2) that is perfected under Section 9-309 when it
21    attaches;
22        (3) in property subject to a statute, regulation, or
23    treaty described in Section 9-311(a);
24        (4) in goods in possession of a bailee which is
25    perfected under Section 9-312(d)(1) or (2);

 

 

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1        (5) in certificated securities, documents, goods, or
2    instruments which is perfected without filing, control, or
3    possession under Section 9-312(e), (f), or (g);
4        (6) in collateral in the secured party's possession
5    under Section 9-313;
6        (7) in a certificated security which is perfected by
7    delivery of the security certificate to the secured party
8    under Section 9-313;
9        (8) in controllable accounts, controllable electronic
10    records, controllable payment intangibles, deposit
11    accounts, electronic chattel paper, electronic documents,
12    investment property, letter-of-credit rights, or
13    beneficial interests in Illinois land trusts which is
14    perfected by control under Section 9-314;
15        (8.1) in chattel paper which is perfected by
16    possession and control under Section 9-314A;
17        (9) in proceeds which is perfected under Section
18    9-315; or
19        (10) that is perfected under Section 9-316.
20    (c) Assignment of perfected security interest. If a
21secured party assigns a perfected security interest or
22agricultural lien, a filing under this Article is not required
23to continue the perfected status of the security interest
24against creditors of and transferees from the original debtor.
25(Source: P.A. 95-895, eff. 1-1-09.)
 

 

 

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1    (810 ILCS 5/9-312)  (from Ch. 26, par. 9-312)
2    Sec. 9-312. Perfection of security interests in chattel
3paper, controllable accounts, controllable electronic records,
4controllable payment intangibles, deposit accounts, negotiable
5documents, goods covered by documents, instruments, investment
6property, letter-of-credit rights, and money; perfection by
7permissive filing; temporary perfection without filing or
8transfer of possession.
9    (a) Perfection by filing permitted. A security interest in
10chattel paper, controllable accounts, controllable electronic
11records, controllable payment intangibles, negotiable
12documents, instruments, beneficial interests in Illinois land
13trusts, or investment property, or negotiable documents may be
14perfected by filing.
15    (b) Control or possession of certain collateral. Except as
16otherwise provided in Section 9-315(c) and (d) for proceeds:
17        (1) a security interest in a deposit account may be
18    perfected only by control under Section 9-314;
19        (2) and except as otherwise provided in Section
20    9-308(d), a security interest in a letter-of-credit right
21    may be perfected only by control under Section 9-314; and
22        (3) a security interest in tangible money may be
23    perfected only by the secured party's taking possession
24    under Section 9-313; and .
25        (4) a security interest in electronic money may be
26    perfected only by control under Section 9-314.

 

 

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1    (c) Goods covered by negotiable document. While goods are
2in the possession of a bailee that has issued a negotiable
3document covering the goods:
4        (1) a security interest in the goods may be perfected
5    by perfecting a security interest in the document; and
6        (2) a security interest perfected in the document has
7    priority over any security interest that becomes perfected
8    in the goods by another method during that time.
9    (d) Goods covered by nonnegotiable document. While goods
10are in the possession of a bailee that has issued a
11nonnegotiable document covering the goods, a security interest
12in the goods may be perfected by:
13        (1) issuance of a document in the name of the secured
14    party;
15        (2) the bailee's receipt of notification of the
16    secured party's interest; or
17        (3) filing as to the goods.
18    (e) Temporary perfection: new value. A security interest
19in certificated securities, negotiable documents, or
20instruments is perfected without filing or the taking of
21possession or control for a period of 20 days from the time it
22attaches to the extent that it arises for new value given under
23a signed an authenticated security agreement.
24    (f) Temporary perfection: goods or documents made
25available to debtor. A perfected security interest in a
26negotiable document or goods in possession of a bailee, other

 

 

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1than one that has issued a negotiable document for the goods,
2remains perfected for 20 days without filing if the secured
3party makes available to the debtor the goods or documents
4representing the goods for the purpose of:
5        (1) ultimate sale or exchange; or
6        (2) loading, unloading, storing, shipping,
7    transshipping, manufacturing, processing, or otherwise
8    dealing with them in a manner preliminary to their sale or
9    exchange.
10    (g) Temporary perfection: delivery of security certificate
11or instrument to debtor. A perfected security interest in a
12certificated security or instrument remains perfected for 20
13days without filing if the secured party delivers the security
14certificate or instrument to the debtor for the purpose of:
15        (1) ultimate sale or exchange; or
16        (2) presentation, collection, enforcement, renewal, or
17    registration of transfer.
18    (h) Expiration of temporary perfection. After the 20-day
19period specified in subsection (e), (f), or (g) expires,
20perfection depends upon compliance with this Article.
21(Source: P.A. 95-895, eff. 1-1-09.)
 
22    (810 ILCS 5/9-313)  (from Ch. 26, par. 9-313)
23    Sec. 9-313. When possession by or delivery to secured
24party perfects security interest without filing.
25    (a) Perfection by possession or delivery. Except as

 

 

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1otherwise provided in subsection (b), a secured party may
2perfect a security interest in tangible negotiable documents,
3goods, instruments, negotiable tangible documents, or tangible
4money, or tangible chattel paper by taking possession of the
5collateral. A secured party may perfect a security interest in
6certificated securities by taking delivery of the certificated
7securities under Section 8-301.
8    (b) Goods covered by certificate of title. With respect to
9goods covered by a certificate of title issued by this State, a
10secured party may perfect a security interest in the goods by
11taking possession of the goods only in the circumstances
12described in Section 9-316(d).
13    (c) Collateral in possession of person other than debtor.
14With respect to collateral other than certificated securities
15and goods covered by a document, a secured party takes
16possession of collateral in the possession of a person other
17than the debtor, the secured party, or a lessee of the
18collateral from the debtor in the ordinary course of the
19debtor's business, when:
20        (1) the person in possession signs authenticates a
21    record acknowledging that it holds possession of the
22    collateral for the secured party's benefit; or
23        (2) the person takes possession of the collateral
24    after having signed authenticated a record acknowledging
25    that it will hold possession of the collateral for the
26    secured party's benefit.

 

 

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1    (d) Time of perfection by possession; continuation of
2perfection. If perfection of a security interest depends upon
3possession of the collateral by a secured party, perfection
4occurs not no earlier than the time the secured party takes
5possession and continues only while the secured party retains
6possession.
7    (e) Time of perfection by delivery; continuation of
8perfection. A security interest in a certificated security in
9registered form is perfected by delivery when delivery of the
10certificated security occurs under Section 8-301 and remains
11perfected by delivery until the debtor obtains possession of
12the security certificate.
13    (f) Acknowledgment not required. A person in possession of
14collateral is not required to acknowledge that it holds
15possession for a secured party's benefit.
16    (g) Effectiveness of acknowledgment; no duties or
17confirmation. If a person acknowledges that it holds
18possession for the secured party's benefit:
19        (1) the acknowledgment is effective under subsection
20    (c) or Section 8-301(a), even if the acknowledgment
21    violates the rights of a debtor; and
22        (2) unless the person otherwise agrees or law other
23    than this Article otherwise provides, the person does not
24    owe any duty to the secured party and is not required to
25    confirm the acknowledgment to another person.
26    (h) Secured party's delivery to person other than debtor.

 

 

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1A secured party having possession of collateral does not
2relinquish possession by delivering the collateral to a person
3other than the debtor or a lessee of the collateral from the
4debtor in the ordinary course of the debtor's business if the
5person was instructed before the delivery or is instructed
6contemporaneously with the delivery:
7        (1) to hold possession of the collateral for the
8    secured party's benefit; or
9        (2) to redeliver the collateral to the secured party.
10    (i) Effect of delivery under subsection (h); no duties or
11confirmation. A secured party does not relinquish possession,
12even if a delivery under subsection (h) violates the rights of
13a debtor. A person to which collateral is delivered under
14subsection (h) does not owe any duty to the secured party and
15is not required to confirm the delivery to another person
16unless the person otherwise agrees or law other than this
17Article otherwise provides.
18(Source: P.A. 95-895, eff. 1-1-09.)
 
19    (810 ILCS 5/9-314)  (from Ch. 26, par. 9-314)
20    Sec. 9-314. Perfection by control.
21    (a) Perfection by control. A security interest in
22controllable accounts, controllable electronic records,
23controllable payment intangibles, deposit accounts, electronic
24documents, electronic money, investment property, or
25letter-of-credit rights investment property, deposit accounts,

 

 

SB3696 Enrolled- 145 -LRB103 37687 SPS 67814 b

1electronic chattel paper, letter-of-credit rights, electronic
2documents, or beneficial interests in Illinois land trusts may
3be perfected by control of the collateral under Section 7-106,
49-104, 9-105A 9-105, 9-106, 9-107, or 9-107.1, or 9-107A.
5    (b) Specified collateral: time of perfection by control;
6continuation of perfection. A security interest in
7controllable accounts, controllable electronic records,
8controllable payment intangibles, deposit accounts, electronic
9documents, electronic money, or letter-of-credit rights
10deposit accounts, electronic chattel paper, letter-of-credit
11rights, electronic documents, or beneficial interests in
12Illinois land trusts is perfected by control under Section
137-106, 9-104, 9-105A, 9-105, 9-107, or 9-107.1, or 9-107A not
14earlier than the time when the secured party obtains control
15and remains perfected by control only while the secured party
16retains control.
17    (c) Investment property: time of perfection by control;
18continuation of perfection. A security interest in investment
19property is perfected by control under Section 9-106 not
20earlier than from the time the secured party obtains control
21and remains perfected by control until:
22        (1) the secured party does not have control; and
23        (2) one of the following occurs:
24            (A) if the collateral is a certificated security,
25        the debtor has or acquires possession of the security
26        certificate;

 

 

SB3696 Enrolled- 146 -LRB103 37687 SPS 67814 b

1            (B) if the collateral is an uncertificated
2        security, the issuer has registered or registers the
3        debtor as the registered owner; or
4            (C) if the collateral is a security entitlement,
5        the debtor is or becomes the entitlement holder.
6(Source: P.A. 95-895, eff. 1-1-09.)
 
7    (810 ILCS 5/9-314A new)
8    Sec. 9-314A. Perfection by possession and control of
9chattel paper.
10    (a) Perfection by possession and control. A secured party
11may perfect a security interest in chattel paper by taking
12possession of each authoritative tangible copy of the record
13evidencing the chattel paper and obtaining control of each
14authoritative electronic copy of the electronic record
15evidencing the chattel paper.
16    (b) Time of perfection; continuation of perfection. A
17security interest is perfected under subsection (a) not
18earlier than the time the secured party takes possession and
19obtains control and remains perfected under subsection (a)
20only while the secured party retains possession and control.
21    (c) Application of Section 9-313 to perfection by
22possession of chattel paper. Section 9-313(c) and (f) through
23(i) applies to perfection by possession of an authoritative
24tangible copy of a record evidencing chattel paper.
 

 

 

SB3696 Enrolled- 147 -LRB103 37687 SPS 67814 b

1    (810 ILCS 5/9-316)  (from Ch. 26, par. 9-316)
2    Sec. 9-316. Effect of change in governing law.
3    (a) General rule: effect on perfection of change in
4governing law. A security interest perfected pursuant to the
5law of the jurisdiction designated in Section 9-301(1), or
69-305(c), 9-306A(d), or 9-306B(b) remains perfected until the
7earliest of:
8        (1) the time perfection would have ceased under the
9    law of that jurisdiction;
10        (2) the expiration of four months after a change of
11    the debtor's location to another jurisdiction; or
12        (3) the expiration of one year after a transfer of
13    collateral to a person that thereby becomes a debtor and
14    is located in another jurisdiction.
15    (b) Security interest perfected or unperfected under law
16of new jurisdiction. If a security interest described in
17subsection (a) becomes perfected under the law of the other
18jurisdiction before the earliest time or event described in
19that subsection, it remains perfected thereafter. If the
20security interest does not become perfected under the law of
21the other jurisdiction before the earliest time or event, it
22becomes unperfected and is deemed never to have been perfected
23as against a purchaser of the collateral for value.
24    (c) Possessory security interest in collateral moved to
25new jurisdiction. A possessory security interest in
26collateral, other than goods covered by a certificate of title

 

 

SB3696 Enrolled- 148 -LRB103 37687 SPS 67814 b

1and as-extracted collateral consisting of goods, remains
2continuously perfected if:
3        (1) the collateral is located in one jurisdiction and
4    subject to a security interest perfected under the law of
5    that jurisdiction;
6        (2) thereafter the collateral is brought into another
7    jurisdiction; and
8        (3) upon entry into the other jurisdiction, the
9    security interest is perfected under the law of the other
10    jurisdiction.
11    (d) Goods covered by certificate of title from this State.
12Except as otherwise provided in subsection (e), a security
13interest in goods covered by a certificate of title which is
14perfected by any method under the law of another jurisdiction
15when the goods become covered by a certificate of title from
16this State remains perfected until the security interest would
17have become unperfected under the law of the other
18jurisdiction had the goods not become so covered.
19    (e) When subsection (d) security interest becomes
20unperfected against purchasers. A security interest described
21in subsection (d) becomes unperfected as against a purchaser
22of the goods for value and is deemed never to have been
23perfected as against a purchaser of the goods for value if the
24applicable requirements for perfection under Section 9-311(b)
25or 9-313 are not satisfied before the earlier of:
26        (1) the time the security interest would have become

 

 

SB3696 Enrolled- 149 -LRB103 37687 SPS 67814 b

1    unperfected under the law of the other jurisdiction had
2    the goods not become covered by a certificate of title
3    from this State; or
4        (2) the expiration of four months after the goods had
5    become so covered.
6    (f) Change in jurisdiction of chattel paper, controllable
7electronic record, bank, issuer, nominated person, securities
8intermediary, or commodity intermediary. A security interest
9in chattel paper, controllable accounts, controllable
10electronic records, controllable payment intangibles, deposit
11accounts, letter-of-credit rights, or investment property
12which is perfected under the law of the chattel paper's
13jurisdiction, the controllable electronic record's
14jurisdiction, the bank's jurisdiction, the issuer's
15jurisdiction, a nominated person's jurisdiction, the
16securities intermediary's jurisdiction, or the commodity
17intermediary's jurisdiction, as applicable, remains perfected
18until the earlier of:
19        (1) the time the security interest would have become
20    unperfected under the law of that jurisdiction; or
21        (2) the expiration of four months after a change of
22    the applicable jurisdiction to another jurisdiction.
23    (g) Subsection (f) security interest perfected or
24unperfected under law of new jurisdiction. If a security
25interest described in subsection (f) becomes perfected under
26the law of the other jurisdiction before the earlier of the

 

 

SB3696 Enrolled- 150 -LRB103 37687 SPS 67814 b

1time or the end of the period described in that subsection, it
2remains perfected thereafter. If the security interest does
3not become perfected under the law of the other jurisdiction
4before the earlier of that time or the end of that period, it
5becomes unperfected and is deemed never to have been perfected
6as against a purchaser of the collateral for value.
7    (h) Effect on filed financing statement of change in
8governing law. The following rules apply to collateral to
9which a security interest attaches within four months after
10the debtor changes its location to another jurisdiction:
11        (1) A financing statement filed before the change
12    pursuant to the law of the jurisdiction designated in
13    Section 9-301(1) or 9-305(c) is effective to perfect a
14    security interest in the collateral if the financing
15    statement would have been effective to perfect a security
16    interest in the collateral had the debtor not changed its
17    location.
18        (2) If a security interest perfected by a financing
19    statement that is effective under paragraph (1) becomes
20    perfected under the law of the other jurisdiction before
21    the earlier of the time the financing statement would have
22    become ineffective under the law of the jurisdiction
23    designated in Section 9-301(1) or 9-305(c) or the
24    expiration of the four-month period, it remains perfected
25    thereafter. If the security interest does not become
26    perfected under the law of the other jurisdiction before

 

 

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1    the earlier time or event, it becomes unperfected and is
2    deemed never to have been perfected as against a purchaser
3    of the collateral for value.
4    (i) Effect of change in governing law on financing
5statement filed against original debtor. If a financing
6statement naming an original debtor is filed pursuant to the
7law of the jurisdiction designated in Section 9-301(1) or
89-305(c) and the new debtor is located in another
9jurisdiction, the following rules apply:
10        (1) The financing statement is effective to perfect a
11    security interest in collateral acquired by the new debtor
12    before, and within four months after, the new debtor
13    becomes bound under Section 9-203(d), if the financing
14    statement would have been effective to perfect a security
15    interest in the collateral had the collateral been
16    acquired by the original debtor.
17        (2) A security interest perfected by the financing
18    statement and which becomes perfected under the law of the
19    other jurisdiction before the earlier of the time the
20    financing statement would have become ineffective under
21    the law of the jurisdiction designated in Section 9-301(1)
22    or 9-305(c) or the expiration of the four-month period
23    remains perfected thereafter. A security interest that is
24    perfected by the financing statement but which does not
25    become perfected under the law of the other jurisdiction
26    before the earlier time or event becomes unperfected and

 

 

SB3696 Enrolled- 152 -LRB103 37687 SPS 67814 b

1    is deemed never to have been perfected as against a
2    purchaser of the collateral for value.
3(Source: P.A. 97-1034, eff. 7-1-13.)
 
4    (810 ILCS 5/9-317)  (from Ch. 26, par. 9-317)
5    Sec. 9-317. Interests that take priority over or take free
6of security interest or agricultural lien.
7    (a) Conflicting security interests and rights of lien
8creditors. A security interest or agricultural lien is
9subordinate to the rights of:
10        (1) a person entitled to priority under Section 9-322;
11    and
12        (2) except as otherwise provided in subsection (e) or
13    (f), a person that becomes a lien creditor before the
14    earlier of the time:
15            (A) the security interest or agricultural lien is
16        perfected; or
17            (B) one of the conditions specified in Section
18        9-203(b)(3) is met and a financing statement covering
19        the collateral is filed.
20    (b) Buyers that receive delivery. Except as otherwise
21provided in subsection (e), a buyer, other than a secured
22party, of tangible chattel paper, tangible documents, goods,
23instruments, tangible documents, or a certificated security
24takes free of a security interest or agricultural lien if the
25buyer gives value and receives delivery of the collateral

 

 

SB3696 Enrolled- 153 -LRB103 37687 SPS 67814 b

1without knowledge of the security interest or agricultural
2lien and before it is perfected.
3    (c) Lessees that receive delivery. Except as otherwise
4provided in subsection (e), a lessee of goods takes free of a
5security interest or agricultural lien if the lessee gives
6value and receives delivery of the collateral without
7knowledge of the security interest or agricultural lien and
8before it is perfected.
9    (d) Licensees and buyers of certain collateral. Subject to
10subsections (g) through (j), a A licensee of a general
11intangible or a buyer, other than a secured party, of
12collateral other than electronic money tangible chattel paper,
13tangible documents, goods, instruments, tangible documents, or
14a certificated security takes free of a security interest if
15the licensee or buyer gives value without knowledge of the
16security interest and before it is perfected.
17    (e) Purchase-money security interest. Except as otherwise
18provided in Sections 9-320 and 9-321, if a person files a
19financing statement with respect to a purchase-money security
20interest before or within 20 days after the debtor receives
21delivery of the collateral, the security interest takes
22priority over the rights of a buyer, lessee, or lien creditor
23which arise between the time the security interest attaches
24and the time of filing.
25    (f) Public deposits. An unperfected security interest
26shall take priority over the rights of a lien creditor if (i)

 

 

SB3696 Enrolled- 154 -LRB103 37687 SPS 67814 b

1the lien creditor is a trustee or receiver of a bank or acting
2in furtherance of its supervisory authority over such bank and
3(ii) a security interest is granted by the bank to secure a
4deposit of public funds with the bank or a repurchase
5agreement with the bank pursuant to the Government Securities
6Act of 1986, as amended.
7    (g) Buyers of chattel paper. A buyer, other than a secured
8party, of chattel paper takes free of a security interest if,
9without knowledge of the security interest and before it is
10perfected, the buyer gives value and:
11        (1) receives delivery of each authoritative tangible
12    copy of the record evidencing the chattel paper; and
13        (2) if each authoritative electronic copy of the
14    record evidencing the chattel paper can be subjected to
15    control under Section 9-105, obtains control of each
16    authoritative electronic copy.
17    (h) Buyers of electronic documents. A buyer of an
18electronic document takes free of a security interest if,
19without knowledge of the security interest and before it is
20perfected, the buyer gives value and, if each authoritative
21electronic copy of the document can be subjected to control
22under Section 7-106, obtains control of each authoritative
23electronic copy.
24    (i) Buyers of controllable electronic records. A buyer of
25a controllable electronic record takes free of a security
26interest if, without knowledge of the security interest and

 

 

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1before it is perfected, the buyer gives value and obtains
2control of the controllable electronic record.
3    (j) Buyers of controllable accounts and controllable
4payment intangibles. A buyer, other than a secured party, of a
5controllable account or a controllable payment intangible
6takes free of a security interest if, without knowledge of the
7security interest and before it is perfected, the buyer gives
8value and obtains control of the controllable account or
9controllable payment intangible.
10(Source: P.A. 97-1034, eff. 7-1-13.)
 
11    (810 ILCS 5/9-323)
12    Sec. 9-323. Future advances.
13    (a) When priority based on time of advance. Except as
14otherwise provided in subsection (c), for purposes of
15determining the priority of a perfected security interest
16under Section 9-322(a)(1), perfection of the security interest
17dates from the time an advance is made to the extent that the
18security interest secures an advance that:
19        (1) is made while the security interest is perfected
20    only:
21            (A) under Section 9-309 when it attaches; or
22            (B) temporarily under Section 9-312(e), (f), or
23        (g); and
24        (2) is not made pursuant to a commitment entered into
25    before or while the security interest is perfected by a

 

 

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1    method other than under Section 9-309 or 9-312(e), (f), or
2    (g).
3    (b) Lien creditor. Except as otherwise provided in
4subsection (c), a security interest is subordinate to the
5rights of a person that becomes a lien creditor to the extent
6that the security interest secures an advance made more than
745 days after the person becomes a lien creditor unless the
8advance is made:
9        (1) without knowledge of the lien; or
10        (2) pursuant to a commitment entered into without
11    knowledge of the lien.
12    (c) Buyer of receivables. Subsections (a) and (b) do not
13apply to a security interest held by a secured party that is a
14buyer of accounts, chattel paper, payment intangibles, or
15promissory notes or a consignor.
16    (d) Buyer of goods. Except as otherwise provided in
17subsection (e), a buyer of goods other than a buyer in ordinary
18course of business takes free of a security interest to the
19extent that it secures advances made after the earlier of:
20        (1) the time the secured party acquires knowledge of
21    the buyer's purchase; or
22        (2) 45 days after the purchase.
23    (e) Advances made pursuant to commitment: priority of
24buyer of goods. Subsection (d) does not apply if the advance is
25made pursuant to a commitment entered into without knowledge
26of the buyer's purchase and before the expiration of the

 

 

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145-day period.
2    (f) Lessee of goods. Except as otherwise provided in
3subsection (g), a lessee of goods, other than a lessee in
4ordinary course of business, takes the leasehold interest free
5of a security interest to the extent that it secures advances
6made after the earlier of:
7        (1) the time the secured party acquires knowledge of
8    the lease; or
9        (2) 45 days after the lease contract becomes
10    enforceable.
11    (g) Advances made pursuant to commitment: priority of
12lessee of goods. Subsection (f) does not apply if the advance
13is made pursuant to a commitment entered into without
14knowledge of the lease and before the expiration of the 45-day
15period.
16(Source: P.A. 91-893, eff. 7-1-01.)
 
17    (810 ILCS 5/9-324)
18    Sec. 9-324. Priority of purchase-money security interests.
19    (a) General rule: purchase-money priority. Except as
20otherwise provided in subsection (g), a perfected
21purchase-money security interest in goods other than inventory
22or livestock has priority over a conflicting security interest
23in the same goods, and, except as otherwise provided in
24Section 9-327, a perfected security interest in its
25identifiable proceeds also has priority, if the purchase-money

 

 

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1security interest is perfected when the debtor receives
2possession of the collateral or within 20 days thereafter.
3    (b) Inventory purchase-money priority. Subject to
4subsection (c) and except as otherwise provided in subsection
5(g), a perfected purchase-money security interest in inventory
6has priority over a conflicting security interest in the same
7inventory, has priority over a conflicting security interest
8in chattel paper or an instrument constituting proceeds of the
9inventory and in proceeds of the chattel paper, if so provided
10in Section 9-330, and, except as otherwise provided in Section
119-327, also has priority in identifiable cash proceeds of the
12inventory to the extent the identifiable cash proceeds are
13received on or before the delivery of the inventory to a buyer,
14if:
15        (1) the purchase-money security interest is perfected
16    when the debtor receives possession of the inventory;
17        (2) the purchase-money secured party sends a signed an
18    authenticated notification to the holder of the
19    conflicting security interest;
20        (3) the holder of the conflicting security interest
21    receives the notification within five years before the
22    debtor receives possession of the inventory; and
23        (4) the notification states that the person sending
24    the notification has or expects to acquire a
25    purchase-money security interest in inventory of the
26    debtor and describes the inventory.

 

 

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1    (c) Holders of conflicting inventory security interests to
2be notified. Subsections (b)(2) through (4) apply only if the
3holder of the conflicting security interest had filed a
4financing statement covering the same types of inventory:
5        (1) if the purchase-money security interest is
6    perfected by filing, before the date of the filing; or
7        (2) if the purchase-money security interest is
8    temporarily perfected without filing or possession under
9    Section 9-312(f), before the beginning of the 20-day
10    period thereunder.
11    (d) Livestock purchase-money priority. Subject to
12subsection (e) and except as otherwise provided in subsection
13(g), a perfected purchase-money security interest in livestock
14that are farm products has priority over a conflicting
15security interest in the same livestock, and, except as
16otherwise provided in Section 9-327, a perfected security
17interest in their identifiable proceeds and identifiable
18products in their unmanufactured states also has priority, if:
19        (1) the purchase-money security interest is perfected
20    when the debtor receives possession of the livestock;
21        (2) the purchase-money secured party sends a signed an
22    authenticated notification to the holder of the
23    conflicting security interest;
24        (3) the holder of the conflicting security interest
25    receives the notification within six months before the
26    debtor receives possession of the livestock; and

 

 

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1        (4) the notification states that the person sending
2    the notification has or expects to acquire a
3    purchase-money security interest in livestock of the
4    debtor and describes the livestock.
5    (e) Holders of conflicting livestock security interests to
6be notified. Subsections (d)(2) through (4) apply only if the
7holder of the conflicting security interest had filed a
8financing statement covering the same types of livestock:
9        (1) if the purchase-money security interest is
10    perfected by filing, before the date of the filing; or
11        (2) if the purchase-money security interest is
12    temporarily perfected without filing or possession under
13    Section 9-312(f), before the beginning of the 20-day
14    period thereunder.
15    (f) Software purchase-money priority. Except as otherwise
16provided in subsection (g), a perfected purchase-money
17security interest in software has priority over a conflicting
18security interest in the same collateral, and, except as
19otherwise provided in Section 9-327, a perfected security
20interest in its identifiable proceeds also has priority, to
21the extent that the purchase-money security interest in the
22goods in which the software was acquired for use has priority
23in the goods and proceeds of the goods under this Section.
24    (g) Conflicting purchase-money security interests. If more
25than one security interest qualifies for priority in the same
26collateral under subsection (a), (b), (d), or (f):

 

 

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1        (1) a security interest securing an obligation
2    incurred as all or part of the price of the collateral has
3    priority over a security interest securing an obligation
4    incurred for value given to enable the debtor to acquire
5    rights in or the use of collateral; and
6        (2) in all other cases, Section 9-322(a) applies to
7    the qualifying security interests.
8(Source: P.A. 91-893, eff. 7-1-01.)
 
9    (810 ILCS 5/9-326A new)
10    Sec. 9-326A. Priority of security interest in controllable
11account, controllable electronic record, and controllable
12payment intangible. A security interest in a controllable
13account, controllable electronic record, or controllable
14payment intangible held by a secured party having control of
15the account, electronic record, or payment intangible has
16priority over a conflicting security interest held by a
17secured party that does not have control.
 
18    (810 ILCS 5/9-330)
19    Sec. 9-330. Priority of purchaser of chattel paper or
20instrument.
21    (a) Purchaser's priority: security interest claimed merely
22as proceeds. A purchaser of chattel paper has priority over a
23security interest in the chattel paper which is claimed merely
24as proceeds of inventory subject to a security interest if:

 

 

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1        (1) in good faith and in the ordinary course of the
2    purchaser's business, the purchaser gives new value, and
3    takes possession of each authoritative tangible copy of
4    the record evidencing the chattel paper, and or obtains
5    control under Section 9-105 of each authoritative
6    electronic copy of the record evidencing of the chattel
7    paper under Section 9-105; and
8        (2) the authoritative copies of the record evidencing
9    the chattel paper do chattel paper does not indicate that
10    the chattel paper it has been assigned to an identified
11    assignee other than the purchaser.
12    (b) Purchaser's priority: other security interests. A
13purchaser of chattel paper has priority over a security
14interest in the chattel paper which is claimed other than
15merely as proceeds of inventory subject to a security interest
16if the purchaser gives new value, and takes possession of each
17authoritative tangible copy of the record evidencing the
18chattel paper, and or obtains control under Section 9-105 of
19each authoritative electronic copy of the record evidencing of
20the chattel paper under Section 9-105 in good faith, in the
21ordinary course of the purchaser's business, and without
22knowledge that the purchase violates the rights of the secured
23party.
24    (c) Chattel paper purchaser's priority in proceeds. Except
25as otherwise provided in Section 9-327, a purchaser having
26priority in chattel paper under subsection (a) or (b) also has

 

 

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1priority in proceeds of the chattel paper to the extent that:
2        (1) Section 9-322 provides for priority in the
3    proceeds; or
4        (2) the proceeds consist of the specific goods covered
5    by the chattel paper or cash proceeds of the specific
6    goods, even if the purchaser's security interest in the
7    proceeds is unperfected.
8    (d) Instrument purchaser's priority. Except as otherwise
9provided in Section 9-331(a), a purchaser of an instrument has
10priority over a security interest in the instrument perfected
11by a method other than possession if the purchaser gives value
12and takes possession of the instrument in good faith and
13without knowledge that the purchase violates the rights of the
14secured party.
15    (e) Holder of purchase-money security interest gives new
16value. For purposes of subsections (a) and (b), the holder of a
17purchase-money security interest in inventory gives new value
18for chattel paper constituting proceeds of the inventory.
19    (f) Indication of assignment gives knowledge. For purposes
20of subsections (b) and (d), if the authoritative copies of the
21record evidencing chattel paper or an instrument indicate
22indicates that the chattel paper or instrument it has been
23assigned to an identified secured party other than the
24purchaser, a purchaser of the chattel paper or instrument has
25knowledge that the purchase violates the rights of the secured
26party.

 

 

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1(Source: P.A. 91-893, eff. 7-1-01.)
 
2    (810 ILCS 5/9-331)
3    Sec. 9-331. Priority of rights of purchasers of
4controllable accounts, controllable electronic records,
5controllable payment intangibles, instruments, documents,
6instruments, and securities under other Articles; priority of
7interests in financial assets and security entitlements and
8protection against assertion of claim under Articles Article 8
9and 12.
10    (a) Rights under Articles 3, 7, and 8, and 12 not limited.
11This Article does not limit the rights of a holder in due
12course of a negotiable instrument, a holder to which a
13negotiable document of title has been duly negotiated, or a
14protected purchaser of a security, or a qualifying purchaser
15of a controllable account, controllable electronic record, or
16controllable payment intangible. These holders or purchasers
17take priority over an earlier security interest, even if
18perfected, to the extent provided in Articles 3, 7, and 8, and
1912.
20    (b) Protection under Articles Article 8 and 12. This
21Article does not limit the rights of or impose liability on a
22person to the extent that the person is protected against the
23assertion of a claim under Article 8 or 12.
24    (c) Filing not notice. Filing under this Article does not
25constitute notice of a claim or defense to the holders, or

 

 

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1purchasers, or persons described in subsections (a) and (b).
2(Source: P.A. 91-893, eff. 7-1-01.)
 
3    (810 ILCS 5/9-332)
4    Sec. 9-332. Transfer of money; transfer of funds from
5deposit account.
6    (a) Transferee of tangible money. A transferee of tangible
7money takes the money free of a security interest if the
8transferee receives possession of the money without acting
9unless the transferee acts in collusion with the debtor in
10violating the rights of the secured party.
11    (b) Transferee of funds from deposit account. A transferee
12of funds from a deposit account takes the funds free of a
13security interest in the deposit account if the transferee
14receives the funds without acting unless the transferee acts
15in collusion with the debtor in violating the rights of the
16secured party.
17    (c) Transferee of electronic money. A transferee of
18electronic money takes the money free of a security interest
19if the transferee obtains control of the money without acting
20in collusion with the debtor in violating the rights of the
21secured party.
22(Source: P.A. 91-893, eff. 7-1-01.)
 
23    (810 ILCS 5/9-334)
24    Sec. 9-334. Priority of security interests in fixtures and

 

 

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1crops.
2    (a) Security interest in fixtures under this Article. A
3security interest under this Article may be created in goods
4that are fixtures or may continue in goods that become
5fixtures. A security interest does not exist under this
6Article in ordinary building materials incorporated into an
7improvement on land.
8    (b) Security interest in fixtures under real-property law.
9This Article does not prevent creation of an encumbrance upon
10fixtures under real property law.
11    (c) General rule: subordination of security interest in
12fixtures. In cases not governed by subsections (d) through
13(h), a security interest in fixtures is subordinate to a
14conflicting interest of an encumbrancer or owner of the
15related real property other than the debtor.
16    (d) Fixtures purchase-money priority. Except as otherwise
17provided in subsection (h), a perfected security interest in
18fixtures has priority over a conflicting interest of an
19encumbrancer or owner of the real property if the debtor has an
20interest of record in or is in possession of the real property
21and:
22        (1) the security interest is a purchase-money security
23    interest;
24        (2) the interest of the encumbrancer or owner arises
25    before the goods become fixtures; and
26        (3) the security interest is perfected by a fixture

 

 

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1    filing before the goods become fixtures or within 20 days
2    thereafter.
3    (e) Priority of security interest in fixtures over
4interests in real property. A perfected security interest in
5fixtures has priority over a conflicting interest of an
6encumbrancer or owner of the real property if:
7        (1) the debtor has an interest of record in the real
8    property or is in possession of the real property and the
9    security interest:
10            (A) is perfected by a fixture filing before the
11        interest of the encumbrancer or owner is of record;
12        and
13            (B) has priority over any conflicting interest of
14        a predecessor in title of the encumbrancer or owner;
15        (2) before the goods become fixtures, the security
16    interest is perfected by any method permitted by this
17    Article and the fixtures are readily removable:
18            (A) factory or office machines;
19            (B) equipment that is not primarily used or leased
20        for use in the operation of the real property; or
21            (C) replacements of domestic appliances that are
22        consumer goods;
23        (3) the conflicting interest is a lien on the real
24    property obtained by legal or equitable proceedings after
25    the security interest was perfected by any method
26    permitted by this Article; or

 

 

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1        (4) the security interest is:
2            (A) created in a manufactured home in a
3        manufactured-home transaction; and
4            (B) perfected pursuant to a statute described in
5        Section 9-311(a)(2).
6    (f) Priority based on consent, disclaimer, or right to
7remove. A security interest in fixtures, whether or not
8perfected, has priority over a conflicting interest of an
9encumbrancer or owner of the real property if:
10        (1) the encumbrancer or owner has, in a signed an
11    authenticated record, consented to the security interest
12    or disclaimed an interest in the goods as fixtures; or
13        (2) the debtor has a right to remove the goods as
14    against the encumbrancer or owner.
15    (g) Continuation of subsection (f)(2) priority. The
16priority of the security interest under subsection (f)(2)
17continues for a reasonable time if the debtor's right to
18remove the goods as against the encumbrancer or owner
19terminates.
20    (h) Priority of construction mortgage. A mortgage is a
21construction mortgage to the extent that it secures an
22obligation incurred for the construction of an improvement on
23land, including the acquisition cost of the land, if a
24recorded record of the mortgage so indicates. Except as
25otherwise provided in subsections (e) and (f), a security
26interest in fixtures is subordinate to a construction mortgage

 

 

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1if a record of the mortgage is recorded before the goods become
2fixtures and the goods become fixtures before the completion
3of the construction. A mortgage has this priority to the same
4extent as a construction mortgage to the extent that it is
5given to refinance a construction mortgage.
6    (i) Priority of security interest in crops.
7        (1) Subject to Section 9-322(g), a perfected security
8    interest in crops growing on real property has priority
9    over:
10            (A) a conflicting interest of an encumbrancer or
11        owner of the real property; and
12            (B) the rights of a holder of an obligation
13        secured by a collateral assignment of beneficial
14        interest in a land trust, including rights by virtue
15        of an equitable lien.
16        (2) For purposes of this subsection:
17            (A) "Collateral assignment of beneficial interest"
18        means any pledge or assignment of the beneficial
19        interest in a land trust to a person to secure a debt
20        to other obligation.
21            (B) "Land trust" means any trust arrangement under
22        which the legal and equitable title to real estate is
23        held by a trustee, the interest of the beneficiary of
24        the trust is personal property, and the beneficiary or
25        any person designated in writing by the beneficiary
26        has (i) the exclusive power to direct or control the

 

 

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1        trustee in dealing with the title to the trust
2        property, (ii) the exclusive control of the
3        management, operation, renting, and selling of the
4        trust property, and (iii) the exclusive right to the
5        earnings, avails, and proceeds of trust property.
6(Source: P.A. 91-893, eff. 7-1-01.)
 
7    (810 ILCS 5/9-341)
8    Sec. 9-341. Bank's rights and duties with respect to
9deposit account. Except as otherwise provided in Section
109-340(c), and unless the bank otherwise agrees in a signed an
11authenticated record, a bank's rights and duties with respect
12to a deposit account maintained with the bank are not
13terminated, suspended, or modified by:
14        (1) the creation, attachment, or perfection of a
15    security interest in the deposit account;
16        (2) the bank's knowledge of the security interest; or
17        (3) the bank's receipt of instructions from the
18    secured party.
19(Source: P.A. 91-893, eff. 7-1-01.)
 
20    (810 ILCS 5/9-404)  (from Ch. 26, par. 9-404)
21    Sec. 9-404. Rights acquired by assignee; claims and
22defenses against assignee.
23    (a) Assignee's rights subject to terms, claims, and
24defenses; exceptions. Unless an account debtor has made an

 

 

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1enforceable agreement not to assert defenses or claims, and
2subject to subsections (b) through (e), the rights of an
3assignee are subject to:
4        (1) all terms of the agreement between the account
5    debtor and assignor and any defense or claim in recoupment
6    arising from the transaction that gave rise to the
7    contract; and
8        (2) any other defense or claim of the account debtor
9    against the assignor which accrues before the account
10    debtor receives a notification of the assignment signed
11    authenticated by the assignor or the assignee.
12    (b) Account debtor's claim reduces amount owed to
13assignee. Subject to subsection (c) and except as otherwise
14provided in subsection (d), the claim of an account debtor
15against an assignor may be asserted against an assignee under
16subsection (a) only to reduce the amount the account debtor
17owes.
18    (c) Rule for individual under other law. This Section is
19subject to law other than this Article which establishes a
20different rule for an account debtor who is an individual and
21who incurred the obligation primarily for personal, family, or
22household purposes.
23    (d) Omission of required statement in consumer
24transaction. In a consumer transaction, if a record evidences
25the account debtor's obligation, law other than this Article
26requires that the record include a statement to the effect

 

 

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1that the account debtor's recovery against an assignee with
2respect to claims and defenses against the assignor may not
3exceed amounts paid by the account debtor under the record,
4and the record does not include such a statement, the extent to
5which a claim of an account debtor against the assignor may be
6asserted against an assignee is determined as if the record
7included such a statement.
8    (e) Inapplicability to health-care-insurance receivable.
9This Section does not apply to an assignment of a
10health-care-insurance receivable.
11(Source: P.A. 91-893, eff. 7-1-01.)
 
12    (810 ILCS 5/9-406)  (from Ch. 26, par. 9-406)
13    Sec. 9-406. Discharge of account debtor; notification of
14assignment; identification and proof of assignment;
15restrictions on assignment of accounts, chattel paper, payment
16intangibles, and promissory notes ineffective.
17    (a) Discharge of account debtor; effect of notification.
18Subject to subsections (b) through (i) and (l), an account
19debtor on an account, chattel paper, or a payment intangible
20may discharge its obligation by paying the assignor until, but
21not after, the account debtor receives a notification, signed
22authenticated by the assignor or the assignee, that the amount
23due or to become due has been assigned and that payment is to
24be made to the assignee. After receipt of the notification,
25the account debtor may discharge its obligation by paying the

 

 

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1assignee and may not discharge the obligation by paying the
2assignor.
3    (b) When notification ineffective. Subject to subsections
4subsection (h) and (l), notification is ineffective under
5subsection (a):
6        (1) if it does not reasonably identify the rights
7    assigned;
8        (2) to the extent that an agreement between an account
9    debtor and a seller of a payment intangible limits the
10    account debtor's duty to pay a person other than the
11    seller and the limitation is effective under law other
12    than this Article; or
13        (3) at the option of an account debtor, if the
14    notification notifies the account debtor to make less than
15    the full amount of any installment or other periodic
16    payment to the assignee, even if:
17            (A) only a portion of the account, chattel paper,
18        or payment intangible has been assigned to that
19        assignee;
20            (B) a portion has been assigned to another
21        assignee; or
22            (C) the account debtor knows that the assignment
23        to that assignee is limited.
24    (c) Proof of assignment. Subject to subsections subsection
25(h) and (l), if requested by the account debtor, an assignee
26shall seasonably furnish reasonable proof that the assignment

 

 

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1has been made. Unless the assignee complies, the account
2debtor may discharge its obligation by paying the assignor,
3even if the account debtor has received a notification under
4subsection (a).
5    (d) Term restricting assignment generally ineffective. In
6this subsection, "promissory note" includes a negotiable
7instrument that evidences chattel paper. Except as otherwise
8provided in subsection (e) and Sections 2A-303 and 9-407, and
9subject to subsection (h), a term in an agreement between an
10account debtor and an assignor or in a promissory note is
11ineffective to the extent that it:
12        (1) prohibits, restricts, or requires the consent of
13    the account debtor or person obligated on the promissory
14    note to the assignment or transfer of, or the creation,
15    attachment, perfection, or enforcement of a security
16    interest in, the account, chattel paper, payment
17    intangible, or promissory note; or
18        (2) provides that the assignment or transfer or the
19    creation, attachment, perfection, or enforcement of the
20    security interest may give rise to a default, breach,
21    right of recoupment, claim, defense, termination, right of
22    termination, or remedy under the account, chattel paper,
23    payment intangible, or promissory note.
24    (e) Inapplicability of subsection (d) to certain sales.
25Subsection (d) does not apply to the sale of a payment
26intangible or promissory note, other than a sale pursuant to a

 

 

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1disposition under Section 9-610 or an acceptance of collateral
2under Section 9-620.
3    (f) Legal restrictions on assignment generally
4ineffective. Except as otherwise provided in Sections 2A-303
5and 9-407 and subject to subsections (h) and (i), a rule of
6law, statute, or regulation that prohibits, restricts, or
7requires the consent of a government, governmental body or
8official, or account debtor to the assignment or transfer of,
9or creation of a security interest in, an account or chattel
10paper is ineffective to the extent that the rule of law,
11statute, or regulation:
12        (1) prohibits, restricts, or requires the consent of
13    the government, governmental body or official, or account
14    debtor to the assignment or transfer of, or the creation,
15    attachment, perfection, or enforcement of a security
16    interest in the account or chattel paper; or
17        (2) provides that the assignment or transfer or the
18    creation, attachment, perfection, or enforcement of the
19    security interest may give rise to a default, breach,
20    right of recoupment, claim, defense, termination, right of
21    termination, or remedy under the account or chattel paper.
22    (g) Subsection (b)(3) not waivable. Subject to subsections
23subsection (h) and (l), an account debtor may not waive or vary
24its option under subsection (b)(3).
25    (h) Rule for individual under other law. This Section is
26subject to law other than this Article which establishes a

 

 

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1different rule for an account debtor who is an individual and
2who incurred the obligation primarily for personal, family, or
3household purposes.
4    (i) Inapplicability to health-care-insurance receivable.
5This Section does not apply to an assignment of a
6health-care-insurance receivable.
7    (j) (Reserved).
8    (k) (Reserved).
9    (l) Inapplicability of certain subsections. Subsections
10(a), (b), (c), and (g) do not apply to a controllable account
11or controllable payment intangible.
12(Source: P.A. 97-1034, eff. 7-1-13.)
 
13    (810 ILCS 5/9-408)  (from Ch. 26, par. 9-408)
14    Sec. 9-408. Restrictions on assignment of promissory
15notes, health-care-insurance receivables, and certain general
16intangibles ineffective.
17    (a) Term restricting assignment generally ineffective.
18Except as otherwise provided in subsection (b), a term in a
19promissory note or in an agreement between an account debtor
20and a debtor which relates to a health-care-insurance
21receivable or a general intangible, including a contract,
22permit, license, or franchise, and which term prohibits,
23restricts, or requires the consent of the person obligated on
24the promissory note or the account debtor to, the assignment
25or transfer of, or creation, attachment, or perfection of a

 

 

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1security interest in, the promissory note,
2health-care-insurance receivable, or general intangible, is
3ineffective to the extent that the term:
4        (1) would impair the creation, attachment, or
5    perfection of a security interest; or
6        (2) provides that the assignment or transfer or the
7    creation, attachment, or perfection of the security
8    interest may give rise to a default, breach, right of
9    recoupment, claim, defense, termination, right of
10    termination, or remedy under the promissory note,
11    health-care-insurance receivable, or general intangible.
12    (b) Applicability of subsection (a) to sales of certain
13rights to payment. Subsection (a) applies to a security
14interest in a payment intangible or promissory note only if
15the security interest arises out of a sale of the payment
16intangible or promissory note, other than a sale pursuant to a
17disposition under Section 9-610 or an acceptance of collateral
18under Section 9-620.
19    (c) Legal restrictions on assignment generally
20ineffective. A rule of law, statute, or regulation that
21prohibits, restricts, or requires the consent of a government,
22governmental body or official, person obligated on a
23promissory note, or account debtor to the assignment or
24transfer of, or creation of a security interest in, a
25promissory note, health-care-insurance receivable, or general
26intangible, including a contract, permit, license, or

 

 

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1franchise between an account debtor and a debtor, is
2ineffective to the extent that the rule of law, statute, or
3regulation:
4        (1) would impair the creation, attachment, or
5    perfection of a security interest; or
6        (2) provides that the assignment or transfer or the
7    creation, attachment, or perfection of the security
8    interest may give rise to a default, breach, right of
9    recoupment, claim, defense, termination, right of
10    termination, or remedy under the promissory note,
11    health-care-insurance receivable, or general intangible.
12    (d) Limitation on ineffectiveness under subsections (a)
13and (c). To the extent that a term in a promissory note or in
14an agreement between an account debtor and a debtor which
15relates to a health-care-insurance receivable or general
16intangible or a rule of law, statute, or regulation described
17in subsection (c) would be effective under law other than this
18Article but is ineffective under subsection (a) or (c), the
19creation, attachment, or perfection of a security interest in
20the promissory note, health-care-insurance receivable, or
21general intangible:
22        (1) is not enforceable against the person obligated on
23    the promissory note or the account debtor;
24        (2) does not impose a duty or obligation on the person
25    obligated on the promissory note or the account debtor;
26        (3) does not require the person obligated on the

 

 

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1    promissory note or the account debtor to recognize the
2    security interest, pay or render performance to the
3    secured party, or accept payment or performance from the
4    secured party;
5        (4) does not entitle the secured party to use or
6    assign the debtor's rights under the promissory note,
7    health-care-insurance receivable, or general intangible,
8    including any related information or materials furnished
9    to the debtor in the transaction giving rise to the
10    promissory note, health-care-insurance receivable, or
11    general intangible;
12        (5) does not entitle the secured party to use, assign,
13    possess, or have access to any trade secrets or
14    confidential information of the person obligated on the
15    promissory note or the account debtor; and
16        (6) does not entitle the secured party to enforce the
17    security interest in the promissory note,
18    health-care-insurance receivable, or general intangible.
19    (e) "Promissory note". In this Section, "promissory note"
20includes a negotiable instrument that evidences chattel paper.
21(Source: P.A. 97-1034, eff. 7-1-13.)
 
22    (810 ILCS 5/9-509)
23    Sec. 9-509. Persons entitled to file a record.
24    (a) Person entitled to file record. A person may file an
25initial financing statement, amendment that adds collateral

 

 

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1covered by a financing statement, or amendment that adds a
2debtor to a financing statement only if:
3        (1) the debtor authorizes the filing in a signed an
4    authenticated record or pursuant to subsection (b) or (c);
5    or
6        (2) the person holds an agricultural lien that has
7    become effective at the time of filing and the financing
8    statement covers only collateral in which the person holds
9    an agricultural lien.
10    (b) Security agreement as authorization. By signing
11authenticating or becoming bound as debtor by a security
12agreement, a debtor or new debtor authorizes the filing of an
13initial financing statement, and an amendment, covering:
14        (1) the collateral described in the security
15    agreement; and
16        (2) property that becomes collateral under Section
17    9-315(a)(2), whether or not the security agreement
18    expressly covers proceeds.
19    (c) Acquisition of collateral as authorization. By
20acquiring collateral in which a security interest or
21agricultural lien continues under Section 9-315(a)(1), a
22debtor authorizes the filing of an initial financing
23statement, and an amendment, covering the collateral and
24property that becomes collateral under Section 9-315(a)(2).
25    (d) Person entitled to file certain amendments. A person
26may file an amendment other than an amendment that adds

 

 

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1collateral covered by a financing statement or an amendment
2that adds a debtor to a financing statement only if:
3        (1) the secured party of record authorizes the filing;
4    or
5        (2) the amendment is a termination statement for a
6    financing statement as to which the secured party of
7    record has failed to file or send a termination statement
8    as required by Section 9-513(a) or (c), the debtor
9    authorizes the filing, and the termination statement
10    indicates that the debtor authorized it to be filed.
11    (e) Multiple secured parties of record. If there is more
12than one secured party of record for a financing statement,
13each secured party of record may authorize the filing of an
14amendment under subsection (d).
15(Source: P.A. 91-893, eff. 7-1-01.)
 
16    (810 ILCS 5/9-513)
17    Sec. 9-513. Termination statement.
18    (a) Consumer goods. A secured party shall cause the
19secured party of record for a financing statement to file a
20termination statement for the financing statement if the
21financing statement covers consumer goods and:
22        (1) there is no obligation secured by the collateral
23    covered by the financing statement and no commitment to
24    make an advance, incur an obligation, or otherwise give
25    value; or

 

 

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1        (2) the debtor did not authorize the filing of the
2    initial financing statement.
3    (b) Time for compliance with subsection (a). To comply
4with subsection (a), a secured party shall cause the secured
5party of record to file the termination statement:
6        (1) within one month after there is no obligation
7    secured by the collateral covered by the financing
8    statement and no commitment to make an advance, incur an
9    obligation, or otherwise give value; or
10        (2) if earlier, within 20 days after the secured party
11    receives a signed an authenticated demand from a debtor.
12    (c) Other collateral. In cases not governed by subsection
13(a), within 20 days after a secured party receives a signed an
14authenticated demand from a debtor, the secured party shall
15cause the secured party of record for a financing statement to
16send to the debtor a termination statement for the financing
17statement or file the termination statement in the filing
18office if:
19        (1) except in the case of a financing statement
20    covering accounts or chattel paper that has been sold or
21    goods that are the subject of a consignment, there is no
22    obligation secured by the collateral covered by the
23    financing statement and no commitment to make an advance,
24    incur an obligation, or otherwise give value;
25        (2) the financing statement covers accounts or chattel
26    paper that has been sold but as to which the account debtor

 

 

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1    or other person obligated has discharged its obligation;
2        (3) the financing statement covers goods that were the
3    subject of a consignment to the debtor but are not in the
4    debtor's possession; or
5        (4) the debtor did not authorize the filing of the
6    initial financing statement.
7    (d) Effect of filing termination statement. Except as
8otherwise provided in Section 9-510, upon the filing of a
9termination statement with the filing office, the financing
10statement to which the termination statement relates ceases to
11be effective. Except as otherwise provided in Section 9-510,
12for purposes of Sections 9-519(g), 9-522(a), and 9-523(c) the
13filing with the filing office of a termination statement
14relating to a financing statement that indicates that the
15debtor is a transmitting utility also causes the effectiveness
16of the financing statement to lapse.
17(Source: P.A. 91-893, eff. 7-1-01.)
 
18    (810 ILCS 5/9-601)
19    Sec. 9-601. Rights after default; judicial enforcement;
20consignor or buyer of accounts, chattel paper, payment
21intangibles, or promissory notes.
22    (a) Rights of secured party after default. After default,
23a secured party has the rights provided in this Part and,
24except as otherwise provided in Section 9-602, those provided
25by agreement of the parties. A secured party:

 

 

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1        (1) may reduce a claim to judgment, foreclose, or
2    otherwise enforce the claim, security interest, or
3    agricultural lien by any available judicial procedure; and
4        (2) if the collateral is documents, may proceed either
5    as to the documents or as to the goods they cover.
6    (b) Rights and duties of secured party in possession or
7control. A secured party in possession of collateral or
8control of collateral under Section 7-106, 9-104, 9-105,
99-105A, 9-106, or 9-107, or 9-107A has the rights and duties
10provided in Section 9-207.
11    (c) Rights cumulative; simultaneous exercise. The rights
12under subsections (a) and (b) are cumulative and may be
13exercised simultaneously.
14    (d) Rights of debtor and obligor. Except as otherwise
15provided in subsection (g) and Section 9-605, after default, a
16debtor and an obligor have the rights provided in this Part and
17by agreement of the parties.
18    (e) Lien of levy after judgment. If a secured party has
19reduced its claim to judgment, the lien of any levy that may be
20made upon the collateral by virtue of a judgment relates back
21to the earliest of:
22        (1) the date of perfection of the security interest or
23    agricultural lien in the collateral;
24        (2) the date of filing a financing statement covering
25    the collateral; or
26        (3) any date specified in a statute under which the

 

 

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1    agricultural lien was created.
2    (f) Execution sale. A sale pursuant to a judgment is a
3foreclosure of the security interest or agricultural lien by
4judicial procedure within the meaning of this Section. A
5secured party may purchase at the sale and thereafter hold the
6collateral free of any other requirements of this Article.
7    (g) Consignor or buyer of certain rights to payment.
8Except as otherwise provided in Section 9-607(c), this Part
9imposes no duties upon a secured party that is a consignor or
10is a buyer of accounts, chattel paper, payment intangibles, or
11promissory notes.
12(Source: P.A. 95-895, eff. 1-1-09.)
 
13    (810 ILCS 5/9-605)
14    Sec. 9-605. Unknown debtor or secondary obligor.
15    (a) In general: No duty owed by secured party. Except as
16provided in subsection (b), a A secured party does not owe a
17duty based on its status as secured party:
18        (1) to a person that is a debtor or obligor, unless the
19    secured party knows:
20            (A) that the person is a debtor or obligor;
21            (B) the identity of the person; and
22            (C) how to communicate with the person; or
23        (2) to a secured party or lienholder that has filed a
24    financing statement against a person, unless the secured
25    party knows:

 

 

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1            (A) that the person is a debtor; and
2            (B) the identity of the person.
3    (b) Exception: Secured party owes duty to debtor or
4obligor. A secured party owes a duty based on its status as a
5secured party to a person if, at the time the secured party
6obtains control of collateral that is a controllable account,
7controllable electronic record, or controllable payment
8intangible or at the time the security interest attaches to
9the collateral, whichever is later:
10        (1) the person is a debtor or obligor; and
11        (2) the secured party knows that the information in
12    subsection (a)(1)(A), (B), or (C) relating to the person
13    is not provided by the collateral, a record attached to or
14    logically associated with the collateral, or the system in
15    which the collateral is recorded.
16(Source: P.A. 91-893, eff. 7-1-01.)
 
17    (810 ILCS 5/9-608)
18    Sec. 9-608. Application of proceeds of collection or
19enforcement; liability for deficiency and right to surplus.
20    (a) Application of proceeds, surplus, and deficiency if
21obligation secured. If a security interest or agricultural
22lien secures payment or performance of an obligation, the
23following rules apply:
24        (1) A secured party shall apply or pay over for
25    application the cash proceeds of collection or enforcement

 

 

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1    under Section 9-607 in the following order to:
2            (A) the reasonable expenses of collection and
3        enforcement and, to the extent provided for by
4        agreement and not prohibited by law, reasonable
5        attorney's fees and legal expenses incurred by the
6        secured party;
7            (B) the satisfaction of obligations secured by the
8        security interest or agricultural lien under which the
9        collection or enforcement is made; and
10            (C) the satisfaction of obligations secured by any
11        subordinate security interest in or other lien on the
12        collateral subject to the security interest or
13        agricultural lien under which the collection or
14        enforcement is made if the secured party receives a
15        signed an authenticated demand for proceeds before
16        distribution of the proceeds is completed.
17        (2) If requested by a secured party, a holder of a
18    subordinate security interest or other lien shall furnish
19    reasonable proof of the interest or lien within a
20    reasonable time. Unless the holder complies, the secured
21    party need not comply with the holder's demand under
22    paragraph (1)(C).
23        (3) A secured party need not apply or pay over for
24    application noncash proceeds of collection and enforcement
25    under Section 9-607 unless the failure to do so would be
26    commercially unreasonable. A secured party that applies or

 

 

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1    pays over for application noncash proceeds shall do so in
2    a commercially reasonable manner.
3        (4) A secured party shall account to and pay a debtor
4    for any surplus, and the obligor is liable for any
5    deficiency.
6    (b) No surplus or deficiency in sales of certain rights to
7payment. If the underlying transaction is a sale of accounts,
8chattel paper, payment intangibles, or promissory notes, the
9debtor is not entitled to any surplus, and the obligor is not
10liable for any deficiency.
11(Source: P.A. 91-893, eff. 7-1-01.)
 
12    (810 ILCS 5/9-611)
13    Sec. 9-611. Notification before disposition of collateral.
14    (a) "Notification date." In this Section, "notification
15date" means the earlier of the date on which:
16        (1) a secured party sends to the debtor and any
17    secondary obligor a signed an authenticated notification
18    of disposition; or
19        (2) the debtor and any secondary obligor waive the
20    right to notification.
21    (b) Notification of disposition required. Except as
22otherwise provided in subsection (d), a secured party that
23disposes of collateral under Section 9-610 shall send to the
24persons specified in subsection (c) a reasonable signed
25authenticated notification of disposition.

 

 

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1    (c) Persons to be notified. To comply with subsection (b),
2the secured party shall send a signed an authenticated
3notification of disposition to:
4        (1) the debtor;
5        (2) any secondary obligor; and
6        (3) if the collateral is other than consumer goods:
7            (A) any other person from which the secured party
8        has received, before the notification date, a signed
9        an authenticated notification of a claim of an
10        interest in the collateral;
11            (B) any other secured party or lienholder that, 10
12        days before the notification date, held a security
13        interest in or other lien on the collateral perfected
14        by the filing of a financing statement that:
15                (i) identified the collateral;
16                (ii) was indexed under the debtor's name as of
17            that date; and
18                (iii) was filed in the office in which to file
19            a financing statement against the debtor covering
20            the collateral as of that date; and
21            (C) any other secured party that, 10 days before
22        the notification date, held a security interest in the
23        collateral perfected by compliance with a statute,
24        regulation, or treaty described in Section 9-311(a).
25    (d) Subsection (b) inapplicable: perishable collateral;
26recognized market. Subsection (b) does not apply if the

 

 

SB3696 Enrolled- 190 -LRB103 37687 SPS 67814 b

1collateral is perishable or threatens to decline speedily in
2value or is of a type customarily sold on a recognized market.
3    (e) Compliance with subsection (c)(3)(B). A secured party
4complies with the requirement for notification prescribed by
5subsection (c)(3)(B) if:
6        (1) not later than 20 days or earlier than 30 days
7    before the notification date, the secured party requests,
8    in a commercially reasonable manner, information
9    concerning financing statements indexed under the debtor's
10    name in the office indicated in subsection (c)(3)(B); and
11        (2) before the notification date, the secured party:
12            (A) did not receive a response to the request for
13        information; or
14            (B) received a response to the request for
15        information and sent a signed an authenticated
16        notification of disposition to each secured party or
17        other lienholder named in that response whose
18        financing statement covered the collateral.
19(Source: P.A. 91-893, eff. 7-1-01.)
 
20    (810 ILCS 5/9-613)
21    Sec. 9-613. Contents and form of notification before
22disposition of collateral: general.
23    (a) Contents and form of notification. Except in a
24consumer-goods transaction, the following rules apply:
25        (1) The contents of a notification of disposition are

 

 

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1    sufficient if the notification:
2            (A) describes the debtor and the secured party;
3            (B) describes the collateral that is the subject
4        of the intended disposition;
5            (C) states the method of intended disposition;
6            (D) states that the debtor is entitled to an
7        accounting of the unpaid indebtedness and states the
8        charge, if any, for an accounting; and
9            (E) states the time and place of a public
10        disposition or the time after which any other
11        disposition is to be made.
12        (2) Whether the contents of a notification that lacks
13    any of the information specified in paragraph (1) are
14    nevertheless sufficient is a question of fact.
15        (3) The contents of a notification providing
16    substantially the information specified in paragraph (1)
17    are sufficient, even if the notification is accompanied by
18    or combined other notification or includes:
19            (A) information not specified by that paragraph;
20        or
21            (B) minor errors that are not seriously
22        misleading.
23        (4) A particular phrasing of the notification is not
24    required.
25        (5) The following form of notification and the form
26    appearing in Section 9-614(a)(4) 9-614(4), when completed

 

 

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1    in accordance with the instructions in subsection (b) and
2    Section 9-614(b), each provides sufficient information:
3
NOTIFICATION OF DISPOSITION OF COLLATERAL
4To: (Name of debtor, obligor, or other person to which the
5notification is sent)
6From: (Name, address, and telephone number of secured party)
7    {1} Name of any debtor that is not an addressee: (Name of
8each debtor)
9    {2} We will sell (describe collateral) (to the highest
10qualified bidder) at public sale. A sale could include a lease
11or license. The sale will be held as follows:
12    (Date)
13    (Time)
14    (Place)
15    {3} We will sell (describe collateral) at private sale
16sometime after (date). A sale could include a lease or
17license.
18    {4} You are entitled to an accounting of the unpaid
19indebtedness secured by the property that we intend to sell
20or, as applicable, lease or license.
21    {5} If you request an accounting you must pay a charge of $
22(amount).
23    {6} You may request an accounting by calling us at
24(telephone number).
25
[End of Form]
26    (b) Instructions for form of notification. The following

 

 

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1instructions apply to the form of notification in subsection
2(a)(5):
3        (1) The instructions in this subsection refer to the
4    numbers in braces before items in the form of notification
5    in subsection (a)(5). Do not include the numbers or braces
6    in the notification. The numbers and braces are used only
7    for the purpose of these instructions.
8        (2) Include and complete item {1} only if there is a
9    debtor that is not an addressee of the notification and
10    list the name or names.
11        (3) Include and complete either item {2}, if the
12    notification relates to a public disposition of the
13    collateral, or item {3}, if the notification relates to a
14    private disposition of the collateral. If item {2} is
15    included, include the words "to the highest qualified
16    bidder" only if applicable.
17        (4) Include and complete items {4} and {6}.
18        (5) Include and complete item {5} only if the sender
19    will charge the recipient for an accounting.
20
NOTIFICATION OF DISPOSITION OF COLLATERAL
21        To: ..................................... (Name of
22    debtor, obligor, or other person to which the notification
23    is sent)
24        From: ................................... (Name,
25    address, and telephone number of secured party)
26        Name of Debtor(s): ..................... (Include only

 

 

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1    if debtor(s) are not an addressee)
 
2        For a public disposition:
3        We will sell or lease or license, as applicable, the
4    ............................ (describe collateral) to the
5    highest qualified bidder in public as follows:
6        Day and Date: ...................................
7        Time: ...........................................
8        Place: ..........................................
 
9        For a private disposition:
10        We will sell (or lease or license, as applicable) the
11    ........................... (describe collateral)
12    privately sometime after ................ (day and date).
13        You are entitled to an accounting of the unpaid
14    indebtedness secured by the property that we intend to
15    sell or lease or license, as applicable for a charge of
16    $................. You may request an accounting by
17    calling us at .................. (telephone number).
18(Source: P.A. 91-893, eff. 7-1-01.)
 
19    (810 ILCS 5/9-614)
20    Sec. 9-614. Contents and form of notification before
21disposition of collateral: consumer-goods transaction.
22    (a) Contents and form of notification. In a consumer-goods
23transaction, the following rules apply:

 

 

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1        (1) A notification of disposition must provide the
2    following information:
3            (A) the information specified in Section
4        9-613(a)(1) 9-613(1);
5            (B) a description of any liability for a
6        deficiency of the person to which the notification is
7        sent;
8            (C) a telephone number from which the amount that
9        must be paid to the secured party to redeem the
10        collateral under Section 9-623 is available; and
11            (D) a telephone number or mailing address from
12        which additional information concerning the
13        disposition and the obligation secured is available.
14        (2) A particular phrasing of the notification is not
15    required.
16        (3) The contents of a notification providing
17    substantially the information specified in paragraph (1)
18    are sufficient, even if the notification:
19            (A) is accompanied by or combined with other
20        notifications;
21            (B) includes information not specified by that
22        paragraph; or
23            (C) includes minor errors that are not seriously
24        misleading.
25        (4) The following form of notification, when completed
26    in accordance with the instructions in subsection (b),

 

 

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1    provides sufficient information:
2(Name and address of secured party)
3(Date)
4
NOTICE OF OUR PLAN TO SELL PROPERTY
5(Name and address of any obligor who is also a debtor)
6Subject: (Identify transaction)
7    We have your (describe collateral), because you broke
8promises in our agreement.
9    {1} We will sell (describe collateral) at public sale. A
10sale could include a lease or license. The sale will be held as
11follows:
12    (Date)
13    (Time)
14    (Place)
15    You may attend the sale and bring bidders if you want.
16    {2} We will sell (describe collateral) at private sale
17sometime after (date). A sale could include a lease or
18license.
19    {3} The money that we get from the sale, after paying our
20costs, will reduce the amount you owe. If we get less money
21than you owe, you (will or will not, as applicable) still owe
22us the difference. If we get more money than you owe, you will
23get the extra money, unless we must pay it to someone else.
24    {4} You can get the property back at any time before we
25sell it by paying us the full amount you owe, not just the past
26due payments, including our expenses. To learn the exact

 

 

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1amount you must pay, call us at (telephone number).
2    {5} If you want us to explain to you in (writing) (writing
3or in (description of electronic record)) (description of
4electronic record) how we have figured the amount that you owe
5us, {6} call us at (telephone number) (or) (write us at
6(secured party's address)) (or contact us by (description of
7electronic communication method)) {7} and request (a written
8explanation) (a written explanation or an explanation in
9(description of electronic record)) (an explanation in
10(description of electronic record)).
11    {8} We will charge you $ (amount) for the explanation if we
12sent you another written explanation of the amount you owe us
13within the last six months.
14    {9} If you need more information about the sale (call us at
15(telephone number)) (or) (write us at (secured party's
16address)) (or contact us by (description of electronic
17communication method)).
18    {10} We are sending this notice to the following other
19people who have an interest in (describe collateral) or who
20owe money under your agreement:
21(Names of all other debtors and obligors, if any)
22
[End of Form]
23    (b) Instructions for form of notification. The following
24instructions apply to the form of notification in subsection
25(a)(4):
26        (1) The instructions in this subsection refer to the

 

 

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1    numbers in braces before items in the form of notification
2    in subsection (a)(4). Do not include the numbers or braces
3    in the notification. The numbers and braces are used only
4    for the purpose of these instructions.
5        (2) Include and complete either item {1}, if the
6    notification relates to a public disposition of the
7    collateral, or item {2}, if the notification relates to a
8    private disposition of the collateral.
9        (3) Include and complete items {3}, {4}, {5}, {6}, and
10    {7}.
11        (4) In item {5}, include and complete any one of the
12    three alternative methods for the explanation—writing,
13    writing or electronic record, or electronic record.
14        (5) In item {6}, include the telephone number. In
15    addition, the sender may include and complete either or
16    both of the two additional alternative methods of
17    communication—writing or electronic communication—for the
18    recipient of the notification to communicate with the
19    sender. Neither of the two additional methods of
20    communication is required to be included.
21        (6) In item {7}, include and complete the method or
22    methods for the explanation—writing, writing or electronic
23    record, or electronic record—included in item {5}.
24        (7) Include and complete item {8} only if a written
25    explanation is included in item {5} as a method for
26    communicating the explanation and the sender will charge

 

 

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1    the recipient for another written explanation.
2        (8) In item {9}, include either the telephone number
3    or the address or both the telephone number and the
4    address. In addition, the sender may include and complete
5    the additional method of communication—electronic
6    communication—for the recipient of the notification to
7    communicate with the sender. The additional method of
8    electronic communication is not required to be included.
9        (9) If item {10} does not apply, insert "None" after
10    "agreement:".
11    ............. (Name and address of secured party)
12    ............. (Date)
13
NOTICE OF OUR PLAN TO SELL PROPERTY
14    ......................................................
15    (Name and address of any obligor who is also a debtor)
16    Subject: ..................................
17    (Identification of Transaction)
18        We have your ..................... (describe
19    collateral), because you broke promises in our agreement.
 
20        For a public disposition:
21        We will sell ....................... (describe
22    collateral) at public sale. A sale could include a lease
23    or license. The sale will be held as follows:
24    Date:  ................................
25    Time:  ................................

 

 

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1    Place: ................................
2        You may attend the sale and bring bidders if you want.
 
3        For a private disposition:
4        We will sell ........................... (describe
5    collateral) at private sale sometime after
6    .................... (date). A sale could include a lease
7    or license.
8        The money that we get from the sale (after paying our
9    costs) will reduce the amount you owe. If we get less money
10    than you owe, you ............ (will or will not, as
11    applicable) still owe us the difference. If we get more
12    money than you owe, you will get the extra money, unless we
13    must pay it to someone else.
14        You can get the property back at any time before we
15    sell it by paying us the full amount you owe (not just the
16    past due payments), including our expenses. To learn the
17    exact amount you must pay, call us at ................
18    (telephone number).
19        If you want us to explain to you in writing how we have
20    figured the amount that you owe us, you may call us at
21    .................. (telephone number) or write us at
22    .................................... (secured party's
23    address) and request a written explanation. We will charge
24    you $ ........... for the explanation if we sent you
25    another written explanation of the amount you owe us

 

 

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1    within the last six months.
2        If you need more information about the sale call us at
3    .................. (telephone number) or write us at
4    ......................... (secured party's address).
5        We are sending this notice to the following other
6    people who have an interest ......................
7    (describe collateral) or who owe money under your
8    agreement:
9    .................................................
10    (Names of all other debtors and obligors, if any)
11        (5) A notification in the form of paragraph (4) is
12    sufficient, even if it includes errors in information not
13    required by paragraph (1).
14        (6) If a notification under this Section is not in the
15    form of paragraph (4), law other than this Article
16    determines the effect of including information not
17    required by paragraph (1).
18(Source: P.A. 91-893, eff. 7-1-01.)
 
19    (810 ILCS 5/9-615)
20    Sec. 9-615. Application of proceeds of disposition;
21liability for deficiency and right to surplus.
22    (a) Application of proceeds. A secured party shall apply
23or pay over for application the cash proceeds of disposition
24in the following order to:
25        (1) the reasonable expenses of retaking, holding,

 

 

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1    preparing for disposition, processing, and disposing, and,
2    to the extent provided for by agreement and not prohibited
3    by law, reasonable attorney's fees and legal expenses
4    incurred by the secured party;
5        (2) the satisfaction of obligations secured by the
6    security interest or agricultural lien under which the
7    disposition is made;
8        (3) the satisfaction of obligations secured by any
9    subordinate security interest in or other subordinate lien
10    on the collateral if:
11            (A) the secured party receives from the holder of
12        the subordinate security interest or other lien a
13        signed an authenticated demand for proceeds before
14        distribution of the proceeds is completed; and
15            (B) in a case in which a consignor has an interest
16        in the collateral, the subordinate security interest
17        or other lien is senior to the interest of the
18        consignor; and
19        (4) a secured party that is a consignor of the
20    collateral if the secured party receives from the
21    consignor a signed an authenticated demand for proceeds
22    before distribution of the proceeds is completed.
23    (b) Proof of subordinate interest. If requested by a
24secured party, a holder of a subordinate security interest or
25other lien shall furnish reasonable proof of the interest or
26lien within a reasonable time. Unless the holder does so, the

 

 

SB3696 Enrolled- 203 -LRB103 37687 SPS 67814 b

1secured party need not comply with the holder's demand under
2subsection (a)(3).
3    (c) Application of noncash proceeds. A secured party need
4not apply or pay over for application noncash proceeds of
5disposition under this Section unless the failure to do so
6would be commercially unreasonable. A secured party that
7applies or pays over for application noncash proceeds shall do
8so in a commercially reasonable manner.
9    (d) Surplus or deficiency if obligation secured. If the
10security interest under which a disposition is made secures
11payment or performance of an obligation, after making the
12payments and applications required by subsection (a) and
13permitted by subsection (c):
14        (1) unless subsection (a)(4) requires the secured
15    party to apply or pay over cash proceeds to a consignor,
16    the secured party shall account to and pay a debtor for any
17    surplus; and
18        (2) the obligor is liable for any deficiency.
19    (e) No surplus or deficiency in sales of certain rights to
20payment. If the underlying transaction is a sale of accounts,
21chattel paper, payment intangibles, or promissory notes:
22        (1) the debtor is not entitled to any surplus; and
23        (2) the obligor is not liable for any deficiency.
24    (f) Calculation of surplus or deficiency in disposition to
25person related to secured party. The surplus or deficiency
26following a disposition is calculated based on the amount of

 

 

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1proceeds that would have been realized in a disposition
2complying with this Part and described in subsection (f)(2) of
3this Section to a transferee other than the secured party, a
4person related to the secured party, or a secondary obligor
5if:
6        (1) the transferee in the disposition is the secured
7    party, a person related to the secured party, or a
8    secondary obligor; and
9        (2) the amount of proceeds of the disposition is
10    significantly below the range of proceeds that would have
11    been received from a complying disposition by a forced
12    sale without reserve to a willing buyer other than the
13    secured party, a person related to the secured party, or a
14    secondary obligor.
15    (g) Cash proceeds received by junior secured party. A
16secured party that receives cash proceeds of a disposition in
17good faith and without knowledge that the receipt violates the
18rights of the holder of a security interest or other lien that
19is not subordinate to the security interest or agricultural
20lien under which the disposition is made:
21        (1) takes the cash proceeds free of the security
22    interest or other lien;
23        (2) is not obligated to apply the proceeds of the
24    disposition to the satisfaction of obligations secured by
25    the security interest or other lien; and
26        (3) is not obligated to account to or pay the holder of

 

 

SB3696 Enrolled- 205 -LRB103 37687 SPS 67814 b

1    the security interest or other lien for any surplus.
2(Source: P.A. 91-893, eff. 7-1-01.)
 
3    (810 ILCS 5/9-616)
4    Sec. 9-616. Explanation of calculation of surplus or
5deficiency.
6    (a) Definitions. In this Section:
7        (1) "Explanation" means a record writing that:
8            (A) states whether a surplus or deficiency is owed
9        and the amount of the surplus, if applicable;
10            (B) states, if applicable, that future debits,
11        credits, charges, including additional credit service
12        charges or interest, rebates, and expenses may affect
13        the amount of the surplus or deficiency;
14            (C) provides a telephone number or mailing address
15        from which the debtor or consumer obligor may obtain
16        additional information concerning the transaction and
17        from which such person may request the amount of the
18        deficiency and further information regarding how the
19        secured party calculated the surplus or deficiency;
20        and
21            (D) at the sender's option, the information set
22        forth in subsection (c).
23        (2) "Request" means a record:
24            (A) signed authenticated by a debtor or consumer
25        obligor;

 

 

SB3696 Enrolled- 206 -LRB103 37687 SPS 67814 b

1            (B) requesting that the recipient provide
2        information of how it calculated the surplus or
3        deficiency; and
4            (C) sent after disposition of the collateral under
5        Section 9-610.
6    (b) Explanation of calculation. In a consumer-goods
7transaction in which the debtor is entitled to a surplus or a
8consumer obligor is liable for a deficiency under Section
99-615, the secured party shall:
10        (1) send an explanation to the debtor or consumer
11    obligor, as applicable, after the disposition and:
12            (A) before or when the secured party accounts to
13        the debtor and pays any surplus or first makes written
14        demand in a record on the consumer obligor after the
15        disposition for payment of the deficiency, other than
16        in instances in which such demand is made by a
17        third-party debt collector covered by the Fair Debt
18        Collection Practices Act; and
19            (B) within 14 days after receipt of a request made
20        by the debtor or consumer obligor within one year
21        after the secured party has given an explanation under
22        this Section or notice to such debtor or consumer
23        obligor under Section 9-614 of this Article; or
24        (2) in the case of a consumer obligor who is liable for
25    a deficiency, within 14 days after receipt of a request,
26    send to the consumer obligor a record waiving the secured

 

 

SB3696 Enrolled- 207 -LRB103 37687 SPS 67814 b

1    party's right to a deficiency.
2    (c) Required information for response to request. To
3comply with subsection (a)(1)(B) a request, an explanation the
4secured party must provide a response in writing which
5includes the following information in the following order:
6        (1) the aggregate amount of obligations secured by the
7    security interest under which the disposition was made,
8    and, if the amount reflects a rebate of unearned interest
9    or credit service charge, an indication of that fact,
10    calculated as of a specified date:
11            (A) if the secured party takes or receives
12        possession of the collateral after default, not more
13        than 35 days before the secured party takes or
14        receives possession; or
15            (B) if the secured party takes or receives
16        possession of the collateral before default or does
17        not take possession of the collateral, not more than
18        35 days before the disposition;
19        (2) the amount of proceeds of the disposition;
20        (3) the aggregate amount of the obligations after
21    deducting the amount of proceeds;
22        (4) the amount, in the aggregate or by type, and types
23    of expenses, including expenses of retaking, holding,
24    preparing for disposition, processing, and disposing of
25    the collateral, and attorney's fees secured by the
26    collateral which are known to the secured party and relate

 

 

SB3696 Enrolled- 208 -LRB103 37687 SPS 67814 b

1    to the current disposition;
2        (5) the amount, in the aggregate or by type, and types
3    of credits, including rebates of interest or credit
4    service charges, to which the obligor is known to be
5    entitled and which are not reflected in the amount in
6    paragraph (1); and
7        (6) the amount of the surplus or deficiency.
8    (d) Substantial compliance. A particular phrasing of the
9explanation or response to a request is not required. An
10explanation or a response to a request complying substantially
11with the requirements of this Section is sufficient even if it
12is:
13        (1) accompanied by or combined with other
14    notifications;
15        (2) includes information not specified by this
16    Section;
17        (3) includes minor errors that are not seriously
18    misleading; or
19        (4) includes errors in information not required by
20    this Section.
21    (e) Charges for responses. A debtor or consumer obligor is
22entitled without charge to one response to a request under
23this Section during any six-month period in which the secured
24party did not send to the debtor or consumer obligor an
25explanation pursuant to subsection (b)(1). The secured party
26may require payment of a charge not exceeding $25 for each

 

 

SB3696 Enrolled- 209 -LRB103 37687 SPS 67814 b

1additional response.
2(Source: P.A. 91-893, eff. 7-1-01.)
 
3    (810 ILCS 5/9-619)
4    Sec. 9-619. Transfer of record or legal title.
5    (a) "Transfer statement." In this Section, "transfer
6statement" means a record signed authenticated by a secured
7party stating:
8        (1) that the debtor has defaulted in connection with
9    an obligation secured by specified collateral;
10        (2) that the secured party has exercised its
11    post-default remedies with respect to the collateral;
12        (3) that, by reason of the exercise, a transferee has
13    acquired the rights of the debtor in the collateral; and
14        (4) the name and mailing address of the secured party,
15    debtor, and transferee.
16    (b) Effect of transfer statement. A transfer statement
17entitles the transferee to the transfer of record of all
18rights of the debtor in the collateral specified in the
19statement in any official filing, recording, registration, or
20certificate-of-title system covering the collateral. If a
21transfer statement is presented with the applicable fee and
22request form to the official or office responsible for
23maintaining the system, the official or office shall:
24        (1) accept the transfer statement;
25        (2) promptly amend its records to reflect the

 

 

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1    transfer; and
2        (3) if applicable, issue a new appropriate certificate
3    of title in the name of the transferee.
4    (c) Transfer not a disposition; no relief of secured
5party's duties. A transfer of the record or legal title to
6collateral to a secured party under subsection (b) or
7otherwise is not of itself a disposition of collateral under
8this Article and does not of itself relieve the secured party
9of its duties under this Article.
10(Source: P.A. 91-893, eff. 7-1-01.)
 
11    (810 ILCS 5/9-620)
12    Sec. 9-620. Acceptance of collateral in full or partial
13satisfaction of obligation; compulsory disposition of
14collateral.
15    (a) Conditions to acceptance in satisfaction. Except as
16otherwise provided in subsection (g), a secured party may
17accept collateral in full or partial satisfaction of the
18obligation it secures only if:
19        (1) the debtor consents to the acceptance under
20    subsection (c);
21        (2) the secured party does not receive, within the
22    time set forth in subsection (d), a notification of
23    objection to the proposal signed authenticated by:
24            (A) a person to which the secured party was
25        required to send a proposal under Section 9-621; or

 

 

SB3696 Enrolled- 211 -LRB103 37687 SPS 67814 b

1            (B) any other person, other than the debtor,
2        holding an interest in the collateral subordinate to
3        the security interest that is the subject of the
4        proposal;
5        (3) if the collateral is consumer goods, the
6    collateral is not in the possession of the debtor when the
7    debtor consents to the acceptance; and
8        (4) subsection (e) does not require the secured party
9    to dispose of the collateral or the debtor waives the
10    requirement pursuant to Section 9-624.
11    (b) Purported acceptance ineffective. A purported or
12apparent acceptance of collateral under this Section is
13ineffective unless:
14        (1) the secured party consents to the acceptance in a
15    signed an authenticated record or sends a proposal to the
16    debtor; and
17        (2) the conditions of subsection (a) are met.
18    (c) Debtor's consent. For purposes of this Section:
19        (1) a debtor consents to an acceptance of collateral
20    in partial satisfaction of the obligation it secures only
21    if the debtor agrees to the terms of the acceptance in a
22    record signed authenticated after default; and
23        (2) a debtor consents to an acceptance of collateral
24    in full satisfaction of the obligation it secures only if
25    the debtor agrees to the terms of the acceptance in a
26    record signed authenticated after default or the secured

 

 

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1    party:
2            (A) sends to the debtor after default a proposal
3        that is unconditional or subject only to a condition
4        that collateral not in the possession of the secured
5        party be preserved or maintained;
6            (B) in the proposal, proposes to accept collateral
7        in full satisfaction of the obligation it secures; and
8            (C) does not receive a notification of objection
9        signed authenticated by the debtor within 20 days
10        after the proposal is sent.
11    (d) Effectiveness of notification. To be effective under
12subsection (a)(2), a notification of objection must be
13received by the secured party:
14        (1) in the case of a person to which the proposal was
15    sent pursuant to Section 9-621, within 20 days after
16    notification was sent to that person; and
17        (2) in other cases:
18            (A) within 20 days after the last notification was
19        sent pursuant to Section 9-621; or
20            (B) if a notification was not sent, before the
21        debtor consents to the acceptance under subsection
22        (c).
23    (e) Mandatory disposition of consumer goods. A secured
24party that has taken possession of collateral shall dispose of
25the collateral pursuant to Section 9-610 within the time
26specified in subsection (f) if:

 

 

SB3696 Enrolled- 213 -LRB103 37687 SPS 67814 b

1        (1) 60 percent of the cash price has been paid in the
2    case of a purchase-money security interest in consumer
3    goods; or
4        (2) 60 percent of the principal amount of the
5    obligation secured has been paid in the case of a
6    non-purchase-money security interest in consumer goods.
7    (f) Compliance with mandatory disposition requirement. To
8comply with subsection (e), the secured party shall dispose of
9the collateral:
10        (1) within 90 days after taking possession; or
11        (2) within any longer period to which the debtor and
12    all secondary obligors have agreed in an agreement to that
13    effect entered into and signed authenticated after
14    default.
15    (g) No partial satisfaction in consumer transaction. In a
16consumer transaction, a secured party may not accept
17collateral in partial satisfaction of the obligation it
18secures.
19(Source: P.A. 91-893, eff. 7-1-01.)
 
20    (810 ILCS 5/9-621)
21    Sec. 9-621. Notification of proposal to accept collateral.
22    (a) Persons to which proposal to be sent. A secured party
23that desires to accept collateral in full or partial
24satisfaction of the obligation it secures shall send its
25proposal to:

 

 

SB3696 Enrolled- 214 -LRB103 37687 SPS 67814 b

1        (1) any person from which the secured party has
2    received, before the debtor consented to the acceptance, a
3    signed an authenticated notification of a claim of an
4    interest in the collateral;
5        (2) any other secured party or lienholder that, 10
6    days before the debtor consented to the acceptance, held a
7    security interest in or other lien on the collateral
8    perfected by the filing of a financing statement that:
9            (A) identified the collateral;
10            (B) was indexed under the debtor's name as of that
11        date; and
12            (C) was filed in the office or offices in which to
13        file a financing statement against the debtor covering
14        the collateral as of that date; and
15        (3) any other secured party that, 10 days before the
16    debtor consented to the acceptance, held a security
17    interest in the collateral perfected by compliance with a
18    statute, regulation, or treaty described in Section
19    9-311(a).
20    (b) Proposal to be sent to secondary obligor in partial
21satisfaction. A secured party that desires to accept
22collateral in partial satisfaction of the obligation it
23secures shall send its proposal to any secondary obligor in
24addition to the persons described in subsection (a).
25(Source: P.A. 91-893, eff. 7-1-01.)
 

 

 

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1    (810 ILCS 5/9-624)
2    Sec. 9-624. Waiver.
3    (a) Waiver of disposition notification. A debtor or
4secondary obligor may waive the right to notification of
5disposition of collateral under Section 9-611 only by an
6agreement to that effect entered into and signed authenticated
7after default.
8    (b) Waiver of mandatory disposition. A debtor may waive
9the right to require disposition of collateral under Section
109-620(e) only by an agreement to that effect entered into and
11signed authenticated after default.
12    (c) Waiver of redemption right. A debtor or secondary
13obligor may waive the right to redeem collateral under Section
149-623 only by an agreement to that effect entered into and
15signed authenticated after default.
16(Source: P.A. 91-893, eff. 7-1-01.)
 
17    (810 ILCS 5/9-628)
18    Sec. 9-628. Nonliability and limitation on liability of
19secured party; liability of secondary obligor.
20    (a) Limitation of liability to debtor or obligor. Subject
21to subsection (f), unless Unless a secured party knows that a
22person is a debtor or obligor, knows the identity of the
23person, and knows how to communicate with the person:
24        (1) the secured party is not liable to the person, or
25    to a secured party or lienholder that has filed a

 

 

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1    financing statement against the person, for failure to
2    comply with this Article; and
3        (2) the secured party's failure to comply with this
4    Article does not affect the liability of the person for a
5    deficiency.
6    (b) Limitation of liability to debtor, obligor, another
7secured party, or lienholder. Subject to subsection (f), a A
8secured party is not liable because of its status as secured
9party:
10        (1) to a person that is a debtor or obligor, unless the
11    secured party knows:
12            (A) that the person is a debtor or obligor;
13            (B) the identity of the person; and
14            (C) how to communicate with the person; or
15        (2) to a secured party or lienholder that has filed a
16    financing statement against a person, unless the secured
17    party knows:
18            (A) that the person is a debtor; and
19            (B) the identity of the person.
20    (c) Limitation of liability if reasonable belief that
21transaction not a consumer-goods transaction or consumer
22transaction. A secured party is not liable to any person, and a
23person's liability for a deficiency is not affected, because
24of any act or omission arising out of the secured party's
25reasonable belief that a transaction is not a consumer-goods
26transaction or a consumer transaction or that goods are not

 

 

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1consumer goods, if the secured party's belief is based on its
2reasonable reliance on:
3        (1) a debtor's representation concerning the purpose
4    for which collateral was to be used, acquired, or held; or
5        (2) an obligor's representation concerning the purpose
6    for which a secured obligation was incurred.
7    (d) Limitation of liability for statutory damages. A
8secured party is not liable to any person under Section
99-625(c)(2) for its failure to comply with Section 9-616.
10    (e) Limitation of multiple liability for statutory
11damages. A secured party is not liable under Section
129-625(c)(2) more than once with respect to any one secured
13obligation.
14    (f) Exception: Limitation of liability under subsections
15(a) and (b) does not apply. Subsections (a) and (b) do not
16apply to limit the liability of a secured party to a person if,
17at the time the secured party obtains control of collateral
18that is a controllable account, controllable electronic
19record, or controllable payment intangible or at the time the
20security interest attaches to the collateral, whichever is
21later:
22        (1) the person is a debtor or obligor; and
23        (2) the secured party knows that the information in
24    subsection (b)(1)(A), (B), or (C) relating to the person
25    is not provided by the collateral, a record attached to or
26    logically associated with the collateral, or the system in

 

 

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1    which the collateral is recorded.
2(Source: P.A. 91-893, eff. 7-1-01.)
 
3    (810 ILCS 5/Art. 11A heading)
4
ARTICLE 11A 12
5
EFFECTIVE DATE AND TRANSITION
6
AMENDATORY ACT OF 1987

 
7    (810 ILCS 5/11A-101)
8    Sec. 11A-101 12-101. Effective Date. This amendatory Act
9of 1987 shall take effect on January 1, 1988.
10(Source: P.A. 85-997.)
 
11    (810 ILCS 5/11A-102)
12    Sec. 11A-102 12-102. Transition to Amendatory Act of 1987.
13    (1) Transactions validly entered into after July 1, 1962
14and before January 1, 1988 and which were subject to the
15provisions of the "Uniform Commercial Code", approved July 31,
161961, as amended, and which would be subject to this
17amendatory Act of 1987 if they had been entered into after
18December 31, 1987 and the rights, duties and interest flowing
19from such transactions remain valid after the latter date, and
20may be terminated, completed, consummated or enforced as
21required or permitted by this amendatory Act of 1987. Security
22interests arising out of such transactions which are perfected
23when this amendatory Act of 1987 becomes effective shall

 

 

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1remain perfected until they lapse as provided in this
2amendatory Act of 1987, and may be continued as permitted by
3this amendatory Act of 1987.
4    (2) The persons shown on the books of the issuer as the
5holders of uncertificated securities outstanding when this
6amendatory Act of 1987 becomes effective shall be deemed to be
7the registered owners thereof. Prior to the 90th day after
8this amendatory Act of 1987 takes effect, the issuer of any
9uncertificated security outstanding when this amendatory Act
10of 1987 takes effect shall send to the registered owner a
11written statement containing:
12    (a) A description of the issue of which the uncertificated
13security is a part;
14    (b) The number of shares or other units owned by the
15registered owner;
16    (c) The name and address and (if known to the issuer) any
17taxpayer identification number of the registered owner;
18    (d) A notation of any liens or restrictions of the issuer
19and any adverse claims (as to which the issuer has a duty under
20Section 8-403(4)) to which the uncertificated security is or
21may be subject at the time when the statement is prepared or a
22statement that there are no such liens, restrictions or
23adverse claims; and
24    (e) The date the statement was prepared.
25    Statements sent pursuant to this subsection shall be
26signed by or on behalf of the issuer; shall be identified as

 

 

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1"initial transaction statement"; and shall be deemed to be
2initial transaction statements for the purposes of Article 8
3as amended by this amendatory Act of 1987.
4    (3) If a security interest in an uncertificated security
5outstanding prior to January 1, 1988, is perfected or has
6priority as to all persons or as to certain persons when this
7amendatory Act of 1987 takes effect by virtue of the previous
8filing of a financing statement, and if other acts would be
9required for the perfection or priority of the security
10interest against those persons under this amendatory Act of
111987, the perfection and priority rights of the security
12interest shall continue and shall lapse on the date provided
13by the "Uniform Commercial Code", approved July 31, 1961, as
14amended prior to this amendatory Act of 1987, (whether or not a
15continuation statement is filed with respect to such security
16interest) unless the security interest is perfected in
17accordance with this amendatory Act of 1987.
18    (4) If an issuer's lien or restriction on an
19uncertificated security outstanding prior to January 1, 1988,
20or a term of such a security is valid and effective against all
21persons or against certain persons when this amendatory Act of
221987 takes effect, and if the notation of such lien,
23restriction or term on an initial transaction statement would
24be required for its validity or effectiveness against those
25persons under this amendatory Act of 1987, such lien,
26restriction or term shall remain valid and effective until the

 

 

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1earlier of (i) the time when an initial transaction statement
2is sent by the issuer to the registered owner (after which the
3validity and effectiveness of the lien, restriction or term
4shall be governed by this amendatory Act of 1987), or (ii) 3
5years from the effective date of this amendatory Act of 1987.
6If an initial transaction statement regarding an
7uncertificated security outstanding on the effective date of
8this amendatory Act of 1987 is not sent to the registered owner
9thereof within 3 years after that date, any issuer's lien
10required to be noted thereon shall cease to be valid, and any
11restriction or term required to be noted thereon shall cease
12to be effective except as to those persons against whom an
13unnoted restriction or term would be effective under Article 8
14as amended by this amendatory Act of 1987.
15(Source: P.A. 85-997.)
 
16    (810 ILCS 5/Art. 12 heading new)
17
ARTICLE 12
18
CONTROLLABLE ELECTRONIC RECORDS

 
19    (810 ILCS 5/12-101 new)
20    Sec. 12-101. Title. This Article may be cited as Uniform
21Commercial Code--Controllable Electronic Records.
 
22    (810 ILCS 5/12-102 new)
23    Sec. 12-102. Definitions.

 

 

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1    (a) In this Article:
2        (1) "Controllable electronic record" means a record
3    stored in an electronic medium that can be subjected to
4    control under Section 12-105. The term does not include a
5    controllable account, a controllable payment intangible, a
6    deposit account, an electronic copy of a record evidencing
7    chattel paper, an electronic document of title, electronic
8    money, investment property, or a transferable record.
9        (2) "Qualifying purchaser" means a purchaser of a
10    controllable electronic record or an interest in a
11    controllable electronic record that obtains control of the
12    controllable electronic record for value, in good faith,
13    and without notice of a claim of a property right in the
14    controllable electronic record.
15        (3) "Transferable record" has the meaning provided for
16    that term in:
17            (A) Section 201(a)(1) of the Electronic Signatures
18        in Global and National Commerce Act, 15 U.S.C. Section
19        7021(a)(1), as amended; or
20            (B) Section 16(a) of the Uniform Electronic
21        Transactions Act.
22        (4) "Value" has the meaning provided in Section
23    3-303(a), as if references in that subsection to an
24    "instrument" were references to a controllable account,
25    controllable electronic record, or controllable payment
26    intangible.

 

 

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1    (b) Definitions in Article 9. The definitions in Article 9
2of "account debtor", "controllable account", "controllable
3payment intangible", "chattel paper", "deposit account",
4"electronic money", and "investment property" apply to this
5Article.
6    (c) Article 1 definitions and principles. Article 1
7contains general definitions and principles of construction
8and interpretation applicable throughout this Article.
 
9    (810 ILCS 5/12-103 new)
10    Sec. 12-103. Relation to Article 9 and consumer laws.
11    (a) Article 9 governs in case of conflict. If there is
12conflict between this Article and Article 9, Article 9
13governs.
14    (b) Applicable consumer law and other laws. A transaction
15subject to this Article is subject to any applicable rule of
16law, statute, or regulation which establishes a different rule
17for consumers including, without limitation, the Consumer
18Installment Loan Act, the Predatory Loan Prevention Act, the
19Consumer Fraud and Deceptive Business Practices Act, any other
20statute or regulation that regulates the rates, charges,
21agreements, and practices for loans, credit sales, or other
22extensions of credit, and any consumer protection statute or
23regulation.
 
24    (810 ILCS 5/12-104 new)

 

 

SB3696 Enrolled- 224 -LRB103 37687 SPS 67814 b

1    Sec. 12-104. Rights in controllable account, controllable
2electronic record, and controllable payment intangible.
3    (a) Applicability of Section to controllable account and
4controllable payment intangible. This Section applies to the
5acquisition and purchase of rights in a controllable account
6or controllable payment intangible, including the rights and
7benefits under subsections (c), (d), (e), (g), and (h) of a
8purchaser and qualifying purchaser, in the same manner this
9Section applies to a controllable electronic record.
10    (b) Control of controllable account and controllable
11payment intangible. To determine whether a purchaser of a
12controllable account or a controllable payment intangible is a
13qualifying purchaser, the purchaser obtains control of the
14account or payment intangible if it obtains control of the
15controllable electronic record that evidences the account or
16payment intangible.
17    (c) Applicability of other law to acquisition of rights.
18Except as provided in this Section, law other than this
19Article determines whether a person acquires a right in a
20controllable electronic record and the right the person
21acquires.
22    (d) Shelter principle and purchase of limited interest. A
23purchaser of a controllable electronic record acquires all
24rights in the controllable electronic record that the
25transferor had or had power to transfer, except that a
26purchaser of a limited interest in a controllable electronic

 

 

SB3696 Enrolled- 225 -LRB103 37687 SPS 67814 b

1record acquires rights only to the extent of the interest
2purchased.
3    (e) Rights of qualifying purchaser. A qualifying purchaser
4acquires its rights in the controllable electronic record free
5of a claim of a property right in the controllable electronic
6record.
7    (f) Limitation of rights of qualifying purchaser in other
8property. Except as provided in subsections (a) and (e) for a
9controllable account and a controllable payment intangible or
10law other than this Article, a qualifying purchaser takes a
11right to payment, right to performance, or other interest in
12property evidenced by the controllable electronic record
13subject to a claim of a property right in the right to payment,
14right to performance, or other interest in property.
15    (g) No-action protection for qualifying purchaser. An
16action may not be asserted against a qualifying purchaser
17based on both a purchase by the qualifying purchaser of a
18controllable electronic record and a claim of a property right
19in another controllable electronic record, whether the action
20is framed in conversion, replevin, constructive trust,
21equitable lien, or other theory.
22    (h) Filing not notice. Filing of a financing statement
23under Article 9 is not notice of a claim of a property right in
24a controllable electronic record.
 
25    (810 ILCS 5/12-105 new)

 

 

SB3696 Enrolled- 226 -LRB103 37687 SPS 67814 b

1    Sec. 12-105. Control of controllable electronic record.
2    (a) General rule: control of controllable electronic
3record. A person has control of a controllable electronic
4record if the electronic record, a record attached to or
5logically associated with the electronic record, or a system
6in which the electronic record is recorded:
7        (1) gives the person:
8            (A) power to avail itself of substantially all the
9        benefit from the electronic record; and
10            (B) exclusive power, subject to subsection (b),
11        to:
12                (i) prevent others from availing themselves of
13            substantially all the benefit from the electronic
14            record; and
15                (ii) transfer control of the electronic record
16            to another person or cause another person to
17            obtain control of another controllable electronic
18            record as a result of the transfer of the
19            electronic record; and
20        (2) enables the person readily to identify itself in
21    any way, including by name, identifying number,
22    cryptographic key, office, or account number, as having
23    the powers specified in paragraph (1).
24    (b) Meaning of exclusive. Subject to subsection (c), a
25power is exclusive under subsection (a)(1)(B)(i) and (ii) even
26if:

 

 

SB3696 Enrolled- 227 -LRB103 37687 SPS 67814 b

1        (1) the controllable electronic record, a record
2    attached to or logically associated with the electronic
3    record, or a system in which the electronic record is
4    recorded limits the use of the electronic record or has a
5    protocol programmed to cause a change, including a
6    transfer or loss of control or a modification of benefits
7    afforded by the electronic record; or
8        (2) the power is shared with another person.
9    (c) When power not shared with another person. A power of a
10person is not shared with another person under subsection
11(b)(2) and the person's power is not exclusive if:
12        (1) the person can exercise the power only if the
13    power also is exercised by the other person; and
14        (2) the other person:
15            (A) can exercise the power without exercise of the
16        power by the person; or
17            (B) is the transferor to the person of an interest
18        in the controllable electronic record or a
19        controllable account or controllable payment
20        intangible evidenced by the controllable electronic
21        record.
22    (d) Presumption of exclusivity of certain powers. If a
23person has the powers specified in subsection (a)(1)(B)(i) and
24(ii), the powers are presumed to be exclusive.
25    (e) Control through another person. A person has control
26of a controllable electronic record if another person, other

 

 

SB3696 Enrolled- 228 -LRB103 37687 SPS 67814 b

1than the transferor to the person of an interest in the
2controllable electronic record or a controllable account or
3controllable payment intangible evidenced by the controllable
4electronic record:
5        (1) has control of the electronic record and
6    acknowledges that it has control on behalf of the person;
7    or
8        (2) obtains control of the electronic record after
9    having acknowledged that it will obtain control of the
10    electronic record on behalf of the person.
11    (f) No requirement to acknowledge. A person that has
12control under this Section is not required to acknowledge that
13it has control on behalf of another person.
14    (g) No duties or confirmation. If a person acknowledges
15that it has or will obtain control on behalf of another person,
16unless the person otherwise agrees or law other than this
17Article or Article 9 otherwise provides, the person does not
18owe any duty to the other person and is not required to confirm
19the acknowledgment to any other person.
 
20    (810 ILCS 5/12-106 new)
21    Sec. 12-106. Discharge of account debtor on controllable
22account or controllable payment intangible.
23    (a) Discharge of account debtor. An account debtor on a
24controllable account or controllable payment intangible may
25discharge its obligation by paying:

 

 

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1        (1) the person having control of the controllable
2    electronic record that evidences the controllable account
3    or controllable payment intangible; or
4        (2) except as provided in subsection (b), a person
5    that formerly had control of the controllable electronic
6    record.
7    (b) Content and effect of notification. Subject to
8subsection (d), the account debtor may not discharge its
9obligation by paying a person that formerly had control of the
10controllable electronic record if the account debtor receives
11a notification that:
12        (1) is signed by a person that formerly had control or
13    the person to which control was transferred;
14        (2) reasonably identifies the controllable account or
15    controllable payment intangible;
16        (3) notifies the account debtor that control of the
17    controllable electronic record that evidences the
18    controllable account or controllable payment intangible
19    was transferred;
20        (4) identifies the transferee, in any reasonable way,
21    including by name, identifying number, cryptographic key,
22    office, or account number; and
23        (5) provides a commercially reasonable method by which
24    the account debtor is to pay the transferee.
25    (c) Discharge following effective notification. After
26receipt of a notification that complies with subsection (b),

 

 

SB3696 Enrolled- 230 -LRB103 37687 SPS 67814 b

1the account debtor may discharge its obligation by paying in
2accordance with the notification and may not discharge the
3obligation by paying a person that formerly had control.
4    (d) When notification ineffective. Subject to subsection
5(h), notification is ineffective under subsection (b):
6        (1) unless, before the notification is sent, the
7    account debtor and the person that, at that time, had
8    control of the controllable electronic record that
9    evidences the controllable account or controllable payment
10    intangible agree in a signed record to a commercially
11    reasonable method by which a person may furnish reasonable
12    proof that control has been transferred;
13        (2) to the extent an agreement between the account
14    debtor and seller of a payment intangible limits the
15    account debtor's duty to pay a person other than the
16    seller and the limitation is effective under law other
17    than this Article; or
18        (3) at the option of the account debtor, if the
19    notification notifies the account debtor to:
20            (A) divide a payment;
21            (B) make less than the full amount of an
22        installment or other periodic payment; or
23            (C) pay any part of a payment by more than one
24        method or to more than one person.
25    (e) Proof of transfer of control. Subject to subsection
26(h), if requested by the account debtor, the person giving the

 

 

SB3696 Enrolled- 231 -LRB103 37687 SPS 67814 b

1notification under subsection (b) seasonably shall furnish
2reasonable proof, using the method in the agreement referred
3to in subsection (d)(1), that control of the controllable
4electronic record has been transferred. Unless the person
5complies with the request, the account debtor may discharge
6its obligation by paying a person that formerly had control,
7even if the account debtor has received a notification under
8subsection (b).
9    (f) What constitutes reasonable proof. A person furnishes
10reasonable proof under subsection (e) that control has been
11transferred if the person demonstrates, using the method in
12the agreement referred to in subsection (d)(1), that the
13transferee has the power to:
14        (1) avail itself of substantially all the benefit from
15    the controllable electronic record;
16        (2) prevent others from availing themselves of
17    substantially all the benefit from the controllable
18    electronic record; and
19        (3) transfer the powers specified in paragraphs (1)
20    and (2) to another person.
21    (g) Rights not waivable. Subject to subsection (h), an
22account debtor may not waive or vary its rights under
23subsections (d)(1) and (e) or its option under subsection
24(d)(3).
25    (h) Rule for individual under other law. This Section is
26subject to law other than this Article which establishes a

 

 

SB3696 Enrolled- 232 -LRB103 37687 SPS 67814 b

1different rule for an account debtor who is an individual and
2who incurred the obligation primarily for personal, family, or
3household purposes.
 
4    (810 ILCS 5/12-107 new)
5    Sec. 12-107. Governing law.
6    (a) Governing law: general rule. Except as provided in
7subsection (b), the local law of a controllable electronic
8record's jurisdiction governs a matter covered by this
9Article.
10    (b) Governing law: Section 12-106. For a controllable
11electronic record that evidences a controllable account or
12controllable payment intangible, the local law of the
13controllable electronic record's jurisdiction governs a matter
14covered by Section 12-106 unless an effective agreement
15determines that the local law of another jurisdiction governs.
16    (c) Controllable electronic record's jurisdiction. The
17following rules determine a controllable electronic record's
18jurisdiction under this Section:
19        (1) If the controllable electronic record, or a record
20    attached to or logically associated with the controllable
21    electronic record and readily available for review,
22    expressly provides that a particular jurisdiction is the
23    controllable electronic record's jurisdiction for purposes
24    of this Article or the Uniform Commercial Code, that
25    jurisdiction is the controllable electronic record's

 

 

SB3696 Enrolled- 233 -LRB103 37687 SPS 67814 b

1    jurisdiction.
2        (2) If paragraph (1) does not apply and the rules of
3    the system in which the controllable electronic record is
4    recorded are readily available for review and expressly
5    provide that a particular jurisdiction is the controllable
6    electronic record's jurisdiction for purposes of this
7    Article or the Uniform Commercial Code, that jurisdiction
8    is the controllable electronic record's jurisdiction.
9        (3) If paragraphs (1) and (2) do not apply and the
10    controllable electronic record, or a record attached to or
11    logically associated with the controllable electronic
12    record and readily available for review, expressly
13    provides that the controllable electronic record is
14    governed by the law of a particular jurisdiction, that
15    jurisdiction is the controllable electronic record's
16    jurisdiction.
17        (4) If paragraphs (1), (2), and (3) do not apply and
18    the rules of the system in which the controllable
19    electronic record is recorded are readily available for
20    review and expressly provide that the controllable
21    electronic record or the system is governed by the law of a
22    particular jurisdiction, that jurisdiction is the
23    controllable electronic record's jurisdiction.
24        (5) If paragraphs (1) through (4) do not apply, the
25    controllable electronic record's jurisdiction is the
26    District of Columbia.

 

 

SB3696 Enrolled- 234 -LRB103 37687 SPS 67814 b

1    (d) Applicability of Article 12. If subsection (c)(5)
2applies and Article 12 is not in effect in the District of
3Columbia without material modification, the governing law for
4a matter covered by this Article is the law of the District of
5Columbia as though Article 12 were in effect in the District of
6Columbia without material modification. In this subsection,
7"Article 12" means Article 12 of Uniform Commercial Code
8Amendments (2022)
.
9    (e) Relation of matter or transaction to controllable
10electronic record's jurisdiction not necessary. To the extent
11subsections (a) and (b) provide that the local law of the
12controllable electronic record's jurisdiction governs a matter
13covered by this Article, that law governs even if the matter or
14a transaction to which the matter relates does not bear any
15relation to the controllable electronic record's jurisdiction.
16    (f) Rights of purchasers determined at time of purchase.
17The rights acquired under Section 12-104 by a purchaser or
18qualifying purchaser are governed by the law applicable under
19this Section at the time of purchase.
 
20    (810 ILCS 5/Art. 12A heading new)
21
ARTICLE 12A
22
TRANSITIONAL PROVISIONS FOR UNIFORM COMMERCIAL
23
CODE AMENDMENTS OF THE 103RD GENERAL ASSEMBLY

 
24    (810 ILCS 5/Art. 12A Pt. 1 heading new)

 

 

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1
PART 1
2
GENERAL PROVISIONS AND DEFINITIONS

 
3    (810 ILCS 5/12A-101 new)
4    Sec. 12A-101. Title. This Article may be cited as
5Transitional Provisions for Uniform Commercial Code Amendments
6of the 103rd General Assembly.
 
7    (810 ILCS 5/12A-102 new)
8    Sec. 12A-102. Definitions.
9    (a) In this Article:
10        (1) "Adjustment date" means July 1, 2025, or the date
11    that is one year after the effective date of this
12    amendatory Act of the 103rd General Assembly, whichever is
13    later.
14        (2) "Article 12" means Article 12 of the Uniform
15    Commercial Code.
16        (3) "Article 12 property" means a controllable
17    account, controllable electronic record, or controllable
18    payment intangible.
19    (b) Definitions in other Articles. The following
20definitions in other Articles of the Uniform Commercial Code
21apply to this Article.
22    "Controllable account". Section 9-102.
23    "Controllable electronic record". Section 12-102.
24    "Controllable payment intangible". Section 9-102.

 

 

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1    "Electronic money". Section 9-102.
2    "Financing statement". Section 9-102.
3    (c) Article 1 definitions and principles. Article 1
4contains general definitions and principles of construction
5and interpretation applicable throughout this Article.
 
6    (810 ILCS 5/Art. 12A Pt. 2 heading new)
7
PART 2
8
GENERAL TRANSITIONAL PROVISION

 
9    (810 ILCS 5/12A-201 new)
10    Sec. 12A-201. Saving clause. Except as provided in Part 3,
11a transaction validly entered into before the effective date
12of this amendatory Act of the 103rd General Assembly and the
13rights, duties, and interests flowing from the transaction
14remain valid thereafter and may be terminated, completed,
15consummated, or enforced as required or permitted by law other
16than the Uniform Commercial Code or, if applicable, the
17Uniform Commercial Code, as though this amendatory Act of the
18103rd General Assembly had not taken effect.
 
19    (810 ILCS 5/Art. 12A Pt. 3 heading new)
20
PART 3
21
TRANSITIONAL PROVISIONS FOR ARTICLES 9 AND 12

 
22    (810 ILCS 5/12A-301 new)

 

 

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1    Sec. 12A-301. Saving clause.
2    (a) Pre-effective-date transaction, lien, or interest.
3Except as provided in this Part, Article 9 as amended by this
4amendatory Act of the 103rd General Assembly and Article 12
5apply to a transaction, lien, or other interest in property,
6even if the transaction, lien, or interest was entered into,
7created, or acquired before the effective date of this
8amendatory Act of the 103rd General Assembly.
9    (b) Continuing validity. Except as provided in subsection
10(c) and Sections 12A-302 through 12A-306:
11        (1) a transaction, lien, or interest in property that
12    was validly entered into, created, or transferred before
13    the effective date of this amendatory Act of the 103rd
14    General Assembly and was not governed by the Uniform
15    Commercial Code, but would be subject to Article 9 as
16    amended by this amendatory Act of the 103rd General
17    Assembly or Article 12 if it had been entered into,
18    created, or transferred on or after the effective date of
19    this amendatory Act of the 103rd General Assembly,
20    including the rights, duties, and interests flowing from
21    the transaction, lien, or interest, remains valid on and
22    after the effective date of this amendatory Act of the
23    103rd General Assembly; and
24        (2) the transaction, lien, or interest may be
25    terminated, completed, consummated, and enforced as
26    required or permitted by this amendatory Act of the 103rd

 

 

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1    General Assembly or by the law that would apply if this
2    amendatory Act of the 103rd General Assembly had not taken
3    effect.
4    (c) Pre-effective-date proceeding. This amendatory Act of
5the 103rd General Assembly does not affect an action, case, or
6proceeding commenced before the effective date of this
7amendatory Act of the 103rd General Assembly.
 
8    (810 ILCS 5/12A-302 new)
9    Sec. 12A-302. Security interest perfected before effective
10date.
11    (a) Continuing perfection: perfection requirements
12satisfied. A security interest that is enforceable and
13perfected immediately before the effective date of this
14amendatory Act of the 103rd General Assembly is a perfected
15security interest under this amendatory Act of the 103rd
16General Assembly if, on the effective date of this amendatory
17Act of the 103rd General Assembly, the requirements for
18enforceability and perfection under this amendatory Act of the
19103rd General Assembly are satisfied without further action.
20    (b) Continuing perfection: enforceability or perfection
21requirements not satisfied. If a security interest is
22enforceable and perfected immediately before the effective
23date of this amendatory Act of the 103rd General Assembly, but
24the requirements for enforceability or perfection under this
25amendatory Act of the 103rd General Assembly are not satisfied

 

 

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1on the effective date of this amendatory Act of the 103rd
2General Assembly, the security interest:
3        (1) is a perfected security interest until the earlier
4    of the time perfection would have ceased under the law in
5    effect immediately before the effective date of this
6    amendatory Act of the 103rd General Assembly or the
7    adjustment date;
8        (2) remains enforceable thereafter only if the
9    security interest satisfies the requirements for
10    enforceability under Section 9-203, as amended by this
11    amendatory Act of the 103rd General Assembly, before the
12    adjustment date; and
13        (3) remains perfected thereafter only if the
14    requirements for perfection under this amendatory Act of
15    the 103rd General Assembly are satisfied before the time
16    specified in paragraph (1).
 
17    (810 ILCS 5/12A-303 new)
18    Sec. 12A-303. Security interest unperfected before
19effective date. A security interest that is enforceable
20immediately before the effective date of this amendatory Act
21of the 103rd General Assembly but is unperfected at that time:
22        (1) remains an enforceable security interest until the
23    adjustment date;
24        (2) remains enforceable thereafter if the security
25    interest becomes enforceable under Section 9-203, as

 

 

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1    amended by this amendatory Act of the 103rd General
2    Assembly, on the effective date of this amendatory Act of
3    the 103rd General Assembly or before the adjustment date;
4    and
5        (3) becomes perfected:
6            (A) without further action, on the effective date
7        of this amendatory Act of the 103rd General Assembly
8        if the requirements for perfection under this
9        amendatory Act of the 103rd General Assembly are
10        satisfied before or at that time; or
11            (B) when the requirements for perfection are
12        satisfied if the requirements are satisfied after that
13        time.
 
14    (810 ILCS 5/12A-304 new)
15    Sec. 12A-304. Effectiveness of actions taken before
16effective date.
17    (a) Pre-effective-date action; attachment and perfection
18before adjustment date. If action, other than the filing of a
19financing statement, is taken before the effective date of
20this amendatory Act of the 103rd General Assembly and the
21action would have resulted in perfection of the security
22interest had the security interest become enforceable before
23the effective date of this amendatory Act of the 103rd General
24Assembly, the action is effective to perfect a security
25interest that attaches under this amendatory Act of the 103rd

 

 

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1General Assembly before the adjustment date. An attached
2security interest becomes unperfected on the adjustment date
3unless the security interest becomes a perfected security
4interest under this amendatory Act of the 103rd General
5Assembly before the adjustment date.
6    (b) Pre-effective-date filing. The filing of a financing
7statement before the effective date of this amendatory Act of
8the 103rd General Assembly is effective to perfect a security
9interest on the effective date of this amendatory Act of the
10103rd General Assembly to the extent the filing would satisfy
11the requirements for perfection under this amendatory Act of
12the 103rd General Assembly.
13    (c) Pre-effective-date enforceability action. The taking
14of an action before the effective date of this amendatory Act
15of the 103rd General Assembly is sufficient for the
16enforceability of a security interest on the effective date of
17this amendatory Act of the 103rd General Assembly if the
18action would satisfy the requirements for enforceability under
19this amendatory Act of the 103rd General Assembly.
 
20    (810 ILCS 5/12A-305 new)
21    Sec. 12A-305. Priority.
22    (a) Determination of priority. Subject to subsections (b)
23and (c), this amendatory Act of the 103rd General Assembly
24determines the priority of conflicting claims to collateral.
25    (b) Established priorities. Subject to subsection (c), if

 

 

SB3696 Enrolled- 242 -LRB103 37687 SPS 67814 b

1the priorities of claims to collateral were established before
2the effective date of this amendatory Act of the 103rd General
3Assembly, Article 9 as in effect before the effective date of
4this amendatory Act of the 103rd General Assembly determines
5priority.
6    (c) Determination of certain priorities on adjustment
7date. On the adjustment date, to the extent the priorities
8determined by Article 9 as amended by this amendatory Act of
9the 103rd General Assembly modify the priorities established
10before the effective date of this amendatory Act of the 103rd
11General Assembly, the priorities of claims to Article 12
12property and electronic money established before the effective
13date of this amendatory Act of the 103rd General Assembly
14cease to apply.
 
15    (810 ILCS 5/12A-306 new)
16    Sec. 12A-306. Priority of claims when priority rules of
17Article 9 do not apply.
18    (a) Determination of priority. Subject to subsections (b)
19and (c), Article 12 determines the priority of conflicting
20claims to Article 12 property when the priority rules of
21Article 9 as amended by this amendatory Act of the 103rd
22General Assembly do not apply.
23    (b) Established priorities. Subject to subsection (c),
24when the priority rules of Article 9 as amended by this
25amendatory Act of the 103rd General Assembly do not apply and

 

 

SB3696 Enrolled- 243 -LRB103 37687 SPS 67814 b

1the priorities of claims to Article 12 property were
2established before the effective date of this amendatory Act
3of the 103rd General Assembly, law other than Article 12
4determines priority.
5    (c) Determination of certain priorities on adjustment
6date. When the priority rules of Article 9 as amended by this
7amendatory Act of the 103rd General Assembly do not apply, to
8the extent the priorities determined by this amendatory Act of
9the 103rd General Assembly modify the priorities established
10before the effective date of this amendatory Act of the 103rd
11General Assembly, the priorities of claims to Article 12
12property established before the effective date of this
13amendatory Act of the 103rd General Assembly cease to apply on
14the adjustment date.
 
15    Section 99. Effective date. This Act takes effect January
161, 2025.

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    205 ILCS 657/5
4    810 ILCS 5/1-201from Ch. 26, par. 1-201
5    810 ILCS 5/1-204from Ch. 26, par. 1-204
6    810 ILCS 5/1-301
7    810 ILCS 5/1-306
8    810 ILCS 5/2-102from Ch. 26, par. 2-102
9    810 ILCS 5/2-106from Ch. 26, par. 2-106
10    810 ILCS 5/2-201from Ch. 26, par. 2-201
11    810 ILCS 5/2-202from Ch. 26, par. 2-202
12    810 ILCS 5/2-203from Ch. 26, par. 2-203
13    810 ILCS 5/2-205from Ch. 26, par. 2-205
14    810 ILCS 5/2-209from Ch. 26, par. 2-209
15    810 ILCS 5/2A-102from Ch. 26, par. 2A-102
16    810 ILCS 5/2A-103from Ch. 26, par. 2A-103
17    810 ILCS 5/2A-107from Ch. 26, par. 2A-107
18    810 ILCS 5/2A-201from Ch. 26, par. 2A-201
19    810 ILCS 5/2A-202from Ch. 26, par. 2A-202
20    810 ILCS 5/2A-203from Ch. 26, par. 2A-203
21    810 ILCS 5/2A-205from Ch. 26, par. 2A-205
22    810 ILCS 5/2A-208from Ch. 26, par. 2A-208
23    810 ILCS 5/3-104from Ch. 26, par. 3-104
24    810 ILCS 5/3-105from Ch. 26, par. 3-105
25    810 ILCS 5/3-401from Ch. 26, par. 3-401

 

 

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1    810 ILCS 5/3-604from Ch. 26, par. 3-604
2    810 ILCS 5/4A-103from Ch. 26, par. 4A-103
3    810 ILCS 5/4A-201from Ch. 26, par. 4A-201
4    810 ILCS 5/4A-202from Ch. 26, par. 4A-202
5    810 ILCS 5/4A-203from Ch. 26, par. 4A-203
6    810 ILCS 5/4A-207from Ch. 26, par. 4A-207
7    810 ILCS 5/4A-208from Ch. 26, par. 4A-208
8    810 ILCS 5/4A-210from Ch. 26, par. 4A-210
9    810 ILCS 5/4A-211from Ch. 26, par. 4A-211
10    810 ILCS 5/4A-305from Ch. 26, par. 4A-305
11    810 ILCS 5/5-104from Ch. 26, par. 5-104
12    810 ILCS 5/5-116from Ch. 26, par. 5-116
13    810 ILCS 5/7-102from Ch. 26, par. 7-102
14    810 ILCS 5/7-106
15    810 ILCS 5/8-102from Ch. 26, par. 8-102
16    810 ILCS 5/8-103from Ch. 26, par. 8-103
17    810 ILCS 5/8-106from Ch. 26, par. 8-106
18    810 ILCS 5/8-110
19    810 ILCS 5/8-303from Ch. 26, par. 8-303
20    810 ILCS 5/9-102from Ch. 26, par. 9-102
21    810 ILCS 5/9-104from Ch. 26, par. 9-104
22    810 ILCS 5/9-105from Ch. 26, par. 9-105
23    810 ILCS 5/9-105A new
24    810 ILCS 5/9-107A new
25    810 ILCS 5/9-107B new
26    810 ILCS 5/9-203from Ch. 26, par. 9-203

 

 

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1    810 ILCS 5/9-204from Ch. 26, par. 9-204
2    810 ILCS 5/9-207from Ch. 26, par. 9-207
3    810 ILCS 5/9-208from Ch. 26, par. 9-208
4    810 ILCS 5/9-209
5    810 ILCS 5/9-210
6    810 ILCS 5/9-301from Ch. 26, par. 9-301
7    810 ILCS 5/9-304from Ch. 26, par. 9-304
8    810 ILCS 5/9-305from Ch. 26, par. 9-305
9    810 ILCS 5/9-306A new
10    810 ILCS 5/9-306B new
11    810 ILCS 5/9-310from Ch. 26, par. 9-310
12    810 ILCS 5/9-312from Ch. 26, par. 9-312
13    810 ILCS 5/9-313from Ch. 26, par. 9-313
14    810 ILCS 5/9-314from Ch. 26, par. 9-314
15    810 ILCS 5/9-314A new
16    810 ILCS 5/9-316from Ch. 26, par. 9-316
17    810 ILCS 5/9-317from Ch. 26, par. 9-317
18    810 ILCS 5/9-323
19    810 ILCS 5/9-324
20    810 ILCS 5/9-326A new
21    810 ILCS 5/9-330
22    810 ILCS 5/9-331
23    810 ILCS 5/9-332
24    810 ILCS 5/9-334
25    810 ILCS 5/9-341
26    810 ILCS 5/9-404from Ch. 26, par. 9-404

 

 

SB3696 Enrolled- 247 -LRB103 37687 SPS 67814 b

1    810 ILCS 5/9-406from Ch. 26, par. 9-406
2    810 ILCS 5/9-408from Ch. 26, par. 9-408
3    810 ILCS 5/9-509
4    810 ILCS 5/9-513
5    810 ILCS 5/9-601
6    810 ILCS 5/9-605
7    810 ILCS 5/9-608
8    810 ILCS 5/9-611
9    810 ILCS 5/9-613
10    810 ILCS 5/9-614
11    810 ILCS 5/9-615
12    810 ILCS 5/9-616
13    810 ILCS 5/9-619
14    810 ILCS 5/9-620
15    810 ILCS 5/9-621
16    810 ILCS 5/9-624
17    810 ILCS 5/9-628
18    810 ILCS 5/Art. 11A
19    heading
20    810 ILCS 5/11A-101
21    810 ILCS 5/11A-102
22    810 ILCS 5/Art. 12 heading
23    new
24    810 ILCS 5/12-101 new
25    810 ILCS 5/12-102 new
26    810 ILCS 5/12-103 new

 

 

SB3696 Enrolled- 248 -LRB103 37687 SPS 67814 b

1    810 ILCS 5/12-104 new
2    810 ILCS 5/12-105 new
3    810 ILCS 5/12-106 new
4    810 ILCS 5/12-107 new
5    810 ILCS 5/Art. 12A
6    heading new
7    810 ILCS 5/Art. 12A Pt. 1
8    heading new
9    810 ILCS 5/12A-101 new
10    810 ILCS 5/12A-102 new
11    810 ILCS 5/Art. 12A Pt. 2
12    heading new
13    810 ILCS 5/12A-201 new
14    810 ILCS 5/Art. 12A Pt. 3
15    heading new
16    810 ILCS 5/12A-301 new
17    810 ILCS 5/12A-302 new
18    810 ILCS 5/12A-303 new
19    810 ILCS 5/12A-304 new
20    810 ILCS 5/12A-305 new
21    810 ILCS 5/12A-306 new