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Illinois Compiled Statutes
Information maintained by the Legislative Reference Bureau Updating the database of the Illinois Compiled Statutes (ILCS) is an ongoing process. Recent laws may not yet be included in the ILCS database, but they are found on this site as Public Acts soon after they become law. For information concerning the relationship between statutes and Public Acts, refer to the Guide. Because the statute database is maintained primarily for legislative drafting purposes, statutory changes are sometimes included in the statute database before they take effect. If the source note at the end of a Section of the statutes includes a Public Act that has not yet taken effect, the version of the law that is currently in effect may have already been removed from the database and you should refer to that Public Act to see the changes made to the current law.
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810 ILCS 5/Art. 1
(810 ILCS 5/Art. 1 heading)
ARTICLE 1
GENERAL PROVISIONS
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810 ILCS 5/Art. 1 Pt. 1
(810 ILCS 5/Art. 1 Pt. 1 heading)
PART 1
GENERAL PROVISIONS
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/1-101
(810 ILCS 5/1-101) (from Ch. 26, par. 1-101)
Sec. 1-101. Short Titles.
(a) This Act may be cited as the Uniform Commercial Code. (b) This Article may be cited as Uniform Commercial Code - General Provisions.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/1-102
(810 ILCS 5/1-102) (from Ch. 26, par. 1-102)
Sec. 1-102. Scope of Article.
This Article applies to a transaction to the extent that it is governed by another Article of the Uniform Commercial Code.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/1-103
(810 ILCS 5/1-103) (from Ch. 26, par. 1-103)
Sec. 1-103. Construction of Uniform Commercial Code to promote its purposes and policies; applicability of supplemental principles of law.
(a) The Uniform Commercial Code must be liberally construed and applied to promote its underlying purposes and policies, which are: (1) to simplify, clarify, and modernize the law | | governing commercial transactions;
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| (2) to permit the continued expansion of commercial
| | practices through custom, usage, and agreement of the parties; and
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| (3) to make uniform the law among the various
| | (b) Unless displaced by the particular provisions of the Uniform Commercial Code, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement its provisions.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/1-104
(810 ILCS 5/1-104) (from Ch. 26, par. 1-104)
Sec. 1-104. Construction against implied repeal.
The Uniform Commercial Code being a general Act intended as a unified coverage of its subject matter, no part of it shall be deemed to be impliedly repealed by subsequent legislation if such construction can reasonably be avoided.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/1-104a
(810 ILCS 5/1-104a) (from Ch. 26, par. 1-104a)
Sec. 1-104a.
Legislative Intent.
If any provision of
this Act conflicts with Section 205-410 of the
Department of Agriculture Law (20 ILCS 205/205-410), the provisions of that
Section 205-410 control. If any provision of this Act conflicts with the Grain
Code, the provisions of the Grain Code control.
(Source: P.A. 91-239, eff. 1-1-00.)
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810 ILCS 5/1-104b
(810 ILCS 5/1-104b)
Sec. 1-104b.
Agriculture Production Contract Code.
This Act is subject to
the
provisions of the Agriculture Production Contract Code.
(Source: P.A. 93-522, eff. 1-1-05.)
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810 ILCS 5/1-105
(810 ILCS 5/1-105) (from Ch. 26, par. 1-105)
Sec. 1-105. Severability. If any provision or clause of the Uniform Commercial Code or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Uniform Commercial Code which can be given effect without the invalid provision or application, and to this end the provisions of the Uniform Commercial Code are severable.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/1-106
(810 ILCS 5/1-106) (from Ch. 26, par. 1-106)
Sec. 1-106. Use of singular and plural; gender.
In the Uniform Commercial Code, unless the statutory context otherwise requires:
(1) words in the singular number include the plural, | | and those in the plural include the singular; and
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| (2) words of any gender also refer to any other
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(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/1-107
(810 ILCS 5/1-107) (from Ch. 26, par. 1-107)
Sec. 1-107. Section captions.
Section captions are part of the Uniform Commercial Code.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/1-108
(810 ILCS 5/1-108) (from Ch. 26, par. 1-108)
Sec. 1-108. Relation to Electronic Signatures in Global and National Commerce Act.
This Article modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001 et seq., except that nothing in this Article modifies, limits, or supersedes 15 U.S.C. Section 7001(c) or authorizes electronic delivery of any of the notices described in 15 U.S.C. Section 7003(b).
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/1-109
(810 ILCS 5/1-109) (from Ch. 26, par. 1-109)
Sec. 1-109.
(Blank).(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/Art. 1 Pt. 2
(810 ILCS 5/Art. 1 Pt. 2 heading)
PART 2
GENERAL DEFINITIONS AND PRINCIPLES OF INTERPRETATION
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/1-201 (810 ILCS 5/1-201) (from Ch. 26, par. 1-201) (Text of Section before amendment by P.A. 103-1036) Sec. 1-201. General definitions. (a) Unless the context otherwise requires, words or phrases defined in this Section, or in the additional definitions contained in other Articles of the Uniform Commercial Code that apply to particular Articles or parts thereof, have the meanings stated. (b) Subject to definitions contained in other Articles of the Uniform Commercial Code that apply to particular Articles or parts thereof: (1) "Action", in the sense of a judicial proceeding, | | includes recoupment, counterclaim, set-off, suit in equity, and any other proceeding in which rights are determined.
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| (2) "Aggrieved party" means a party entitled to
| | (3) "Agreement", as distinguished from "contract",
| | means the bargain of the parties in fact, as found in their language or inferred from other circumstances, including course of performance, course of dealing, or usage of trade as provided in Section 1-303.
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| (4) "Bank" means a person engaged in the business of
| | banking and includes a savings bank, savings and loan association, credit union, and trust company.
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| (5) "Bearer" means a person in possession of a
| | negotiable instrument, document of title, or certificated security that is payable to bearer or indorsed in blank.
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| (6) "Bill of lading" means a document evidencing the
| | receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods.
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| (7) "Branch" includes a separately incorporated
| | foreign branch of a bank.
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| (8) "Burden of establishing" a fact means the burden
| | of persuading the trier of fact that the existence of the fact is more probable than its nonexistence.
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| (9) "Buyer in ordinary course of business" means a
| | person that buys goods in good faith, without knowledge that the sale violates the rights of another person in the goods, and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind. A person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices. A person that sells oil, gas, or other minerals at the wellhead or minehead is a person in the business of selling goods of that kind. A buyer in ordinary course of business may buy for cash, by exchange of other property, or on secured or unsecured credit, and may acquire goods or documents of title under a preexisting contract for sale. Only a buyer that takes possession of the goods or has a right to recover the goods from the seller under Article 2 may be a buyer in ordinary course of business. "Buyer in ordinary course of business" does not include a person that acquires goods in a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
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| (10) "Conspicuous", with reference to a term, means
| | so written, displayed, or presented that a reasonable person against which it is to operate ought to have noticed it. Whether a term is "conspicuous" or not is a decision for the court. Conspicuous terms include the following:
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| (A) a heading in capitals equal to or greater in
| | size than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same or lesser size; and
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| (B) language in the body of a record or display
| | in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from surrounding text of the same size by symbols or other marks that call attention to the language.
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| (11) "Consumer" means an individual who enters into a
| | transaction primarily for personal, family, or household purposes.
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| (12) "Contract", as distinguished from "agreement",
| | means the total legal obligation that results from the parties' agreement as determined by the Uniform Commercial Code as supplemented by any other applicable laws.
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| (13) "Creditor" includes a general creditor, a
| | secured creditor, a lien creditor, and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity, and an executor or administrator of an insolvent debtor's or assignor's estate.
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| (14) "Defendant" includes a person in the position of
| | defendant in a counterclaim, cross-claim, or third-party claim.
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| (15) "Delivery", with respect to an instrument,
| | document of title, or chattel paper, means voluntary transfer of possession.
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| (16) "Document of title" includes bill of lading,
| | dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold, and dispose of the document and the goods it covers. To be a document of title, a document must purport to be issued by or addressed to a bailee and purport to cover goods in the bailee's possession which are either identified or are fungible portions of an identified mass.
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| (17) "Fault" means a default, breach, or wrongful act
| | (18) "Fungible goods" means:
(A) goods of which any unit, by nature or usage
| | of trade, is the equivalent of any other like unit; or
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| (B) goods that by agreement are treated as
| | (19) "Genuine" means free of forgery or
| | (20) "Good faith" means honesty in fact in the
| | conduct or transaction concerned.
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| (21) "Holder" means:
(A) the person in possession of a negotiable
| | instrument that is payable either to bearer or to an identified person that is the person in possession; or
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| (B) the person in possession of a document of
| | title if the goods are deliverable either to bearer or to the order of the person in possession.
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| (22) "Insolvency proceeding" includes an assignment
| | for the benefit of creditors or other proceeding intended to liquidate or rehabilitate the estate of the person involved.
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| (23) "Insolvent" means:
(A) having generally ceased to pay debts in the
| | ordinary course of business other than as a result of bona fide dispute;
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| (B) being unable to pay debts as they become due;
| | (C) being insolvent within the meaning of federal
| | (24) "Money" means a medium of exchange currently
| | authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries.
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| (25) "Organization" means a person other than an
| | (26) "Party", as distinguished from "third party",
| | means a person that has engaged in a transaction or made an agreement subject to the Uniform Commercial Code.
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| (27) "Person" means an individual, corporation,
| | business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, public corporation, or any other legal or commercial entity.
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| (28) "Present value" means the amount as of a date
| | certain of one or more sums payable in the future, discounted to the date certain by use of either an interest rate specified by the parties if that rate is not manifestly unreasonable at the time the transaction is entered into or, if an interest rate is not so specified, a commercially reasonable rate that takes into account the facts and circumstances at the time the transaction is entered into.
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| (29) "Purchase" means taking by sale, lease,
| | discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift, or any other voluntary transaction creating an interest in property.
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| (30) "Purchaser" means a person that takes by
| | (31) "Record" means information that is inscribed on
| | a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
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| (32) "Remedy" means any remedial right to which an
| | aggrieved party is entitled with or without resort to a tribunal.
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| (33) "Representative" means a person empowered to act
| | for another, including an agent, an officer of a corporation or association, and a trustee, executor, or administrator of an estate.
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| (34) "Right" includes remedy.
(35) "Security interest" means an interest in
| | personal property or fixtures which secures payment or performance of an obligation. "Security interest" includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction that is subject to Article 9. "Security interest" does not include the special property interest of a buyer of goods on identification of those goods to a contract for sale under Section 2-401, but a buyer may also acquire a "security interest" by complying with Article 9. Except as otherwise provided in Section 2-505, the right of a seller or lessor of goods under Article 2 or 2A to retain or acquire possession of the goods is not a "security interest", but a seller or lessor may also acquire a "security interest" by complying with Article 9. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer under Section 2-401 is limited in effect to a reservation of a "security interest". Whether a transaction in the form of a lease creates a "security interest" is determined pursuant to Section 1-203.
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| (36) "Send" in connection with a writing, record, or
| | (A) to deposit in the mail or deliver for
| | transmission by any other usual means of communication with postage or cost of transmission provided for and properly addressed and, in the case of an instrument, to an address specified thereon or otherwise agreed, or if there be none to any address reasonable under the circumstances; or
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| (B) in any other way to cause to be received any
| | record or notice within the time it would have arrived if properly sent.
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| (37) "Signed" includes using any symbol executed or
| | adopted with present intention to adopt or accept a writing.
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| (38) "State" means a State of the United States, the
| | District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.
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| (39) "Surety" includes a guarantor or other secondary
| | (40) "Term" means a portion of an agreement that
| | relates to a particular matter.
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| (41) "Unauthorized signature" means a signature made
| | without actual, implied, or apparent authority. The term includes a forgery.
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| (42) "Warehouse receipt" means a receipt issued by a
| | person engaged in the business of storing goods for hire.
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| (43) "Writing" includes printing, typewriting, or any
| | other intentional reduction to tangible form. "Written" has a corresponding meaning.
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| (Source: P.A. 95-895, eff. 1-1-09.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 1-201. General definitions.
(a) Unless the context otherwise requires, words or phrases defined in this Section, or in the additional definitions contained in other Articles of the Uniform Commercial Code that apply to particular Articles or parts thereof, have the meanings stated.
(b) Subject to definitions contained in other Articles of the Uniform Commercial Code that apply to particular Articles or parts thereof:
(1) "Action", in the sense of a judicial proceeding,
| | includes recoupment, counterclaim, set-off, suit in equity, and any other proceeding in which rights are determined.
|
| (2) "Aggrieved party" means a party entitled to
| | (3) "Agreement", as distinguished from "contract",
| | means the bargain of the parties in fact, as found in their language or inferred from other circumstances, including course of performance, course of dealing, or usage of trade as provided in Section 1-303.
|
| (4) "Bank" means a person engaged in the business of
| | banking and includes a savings bank, savings and loan association, credit union, and trust company.
|
| (5) "Bearer" means a person in possession of a
| | negotiable instrument, document of title, or certificated security that is payable to bearer or indorsed in blank.
|
| (6) "Bill of lading" means a document evidencing the
| | receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods.
|
| (7) "Branch" includes a separately incorporated
| | foreign branch of a bank.
|
| (8) "Burden of establishing" a fact means the burden
| | of persuading the trier of fact that the existence of the fact is more probable than its nonexistence.
|
| (9) "Buyer in ordinary course of business" means a
| | person that buys goods in good faith, without knowledge that the sale violates the rights of another person in the goods, and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind. A person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices. A person that sells oil, gas, or other minerals at the wellhead or minehead is a person in the business of selling goods of that kind. A buyer in ordinary course of business may buy for cash, by exchange of other property, or on secured or unsecured credit, and may acquire goods or documents of title under a preexisting contract for sale. Only a buyer that takes possession of the goods or has a right to recover the goods from the seller under Article 2 may be a buyer in ordinary course of business. "Buyer in ordinary course of business" does not include a person that acquires goods in a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
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| (10) "Conspicuous", with reference to a term, means
| | so written, displayed, or presented that, based on the totality of the circumstances, a reasonable person against which it is to operate ought to have noticed it. Whether a term is "conspicuous" or not is a decision for the court.
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| (11) "Consumer" means an individual who enters into a
| | transaction primarily for personal, family, or household purposes.
|
| (12) "Contract", as distinguished from "agreement",
| | means the total legal obligation that results from the parties' agreement as determined by the Uniform Commercial Code as supplemented by any other applicable laws.
|
| (13) "Creditor" includes a general creditor, a
| | secured creditor, a lien creditor, and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity, and an executor or administrator of an insolvent debtor's or assignor's estate.
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| (14) "Defendant" includes a person in the position of
| | defendant in a counterclaim, cross-claim, or third-party claim.
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| (15) "Delivery", with respect to an electronic
| | document of title, means voluntary transfer of control and, with respect to an instrument, document of title, or an authoritative tangible copy of a record evidencing chattel paper, means voluntary transfer of possession.
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| (16) "Document of title" includes bill of lading,
| | dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold, and dispose of the document and the goods it covers. To be a document of title, a document must purport to be issued by or addressed to a bailee and purport to cover goods in the bailee's possession which are either identified or are fungible portions of an identified mass.
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| (16A) "Electronic" means relating to technology
| | having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
|
| (17) "Fault" means a default, breach, or wrongful act
| | (18) "Fungible goods" means:
(A) goods of which any unit, by nature or usage
| | of trade, is the equivalent of any other like unit; or
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| (B) goods that by agreement are treated as
| | (19) "Genuine" means free of forgery or
| | (20) "Good faith" means honesty in fact in the
| | conduct or transaction concerned.
|
| (21) "Holder" means:
(A) the person in possession of a negotiable
| | instrument that is payable either to bearer or to an identified person that is the person in possession;
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| (B) the person in possession of a document of
| | title if the goods are deliverable either to bearer or to the order of the person in possession; or
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| (C) the person in control, other than pursuant to
| | Section 7-106(g), of a negotiable electronic document of title.
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| (22) "Insolvency proceeding" includes an assignment
| | for the benefit of creditors or other proceeding intended to liquidate or rehabilitate the estate of the person involved.
|
| (23) "Insolvent" means:
(A) having generally ceased to pay debts in the
| | ordinary course of business other than as a result of bona fide dispute;
|
| (B) being unable to pay debts as they become due;
| | (C) being insolvent within the meaning of federal
| | (24) "Money" means a medium of exchange that is
| | currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries. The term does not include an electronic record that is a medium of exchange recorded and transferable in a system that existed and operated for the medium of exchange before the medium of exchange was authorized or adopted by the government.
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| (25) "Organization" means a person other than an
| | (26) "Party", as distinguished from "third party",
| | means a person that has engaged in a transaction or made an agreement subject to the Uniform Commercial Code.
|
| (27) "Person" means an individual, corporation,
| | business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. The term includes a protected series, however denominated, of an entity if the protected series is established under law other than the Uniform Commercial Code that limits, or limits if conditions specified under the law are satisfied, the ability of a creditor of the entity or of any other protected series of the entity to satisfy a claim from assets of the protected series.
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| (28) "Present value" means the amount as of a date
| | certain of one or more sums payable in the future, discounted to the date certain by use of either an interest rate specified by the parties if that rate is not manifestly unreasonable at the time the transaction is entered into or, if an interest rate is not so specified, a commercially reasonable rate that takes into account the facts and circumstances at the time the transaction is entered into.
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| (29) "Purchase" means taking by sale, lease,
| | discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift, or any other voluntary transaction creating an interest in property.
|
| (30) "Purchaser" means a person that takes by
| | (31) "Record" means information that is inscribed on
| | a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
|
| (32) "Remedy" means any remedial right to which an
| | aggrieved party is entitled with or without resort to a tribunal.
|
| (33) "Representative" means a person empowered to act
| | for another, including an agent, an officer of a corporation or association, and a trustee, executor, or administrator of an estate.
|
| (34) "Right" includes remedy.
(35) "Security interest" means an interest in
| | personal property or fixtures which secures payment or performance of an obligation. "Security interest" includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction that is subject to Article 9. "Security interest" does not include the special property interest of a buyer of goods on identification of those goods to a contract for sale under Section 2-401, but a buyer may also acquire a "security interest" by complying with Article 9. Except as otherwise provided in Section 2-505, the right of a seller or lessor of goods under Article 2 or 2A to retain or acquire possession of the goods is not a "security interest", but a seller or lessor may also acquire a "security interest" by complying with Article 9. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer under Section 2-401 is limited in effect to a reservation of a "security interest". Whether a transaction in the form of a lease creates a "security interest" is determined pursuant to Section 1-203.
|
| (36) "Send", in connection with a record or
| | (A) to deposit in the mail, deliver for
| | transmission, or transmit by any other usual means of communication, with postage or cost of transmission provided for, addressed to any address reasonable under the circumstances; or
|
| (B) to cause the record or notification to be
| | received within the time it would have been received if properly sent under subparagraph (A).
|
| (37) "Sign" means, with present intent to
| | authenticate or adopt a record:
|
| (A) execute or adopt a tangible symbol; or
(B) attach to or logically associate with the
| | record an electronic symbol, sound, or process.
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| "Signed", "signing", and "signature" have
| | (38) "State" means a State of the United States, the
| | District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.
|
| (39) "Surety" includes a guarantor or other secondary
| | (40) "Term" means a portion of an agreement that
| | relates to a particular matter.
|
| (41) "Unauthorized signature" means a signature made
| | without actual, implied, or apparent authority. The term includes a forgery.
|
| (42) "Warehouse receipt" means a receipt issued by a
| | person engaged in the business of storing goods for hire.
|
| (43) "Writing" includes printing, typewriting, or any
| | other intentional reduction to tangible form. "Written" has a corresponding meaning.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/1-202
(810 ILCS 5/1-202) (from Ch. 26, par. 1-202)
Sec. 1-202. Notice; knowledge.
(a) Subject to subsection (f), a person has "notice" of a fact if the person: (1) has actual knowledge of it; (2) has received a notice or notification of it; or (3) from all the facts and circumstances known to the | | person at the time in question, has reason to know that it exists.
|
| (b) "Knowledge" means actual knowledge. "Knows" has a corresponding meaning.
(c) "Discover", "learn", or words of similar import refer to knowledge rather than to reason to know.
(d) A person "notifies" or "gives" a notice or notification to another person by taking such steps as may be reasonably required to inform the other person in ordinary course, whether or not the other person actually comes to know of it.
(e) Subject to subsection (f), a person "receives" a notice or notification when:
(1) it comes to that person's attention; or
(2) it is duly delivered in a form reasonable under
| | the circumstances at the place of business through which the contract was made or at another location held out by that person as the place for receipt of such communications.
|
| (f) Notice, knowledge, or a notice or notification received by an organization is effective for a particular transaction from the time it is brought to the attention of the individual conducting that transaction and, in any event, from the time it would have been brought to the individual's attention if the organization had exercised due diligence. An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines. Due diligence does not require an individual acting for the organization to communicate information unless the communication is part of the individual's regular duties or the individual has reason to know of the transaction and that the transaction would be materially affected by the information.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/1-203
(810 ILCS 5/1-203) (from Ch. 26, par. 1-203)
Sec. 1-203. Lease distinguished from security interest.
(a) Whether a transaction in the form of a lease creates a lease or security interest is determined by the facts of each case. (b) A transaction in the form of a lease creates a security interest if the consideration that the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease and is not subject to termination by the lessee, and: (1) the original term of the lease is equal to or | | greater than the remaining economic life of the goods;
|
| (2) the lessee is bound to renew the lease for the
| | remaining economic life of the goods or is bound to become the owner of the goods;
|
| (3) the lessee has an option to renew the lease for
| | the remaining economic life of the goods for no additional consideration or for nominal additional consideration upon compliance with the lease agreement; or
|
| (4) the lessee has an option to become the owner of
| | the goods for no additional consideration or for nominal additional consideration upon compliance with the lease agreement.
|
| (c) A transaction in the form of a lease does not create a security interest merely because:
(1) the present value of the consideration the lessee
| | is obligated to pay the lessor for the right to possession and use of the goods is substantially equal to or is greater than the fair market value of the goods at the time the lease is entered into;
|
| (2) the lessee assumes risk of loss of the goods;
(3) the lessee agrees to pay, with respect to the
| | goods, taxes, insurance, filing, recording, or registration fees, or service or maintenance costs;
|
| (4) the lessee has an option to renew the lease or to
| | become the owner of the goods;
|
| (5) the lessee has an option to renew the lease for a
| | fixed rent that is equal to or greater than the reasonably predictable fair market rent for the use of the goods for the term of the renewal at the time the option is to be performed; or
|
| (6) the lessee has an option to become the owner of
| | the goods for a fixed price that is equal to or greater than the reasonably predictable fair market value of the goods at the time the option is to be performed.
|
| (d) Additional consideration is nominal if it is less than the lessee's reasonably predictable cost of performing under the lease agreement if the option is not exercised. Additional consideration is not nominal if:
(1) when the option to renew the lease is granted to
| | the lessee, the rent is stated to be the fair market rent for the use of the goods for the term of the renewal determined at the time the option is to be performed; or
|
| (2) when the option to become the owner of the goods
| | is granted to the lessee, the price is stated to be the fair market value of the goods determined at the time the option is to be performed.
|
| (e) The "remaining economic life of the goods" and "reasonably predictable" fair market rent, fair market value, or cost of performing under the lease agreement must be determined with reference to the facts and circumstances at the time the transaction is entered into.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/1-204 (810 ILCS 5/1-204) (from Ch. 26, par. 1-204) (Text of Section before amendment by P.A. 103-1036) Sec. 1-204. Value.
Except as otherwise provided in Articles 3, 4, 5, and 6, a person gives value for rights if the person acquires them:
(1) in return for a binding commitment to extend | | credit or for the extension of immediately available credit, whether or not drawn upon and whether or not a charge-back is provided for in the event of difficulties in collection;
|
| (2) as security for, or in total or partial
| | satisfaction of, a preexisting claim;
|
| (3) by accepting delivery under a preexisting
| | contract for purchase; or
|
| (4) in return for any consideration sufficient to
| | support a simple contract.
|
| (Source: P.A. 95-895, eff. 1-1-09.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 1-204. Value. Except as otherwise provided in Articles 3, 4, 5, 6, and 12, a person gives value for rights if the person acquires them:
(1) in return for a binding commitment to extend
| | credit or for the extension of immediately available credit, whether or not drawn upon and whether or not a charge-back is provided for in the event of difficulties in collection;
|
| (2) as security for, or in total or partial
| | satisfaction of, a preexisting claim;
|
| (3) by accepting delivery under a preexisting
| | contract for purchase; or
|
| (4) in return for any consideration sufficient to
| | support a simple contract.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/1-205
(810 ILCS 5/1-205) (from Ch. 26, par. 1-205)
Sec. 1-205. Reasonable time; seasonableness.
(a) Whether a time for taking an action required by the Uniform Commercial Code is reasonable depends on the nature, purpose, and circumstances of the action. (b) An action is taken seasonably if it is taken at or within the time agreed or, if no time is agreed, at or within a reasonable time.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/1-206
(810 ILCS 5/1-206) (from Ch. 26, par. 1-206)
Sec. 1-206. Presumptions.
Whenever the Uniform Commercial Code creates a "presumption" with respect to a fact, or provides that a fact is "presumed", the trier of fact must find the existence of the fact unless and until evidence is introduced that supports a finding of its nonexistence.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/1-207
(810 ILCS 5/1-207) (from Ch. 26, par. 1-207)
Sec. 1-207. (Blank).
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/1-208
(810 ILCS 5/1-208) (from Ch. 26, par. 1-208)
Sec. 1-208. (Blank).
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/1-209
(810 ILCS 5/1-209) (from Ch. 26, par. 1-209)
Sec. 1-209. (Blank).
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/Art. 1 Pt. 3
(810 ILCS 5/Art. 1 Pt. 3 heading)
PART 3TERRITORIAL APPLICABILITY AND GENERAL RULES
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/1-301 (810 ILCS 5/1-301) (Text of Section before amendment by P.A. 103-1036) Sec. 1-301. Territorial applicability; parties' power to choose applicable law. (a) Except as otherwise provided in this Section, when a transaction bears a reasonable relation to this State and also to another state or nation the parties may agree that the law either of this State or of such other state or nation shall govern their rights and duties. (b) In the absence of an agreement effective under subsection (a), and except as provided in subsection (c), the Uniform Commercial Code applies to transactions bearing an appropriate relation to this State. (c) If one of the following provisions of the Uniform Commercial Code specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law so specified: (1) Section 2-402; (2) Sections 2A-105 and 2A-106; (3) Section 4-102; (4) Section 4A-507; (5) Section 5-116; (6) Section 8-110; (7) Sections 9-301 through 9-307.(Source: P.A. 95-895, eff. 1-1-09.) (Text of Section after amendment by P.A. 103-1036) Sec. 1-301. Territorial applicability; parties' power to choose applicable law. (a) Except as otherwise provided in this Section, when a transaction bears a reasonable relation to this State and also to another state or nation the parties may agree that the law either of this State or of such other state or nation shall govern their rights and duties. (b) In the absence of an agreement effective under subsection (a), and except as provided in subsection (c), the Uniform Commercial Code applies to transactions bearing an appropriate relation to this State. (c) If one of the following provisions of the Uniform Commercial Code specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law so specified: (1) Section 2-402; (2) Sections 2A-105 and 2A-106; (3) Section 4-102; (4) Section 4A-507; (5) Section 5-116; (6) Section 8-110; (7) Sections 9-301 through 9-307; (8) Section 12-107. (Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/1-302 (810 ILCS 5/1-302)
Sec. 1-302. Variation by agreement. (a) Except as otherwise provided in subsection (b) or elsewhere in the Uniform Commercial Code, the effect of provisions of the Uniform Commercial Code may be varied by agreement. (b) The obligations of good faith, diligence, reasonableness, and care prescribed by the Uniform Commercial Code may not be disclaimed by agreement. The parties, by agreement, may determine the standards by which the performance of those obligations is to be measured if those standards are not manifestly unreasonable. Whenever the Uniform Commercial Code requires an action to be taken within a reasonable time, a time that is not manifestly unreasonable may be fixed by agreement. (c) The presence in certain provisions of the Uniform Commercial Code of the phrase "unless otherwise agreed", or words of similar import, does not imply that the effect of other provisions may not be varied by agreement under this Section.
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/1-303 (810 ILCS 5/1-303)
Sec. 1-303. Course of performance, course of dealing, and usage of trade. (a) A "course of performance" is a sequence of conduct between the parties to a particular transaction that exists if: (1) the agreement of the parties with respect to the | | transaction involves repeated occasions for performance by a party; and
|
| (2) the other party, with knowledge of the nature of
| | the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.
|
| (b) A "course of dealing" is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
(c) A "usage of trade" is any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage must be proved as facts. If it is established that such a usage is embodied in a trade code or similar record, the interpretation of the record is a question of law.
(d) A course of performance or course of dealing between the parties or usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware is relevant in ascertaining the meaning of the parties' agreement, may give particular meaning to specific terms of the agreement, and may supplement or qualify the terms of the agreement. A usage of trade applicable in the place in which part of the performance under the agreement is to occur may be so utilized as to that part of the performance.
(e) Except as otherwise provided in subsection (f), the express terms of an agreement and any applicable course of performance, course of dealing, or usage of trade must be construed whenever reasonable as consistent with each other. If such a construction is unreasonable:
(1) express terms prevail over course of performance,
| | course of dealing, and usage of trade;
|
| (2) course of performance prevails over course of
| | dealing and usage of trade; and
|
| (3) course of dealing prevails over usage of trade.
(f) Subject to Section 2-209, a course of performance is relevant to show a waiver or modification of any term inconsistent with the course of performance.
(g) Evidence of a relevant usage of trade offered by one party is not admissible unless that party has given the other party notice that the court finds sufficient to prevent unfair surprise to the other party.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/1-304 (810 ILCS 5/1-304)
Sec. 1-304. Obligation of good faith. Every contract or duty within the Uniform Commercial Code imposes an obligation of good faith in its performance and enforcement.
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/1-305 (810 ILCS 5/1-305)
Sec. 1-305. Remedies to be liberally administered. (a) The remedies provided by the Uniform Commercial Code must be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed but neither consequential or special damages nor penal damages may be had except as specifically provided in the Uniform Commercial Code or by other rule of law. (b) Any right or obligation declared by the Uniform Commercial Code is enforceable by action unless the provision declaring it specifies a different and limited effect.
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/1-306 (810 ILCS 5/1-306) (Text of Section before amendment by P.A. 103-1036) Sec. 1-306. Waiver or renunciation of claim or right after breach. A claim or right arising out of an alleged breach may be discharged in whole or in part without consideration by agreement of the aggrieved party in an authenticated record.(Source: P.A. 95-895, eff. 1-1-09.) (Text of Section after amendment by P.A. 103-1036) Sec. 1-306. Waiver or renunciation of claim or right after breach. A claim or right arising out of an alleged breach may be discharged in whole or in part without consideration by agreement of the aggrieved party in a signed record.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/1-307 (810 ILCS 5/1-307)
Sec. 1-307. Prima facie evidence by third-party documents. A document in due form purporting to be a bill of lading, policy or certificate of insurance, official weigher's or inspector's certificate, consular invoice, or any other document authorized or required by the contract to be issued by a third party is prima facie evidence of its own authenticity and genuineness and of the facts stated in the document by the third party.
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/1-308 (810 ILCS 5/1-308)
Sec. 1-308. Performance or acceptance under reservation of rights. (a) A party that with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as "without prejudice", "under protest", or the like are sufficient. (b) Subsection (a) does not apply to an accord and satisfaction.
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/1-309 (810 ILCS 5/1-309)
Sec. 1-309. Option to accelerate at will. A term providing that one party or that party's successor in interest may accelerate payment or performance or require collateral or additional collateral "at will" or when the party "deems itself insecure", or words of similar import, means that the party has power to do so only if that party in good faith believes that the prospect of payment or performance is impaired. The burden of establishing lack of good faith is on the party against which the power has been exercised.
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/1-310 (810 ILCS 5/1-310)
Sec. 1-310. Subordinated obligations. An obligation may be issued as subordinated to performance of another obligation of the person obligated, or a creditor may subordinate its right to performance of an obligation by agreement with either the person obligated or another creditor of the person obligated. Subordination does not create a security interest as against either the common debtor or a subordinated creditor.
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/Art. 2
(810 ILCS 5/Art. 2 heading)
ARTICLE 2
SALES
|
810 ILCS 5/Art. 2 Pt. 1
(810 ILCS 5/Art. 2 Pt. 1 heading)
PART 1.
SHORT TITLE, GENERAL
CONSTRUCTION AND SUBJECT MATTER
|
810 ILCS 5/2-101
(810 ILCS 5/2-101) (from Ch. 26, par. 2-101)
Sec. 2-101.
Short title.
This Article shall be known and may be cited as Uniform Commercial
Code--Sales.
(Source: Laws 1961, p. 2101.)
|
810 ILCS 5/2-102 (810 ILCS 5/2-102) (from Ch. 26, par. 2-102) (Text of Section before amendment by P.A. 103-1036) Sec. 2-102. Scope; certain security and other transactions excluded from this article. Unless the context otherwise requires, this Article applies to
transactions in goods; it does not apply to any transaction which although
in the form of an unconditional contract to sell or present sale is
intended to operate only as a security transaction nor does this Article
impair or repeal any statute regulating sales to consumers, farmers or
other specified classes of buyers.(Source: Laws 1961, p. 2101.) (Text of Section after amendment by P.A. 103-1036) Sec. 2-102. Scope; certain security and other transactions excluded from this Article. (1) Unless the context otherwise requires, and except as provided in subsection (3), this Article applies to transactions in goods and, in the case of a hybrid transaction, it applies to the extent provided in subsection (2). (2) In a hybrid transaction: (a) If the sale-of-goods aspects do not predominate, | | only the provisions of this Article which relate primarily to the sale-of-goods aspects of the transaction apply, and the provisions that relate primarily to the transaction as a whole do not apply.
|
| (b) If the sale-of-goods aspects predominate, this
| | Article applies to the transaction but does not preclude application in appropriate circumstances of other law to aspects of the transaction which do not relate to the sale of goods.
|
| (3) This Article does not:
(a) apply to a transaction that, even though in the
| | form of an unconditional contract to sell or present sale, operates only to create a security interest; or
|
| (b) impair or repeal a statute regulating sales to
| | consumers, farmers, or other specified classes of buyers.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/2-103
(810 ILCS 5/2-103) (from Ch. 26, par. 2-103)
Sec. 2-103. Definitions and index of definitions.
(1) In this Article unless the context otherwise requires
(a) "Buyer" means a person who buys or contracts to | |
(b) "Good faith" in the case of a merchant means
| | honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.
|
|
(c) "Receipt" of goods means taking physical
| |
(d) "Seller" means a person who sells or contracts to
| |
(2) Other definitions applying to this Article or to specified Parts
thereof, and the sections in which they appear are:
"Acceptance". Section 2-606.
"Banker's credit". Section 2-325.
"Between merchants". Section 2-104.
"Cancellation". Section 2-106(4).
"Commercial unit". Section 2-105.
"Confirmed credit". Section 2-325.
"Conforming to contract". Section 2-106.
"Contract for sale". Section 2-106.
"Cover". Section 2-712.
"Entrusting". Section 2-403.
"Financing agency". Section 2-104.
"Future goods". Section 2-105.
"Goods". Section 2-105.
"Identification". Section 2-501.
"Installment contract". Section 2-612.
"Letter of Credit". Section 2-325.
"Lot". Section 2-105.
"Merchant". Section 2-104.
"Overseas". Section 2-323.
"Person in position of seller". Section 2-707.
"Present sale". Section 2-106.
"Sale". Section 2-106.
"Sale on approval". Section 2-326.
"Sale or return". Section 2-326.
"Termination". Section 2-106.
(3) "Control" as provided in Section 7-106 and the
following definitions in other Articles apply to this Article:
"Check". Section 3-104.
"Consignee". Section 7-102.
"Consignor". Section 7-102.
"Consumer goods". Section 9-102.
"Dishonor". Section 3-502.
"Draft". Section 3-104.
(4) In addition Article 1 contains general definitions and principles of
construction and interpretation applicable throughout this Article.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/2-104
(810 ILCS 5/2-104) (from Ch. 26, par. 2-104)
Sec. 2-104. Definitions. "merchant"; "between merchants"; "financing agency".
(1) "Merchant" means a person who deals in goods of the kind or
otherwise by his occupation holds himself out as having knowledge or skill
peculiar to the practices or goods involved in the transaction or to whom
such knowledge or skill may be attributed by his employment of an agent or
broker or other intermediary who by his occupation holds himself out as
having such knowledge or skill.
(2) "Financing agency" means a bank, finance company or other person who
in the ordinary course of business makes advances against goods or
documents of title or who by arrangement with either the seller or the
buyer intervenes in ordinary course to make or collect payment due or
claimed under the contract for sale, as by purchasing or paying the
seller's draft or making advances against it or by merely taking it for
collection whether or not documents of title accompany or are associated with the draft.
"Financing agency" includes also a bank or other person who similarly
intervenes between persons who are in the position of seller and buyer in
respect to the goods (Section 2-707).
(3) "Between merchants" means in any transaction with respect to which
both parties are chargeable with the knowledge or skill of merchants.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/2-105
(810 ILCS 5/2-105) (from Ch. 26, par. 2-105)
Sec. 2-105.
Definitions:
transferability; "goods"; "future" goods; "lot"; "commercial
unit".
(1) "Goods" means all things, including specially manufactured goods,
which are movable at the time of identification to the contract for sale
other than the money in which the price is to be paid, investment
securities (Article 8) and things in action. "Goods" also includes the
unborn young of animals and growing crops and other identified things
attached to realty as described in the section on goods to be severed from
realty (Section 2-107).
(2) Goods must be both existing and identified before any interest in
them can pass. Goods which are not both existing and identified are
"future" goods. A purported present sale of future goods or of any interest
therein operates as a contract to sell.
(3) There may be a sale of a part interest in existing identified goods.
(4) An undivided share in an identified bulk of fungible goods is
sufficiently identified to be sold although the quantity of the bulk is not
determined. Any agreed proportion of such a bulk or any quantity thereof
agreed upon by number, weight or other measure may to the extent of the
seller's interest in the bulk be sold to the buyer who then becomes an
owner in common.
(5) "Lot" means a parcel or a single article which is the subject matter
of a separate sale or delivery, whether or not it is sufficient to perform
the contract.
(6) "Commercial unit" means such a unit of goods as by commercial usage
is a single whole for purposes of sale and division of which materially
impairs its character or value on the market or in use. A commercial unit
may be a single article (as a machine) or a set of articles (as a suite of
furniture or an assortment of sizes) or a quantity (as a bale, gross, or
carload) or any other unit treated in use or in the relevant market as a
single whole.
(Source: Laws 1961, p. 2101.)
|
810 ILCS 5/2-106 (810 ILCS 5/2-106) (from Ch. 26, par. 2-106) (Text of Section before amendment by P.A. 103-1036) Sec. 2-106. Definitions. "contract"; "agreement"; "contract for sale"; "sale"; "present
sale"; "conforming" to contract; "termination"; "cancellation". (1) In this Article unless the context otherwise requires "contract" and
"agreement" are limited to those relating to the present or future sale of
goods. "Contract for sale" includes both a present sale of goods and a
contract to sell goods at a future time. A "sale" consists in the passing
of title from the seller to the buyer for a price (Section 2-401). A
"present sale" means a sale which is accomplished by the making of the
contract. (2) Goods or conduct including any part of a performance are
"conforming" or conform to the contract when they are in accordance with
the obligations under the contract. (3) "Termination" occurs when either party pursuant to a power created
by agreement or law puts an end to the contract otherwise than for its
breach. On "termination" all obligations which are still executory on both
sides are discharged but any right based on prior breach or performance
survives. (4) "Cancellation" occurs when either party puts an end to the contract
for breach by the other and its effect is the same as that of "termination"
except that the cancelling party also retains any remedy for breach of the
whole contract or any unperformed balance.(Source: Laws 1961, 1st SS., p. 7.) (Text of Section after amendment by P.A. 103-1036) Sec. 2-106. Definitions: "contract"; "agreement"; "contract for sale"; "sale"; "present sale"; "conforming" to contract; "termination"; "cancellation"; "hybrid transaction". (1) In this Article unless the context otherwise requires "contract" and "agreement" are limited to those relating to the present or future sale of goods. "Contract for sale" includes both a present sale of goods and a contract to sell goods at a future time. A "sale" consists in the passing of title from the seller to the buyer for a price (Section 2-401). A "present sale" means a sale which is accomplished by the making of the contract. (2) Goods or conduct including any part of a performance are "conforming" or conform to the contract when they are in accordance with the obligations under the contract. (3) "Termination" occurs when either party pursuant to a power created by agreement or law puts an end to the contract otherwise than for its breach. On "termination" all obligations which are still executory on both sides are discharged but any right based on prior breach or performance survives. (4) "Cancellation" occurs when either party puts an end to the contract for breach by the other and its effect is the same as that of "termination" except that the cancelling party also retains any remedy for breach of the whole contract or any unperformed balance. (5) "Hybrid transaction" means a single transaction involving a sale of goods and: (a) the provision of services; (b) a lease of other goods; or (c) a sale, lease, or license of property other than | | (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/2-107
(810 ILCS 5/2-107) (from Ch. 26, par. 2-107)
Sec. 2-107.
Goods to Be Severed From Realty: Recording.
(1) A contract for the sale of minerals or the like (including oil and
gas) or a structure or its materials to be removed from realty is a
contract for the sale of goods within this Article if they are to be
severed by the seller but until severance a purported present sale thereof
which is not effective as a transfer of an interest in land is effective
only as a contract to sell.
(2) A contract for the sale apart from the land of growing crops or
other things attached to realty and capable of severance without material
harm thereto but not described in subsection (1) or of timber to be cut is
a contract for the sale of goods within this Article whether the subject
matter is to be severed by the buyer or by the seller even though it forms
part of the realty at the time of contracting, and the parties can by
identification effect a present sale before severance.
(3) The provisions of this Section are subject to any third party rights
provided by the law relating to realty records, and the contract for sale
may be executed and recorded as a document transferring an interest in land
and shall then constitute notice to third parties of the buyer's rights
under the contract for sale.
(Source: P.A. 77-2810.)
|
810 ILCS 5/Art. 2 Pt. 2
(810 ILCS 5/Art. 2 Pt. 2 heading)
PART 2.
FORM, FORMATION AND READJUSTMENT OF CONTRACT
|
810 ILCS 5/2-201 (810 ILCS 5/2-201) (from Ch. 26, par. 2-201) (Text of Section before amendment by P.A. 103-1036) Sec. 2-201. Formal requirements; statute of frauds. (1) Except as otherwise provided in this Section a contract for the sale
of goods for the price of $500 or more is not enforceable by way of action
or defense unless there is some writing sufficient to indicate that a
contract for sale has been made between the parties and signed by the party
against whom enforcement is sought or by his authorized agent or broker. A
writing is not insufficient because it omits or incorrectly states a term
agreed upon but the contract is not enforceable under this paragraph beyond
the quantity of goods shown in such writing. (2) Between merchants if within a reasonable time a writing in
confirmation of the contract and sufficient against the sender is received
and the party receiving it has reason to know its contents, it satisfies
the requirements of subsection (1) against such party unless written notice
of objection to its contents is given within 10 days after it is received. (3) A contract which does not satisfy the requirements of subsection (1)
but which is valid in other respects is enforceable (a) if the goods are to be specially manufactured for | | the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or
|
| (b) if the party against whom enforcement is sought
| | admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or
|
| (c) with respect to goods for which payment has been
| | made and accepted or which have been received and accepted (Section 2-606).
|
| (Source: Laws 1961, 1st SS., p. 7.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 2-201. Formal requirements; statute of frauds.
(1) Except as otherwise provided in this Section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is a record sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by the party's authorized agent or broker. A record is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this subsection beyond the quantity of goods shown in the record.
(2) Between merchants if within a reasonable time a record in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against the party unless notice in a record of objection to its contents is given within 10 days after it is received.
(3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable
(a) if the goods are to be specially manufactured for
| | the buyer and are not suitable for sale to others in the ordinary course of the seller's business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or
|
| (b) if the party against whom enforcement is sought
| | admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or
|
| (c) with respect to goods for which payment has been
| | made and accepted or which have been received and accepted (Section 2-606).
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/2-202 (810 ILCS 5/2-202) (from Ch. 26, par. 2-202) (Text of Section before amendment by P.A. 103-1036) Sec. 2-202. Final written expression: parol or extrinsic evidence. Terms with respect to which the confirmatory memoranda of the parties
agree or which are otherwise set forth in a writing intended by the parties
as a final expression of their agreement with respect to such terms as are
included therein may not be contradicted by evidence of any prior agreement
or of a contemporaneous oral agreement but may be explained or supplemented (a) by course of performance, course of dealing, or | | usage of trade (Section 1-303); and
|
| (b) by evidence of consistent additional terms unless
| | the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
|
| (Source: P.A. 95-895, eff. 1-1-09.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 2-202. Final expression: parol or extrinsic evidence. Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a record intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:
(a) by course of performance, course of dealing, or
| | usage of trade (Section 1-303); and
|
| (b) by evidence of consistent additional terms unless
| | the court finds the record to have been intended also as a complete and exclusive statement of the terms of the agreement.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/2-203 (810 ILCS 5/2-203) (from Ch. 26, par. 2-203) (Text of Section before amendment by P.A. 103-1036) Sec. 2-203. Seals inoperative. The affixing of a seal to a writing evidencing a contract for sale or an offer to buy or sell goods does not constitute the writing a sealed instrument and the law with respect to sealed instruments does not apply to such a contract or offer.(Source: Laws 1961, p. 2101.) (Text of Section after amendment by P.A. 103-1036) Sec. 2-203. Seals inoperative. The affixing of a seal to a record evidencing a contract for sale or an offer to buy or sell goods does not constitute the record a sealed instrument and the law with respect to sealed instruments does not apply to such a contract or offer.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/2-204
(810 ILCS 5/2-204) (from Ch. 26, par. 2-204)
Sec. 2-204.
Formation in general.
(1) A contract for sale of goods may be made in any manner sufficient to
show agreement, including conduct by both parties which recognizes the
existence of such a contract.
(2) An agreement sufficient to constitute a contract for sale may be
found even though the moment of its making is undetermined.
(3) Even though one or more terms are left open a contract for sale does
not fail for indefiniteness if the parties have intended to make a contract
and there is a reasonably certain basis for giving an appropriate remedy.
(Source: Laws 1961, p. 2101.)
|
810 ILCS 5/2-205 (810 ILCS 5/2-205) (from Ch. 26, par. 2-205) (Text of Section before amendment by P.A. 103-1036) Sec. 2-205. Firm offers. An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed 3 months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.(Source: Laws 1961, 1st SS., p. 7.) (Text of Section after amendment by P.A. 103-1036) Sec. 2-205. Firm offers. An offer by a merchant to buy or sell goods in a signed record which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed 3 months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/2-206
(810 ILCS 5/2-206) (from Ch. 26, par. 2-206)
Sec. 2-206.
Offer and acceptance in formation of contract.
(1) Unless otherwise unambiguously indicated by the language or
circumstances
(a) an offer to make a contract shall be construed as | | inviting acceptance in any manner and by any medium reasonable in the circumstances;
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|
(b) an order or other offer to buy goods for prompt
| | or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.
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|
(2) Where the beginning of a requested performance is a reasonable mode
of acceptance an offeror who is not notified of acceptance within a
reasonable time may treat the offer as having lapsed before acceptance.
(Source: Laws 1961, p. 2101.)
|
810 ILCS 5/2-207
(810 ILCS 5/2-207) (from Ch. 26, par. 2-207)
Sec. 2-207.
Additional terms in acceptance or confirmation.
(1) A definite and seasonable expression of acceptance or a written
confirmation which is sent within a reasonable time operates as an
acceptance even though it states terms additional to or different from
those offered or agreed upon, unless acceptance is expressly made
conditional on assent to the additional or different terms.
(2) The additional terms are to be construed as proposals for addition
to the contract. Between merchants such terms become part of the contract
unless:
(a) the offer expressly limits acceptance to the | |
(b) they materially alter it; or
(c) notification of objection to them has already
| | been given or is given within a reasonable time after notice of them is received.
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|
(3) Conduct by both parties which recognizes the existence of a contract
is sufficient to establish a contract for sale although the writings of the
parties do not otherwise establish a contract. In such case the terms of
the particular contract consist of those terms on which the writings of the
parties agree, together with any supplementary terms incorporated under any
other provisions of this Act.
(Source: Laws 1961, p. 2101.)
|
810 ILCS 5/2-208
(810 ILCS 5/2-208) (from Ch. 26, par. 2-208)
Sec. 2-208. (Blank).
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2-209 (810 ILCS 5/2-209) (from Ch. 26, par. 2-209) (Text of Section before amendment by P.A. 103-1036) Sec. 2-209. Modification, rescission and waiver. (1) An agreement modifying a contract within this Article needs no
consideration to be binding. (2) A signed agreement which excludes modification or rescission except
by a signed writing cannot be otherwise modified or rescinded, but except
as between merchants such a requirement on a form supplied by the merchant
must be separately signed by the other party. (3) The requirements of the statute of frauds section of this Article
(Section 2-201) must be satisfied if the contract as modified is within
its provisions. (4) Although an attempt at modification or rescission does not satisfy
the requirements of subsection (2) or (3) it can operate as a waiver. (5) A party who has made a waiver affecting an executory portion of the
contract may retract the waiver by reasonable notification received by the
other party that strict performance will be required of any term waived,
unless the retraction would be unjust in view of a material change of
position in reliance on the waiver.(Source: Laws 1961, 1st SS., p. 7.) (Text of Section after amendment by P.A. 103-1036) Sec. 2-209. Modification, rescission, and waiver. (1) An agreement modifying a contract within this Article needs no consideration to be binding. (2) A signed agreement which excludes modification or rescission except by a signed writing or other signed record cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party. (3) The requirements of the statute of frauds section of this Article (Section 2-201) must be satisfied if the contract as modified is within its provisions. (4) Although an attempt at modification or rescission does not satisfy the requirements of subsection (2) or (3) it can operate as a waiver. (5) A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/2-210
(810 ILCS 5/2-210) (from Ch. 26, par. 2-210)
Sec. 2-210.
Delegation of performance; assignment of rights.
(1) A party may perform his duty through a delegate unless otherwise
agreed or unless the other party has a substantial interest in having
his original promisor perform or control the acts required by the
contract. No delegation of performance relieves the party delegating of
any duty to perform or any liability for breach.
(2) Except as otherwise provided in Section 9-406, unless otherwise
agreed all rights of either seller or buyer can
be assigned except where the assignment would materially change the duty
of the other party, or increase materially the burden or risk imposed on
him by his contract, or impair materially his chance of obtaining return
performance. A right to damages for breach of the whole contract or a
right arising out of the assignor's due performance of his entire
obligation can be assigned despite agreement otherwise.
(3) The creation, attachment, perfection, or enforcement of a security
interest in the seller's interest under a contract is not a transfer that
materially changes the duty of or increases materially the burden or risk
imposed on the buyer or impairs materially the buyer's chance of obtaining
return performance with the purview of subsection (2) unless, and then only to
the extent that, enforcement actually results in a delegation of material
performance of the seller. Even in that event, the creation, attachment,
perfection, and enforcement of the security interest remain effective, but (i)
the seller is liable to the buyer for damages caused by the delegation to the
extent that the damages could not reasonably be prevented by the buyer, and
(ii) a court having jurisdiction may grant other appropriate relief, including
cancellation of the contract for sale or an injunction against enforcement of
the security interest or consummation of the enforcement.
(4) Unless the circumstances indicate the contrary a
prohibition of assignment of "the contract" is to be construed as barring only
the
delegation to the assignee of the assignor's performance.
(5) An assignment of "the contract" or of "all my rights under
the contract" or an assignment in similar general terms is an assignment of
rights and unless the language or the circumstances (as in an assignment
for security) indicate the contrary, it is a delegation of performance
of the duties of the assignor and its acceptance by the assignee
constitutes a promise by him to perform those duties. This promise is
enforceable by either the assignor or the other party to the original
contract.
(6) The other party may treat any assignment which delegates
performance as creating reasonable grounds for insecurity and may
without prejudice to his rights against the assignor demand assurances
from the assignee (Section 2-609).
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/Art. 2 Pt. 3
(810 ILCS 5/Art. 2 Pt. 3 heading)
PART 3.
GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT
|
810 ILCS 5/2-301
(810 ILCS 5/2-301) (from Ch. 26, par. 2-301)
Sec. 2-301.
General obligations of parties.
The obligation of the seller is to transfer and deliver and that of the
buyer is to accept and pay in accordance with the contract.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-302
(810 ILCS 5/2-302) (from Ch. 26, par. 2-302)
Sec. 2-302.
Unconscionable contract or clause.
(1) If the court as a matter of law finds the contract or any clause of
the contract to have been unconscionable at the time it was made the court
may refuse to enforce the contract, or it may enforce the remainder of the
contract without the unconscionable clause, or it may so limit the
application of any unconscionable clause as to avoid any unconscionable
result.
(2) When it is claimed or appears to the court that the contract or any
clause thereof may be unconscionable the parties shall be afforded a
reasonable opportunity to present evidence as to its commercial setting,
purpose and effect to aid the court in making the determination.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-303
(810 ILCS 5/2-303) (from Ch. 26, par. 2-303)
Sec. 2-303.
Allocation or division of risks.
Where this Article allocates a risk or a burden as between the parties
"unless otherwise agreed", the agreement may not only shift the allocation
but may also divide the risk or burden.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-304
(810 ILCS 5/2-304) (from Ch. 26, par. 2-304)
Sec. 2-304.
Price payable in money, goods, realty, or otherwise.
(1) The price can be made payable in money or otherwise. If it is
payable in whole or in part in goods each party is a seller of the goods
which he is to transfer.
(2) Even though all or part of the price is payable in an interest in
realty the transfer of the goods and the seller's obligations with
reference to them are subject to this Article, but not the transfer of the
interest in realty or the transferor's obligations in connection therewith.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-305
(810 ILCS 5/2-305) (from Ch. 26, par. 2-305)
Sec. 2-305.
Open
price term.
(1) The parties if they so intend can conclude a contract for sale even
though the price is not settled. In such a case the price is a reasonable
price at the time for delivery if
(a) nothing is said as to price; or
(b) the price is left to be agreed by the parties and | |
(c) the price is to be fixed in terms of some agreed
| | market or other standard as set or recorded by a third person or agency and it is not so set or recorded.
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|
(2) A price to be fixed by the seller or by the buyer means a price for
him to fix in good faith.
(3) When a price left to be fixed otherwise than by agreement of the
parties fails to be fixed through fault of one party the other may at his
option treat the contract as cancelled or himself fix a reasonable price.
(4) Where, however, the parties intend not to be bound unless the price
be fixed or agreed and it is not fixed or agreed there is no contract. In
such a case the buyer must return any goods already received or if unable
so to do must pay their reasonable value at the time of delivery and the
seller must return any portion of the price paid on account.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-306
(810 ILCS 5/2-306) (from Ch. 26, par. 2-306)
Sec. 2-306.
Output, requirements and exclusive dealings.
(1) A term which measures the quantity by the output of the seller or
the requirements of the buyer means such actual output or requirements as
may occur in good faith, except that no quantity unreasonably
disproportionate to any stated estimate or in the absence of a stated
estimate to any normal or otherwise comparable prior output or requirements
may be tendered or demanded.
(2) A lawful agreement by either the seller or the buyer for exclusive
dealing in the kind of goods concerned imposes unless otherwise agreed an
obligation by the seller to use best efforts to supply the goods and by the
buyer to use best efforts to promote their sale.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-307
(810 ILCS 5/2-307) (from Ch. 26, par. 2-307)
Sec. 2-307.
Delivery in single lot or several lots.
Unless otherwise agreed all goods called for by a contract for sale must
be tendered in a single delivery and payment is due only on such tender but
where the circumstances give either party the right to make or demand
delivery in lots the price if it can be apportioned may be demanded for
each lot.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-308
(810 ILCS 5/2-308) (from Ch. 26, par. 2-308)
Sec. 2-308.
Absence of specified place for delivery.
Unless otherwise agreed
(a) the place for delivery of goods is the seller's | | place of business or if he has none his residence; but
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|
(b) in a contract for sale of identified goods which
| | to the knowledge of the parties at the time of contracting are in some other place, that place is the place for their delivery; and
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|
(c) documents of title may be delivered through
| | customary banking channels.
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|
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-309
(810 ILCS 5/2-309) (from Ch. 26, par. 2-309)
Sec. 2-309.
Absence of specific time provisions; notice of termination.
(1) The time for shipment or delivery or any other action under a
contract if not provided in this Article or agreed upon shall be a
reasonable time.
(2) Where the contract provides for successive performances but is
indefinite in duration it is valid for a reasonable time but unless
otherwise agreed may be terminated at any time by either party.
(3) Termination of a contract by one party except on the happening of an
agreed event requires that reasonable notification be received by the other
party and an agreement dispensing with notification is invalid if its
operation would be unconscionable.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-310
(810 ILCS 5/2-310) (from Ch. 26, par. 2-310)
Sec. 2-310. Open
time for payment or running of credit authority to ship under reservation.
Unless otherwise agreed
(a) payment is due at the time and place at which the | | buyer is to receive the goods even though the place of shipment is the place of delivery; and
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(b) if the seller is authorized to send the goods he
| | may ship them under reservation, and may tender the documents of title, but the buyer may inspect the goods after their arrival before payment is due unless such inspection is inconsistent with the terms of the contract (Section 2-513); and
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(c) if delivery is authorized and made by way of
| | documents of title otherwise than by subsection (b) then payment is due regardless of where the goods are to be received (i) at the time and place at which the buyer is to receive delivery of the tangible documents or (ii) at the time the buyer is to receive delivery of the electronic documents and at the seller's place of business or if none, the seller's residence; and
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(d) where the seller is required or authorized to
| | ship the goods on credit the credit period runs from the time of shipment but post-dating the invoice or delaying its dispatch will correspondingly delay the starting of the credit period.
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|
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2-311
(810 ILCS 5/2-311) (from Ch. 26, par. 2-311)
Sec. 2-311.
Options and cooperation respecting performance.
(1) An agreement for sale which is otherwise sufficiently definite
(subsection (3) of Section 2-204 to be a contract is not made invalid by
the fact that it leaves particulars of performance to be specified by one
of the parties. Any such specification must be made in good faith and
within limits set by commercial reasonableness.
(2) Unless otherwise agreed specifications relating to assortment of the
goods are at the buyer's option and except as otherwise provided in
subsections (1) (c) and (3) of Section 2-319 specifications or
arrangements relating to shipment are at the seller's option.
(3) Where such specification would materially affect the other party's
performance but is not seasonably made or where one party's cooperation is
necessary to the agreed performance of the other but is not seasonably
forthcoming, the other party in addition to all other remedies.
(a) is excused for any resulting delay in his own | |
(b) may also either proceed to perform in any
| | reasonable manner or after the time for a material part of his own performance treat the failure to specify or to cooperate as a breach by failure to deliver or accept the goods.
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|
(Source: Laws 1961, 1st SS., p. 7.)
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810 ILCS 5/2-312
(810 ILCS 5/2-312) (from Ch. 26, par. 2-312)
Sec. 2-312.
Warranty of title and against infringement; buyer's obligation against
infringement.
(1) Subject to subsection (2) there is in a contract for sale a warranty
by the seller that
(a) the title conveyed shall be good, and its | |
(b) the goods shall be delivered free from any
| | security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.
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(2) A warranty under subsection (1) will be excluded or modified only by
specific language or by circumstances which give the buyer reason to know
that the person selling does not claim title in himself or that he is
purporting to sell only such right or title as he or a third person may
have.
(3) Unless otherwise agreed a seller who is a merchant regularly dealing
in goods of the kind warrants that the goods shall be delivered free of the
rightful claim of any third person by way of infringement or the like but a
buyer who furnishes specifications to the seller must hold the seller
harmless against any such claim which arises out of compliance with the
specifications.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-313
(810 ILCS 5/2-313) (from Ch. 26, par. 2-313)
Sec. 2-313.
Express warranties by affirmation, promise, description, sample.
(1) Express warranties by the seller are created as follows:
(a) Any affirmation of fact or promise made by the | | seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
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(b) Any description of the goods which is made part
| | of the basis of the bargain creates an express warranty that the goods shall conform to the description.
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(c) Any sample or model which is made part of the
| | basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.
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(2) It is not necessary to the creation of an express warranty that the
seller use formal words such as "warrant" or "guarantee" or that he have a
specific intention to make a warranty, but an affirmation merely of the
value of the goods or a statement purporting to be merely the seller's
opinion or commendation of the goods does not create a warranty.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-314
(810 ILCS 5/2-314) (from Ch. 26, par. 2-314)
Sec. 2-314.
Implied warranty: merchantability; usage of trade.
(1) Unless excluded or modified (Section 2-316), a warranty that the
goods shall be merchantable is implied in a contract for their sale if the
seller is a merchant with respect to goods of that kind. Under this Section
the serving for value of food or drink to be consumed either on the
premises or elsewhere is a sale.
(2) Goods to be merchantable must be at least such as
(a) pass without objection in the trade under the | | contract description; and
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(b) in the case of fungible goods, are of fair
| | average quality within the description; and
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(c) are fit for the ordinary purposes for which such
| |
(d) run, within the variations permitted by the
| | agreement, of even kind, quality and quantity within each unit and among all units involved; and
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(e) are adequately contained, packaged, and labeled
| | as the agreement may require; and
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(f) conform to the promises or affirmations of fact
| | made on the container or label if any.
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(3) Unless excluded or modified (Section 2-316) other implied
warranties may arise from course of dealing or usage of trade.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-315
(810 ILCS 5/2-315) (from Ch. 26, par. 2-315)
Sec. 2-315.
Implied warranty: fitness for particular purpose.
Where the seller at the time of contracting has reason to know any
particular purpose for which the goods are required and that the buyer is
relying on the seller's skill or judgment to select or furnish suitable
goods, there is unless excluded or modified under the next section an
implied warranty that the goods shall be fit for such purpose.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-316
(810 ILCS 5/2-316) (from Ch. 26, par. 2-316)
Sec. 2-316.
Exclusion or modification of warranties.
(1) Words or conduct relevant to the creation of an express warranty and
words or conduct tending to negate or limit warranty shall be construed
wherever reasonable as consistent with each other; but subject to the
provisions of this Article on parol or extrinsic evidence (Section 2-202)
negation or limitation is inoperative to the extent that such construction
is unreasonable.
(2) Subject to subsection (3), to exclude or modify the implied warranty
of merchantability or any part of it the language must mention
merchantability and in case of a writing must be conspicuous, and to
exclude or modify any implied warranty of fitness the exclusion must be by
a writing and conspicuous. Language to exclude all implied warranties of
fitness is sufficient if it states, for example, that "There are no
warranties which extend beyond the description on the face hereof."
(3) Notwithstanding subsection (2)
(a) unless the circumstances indicate otherwise, all implied
warranties are excluded by expressions like "as is", "with all faults" or
other language which in common understanding calls the buyer's attention to
the exclusion of warranties and makes plain that there is no implied
warranty; and
(b) when the buyer before entering into the contract has examined the
goods or the sample or model as fully as he desired or has refused to
examine the goods there is no implied warranty with regard to defects which
an examination ought in the circumstances to have revealed to him; and
(c) an implied warranty can also be excluded or modified by course of
dealing or course of performance or usage of trade; and
(d) the implied warranties of merchantability and fitness for a particular
purpose do not apply to the sale of cattle, swine, sheep, horses, poultry
and turkeys, or the unborn young of any of the foregoing, provided the seller
has made reasonable efforts to comply with State and federal regulations
pertaining to animal health. This exemption does not apply if the seller
had knowledge that the animal was diseased at the time of the sale.
(4) Remedies for breach of warranty can be limited in accordance with
the provisions of this Article on liquidation or limitation of damages and
on contractual modification of remedy (Sections 2-718 and 2-719).
(Source: P.A. 82-234.)
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810 ILCS 5/2-317
(810 ILCS 5/2-317) (from Ch. 26, par. 2-317)
Sec. 2-317.
Cumulation and conflict of warranties express or implied.
Warranties whether express or implied shall be construed as consistent
with each other and as cumulative, but if such construction is unreasonable
the intention of the parties shall determine which warranty is dominant.
In ascertaining that intention the following rules apply:
(a) Exact or technical specifications displace an | | inconsistent sample or model or general language of description.
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(b) A sample from an existing bulk displaces
| | inconsistent general language of description.
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(c) Express warranties displace inconsistent implied
| | warranties other than an implied warranty of fitness for a particular purpose.
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|
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-318
(810 ILCS 5/2-318) (from Ch. 26, par. 2-318)
Sec. 2-318.
Third party beneficiaries of warranties express or implied.
A seller's warranty whether express or implied extends to any natural
person who is in the family or household of his buyer or who is a guest in
his home if it is reasonable to expect that such person may use, consume or
be affected by the goods and who is injured in person by breach of the
warranty. A seller may not exclude or limit the operation of this Section.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-319
(810 ILCS 5/2-319) (from Ch. 26, par. 2-319)
Sec. 2-319.
F.O.B.
and F.A.S. terms.
(1) Unless otherwise agreed the term F.O.B. (which means "free on
board") at a named place, even though used only in connection with the
stated price, is a delivery term under which
(a) when the term is F.O.B. the place of shipment, | | the seller must at that place ship the goods in the manner provided in this Article (Section 2-504) and bear the expense and risk of putting them into the possession of the carrier; or
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(b) when the term is F.O.B. the place of destination,
| | the seller must at his own expense and risk transport the goods to that place and there tender delivery of them in the manner provided in this Article (Section 2-503);
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(c) when under either (a) or (b) the term is also
| | F.O.B. vessel, car or other vehicle, the seller must in addition at his own expense and risk load the goods on board. If the term is F.O.B. vessel the buyer must name the vessel and in an appropriate case the seller must comply with the provisions of this Article on the form of bill of lading (Section 2-323).
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(2) Unless otherwise agreed the term F.A.S. vessel (which means "free
alongside") at a named port, even though used only in connection with the
stated price, is a delivery term under which the seller must
(a) at his own expense and risk deliver the goods
| | alongside the vessel in the manner usual in that port or on a dock designated and provided by the buyer; and
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(b) obtain and tender a receipt for the goods in
| | exchange for which the carrier is under a duty to issue a bill of lading.
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(3) Unless otherwise agreed in any case falling within subsection (1)
(a) or (c) or subsection (2) the buyer must seasonably give any needed
instructions for making delivery, including when the term is F.A.S. or
F.O.B. the loading berth of the vessel and in an appropriate case its name
and sailing date. The seller may treat the failure of needed instructions
as a failure of cooperation under this Article (Section 2-311). He may
also at his option move the goods in any reasonable manner preparatory to
delivery or shipment.
(4) Under the term F.O.B. vessel or F.A.S. unless otherwise agreed the
buyer must make payment against tender of the required documents and the
seller may not tender nor the buyer demand delivery of the goods in
substitution for the documents.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-320
(810 ILCS 5/2-320) (from Ch. 26, par. 2-320)
Sec. 2-320.
C.I.F.
and C. & F. terms.
(1) The term C.I.F. means that the price includes in a lump sum the cost
of the goods and the insurance and freight to the named destination. The
term C. & F. or C.F. means that the price so includes cost and freight to
the named destination.
(2) Unless otherwise agreed and even though used only in connection with
the stated price and destination, the term C.I.F. destination or its
equivalent requires the seller at his own expense and risk to
(a) put the goods into the possession of a carrier at | | the port for shipment and obtain a negotiable bill or bills of lading covering the entire transportation to the named destination; and
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(b) load the goods and obtain a receipt from the
| | carrier (which may be contained in the bill of lading) showing that the freight has been paid or provided for; and
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(c) obtain a policy or certificate of insurance,
| | including any war risk insurance, of a kind and on terms then current at the port of shipment in the usual amount, in the currency of the contract, shown to cover the same goods covered by the bill of lading and providing for payment of loss to the order of the buyer or for the account of whom it may concern; but the seller may add to the price the amount of the premium for any such war risk insurance; and
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(d) prepare an invoice of the goods and procure any
| | other documents required to effect shipment or to comply with the contract; and
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(e) forward and tender with commercial promptness all
| | the documents in due form and with any indorsement necessary to perfect the buyer's rights.
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(3) Unless otherwise agreed the term C. & F. or its equivalent has the
same effect and imposes upon the seller the same obligations and risks as a
C.I.F. term except the obligation as to insurance.
(4) Under the term C.I.F. or C. & F. unless otherwise agreed the buyer
must make payment against tender of the required documents and the seller
may not tender nor the buyer demand delivery of the goods in substitution
for the documents.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-321
(810 ILCS 5/2-321) (from Ch. 26, par. 2-321)
Sec. 2-321.
C.I.F.
or C. & F.: "net landed weights"; "payment on
arrival"; warranty of condition on arrival.
Under a contract containing a term C.I.F. or C. & F.
(1) Where the price is based on or is to be adjusted according to
"net landed weights", "delivered weights", "out turn" quantity or
quality or the like, unless otherwise agreed the seller must reasonably
estimate the price. The payment due on tender of the documents called
for by the contract is the amount so estimated, but after final
adjustment of the price a settlement must be made with commercial
promptness.
(2) An agreement described in subsection (1) or any warranty of
quality or condition of the goods on arrival places upon the seller the
risk of ordinary deterioration, shrinkage and the like in transportation
but has no effect on the place or time of identification to the contract
for sale or delivery or on the passing of the risk of loss.
(3) Unless otherwise agreed where the contract provides for payment
on or after arrival of the goods the seller must before payment allow
such preliminary inspection as is feasible; but if the goods are lost
delivery of the documents and payment are due when the goods should have
arrived.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-322
(810 ILCS 5/2-322) (from Ch. 26, par. 2-322)
Sec. 2-322.
Delivery "ex-ship".
(1) Unless otherwise agreed a term for delivery of goods "ex-ship"
(which means from the carrying vessel) or in equivalent language is not
restricted to a particular ship and requires delivery from a ship which has
reached a place at the named port of destination where goods of the kind
are usually discharged.
(2) Under such a term unless otherwise agreed
(a) the seller must discharge all liens arising out | | of the carriage and furnish the buyer with a direction which puts the carrier under a duty to deliver the goods; and
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(b) the risk of loss does not pass to the buyer until
| | the goods leave the ship's tackle or are otherwise properly unloaded.
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(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-323
(810 ILCS 5/2-323) (from Ch. 26, par. 2-323)
Sec. 2-323. Form
of bill of lading required in overseas shipment; "overseas". (1) Where the contract contemplates overseas shipment and contains a
term C.I.F. or C. & F. or F.O.B. vessel, the seller unless otherwise agreed
must obtain a negotiable bill of lading stating that the goods have been
loaded on board or, in the case of a term C.I.F. or C. & F., received for
shipment.
(2) Where in a case within subsection (1) a tangible bill of lading has been
issued in a set of parts, unless otherwise agreed if the documents are not
to be sent from abroad the buyer may demand tender of the full set;
otherwise only one part of the bill of lading need be tendered. Even if the
agreement expressly requires a full set:
(a) due tender of a single part is acceptable within | | the provisions of this Article on cure of improper delivery (subsection (1) of Section 2-508); and
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(b) even though the full set is demanded, if the
| | documents are sent from abroad the person tendering an incomplete set may nevertheless require payment upon furnishing an indemnity which the buyer in good faith deems adequate.
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(3) A shipment by water or by air or a contract contemplating such
shipment is "overseas" insofar as by usage of trade or agreement it is
subject to the commercial, financing or shipping practices characteristic
of international deep water commerce.
(Source: P.A. 100-201, eff. 8-18-17.)
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810 ILCS 5/2-324
(810 ILCS 5/2-324) (from Ch. 26, par. 2-324)
Sec. 2-324.
"No
arrival, no sale" term.
Under a term "no arrival, no sale" or terms of like meaning, unless
otherwise agreed,
(a) the seller must properly ship conforming goods | | and if they arrive by any means he must tender them on arrival but he assumes no obligation that the goods will arrive unless he has caused the non-arrival; and
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(b) where without fault of the seller the goods are
| | in part lost or have so deteriorated as no longer to conform to the contract or arrive after the contract time, the buyer may proceed as if there had been casualty to identified goods (Section 2-613).
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(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-325
(810 ILCS 5/2-325) (from Ch. 26, par. 2-325)
Sec. 2-325.
"Letter of credit" term; "confirmed credit".
(1) Failure of the buyer seasonably to furnish an agreed letter of
credit is a breach of the contract for sale.
(2) The delivery to seller of a proper letter of credit suspends the
buyer's obligation to pay. If the letter of credit is dishonored, the
seller may on seasonable notification to the buyer require payment directly
from him.
(3) Unless otherwise agreed the term "letter of credit" or "banker's
credit" in a contract for sale means an irrevocable credit issued by a
financing agency of good repute and, where the shipment is overseas, of
good international repute. The term "confirmed credit" means that the
credit must also carry the direct obligation of such an agency which does
business in the seller's financial market.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-326
(810 ILCS 5/2-326) (from Ch. 26, par. 2-326)
Sec. 2-326.
Sale
on approval and sale or return; rights of creditors.
(1) Unless otherwise agreed, if delivered goods may be returned by the
buyer even though they conform to the contract, the transaction is
(a) a "sale on approval" if the goods are delivered | |
(b) a "sale or return" if the goods are delivered
| |
(2) Goods held on approval are not
subject to the claims of the buyer's creditors until acceptance; goods held
on sale or return are subject to such claims while in the buyer's
possession.
(3) Any "or return" term of a contract for sale is to be treated as a
separate contract for sale within the statute of frauds section of this
Article (Section 2-201) and as contradicting the sale aspect of the
contract within the provisions of this Article on parol or extrinsic
evidence (Section 2-202).
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/2-327
(810 ILCS 5/2-327) (from Ch. 26, par. 2-327)
Sec. 2-327.
Special incidents of sale on approval and sale or return.
(1) Under a sale on approval unless otherwise agreed
(a) although the goods are identified to the contract | | the risk of loss and the title do not pass to the buyer until acceptance; and
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(b) use of the goods consistent with the purpose of
| | trial is not acceptance but failure seasonably to notify the seller of election to return the goods is acceptance, and if the goods conform to the contract acceptance of any part is acceptance of the whole; and
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(c) after due notification of election to return, the
| | return is at the seller's risk and expense but a merchant buyer must follow any reasonable instructions.
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(2) Under a sale or return unless otherwise agreed
(a) the option to return extends to the whole or any
| | commercial unit of the goods while in substantially their original condition, but must be exercised seasonably; and
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(b) the return is at the buyer's risk and expense.
(Source: Laws 1961, 1st SS., p. 7.)
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810 ILCS 5/2-328
(810 ILCS 5/2-328) (from Ch. 26, par. 2-328)
Sec. 2-328.
Sale by auction.
(1) In a sale by auction if goods are put up in lots each lot is the
subject of a separate sale.
(2) A sale by auction is complete when the auctioneer so announces
by the fall of the hammer or in other customary manner. Where a bid is
made while the hammer is falling in acceptance of a prior bid the
auctioneer may in his discretion reopen the bidding or declare the goods
sold under the bid on which the hammer was falling.
(3) Such a sale is with reserve unless the goods are in explicit
terms put up without reserve. In an auction with reserve the auctioneer
may withdraw the goods at any time until he announces completion of the
sale. In an auction without reserve, after the auctioneer calls for bids
on an article or lot, that article or lot cannot be withdrawn unless no
bid is made within a reasonable time. In either case a bidder may
retract his bid until the auctioneer's announcement of completion of the
sale, but a bidder retraction does not revive any previous bid.
(4) If the auctioneer knowingly receives a bid on the seller's
behalf or the seller makes or procures such a bid, and notice has not
been given that liberty for such bidding is reserved, the buyer may at
his option avoid the sale or take the goods at the price of the last
good faith bid prior to the completion of the sale. This subsection
shall not apply to any bid at a forced sale.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/Art. 2 Pt. 4
(810 ILCS 5/Art. 2 Pt. 4 heading)
PART 4.
TITLE, CREDITORS AND GOOD FAITH PURCHASERS
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810 ILCS 5/2-401
(810 ILCS 5/2-401) (from Ch. 26, par. 2-401)
Sec. 2-401. Passing of title; reservation for security; limited application of this
Section.
Each provision of this Article with regard to the rights, obligations
and remedies of the seller, the buyer, purchasers or other third parties
applies irrespective of title to the goods except where the provision
refers to such title. Insofar as situations are not covered by the other
provisions of this Article and matters concerning title become material the
following rules apply:
(1) Title to goods cannot pass under a contract for | | sale prior to their identification to the contract (Section 2-501), and unless otherwise explicitly agreed the buyer acquires by their identification a special property as limited by this Act. Any retention or reservation by the seller of the title (property) in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest. Subject to these provisions and to the provisions of the Article on Secured Transactions (Article 9), title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties.
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(2) Unless otherwise explicitly agreed title passes
| | to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time or place; and in particular and despite any reservation of a security interest by the bill of lading
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(a) if the contract requires or authorizes the
| | seller to send the goods to the buyer but does not require him to deliver them at destination, title passes to the buyer at the time and place of shipment; and
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(b) if the contract requires delivery at
| | destination, title passes on tender there.
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(3) Unless otherwise explicitly agreed where delivery
| | is to be made without moving the goods,
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(a) if the seller is to deliver a tangible
| | document of title, title passes at the time when and the place where he delivers such documents and if the seller is to deliver an electronic document of title, title passes when the seller delivers the document; or
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(b) if the goods are at the time of contracting
| | already identified and no documents of title are to be delivered, title passes at the time and place of contracting.
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(4) A rejection or other refusal by the buyer to
| | receive or retain the goods, whether or not justified, or a justified revocation of acceptance revests title to the goods in the seller. Such revesting occurs by operation of law and is not a "sale".
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(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2-402
(810 ILCS 5/2-402) (from Ch. 26, par. 2-402)
Sec. 2-402.
Rights of seller's creditors against sold goods.
(1) Except as provided in subsections (2) and (3), rights of unsecured
creditors of the seller with respect to goods which have been identified to
a contract for sale are subject to the buyer's rights to recover the goods
under this Article (Sections 2-502 and 2-716).
(2) A creditor of the seller may treat a sale or an identification of
goods to a contract for sale as void if as against him a retention of
possession by the seller is fraudulent under any rule of law of the state
where the goods are situated, except that retention of possession in good
faith and current course of trade by a merchant-seller for a commercially
reasonable time after a sale or identification is not fraudulent.
(3) Nothing in this Article shall be deemed to impair the rights of
creditors of the seller
(a) under the provisions of the Article on Secured | | Transactions (Article 9); or
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(b) where identification to the contract or delivery
| | is made not in current course of trade but in satisfaction of or as security for a pre-existing claim for money, security or the like and is made under circumstances which under any rule of law of the state where the goods are situated would apart from this Article constitute the transaction a fraudulent transfer or voidable preference.
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(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-403
(810 ILCS 5/2-403) (from Ch. 26, par. 2-403)
Sec. 2-403.
Power to transfer; good faith purchase of goods;
"entrusting".
(1) A purchaser of goods acquires all title which his transferor had
or had power to transfer except that a purchaser of a limited interest
acquires rights only to the extent of the interest purchased. A person
with voidable title has power to transfer a good title to a good faith
purchaser for value. When goods have been delivered under a transaction
of purchase the purchaser has such power even though
(a) the transferor was deceived as to the identity of | |
(b) the delivery was in exchange for a check which is
| |
(c) it was agreed that the transaction was to be a
| |
(d) the delivery was procured through fraud
| | punishable as larcenous under the criminal law.
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(2) Any entrusting of possession of goods to a merchant who deals in
goods of that kind gives him power to transfer all rights of the
entruster to a buyer in ordinary course of business.
(3) "Entrusting" includes any delivery and any acquiescence in
retention of possession regardless of any condition expressed between
the parties to the delivery or acquiescence and regardless of whether
the procurement of the entrusting or the possessor's disposition of the
goods have been such as to be larcenous under the criminal law.
(4) The rights of other purchasers of goods and of lien creditors
are governed by the Articles on Secured Transactions (Article 9) and Documents
of Title (Article 7).
(Source: P.A. 87-308.)
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810 ILCS 5/Art. 2 Pt. 5
(810 ILCS 5/Art. 2 Pt. 5 heading)
PART 5.
PERFORMANCE
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810 ILCS 5/2-501
(810 ILCS 5/2-501) (from Ch. 26, par. 2-501)
Sec. 2-501.
Insurable interest in goods; manner of identification of goods.
(1) The buyer obtains a special property and an insurable interest in
goods by identification of existing goods as goods to which the contract
refers even though the goods so identified are non-conforming and he has an
option to return or reject them. Such identification can be made at any
time and in any manner explicitly agreed to by the parties. In the absence
of explicit agreement identification occurs
(a) when the contract is made if it is for the sale | | of goods already existing and identified;
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(b) if the contract is for the sale of future goods
| | other than those described in paragraph (c), when goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers;
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(c) when the crops are planted or otherwise become
| | growing crops or the young are conceived if the contract is for the sale of unborn young to be born within 12 months after contracting or for the sale of crops to be harvested within 12 months or the next normal harvest season after contracting whichever is longer.
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(2) The seller retains an insurable interest in goods so long as title
to or any security interest in the goods remains in him and where the
identification is by the seller alone he may until default or insolvency or
notification to the buyer that the identification is final substitute other
goods for those identified.
(3) Nothing in this Section impairs any insurable interest recognized
under any other statute or rule of law.
(Source: Laws 1961, 1st SS., p. 7.)
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810 ILCS 5/2-502
(810 ILCS 5/2-502) (from Ch. 26, par. 2-502)
Sec. 2-502.
Buyer's right to goods on seller's insolvency.
(1) Subject to subsections (2) and (3) and even
though the goods have not
been
shipped a buyer who has paid a part or all of the price of goods in which
he has a special property under the provisions of the immediately preceding
section may on making and keeping good a tender of any unpaid portion of
their price recover them from the seller if:
(a) in the case of goods bought for personal, family, | | or household purposes, the seller repudiates or fails to deliver as required by the contract; or
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(b) in all cases, the seller becomes insolvent within
| | 10 days after receipt of the first installment on their price.
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(2) The buyer's right to recover the goods under subsection (1)(a) vests
upon acquisition of a special property, even if the seller had not then
repudiated or failed to deliver.
(3) If the identification creating his special property has been made by
the buyer he acquires the right to recover the goods only if they conform
to the contract for sale.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/2-503
(810 ILCS 5/2-503) (from Ch. 26, par. 2-503)
Sec. 2-503. Manner of seller's tender of delivery.
(1) Tender of delivery requires that the seller put and hold conforming
goods at the buyer's disposition and give the buyer any notification
reasonably necessary to enable him to take delivery. The manner, time and
place for tender are determined by the agreement and this Article, and in
particular
(a) tender must be at a reasonable hour, and if it is | | of goods they must be kept available for the period reasonably necessary to enable the buyer to take possession; but
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(b) unless otherwise agreed the buyer must furnish
| | facilities reasonably suited to the receipt of the goods.
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(2) Where the case is within the next section respecting shipment tender
requires that the seller comply with its provisions.
(3) Where the seller is required to deliver at a particular destination
tender requires that he comply with subsection (1) and also in any
appropriate case tender documents as described in subsections (4) and (5)
of this Section.
(4) Where goods are in the possession of a bailee and are to be
delivered without being moved
(a) tender requires that the seller either tender a
| | negotiable document of title covering such goods or procure acknowledgment by the bailee of the buyer's right to possession of the goods; but
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(b) tender to the buyer of a non-negotiable document
| | of title or of a record directing the bailee to deliver is sufficient tender unless the buyer seasonably objects, and except as otherwise provided in Article 9 receipt by the bailee of notification of the buyer's rights fixes those rights as against the bailee and all third persons; but risk of loss of the goods and of any failure by the bailee to honor the non-negotiable document of title or to obey the direction remains on the seller until the buyer has had a reasonable time to present the document or direction, and a refusal by the bailee to honor the document or to obey the direction defeats the tender.
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(5) Where the contract requires the seller to deliver documents
(a) he must tender all such documents in correct
| | form, except as provided in this Article with respect to bills of lading in a set (subsection (2) of Section 2-323); and
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(b) tender through customary banking channels is
| | sufficient and dishonor of a draft accompanying or associated with the documents constitutes non-acceptance or rejection.
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(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2-504
(810 ILCS 5/2-504) (from Ch. 26, par. 2-504)
Sec. 2-504.
Shipment by seller.
Where the seller is required or authorized to send the goods to the
buyer and the contract does not require him to deliver them at a particular
destination, then unless otherwise agreed he must
(a) put the goods in the possession of such a carrier | | and make such a contract for their transportation as may be reasonable having regard to the nature of the goods and other circumstances of the case; and
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(b) obtain and promptly deliver or tender in due form
| | any document necessary to enable the buyer to obtain possession of the goods or otherwise required by the agreement or by usage of trade; and
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(c) promptly notify the buyer of the shipment.
Failure to notify the buyer under paragraph (c) or to make a proper
contract under paragraph (a) is a ground for rejection only if material
delay or loss ensues.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-505
(810 ILCS 5/2-505) (from Ch. 26, par. 2-505)
Sec. 2-505. Seller's shipment under reservation.
(1) Where the seller has identified goods to the contract by or before
shipment:
(a) his procurement of a negotiable bill of lading to | | his own order or otherwise reserves in him a security interest in the goods. His procurement of the bill to the order of a financing agency or of the buyer indicates in addition only the seller's expectation of transferring that interest to the person named.
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(b) a non-negotiable bill of lading to himself or his
| | nominee reserves possession of the goods as security but except in a case of conditional delivery (subsection (2) of Section 2-507 a non-negotiable bill of lading naming the buyer as consignee reserves no security interest even though the seller retains possession or control of the bill of lading.
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(2) When shipment by the seller with reservation of a security interest
is in violation of the contract for sale it constitutes an improper
contract for transportation within the preceding section but impairs
neither the rights given to the buyer by shipment and identification of the
goods to the contract nor the seller's powers as a holder of a negotiable
document of title.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2-506
(810 ILCS 5/2-506) (from Ch. 26, par. 2-506)
Sec. 2-506. Rights of financing agency.
(1) A financing agency by paying or purchasing for value a draft which
relates to a shipment of goods acquires to the extent of the payment or
purchase and in addition to its own rights under the draft and any document
of title securing it any rights of the shipper in the goods including the
right to stop delivery and the shipper's right to have the draft honored by
the buyer.
(2) The right to reimbursement of a financing agency which has in good
faith honored or purchased the draft under commitment to or authority from
the buyer is not impaired by subsequent discovery of defects with reference
to any relevant document which was apparently regular.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2-507
(810 ILCS 5/2-507) (from Ch. 26, par. 2-507)
Sec. 2-507.
Effect of seller's tender; delivery on condition.
(1) Tender of delivery is a condition to the buyer's duty to accept the
goods and, unless otherwise agreed, to his duty to pay for them. Tender
entitles the seller to acceptance of the goods and to payment according to
the contract.
(2) Where payment is due and demanded on the delivery to the buyer of
goods or documents of title, his right as against the seller to retain or
dispose of them is conditional upon his making the payment due.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-508
(810 ILCS 5/2-508) (from Ch. 26, par. 2-508)
Sec. 2-508.
Cure
by seller of improper tender or delivery; replacement.
(1) Where any tender or delivery by the seller is rejected because
non-conforming and the time for performance has not yet expired, the seller
may seasonably notify the buyer of his intention to cure and may then
within the contract time make a conforming delivery.
(2) Where the buyer rejects a non-conforming tender which the seller had
reasonable grounds to believe would be acceptable with or without money
allowance the seller may if he seasonably notifies the buyer have a further
reasonable time to substitute a conforming tender.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-509
(810 ILCS 5/2-509) (from Ch. 26, par. 2-509)
Sec. 2-509. Risk
of loss in the absence of breach.
(1) Where the contract requires or authorizes the seller to ship the
goods by carrier
(a) if it does not require him to deliver them at a | | particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier even though the shipment is under reservation (Section 2-505); but
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(b) if it does require him to deliver them at a
| | particular destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the buyer when the goods are there duly so tendered as to enable the buyer to take delivery.
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(2) Where the goods are held by a bailee to be delivered without being
moved, the risk of loss passes to the buyer
(a) on his receipt of possession or control of a
| | negotiable document of title covering the goods; or
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(b) on acknowledgment by the bailee of the buyer's
| | right to possession of the goods; or
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(c) after his receipt of possession or control of a
| | non-negotiable document of title or other direction to deliver in a record, as provided in subsection (4) (b) of Section 2-503.
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(3) In any case not within subsection (1) or (2), the risk of loss
passes to the buyer on his receipt of the goods if the seller is a
merchant; otherwise the risk passes to the buyer on tender of delivery.
(4) The provisions of this Section are subject to contrary agreement of
the parties and to the provisions of this Article on sale on approval
(Section 2-327) and on effect of breach on risk of loss (Section 2-510).
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2-510
(810 ILCS 5/2-510) (from Ch. 26, par. 2-510)
Sec. 2-510.
Effect of breach on risk of loss.
(1) Where a tender or delivery of goods so fails to conform to the
contract as to give a right of rejection the risk of their loss remains on
the seller until cure or acceptance.
(2) Where the buyer rightfully revokes acceptance he may to the extent
of any deficiency in his effective insurance coverage treat the risk of
loss as having rested on the seller from the beginning.
(3) Where the buyer as to conforming goods already identified to the
contract for sale repudiates or is otherwise in breach before risk of their
loss has passed to him, the seller may to the extent of any deficiency in
his effective insurance coverage treat the risk of loss as resting on the
buyer for a commercially reasonable time.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-511
(810 ILCS 5/2-511) (from Ch. 26, par. 2-511)
Sec. 2-511.
Tender of payment by buyer; payment by check.
(1) Unless otherwise agreed tender of payment is a condition to the
seller's duty to tender and complete any delivery.
(2) Tender of payment is sufficient when made by any means or in any
manner current in the ordinary course of business unless the seller demands
payment in legal tender and gives any extension of time reasonably
necessary to procure it.
(3) Subject to the provisions of this Act on the effect of an instrument
on an obligation (Section 3-310), payment by check is conditional and is
defeated as between the parties by dishonor of the check on due
presentment.
(Source: P.A. 87-1135.)
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810 ILCS 5/2-512
(810 ILCS 5/2-512) (from Ch. 26, par. 2-512)
Sec. 2-512.
Payment by buyer before inspection.
(1) Where the contract requires payment before inspection non-conformity
of the goods does not excuse the buyer from so making payment unless
(a) the non-conformity appears without inspection; or
(b) despite tender of the required documents the | | circumstances would justify injunction against honor under the provisions of this Act (Section 5-109(b)).
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(2) Payment pursuant to subsection (1) does not constitute an acceptance
of goods or impair the buyer's right to inspect or any of his remedies.
(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/2-513
(810 ILCS 5/2-513) (from Ch. 26, par. 2-513)
Sec. 2-513.
Buyer's right to inspection of goods.
(1) Unless otherwise agreed and subject to subsection (3), where goods
are tendered or delivered or identified to the contract for sale, the buyer
has a right before payment or acceptance to inspect them at any reasonable
place and time and in any reasonable manner. When the seller is required or
authorized to send the goods to the buyer, the inspection may be after
their arrival.
(2) Expenses of inspection must be borne by the buyer but may be
recovered from the seller if the goods do not conform and are rejected.
(3) Unless otherwise agreed and subject to the provisions of this
Article on C.I.F. contracts (subsection (3) of Section 2-321, the buyer
is not entitled to inspect the goods before payment of the price when the
contract provides
(a) for delivery "C.O.D." or on other like terms; or
(b) for payment against documents of title, except | | where such payment is due only after the goods are to become available for inspection.
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(4) A place or method of inspection fixed by the parties is presumed to
be exclusive but unless otherwise expressly agreed it does not postpone
identification or shift the place for delivery or for passing the risk of
loss. If compliance becomes impossible, inspection shall be as provided in
this Section unless the place or method fixed was clearly intended as an
indispensable condition failure of which avoids the contract.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-514
(810 ILCS 5/2-514) (from Ch. 26, par. 2-514)
Sec. 2-514.
When
documents deliverable on acceptance; when on payment.
Unless otherwise agreed documents against which a draft is drawn are to
be delivered to the drawee on acceptance of the draft if it is payable more
than 3 days after presentment; otherwise, only on payment.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-515
(810 ILCS 5/2-515) (from Ch. 26, par. 2-515)
Sec. 2-515.
Preserving evidence of goods in dispute.
In furtherance of the adjustment of any claim or dispute
(a) either party on reasonable notification to the | | other and for the purpose of ascertaining the facts and preserving evidence has the right to inspect, test and sample the goods including such of them as may be in the possession or control of the other; and
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(b) the parties may agree to a third party inspection
| | or survey to determine the conformity or condition of the goods and may agree that the findings shall be binding upon them in any subsequent litigation or adjustment.
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(Source: Laws 1961, p. 2101.)
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810 ILCS 5/Art. 2 Pt. 6
(810 ILCS 5/Art. 2 Pt. 6 heading)
PART 6.
BREACH, REPUDIATION AND EXCUSE
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810 ILCS 5/2-601
(810 ILCS 5/2-601) (from Ch. 26, par. 2-601)
Sec. 2-601.
Buyer's rights on improper delivery.
Subject to the provisions of this Article on breach in installment
contracts (Section 2-612) and unless otherwise agreed under the sections
on contractual limitations of remedy (Sections 2-718 and 2-719), if the
goods or the tender of delivery fail in any respect to conform to the
contract, the buyer may
(a) reject the whole; or
(b) accept the whole; or
(c) accept any commercial unit or units and reject | |
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-602
(810 ILCS 5/2-602) (from Ch. 26, par. 2-602)
Sec. 2-602.
Manner and effect of rightful rejection.
(1) Rejection of goods must be within a reasonable time after their
delivery or tender. It is ineffective unless the buyer seasonably notifies
the seller.
(2) Subject to the provisions of the two following sections on rejected
goods (Sections 2-603 and 2-604),
(a) after rejection any exercise of ownership by the | | buyer with respect to any commercial unit is wrongful as against the seller; and
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(b) if the buyer has before rejection taken physical
| | possession of goods in which he does not have a security interest under the provisions of this Article (subsection (3) of Section 2-711, he is under a duty after rejection to hold them with reasonable care at the seller's disposition for a time sufficient to permit the seller to remove them; but
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(c) the buyer has no further obligations with regard
| | to goods rightfully rejected.
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(3) The seller's rights with respect to goods wrongfully rejected are
governed by the provisions of this Article on Seller's remedies in general
(Section 2-703).
(Source: Laws 1961, 1st S.S., p. 7.)
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810 ILCS 5/2-603
(810 ILCS 5/2-603) (from Ch. 26, par. 2-603)
Sec. 2-603.
Merchant buyer's duties as to rightfully rejected goods.
(1) Subject to any security interest in the buyer (subsection (3) of
Section 2-711, when the seller has no agent or place of business at the
market of rejection a merchant buyer is under a duty after rejection of
goods in his possession or control to follow any reasonable instructions
received from the seller with respect to the goods and in the absence of
such instructions to make reasonable efforts to sell them for the seller's
account if they are perishable or threaten to decline in value speedily.
Instructions are not reasonable if on demand indemnity for expenses is not
forthcoming.
(2) When the buyer sells goods under subsection (1), he is entitled to
reimbursement from the seller or out of the proceeds for reasonable
expenses of caring for and selling them, and if the expenses include no
selling commission then to such commission as is usual in the trade or if
there is none to a reasonable sum not exceeding 10% on the gross proceeds.
(3) In complying with this Section the buyer is held only to good faith
and good faith conduct hereunder is neither acceptance nor conversion nor
the basis of an action for damages.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-604
(810 ILCS 5/2-604) (from Ch. 26, par. 2-604)
Sec. 2-604.
Buyer's options as to salvage of rightfully rejected goods.
Subject to the provisions of the immediately preceding section on
perishables if the seller gives no instructions within a reasonable time
after notification of rejection the buyer may store the rejected goods for
the seller's account or reship them to him or resell them for the seller's
account with reimbursement as provided in the preceding section. Such
action is not acceptance or conversion.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-605
(810 ILCS 5/2-605) (from Ch. 26, par. 2-605)
Sec. 2-605. Waiver of buyer's objections by failure to particularize.
(1) The buyer's failure to state in connection with rejection a
particular defect which is ascertainable by reasonable inspection precludes
him from relying on the unstated defect to justify rejection or to
establish breach
(a) where the seller could have cured it if stated | |
(b) between merchants when the seller has after
| | rejection made a request in writing for a full and final written statement of all defects on which the buyer proposes to rely.
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(2) Payment against documents made without reservation of rights
precludes recovery of the payment for defects apparent in
the
documents.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2-606
(810 ILCS 5/2-606) (from Ch. 26, par. 2-606)
Sec. 2-606.
What
constitutes acceptance of goods.
(1) Acceptance of goods occurs when the buyer
(a) after a reasonable opportunity to inspect the | | goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their non-conformity; or
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(b) fails to make an effective rejection (subsection
| | (1) of Section 2-602, but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or
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(c) does any act inconsistent with the seller's
| | ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him.
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(2) Acceptance of a part of any commercial unit is acceptance of that
entire unit.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-607
(810 ILCS 5/2-607) (from Ch. 26, par. 2-607)
Sec. 2-607.
Effect of acceptance; notice of breach; burden of establishing breach after
acceptance; notice of claim or litigation to person answerable over.
(1) The buyer must pay at the contract rate for any goods accepted.
(2) Acceptance of goods by the buyer precludes rejection of the goods
accepted and if made with knowledge of a non-conformity cannot be revoked
because of it unless the acceptance was on the reasonable assumption that
the non-conformity would be seasonably cured but acceptance does not of
itself impair any other remedy provided by this Article for non-conformity.
(3) Where a tender has been accepted
(a) the buyer must within a reasonable time after he | | discovers or should have discovered any breach notify the seller of breach or be barred from any remedy; and
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(b) if the claim is one for infringement or the like
| | (subsection (3) of Section 2-312 and the buyer is sued as a result of such a breach he must so notify the seller within a reasonable time after he receives notice of the litigation or be barred from any remedy over for liability established by the litigation.
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(4) The burden is on the buyer to establish any breach with respect to
the goods accepted.
(5) Where the buyer is sued for breach of a warranty or other obligation
for which his seller is answerable over
(a) he may give his seller written notice of the
| | litigation. If the notice states that the seller may come in and defend and that if the seller does not do so he will be bound in any action against him by his buyer by any determination of fact common to the two litigations, then unless the seller after seasonable receipt of the notice does come in and defend he is so bound.
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(b) if the claim is one for infringement or the like
| | (subsection (3) of Section 2-312 the original seller may demand in writing that his buyer turn over to him control of the litigation including settlement or else be barred from any remedy over and if he also agrees to bear all expense and to satisfy any adverse judgment, then unless the buyer after seasonable receipt of the demand does turn over control the buyer is so barred.
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(6) The provisions of subsections (3), (4) and (5) apply to any
obligation of a buyer to hold the seller harmless against infringement or
the like (subsection (3) of Section 2-312.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-608
(810 ILCS 5/2-608) (from Ch. 26, par. 2-608)
Sec. 2-608.
Revocation of acceptance in whole or in part.
(1) The buyer may revoke his acceptance of a lot or commercial unit
whose non-conformity substantially impairs its value to him if he has
accepted it
(a) on the reasonable assumption that its | | non-conformity would be cured and it has not been seasonably cured; or
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(b) without discovery of such non-conformity if his
| | acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller's assurances.
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(2) Revocation of acceptance must occur within a reasonable time after
the buyer discovers or should have discovered the ground for it and before
any substantial change in condition of the goods which is not caused by
their own defects. It is not effective until the buyer notifies the seller
of it.
(3) A buyer who so revokes has the same rights and duties with regard to
the goods involved as if he had rejected them.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-609
(810 ILCS 5/2-609) (from Ch. 26, par. 2-609)
Sec. 2-609.
Right to adequate assurance of performance.
(1) A contract for sale imposes an obligation on each party that the
other's expectation of receiving due performance will not be impaired. When
reasonable grounds for insecurity arise with respect to the performance of
either party the other may in writing demand adequate assurance of due
performance and until he receives such assurance may if commercially
reasonable suspend any performance for which he has not already received
the agreed return.
(2) Between merchants the reasonableness of grounds for insecurity and
the adequacy of any assurance offered shall be determined according to
commercial standards.
(3) Acceptance of any improper delivery or payment does not prejudice
the aggrieved party's right to demand adequate assurance of future
performance.
(4) After receipt of a justified demand failure to provide within a
reasonable time not exceeding 30 days such assurance of due performance as
is adequate under the circumstances of the particular case is a repudiation
of the contract.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-610
(810 ILCS 5/2-610) (from Ch. 26, par. 2-610)
Sec. 2-610.
Anticipatory repudiation.
When either party repudiates the contract with respect to a performance
not yet due the loss of which will substantially impair the value of the
contract to the other, the aggrieved party may
(a) for a commercially reasonable time await | | performance by the repudiating party; or
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(b) resort to any remedy for breach (Section 2-703 or
| | Section 2-711), even though he has notified the repudiating party that he would await the latter's performance and has urged retraction; and
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(c) in either case suspend his own performance or
| | proceed in accordance with the provisions of this Article on the seller's right to identify goods to the contract notwithstanding breach or to salvage unfinished goods (Section 2-704).
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(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-611
(810 ILCS 5/2-611) (from Ch. 26, par. 2-611)
Sec. 2-611.
Retraction of anticipatory repudiation.
(1) Until the repudiating party's next performance is due he can retract
his repudiation unless the aggrieved party has since the repudiation
cancelled or materially changed his position or otherwise indicated that he
considers the repudiation final.
(2) Retraction may be by any method which clearly indicates to the
aggrieved party that the repudiating party intends to perform, but must
include any assurance justifiably demanded under the provisions of this
Article (Section 2-609).
(3) Retraction reinstates the repudiating party's rights under the
contract with due excuse and allowance to the aggrieved party for any delay
occasioned by the repudiation.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-612
(810 ILCS 5/2-612) (from Ch. 26, par. 2-612)
Sec. 2-612.
"Installment contract"; breach.
(1) An "installment contract" is one which requires or authorizes the
delivery of goods in separate lots to be separately accepted, even though
the contract contains a clause "each delivery is a separate contract" or
its equivalent.
(2) The buyer may reject any installment which is non-conforming if the
non-conformity substantially impairs the value of that installment and
cannot be cured or if the non-conformity is a defect in the required
documents; but if the non-conformity does not fall within subsection (3)
and the seller gives adequate assurance of its cure the buyer must accept
that installment.
(3) Whenever non-conformity or default with respect to one or more
installments substantially impairs the value of the whole contract there is
a breach of the whole. But the aggrieved party reinstates the contract if
he accepts a non-conforming installment without seasonably notifying of
cancellation or if he brings an action with respect only to past
installments or demands performance as to future installments.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-613
(810 ILCS 5/2-613) (from Ch. 26, par. 2-613)
Sec. 2-613.
Casualty to identified goods.
Where the contract requires for its performance goods identified when
the contract is made, and the goods suffer casualty without fault of either
party before the risk of loss passes to the buyer, or in a proper case
under a "no arrival, no sale" term (Section 2-324) then
(a) if the loss is total the contract is avoided; and
(b) if the loss is partial or the goods have so | | deteriorated as no longer to conform to the contract the buyer may nevertheless demand inspection and at his option either treat the contract as avoided or accept the goods with due allowance from the contract price for the deterioration or the deficiency in quantity but without further right against the seller.
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(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-614
(810 ILCS 5/2-614) (from Ch. 26, par. 2-614)
Sec. 2-614.
Substituted performance.
(1) Where without fault of either party the agreed berthing, loading, or
unloading facilities fail or an agreed type of carrier becomes unavailable
or the agreed manner of delivery otherwise becomes commercially
impracticable but a commercially reasonable substitute is available, such
substitute performance must be tendered and accepted.
(2) If the agreed means or manner of payment fails because of domestic
or foreign governmental regulation, the seller may withhold or stop
delivery unless the buyer provides a means or manner of payment which is
commercially a substantial equivalent. If delivery has already been taken,
payment by the means or in the manner provided by the regulation discharges
the buyer's obligation unless the regulation is discriminatory, oppressive
or predatory.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-615
(810 ILCS 5/2-615) (from Ch. 26, par. 2-615)
Sec. 2-615.
Excuse by failure of presupposed conditions.
Except so far as a seller may have assumed a greater obligation and
subject to the preceding section on substituted performance:
(a) Delay in delivery or non-delivery in whole or in | | part by a seller who complies with paragraphs (b) and (c) is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.
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(b) Where the causes mentioned in paragraph (a)
| | affect only a part of the seller's capacity to perform, he must allocate production and deliveries among his customers but may at his option include regular customers not then under contract as well as his own requirements for further manufacture. He may so allocate in any manner which is fair and reasonable.
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(c) The seller must notify the buyer seasonably that
| | there will be delay or non-delivery and, when allocation is required under paragraph (b), of the estimated quota thus made available for the buyer.
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(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-616
(810 ILCS 5/2-616) (from Ch. 26, par. 2-616)
Sec. 2-616.
Procedure on notice claiming excuse.
(1) Where the buyer receives notification of a material or
indefinite delay or an allocation justified under the preceding section
he may by written notification to the seller as to any delivery
concerned, and where the prospective deficiency substantially impairs
the value of the whole contract under the provisions of this Article
relating to breach of installment contracts (Section 2-612), then also
as to the whole,
(a) terminate and thereby discharge any unexecuted | | portion of the contract; or
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(b) modify the contract by agreeing to take his
| | available quota in substitution.
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(2) If after receipt of such notification from the seller the buyer
fails so to modify the contract within a reasonable time not exceeding
30 days the contract lapses with respect to any deliveries affected.
(3) The provisions of this Section may not be negated by agreement
except in so far as the seller has assumed a greater obligation under
the preceding section.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/Art. 2 Pt. 7
(810 ILCS 5/Art. 2 Pt. 7 heading)
PART 7.
REMEDIES
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810 ILCS 5/2-701
(810 ILCS 5/2-701) (from Ch. 26, par. 2-701)
Sec. 2-701.
Remedies for breach of collateral contracts not impaired.
Remedies for breach of any obligation or promise collateral or ancillary
to a contract for sale are not impaired by the provisions of this Article.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-702
(810 ILCS 5/2-702) (from Ch. 26, par. 2-702)
Sec. 2-702.
Seller's remedies on discovery of buyer's insolvency.
(1) Where the seller discovers the buyer to be insolvent he may refuse
delivery except for cash including payment for all goods theretofore
delivered under the contract, and stop delivery under this Article (Section
2-705).
(2) Where the seller discovers that the buyer has received goods on
credit while insolvent he may reclaim the goods upon demand made within 10
days after the receipt, but if misrepresentation of solvency has been made
to the particular seller in writing within 3 months before delivery the 10
day limitation does not apply. Except as provided in this subsection the
seller may not base a right to reclaim goods on the buyer's fraudulent or
innocent misrepresentation of solvency or of intent to pay.
(3) The seller's right to reclaim under subsection (2) is subject to the
rights of a buyer in ordinary course or other good faith purchaser under
this Article (Section 2-403). Successful reclamation of goods excludes all
other remedies with respect to them.
(Source: Laws 1961, 1st SS., p. 7.)
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810 ILCS 5/2-703
(810 ILCS 5/2-703) (from Ch. 26, par. 2-703)
Sec. 2-703.
Seller's remedies in general.
Where the buyer wrongfully rejects or revokes acceptance of goods or
fails to make a payment due on or before delivery or repudiates with
respect to a part or the whole, then with respect to any goods directly
affected and, if the breach is of the whole contract (Section 2-612), then
also with respect to the whole undelivered balance, the aggrieved seller
may
(a) withhold delivery of such goods;
(b) stop delivery by any bailee as hereafter provided | |
(c) proceed under the next section respecting goods
| | still unidentified to the contract;
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(d) resell and recover damages as hereafter provided
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(e) recover damages for non-acceptance (Section
| | 2-708) or in a proper case the price (Section 2-709);
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(f) cancel.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-704
(810 ILCS 5/2-704) (from Ch. 26, par. 2-704)
Sec. 2-704.
Seller's right to identify goods to the contract notwithstanding breach or
to salvage unfinished goods.
(1) An aggrieved seller under the preceding section may
(a) identify to the contract conforming goods not | | already identified if at the time he learned of the breach they are in his possession or control;
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(b) treat as the subject of resale goods which have
| | demonstrably been intended for the particular contract even though those goods are unfinished.
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(2) Where the goods are unfinished an aggrieved seller may in the
exercise of reasonable commercial judgment for the purposes of avoiding
loss and of effective realization either complete the manufacture and
wholly identify the goods to the contract or cease manufacture and resell
for scrap or salvage value or proceed in any other reasonable manner.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-705
(810 ILCS 5/2-705) (from Ch. 26, par. 2-705)
Sec. 2-705. Seller's stoppage of delivery in transit or otherwise.
(1) The seller may stop delivery of goods in the possession of a carrier
or other bailee when he discovers the buyer to be insolvent (Section 2-702)
and may stop delivery of carload, truckload, planeload or larger shipments
of express or freight when the buyer repudiates or fails to make a payment
due before delivery or if for any other reason the seller has a right to
withhold or reclaim the goods.
(2) As against such buyer the seller may stop delivery until
(a) receipt of the goods by the buyer; or
(b) acknowledgment to the buyer by any bailee of the | | goods except a carrier that the bailee holds the goods for the buyer; or
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(c) such acknowledgment to the buyer by a carrier by
| | reshipment or as a warehouse; or
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(d) negotiation to the buyer of any negotiable
| | document of title covering the goods.
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(3)(a) To stop delivery the seller must so notify as to enable the
bailee by reasonable diligence to prevent delivery of the goods.
(b) After such notification the bailee must hold and deliver the
goods according to the directions of the seller but the seller is liable to
the bailee for any ensuing charges or damages.
(c) If a negotiable document of title has been issued for goods the
bailee is not obliged to obey a notification to stop until surrender of possession or control of the
document.
(d) A carrier who has issued a non-negotiable bill of lading is not
obliged to obey a notification to stop received from a person other than
the consignor.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2-706
(810 ILCS 5/2-706) (from Ch. 26, par. 2-706)
Sec. 2-706.
Seller's resale including contract for resale.
(1) Under the conditions stated in Section 2-703 on seller's remedies,
the seller may resell the goods concerned or the undelivered balance
thereof. Where the resale is made in good faith and in a commercially
reasonable manner the seller may recover the difference between the resale
price and the contract price together with any incidental damages allowed
under the provisions of this Article (Section 2-710), but less expenses
saved in consequence of the buyer's breach.
(2) Except as otherwise provided in subsection (3) or unless otherwise
agreed resale may be at public or private sale including sale by way of one
or more contracts to sell or of identification to an existing contract of
the seller. Sale may be as a unit or in parcels and at any time and place
and on any terms but every aspect of the sale including the method, manner,
time, place and terms must be commercially reasonable. The resale must be
reasonably identified as referring to the broken contract, but it is not
necessary that the goods be in existence or that any or all of them have
been identified to the contract before the breach.
(3) Where the resale is at private sale the seller must give the buyer
reasonable notification of his intention to resell.
(4) Where the resale is at public sale
(a) only identified goods can be sold except where | | there is a recognized market for a public sale of futures in goods of the kind; and
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(b) it must be made at a usual place or market for
| | public sale if one is reasonably available and except in the case of goods which are perishable or threaten to decline in value speedily the seller must give the buyer reasonable notice of the time and place of the resale; and
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(c) if the goods are not to be within the view of
| | those attending the sale the notification of sale must state the place where the goods are located and provide for their reasonable inspection by prospective bidders; and
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(d) the seller may buy.
(5) A purchaser who buys in good faith at a resale takes the goods free
of any rights of the original buyer even though the seller fails to comply
with one or more of the requirements of this Section.
(6) The seller is not accountable to the buyer for any profit made on
any resale. A person in the position of a seller (Section 2-707) or a buyer
who has rightfully rejected or justifiably revoked acceptance must account
for any excess over the amount of his security interest, as hereinafter
defined (subsection (3) of Section 2-711.
(Source: Laws 1961, 1st SS., p. 7.)
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810 ILCS 5/2-707
(810 ILCS 5/2-707) (from Ch. 26, par. 2-707)
Sec. 2-707.
"Person in the position of a seller".
(1) A "person in the position of a seller" includes as against a
principal an agent who has paid or become responsible for the price of
goods on behalf of his principal or anyone who otherwise holds a security
interest or other right in goods similar to that of a seller.
(2) A person in the position of a seller may as provided in this Article
withhold or stop delivery (Section 2-705) and resell (Section 2-706) and
recover incidental damages (Section 2-710).
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-708
(810 ILCS 5/2-708) (from Ch. 26, par. 2-708)
Sec. 2-708.
Seller's damages for non-acceptance or repudiation.
(1) Subject to subsection (2) and to the provisions of this Article with
respect to proof of market price (Section 2-723), the measure of damages
for non-acceptance or repudiation by the buyer is the difference between
the market price at the time and place for tender and the unpaid contract
price together with any incidental damages provided in this Article
(Section 2-710), but less expenses saved in consequence of the buyer's
breach.
(2) If the measure of damages provided in subsection (1) is inadequate
to put the seller in as good a position as performance would have done then
the measure of damages is the profit (including reasonable overhead) which
the seller would have made from full performance by the buyer, together
with any incidental damages provided in this Article (Section 2-710), due
allowance for costs reasonably incurred and due credit for payments or
proceeds of resale.
(Source: Laws 1961, 1st SS., p. 7.)
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810 ILCS 5/2-709
(810 ILCS 5/2-709) (from Ch. 26, par. 2-709)
Sec. 2-709.
Action for the price.
(1) When the buyer fails to pay the price as it becomes due the seller
may recover, together with any incidental damages under the next Section,
the price
(a) of goods accepted or of conforming goods lost or | | damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and
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(b) of goods identified to the contract if the seller
| | is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing.
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(2) Where the seller sues for the price he must hold for the buyer any
goods which have been identified to the contract and are still in his
control except that if resale becomes possible he may resell them at any
time prior to the collection of the judgment. The net proceeds of any such
resale must be credited to the buyer and payment of the judgment entitles
him to any goods not resold.
(3) After the buyer has wrongfully rejected or revoked acceptance of the
goods or has failed to make a payment due or has repudiated (Section 2-610),
a seller who is held not entitled to the price under this Section
shall nevertheless be awarded damages for non-acceptance under the
preceding Section.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-710
(810 ILCS 5/2-710) (from Ch. 26, par. 2-710)
Sec. 2-710.
Seller's incidental damages.
Incidental damages to an aggrieved seller include any commercially
reasonable charges, expenses or commissions incurred in stopping delivery,
in the transportation, care and custody of goods after the buyer's breach,
in connection with return or resale of the goods or otherwise resulting
from the breach.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-711
(810 ILCS 5/2-711) (from Ch. 26, par. 2-711)
Sec. 2-711.
Buyer's remedies in general; buyer's security interest in
rejected goods.
(1) Where the seller fails to make delivery or repudiates or the buyer
rightfully rejects or justifiably revokes acceptance then with respect to
any goods involved, and with respect to the whole if the breach goes to the
whole contract (Section 2-612), the buyer may cancel and whether or not he
has done so may in addition to recovering so much of the price as has been
paid
(a) "cover" and have damages under the next section | | as to all the goods affected whether or not they have been identified to the contract; or
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(b) recover damages for non-delivery as provided in
| | this Article (Section 2-713).
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(2) Where the seller fails to deliver or repudiates the buyer may also
(a) if the goods have been identified recover them as
| | provided in this Article (Section 2-502); or
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(b) in a proper case obtain specific performance or
| | replevy the goods as provided in this Article (Section 2-716).
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(3) On rightful rejection or justifiable revocation of acceptance a
buyer has a security interest in goods in his possession or control for any
payments made on their price and any expenses reasonably incurred in their
inspection, receipt, transportation, care and custody and may hold such
goods and resell them in like manner as an aggrieved seller (Section 2-706).
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-712
(810 ILCS 5/2-712) (from Ch. 26, par. 2-712)
Sec. 2-712.
"Cover"; buyer's procurement of substitute goods.
(1) After a breach within the preceding section the buyer may "cover" by
making in good faith and without unreasonable delay any reasonable purchase
of or contract to purchase goods in substitution for those due from the
seller.
(2) The buyer may recover from the seller as damages the difference
between the cost of cover and the contract price together with any
incidental or consequential damages as hereinafter defined (Section 2-715), but
less expenses saved in consequence of the seller's breach.
(3) Failure of the buyer to effect cover within this Section does not
bar him from any other remedy.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-713
(810 ILCS 5/2-713) (from Ch. 26, par. 2-713)
Sec. 2-713.
Buyer's damages for non-delivery or repudiation.
(1) Subject to the provisions of this Article with respect to proof of
market price (Section 2-723), the measure of damages for non-delivery or
repudiation by the seller is the difference between the market price at the
time when the buyer learned of the breach and the contract price together
with any incidental and consequential damages provided in this Article
(Section 2-715), but less expenses saved in consequence of the seller's
breach.
(2) Market price is to be determined as of the place for tender or, in
cases of rejection after arrival or revocation of acceptance as of the
place of arrival.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-714
(810 ILCS 5/2-714) (from Ch. 26, par. 2-714)
Sec. 2-714.
Buyer's damages for breach in regard to accepted goods.
(1) Where the buyer has accepted goods and given notification
(subsection (3) of Section 2-607 he may recover as damages for any
non-conformity of tender the loss resulting in the ordinary course of
events from the seller's breach as determined in any manner which is
reasonable.
(2) The measure of damages for breach of warranty is the difference at
the time and place of acceptance between the value of the goods accepted
and the value they would have had if they had been as warranted, unless
special circumstances show proximate damages of a different amount.
(3) In a proper case any incidental and consequential damages under the
next section may also be recovered.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-715
(810 ILCS 5/2-715) (from Ch. 26, par. 2-715)
Sec. 2-715.
Buyer's incidental and consequential damages.
(1) Incidental damages resulting from the seller's breach include
expenses reasonably incurred in inspection, receipt, transportation and
care and custody of goods rightfully rejected, any commercially reasonable
charges, expenses or commissions in connection with effecting cover and any
other reasonable expense incident to the delay or other breach.
(2) Consequential damages resulting from the seller's breach include
(a) any loss resulting from general or particular | | requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
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(b) injury to person or property proximately
| | resulting from any breach of warranty.
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(Source: Laws 1961, 1st S.S., p. 7.)
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810 ILCS 5/2-716
(810 ILCS 5/2-716) (from Ch. 26, par. 2-716)
Sec. 2-716.
Buyer's right to specific performance or replevin.
(1) Specific performance may be ordered where the goods are unique or in
other proper circumstances.
(2) The judgment for specific performance may include such terms and
conditions as to payment of the price, damages, or other relief as the
court may deem just.
(3) The buyer has a right of replevin for goods identified to the
contract if after reasonable effort he is unable to effect cover for such
goods or the circumstances reasonably indicate that such effort will be
unavailing or if the goods have been shipped under reservation and
satisfaction of the security interest in them has been made or tendered.
In the case of goods bought for personal, family, or household
purposes, the buyer's right of replevin vests upon acquisition of a special
property, even if the seller had not then repudiated or failed to deliver.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/2-717
(810 ILCS 5/2-717) (from Ch. 26, par. 2-717)
Sec. 2-717.
Deduction of damages from the price.
The buyer on notifying the seller of his intention to do so may deduct
all or any part of the damages resulting from any breach of the contract
from any part of the price still due under the same contract.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-718
(810 ILCS 5/2-718) (from Ch. 26, par. 2-718)
Sec. 2-718.
Liquidation or limitation of damages; deposits.
(1) Damages for breach by either party may be liquidated in the
agreement but only at an amount which is reasonable in the light of the
anticipated or actual harm caused by the breach, the difficulties of proof
of loss, and the inconvenience or nonfeasibility of otherwise obtaining an
adequate remedy. A term fixing unreasonably large liquidated damages is
void as a penalty.
(2) Where the seller justifiably withholds delivery of goods because of
the buyer's breach, the buyer is entitled to restitution of any amount by
which the sum of his payments exceeds
(a) the amount to which the seller is entitled by | | virtue of terms liquidating the seller's damages in accordance with subsection (1), or
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(b) in the absence of such terms, 20% of the value of
| | the total performance for which the buyer is obligated under the contract or $500, whichever is smaller.
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(3) The buyer's right to restitution under subsection (2) is subject to
offset to the extent that the seller establishes
(a) a right to recover damages under the provisions
| | of this Article other than subsection (1), and
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(b) the amount or value of any benefits received by
| | the buyer directly or indirectly by reason of the contract.
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(4) Where a seller has received payment in goods their reasonable value
or the proceeds of their resale shall be treated as payments for the
purposes of subsection (2); but if the seller has notice of the buyer's
breach before reselling goods received in part performance, his resale is
subject to the conditions laid down in this Article on resale by an
aggrieved seller (Section 2-706).
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-719
(810 ILCS 5/2-719) (from Ch. 26, par. 2-719)
Sec. 2-719.
Contractual modification or limitation of remedy.
(1) Subject to the provisions of subsections (2) and (3) of this Section
and of the preceding section on liquidation and limitation of damages,
(a) the agreement may provide for remedies in | | addition to or in substitution for those provided in this Article and may limit or alter the measure of damages recoverable under this Article, as by limiting the buyer's remedies to return of the goods and repayment of the price or to repair and replacement of non-conforming goods or parts; and
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(b) resort to a remedy as provided is optional unless
| | the remedy is expressly agreed to be exclusive, in which case it is the sole remedy.
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(2) Where circumstances cause an exclusive or limited remedy to fail of
its essential purpose, remedy may be had as provided in this Act.
(3) Consequential damages may be limited or excluded unless the
limitation or exclusion is unconscionable. Limitation of consequential
damages for injury to the person in the case of consumer goods is prima
facie unconscionable but limitation of damages where the loss is commercial
is not.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-720
(810 ILCS 5/2-720) (from Ch. 26, par. 2-720)
Sec. 2-720.
Effect of "cancellation" or "recision" on claims for antecedent breach.
Unless the contrary intention clearly appears, expressions of
"cancellation" or "rescission" of the contract or the like shall not be
construed as a renunciation or discharge of any claim in damages for an
antecedent breach.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-721
(810 ILCS 5/2-721) (from Ch. 26, par. 2-721)
Sec. 2-721.
Remedies for fraud.
Remedies for material misrepresentation or fraud include all remedies
available under this Article for non-fraudulent breach. Neither rescission
or a claim for rescission of the contract for sale nor rejection or return
of the goods shall bar or be deemed inconsistent with a claim for damages
or other remedy.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-722
(810 ILCS 5/2-722) (from Ch. 26, par. 2-722)
Sec. 2-722.
Who
can sue third parties for injury to goods.
Where a third party so deals with goods which have been identified to a
contract for sale as to cause actionable injury to a party to that contract
(a) a right of action against the third party is in | | either party to the contract for sale who has title to or a security interest or a special property or an insurable interest in the goods; and if the goods have been destroyed or converted a right of action is also in the party who either bore the risk of loss under the contract for sale or has since the injury assumed that risk as against the other;
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(b) if at the time of the injury the party plaintiff
| | did not bear the risk of loss as against the other party to the contract for sale and there is no arrangement between them for disposition of the recovery, his suit or settlement is, subject to his own interest, as a fiduciary for the other party to the contract.
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(c) either party may with the consent of the other
| | sue for the benefit of whom it may concern.
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(Source: Laws 1961, 1st S.S., p. 7.)
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810 ILCS 5/2-723
(810 ILCS 5/2-723) (from Ch. 26, par. 2-723)
Sec. 2-723.
Proof of market price: time and place.
(1) If an action based on anticipatory repudiation comes to trial before
the time for performance with respect to some or all of the goods, any
damages based on market price (Section 2-708 and Section 2-713) shall be
determined according to the price of such goods prevailing at the time when
the aggrieved party learned of the repudiation.
(2) If evidence of a price prevailing at the times or places described
in this Article is not readily available the price prevailing within any
reasonable time before or after the time described or at any other place
which in commercial judgment or under usage of trade would serve as a
reasonable substitute for the one described may be used, making any proper
allowance for the cost of transporting the goods to or from such other
place.
(3) Evidence of a relevant price prevailing at a time or place other
than the one described in this Article offered by one party is not
admissible unless and until he has given the other party such notice as the
court finds sufficient to prevent unfair surprise.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-724
(810 ILCS 5/2-724) (from Ch. 26, par. 2-724)
Sec. 2-724.
Admissibility of market quotations.
Whenever the prevailing price or value of any goods regularly bought and
sold in any established commodity market is in issue, reports in official
publications or trade journals or in newspapers or periodicals of general
circulation published as the reports of such market shall be admissible in
evidence. The circumstances of the preparation of such a report may be
shown to affect its weight but not its admissibility.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/2-725
(810 ILCS 5/2-725) (from Ch. 26, par. 2-725)
Sec. 2-725.
Statute of Limitations in Contracts for Sale.
(1) An action for breach of any contract for sale must be commenced
within 4 years after the cause of action has accrued. By the original
agreement the parties may reduce the period of limitation to not less than
one year but may not extend it.
(2) A cause of action accrues when the breach occurs, regardless of the
aggrieved party's lack of knowledge of the breach. A breach of warranty
occurs when tender of delivery is made, except that where a warranty
explicitly extends to future performance of the goods and discovery of the
breach must await the time of such performance the cause of action accrues
when the breach is or should have been discovered.
(3) Where an action commenced within the time limited by subsection (1)
is so terminated as to leave available a remedy by another action for the
same breach such other action may be commenced after the expiration of the
time limited and within 6 months after the termination of the first action
unless the termination resulted from voluntary discontinuance or from
dismissal for failure or neglect to prosecute.
(4) This Section does not alter the law on tolling of the statute of
limitations nor does it apply to causes of action which have accrued before
this Act becomes effective.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/Art. 2A
(810 ILCS 5/Art. 2A heading)
ARTICLE 2A.
LEASES
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810 ILCS 5/Art. 2A Pt. 1
(810 ILCS 5/Art. 2A Pt. 1 heading)
PART 1.
GENERAL PROVISIONS
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810 ILCS 5/2A-101
(810 ILCS 5/2A-101) (from Ch. 26, par. 2A-101)
Sec. 2A-101.
Short title.
This Article shall be known and may be cited
as the Uniform Commercial Code; Leases.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-102 (810 ILCS 5/2A-102) (from Ch. 26, par. 2A-102) (Text of Section before amendment by P.A. 103-1036) Sec. 2A-102. Scope. This Article applies to any transaction, regardless
of form, that creates a lease.(Source: P.A. 87-493.) (Text of Section after amendment by P.A. 103-1036) Sec. 2A-102. Scope. (1) This Article applies to any transaction, regardless of form, that creates a lease and, in the case of a hybrid lease, it applies to the extent provided in subsection (2). (2) In a hybrid lease: (a) if the lease-of-goods aspects do not predominate: (i) only the provisions of this Article which | | relate primarily to the lease-of-goods aspects of the transaction apply, and the provisions that relate primarily to the transaction as a whole do not apply;
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| (ii) Section 2A-209 applies if the lease is a
| | (iii) Section 2A-407 applies to the promises of
| | the lessee in a finance lease to the extent the promises are consideration for the right to possession and use of the leased goods; and
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| (b) if the lease-of-goods aspects predominate, this
| | Article applies to the transaction, but does not preclude application in appropriate circumstances of other law to aspects of the lease which do not relate to the lease of goods.
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| (Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/2A-103 (810 ILCS 5/2A-103) (from Ch. 26, par. 2A-103) (Text of Section before amendment by P.A. 103-1036) Sec. 2A-103. Definitions and index of definitions. (1) In this Article unless the context otherwise requires: (a) "Buyer in ordinary course of business" means a | | person who, in good faith and without knowledge that the sale to him or her is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker. "Buying" may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a pre-existing contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
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| (b) "Cancellation" occurs when either party puts an
| | end to the lease contract for default by the other party.
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| (c) "Commercial unit" means such a unit of goods as
| | by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a single whole.
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| (d) "Conforming" goods or performance under a lease
| | contract means goods or performance that are in accordance with the obligations under the lease contract.
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| (e) "Consumer lease" means a lease that a lessor
| | regularly engaged in the business of leasing or selling makes to a lessee who is an individual and who takes under the lease primarily for a personal, family, or household purpose, if the total payments to be made under the lease contract, excluding payments for options to renew or buy, do not exceed $40,000.
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| (f) "Fault" means wrongful act, omission, breach, or
| | (g) "Finance lease" means a lease with respect to
| | (i) the lessor does not select, manufacture, or
| | (ii) the lessor acquires the goods or the right
| | to possession and use of the goods in connection with the lease; and
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| (iii) one of the following occurs:
(A) the lessee receives a copy of the
| | contract by which the lessor acquired the goods or the right to possession and use of the goods before signing the lease contract;
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| (B) the lessee's approval of the contract by
| | which the lessor acquired the goods or the right to possession and use of the goods is a condition to effectiveness of the lease contract;
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| (C) the lessee, before signing the lease
| | contract, receives an accurate and complete statement designating the promises and warranties, and any disclaimers of warranties, limitations or modifications of remedies, or liquidated damages, including those of a third party, such as the manufacturer of the goods, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; or
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| (D) if the lease is not a consumer lease, the
| | lessor, before the lessee signs the lease contract, informs the lessee in writing (a) of the identity of the person supplying the goods to the lessor, unless the lessee has selected that person and directed the lessor to acquire the goods or the right to possession and use of the goods from that person, (b) that the lessee is entitled under this Article to the promises and warranties, including those of any third party, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods, and (c) that the lessee may communicate with the person supplying the goods to the lessor and receive an accurate and complete statement of those promises and warranties, including any disclaimers and limitations of them or of remedies.
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| (h) "Goods" means all things that are movable at the
| | time of identification to the lease contract, or are fixtures (Section 2A-309), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction. The term also includes the unborn young of animals.
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| (i) "Installment lease contract" means a lease
| | contract that authorizes or requires the delivery of goods in separate lots to be separately accepted, even though the lease contract contains a clause "each delivery is a separate lease" or its equivalent.
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| (j) "Lease" means a transfer of the right to
| | possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease. Unless the context clearly indicates otherwise, the term includes a sublease.
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| (k) "Lease agreement" means the bargain, with respect
| | to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this Article. Unless the context clearly indicates otherwise, the term includes a sublease agreement.
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| (l) "Lease contract" means the total legal obligation
| | that results from the lease agreement as affected by this Article and any other applicable rules of law. Unless the context clearly indicates otherwise, the term includes a sublease contract.
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| (m) "Leasehold interest" means the interest of the
| | lessor or the lessee under a lease contract.
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| (n) "Lessee" means a person who acquires the right to
| | possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessee.
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| (o) "Lessee in ordinary course of business" means a
| | person who in good faith and without knowledge that the lease to him or her is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods leases in ordinary course from a person in the business of selling or leasing goods of that kind but does not include a pawnbroker. "Leasing" may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a pre-existing lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
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| (p) "Lessor" means a person who transfers the right
| | to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessor.
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| (q) "Lessor's residual interest" means the lessor's
| | interest in the goods after expiration, termination, or cancellation of the lease contract.
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| (r) "Lien" means a charge against or interest in
| | goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest.
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| (s) "Lot" means a parcel or a single article that is
| | the subject matter of a separate lease or delivery, whether or not it is sufficient to perform the lease contract.
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| (t) "Merchant lessee" means a lessee that is a
| | merchant with respect to goods of the kind subject to the lease.
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| (u) "Present value" means the amount as of a date
| | certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate was not manifestly unreasonable at the time the transaction was entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.
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| (v) "Purchase" includes taking by sale, lease,
| | mortgage, security interest, pledge, gift, or any other voluntary transaction creating an interest in goods.
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| (w) "Sublease" means a lease of goods the right to
| | possession and use of which was acquired by the lessor as a lessee under an existing lease.
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| (x) "Supplier" means a person from whom a lessor buys
| | or leases goods to be leased under a finance lease.
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| (y) "Supply contract" means a contract under which a
| | lessor buys or leases goods to be leased.
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| (z) "Termination" occurs when either party pursuant
| | to a power created by agreement or law puts an end to the lease contract otherwise than for default.
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| (2) Other definitions applying to this Article and the
Sections in which they appear are:
"Accessions". Section 2A-310(1).
"Construction mortgage". Section 2A-309(1)(d).
"Encumbrance". Section 2A-309(1)(e).
"Fixtures". Section 2A-309(1)(a).
"Fixture filing". Section 2A-309(1)(b).
"Purchase money lease". Section 2A-309(1)(c).
(3) The following definitions in other Articles apply to
this Article:
"Account". Section 9-102(a)(2).
"Between merchants". Section 2-104(3).
"Buyer". Section 2-103(1)(a).
"Chattel paper". Section 9-102(a)(11).
"Consumer goods". Section 9-102(a)(23).
"Document". Section 9-102(a)(30).
"Entrusting". Section 2-403(3).
"General intangible". Section 9-102(a)(42).
"Good faith". Section 2-103(1)(b).
"Instrument". Section 9-102(a)(47).
"Merchant". Section 2-104(1).
"Mortgage". Section 9-102(a)(55).
"Pursuant to commitment". Section 9-102(a)(69).
"Receipt". Section 2-103(1)(c).
"Sale". Section 2-106(1).
"Sale on approval". Section 2-326.
"Sale or return". Section 2-326.
"Seller". Section 2-103(1)(d).
(4) In addition, Article 1 contains general definitions and
principles of construction and interpretation applicable
throughout this Article.
(Source: P.A. 97-1034, eff. 7-1-13.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 2A-103. Definitions and index of definitions.
(1) In this Article unless the context otherwise requires:
(a) "Buyer in ordinary course of business" means a
| | person who, in good faith and without knowledge that the sale to him or her is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods, buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker. "Buying" may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a pre-existing contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
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| (b) "Cancellation" occurs when either party puts an
| | end to the lease contract for default by the other party.
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| (c) "Commercial unit" means such a unit of goods as
| | by commercial usage is a single whole for purposes of lease and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article, as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload, or any other unit treated in use or in the relevant market as a single whole.
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| (d) "Conforming" goods or performance under a lease
| | contract means goods or performance that are in accordance with the obligations under the lease contract.
|
| (e) "Consumer lease" means a lease that a lessor
| | regularly engaged in the business of leasing or selling makes to a lessee who is an individual and who takes under the lease primarily for a personal, family, or household purpose, if the total payments to be made under the lease contract, excluding payments for options to renew or buy, do not exceed $40,000.
|
| (f) "Fault" means wrongful act, omission, breach, or
| | (g) "Finance lease" means a lease with respect to
| | (i) the lessor does not select, manufacture, or
| | (ii) the lessor acquires the goods or the right
| | to possession and use of the goods in connection with the lease; and
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| (iii) one of the following occurs:
(A) the lessee receives a copy of the
| | contract by which the lessor acquired the goods or the right to possession and use of the goods before signing the lease contract;
|
| (B) the lessee's approval of the contract by
| | which the lessor acquired the goods or the right to possession and use of the goods is a condition to effectiveness of the lease contract;
|
| (C) the lessee, before signing the lease
| | contract, receives an accurate and complete statement designating the promises and warranties, and any disclaimers of warranties, limitations or modifications of remedies, or liquidated damages, including those of a third party, such as the manufacturer of the goods, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods; or
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| (D) if the lease is not a consumer lease, the
| | lessor, before the lessee signs the lease contract, informs the lessee in writing (a) of the identity of the person supplying the goods to the lessor, unless the lessee has selected that person and directed the lessor to acquire the goods or the right to possession and use of the goods from that person, (b) that the lessee is entitled under this Article to the promises and warranties, including those of any third party, provided to the lessor by the person supplying the goods in connection with or as part of the contract by which the lessor acquired the goods or the right to possession and use of the goods, and (c) that the lessee may communicate with the person supplying the goods to the lessor and receive an accurate and complete statement of those promises and warranties, including any disclaimers and limitations of them or of remedies.
|
| (h) "Goods" means all things that are movable at the
| | time of identification to the lease contract, or are fixtures (Section 2A-309), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction. The term also includes the unborn young of animals.
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| (h.1) "Hybrid lease" means a single transaction
| | involving a lease of goods and:
|
| (i) the provision of services;
(ii) a sale of other goods; or
(iii) a sale, lease, or license of property other
| | (i) "Installment lease contract" means a lease
| | contract that authorizes or requires the delivery of goods in separate lots to be separately accepted, even though the lease contract contains a clause "each delivery is a separate lease" or its equivalent.
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| (j) "Lease" means a transfer of the right to
| | possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease. Unless the context clearly indicates otherwise, the term includes a sublease.
|
| (k) "Lease agreement" means the bargain, with respect
| | to the lease, of the lessor and the lessee in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this Article. Unless the context clearly indicates otherwise, the term includes a sublease agreement.
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| (l) "Lease contract" means the total legal obligation
| | that results from the lease agreement as affected by this Article and any other applicable rules of law. Unless the context clearly indicates otherwise, the term includes a sublease contract.
|
| (m) "Leasehold interest" means the interest of the
| | lessor or the lessee under a lease contract.
|
| (n) "Lessee" means a person who acquires the right to
| | possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessee.
|
| (o) "Lessee in ordinary course of business" means a
| | person who in good faith and without knowledge that the lease to him or her is in violation of the ownership rights or security interest or leasehold interest of a third party in the goods leases in ordinary course from a person in the business of selling or leasing goods of that kind but does not include a pawnbroker. "Leasing" may be for cash or by exchange of other property or on secured or unsecured credit and includes acquiring goods or documents of title under a pre-existing lease contract but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.
|
| (p) "Lessor" means a person who transfers the right
| | to possession and use of goods under a lease. Unless the context clearly indicates otherwise, the term includes a sublessor.
|
| (q) "Lessor's residual interest" means the lessor's
| | interest in the goods after expiration, termination, or cancellation of the lease contract.
|
| (r) "Lien" means a charge against or interest in
| | goods to secure payment of a debt or performance of an obligation, but the term does not include a security interest.
|
| (s) "Lot" means a parcel or a single article that is
| | the subject matter of a separate lease or delivery, whether or not it is sufficient to perform the lease contract.
|
| (t) "Merchant lessee" means a lessee that is a
| | merchant with respect to goods of the kind subject to the lease.
|
| (u) "Present value" means the amount as of a date
| | certain of one or more sums payable in the future, discounted to the date certain. The discount is determined by the interest rate specified by the parties if the rate was not manifestly unreasonable at the time the transaction was entered into; otherwise, the discount is determined by a commercially reasonable rate that takes into account the facts and circumstances of each case at the time the transaction was entered into.
|
| (v) "Purchase" includes taking by sale, lease,
| | mortgage, security interest, pledge, gift, or any other voluntary transaction creating an interest in goods.
|
| (w) "Sublease" means a lease of goods the right to
| | possession and use of which was acquired by the lessor as a lessee under an existing lease.
|
| (x) "Supplier" means a person from whom a lessor buys
| | or leases goods to be leased under a finance lease.
|
| (y) "Supply contract" means a contract under which a
| | lessor buys or leases goods to be leased.
|
| (z) "Termination" occurs when either party pursuant
| | to a power created by agreement or law puts an end to the lease contract otherwise than for default.
|
| (2) Other definitions applying to this Article and the Sections in which they appear are:
"Accessions". Section 2A-310(1).
"Construction mortgage". Section 2A-309(1)(d).
"Encumbrance". Section 2A-309(1)(e).
"Fixtures". Section 2A-309(1)(a).
"Fixture filing". Section 2A-309(1)(b).
"Purchase money lease". Section 2A-309(1)(c).
(3) The following definitions in other Articles apply to this Article:
"Account". Section 9-102(a)(2).
"Between merchants". Section 2-104(3).
"Buyer". Section 2-103(1)(a).
"Chattel paper". Section 9-102(a)(11).
"Consumer goods". Section 9-102(a)(23).
"Document". Section 9-102(a)(30).
"Entrusting". Section 2-403(3).
"General intangible". Section 9-102(a)(42).
"Good faith". Section 2-103(1)(b).
"Instrument". Section 9-102(a)(47).
"Merchant". Section 2-104(1).
"Mortgage". Section 9-102(a)(55).
"Pursuant to commitment". Section 9-102(a)(69).
"Receipt". Section 2-103(1)(c).
"Sale". Section 2-106(1).
"Sale on approval". Section 2-326.
"Sale or return". Section 2-326.
"Seller". Section 2-103(1)(d).
(4) In addition, Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/2A-104
(810 ILCS 5/2A-104) (from Ch. 26, par. 2A-104)
Sec. 2A-104.
Leases subject to other law.
(1) A lease, although subject to this Article, is also
subject to any applicable:
(a) certificate of title statute of this State: | | (Article I and Article II of Chapter 3 of The Illinois Vehicle Code; Article IIIA and Article IIIB of the Boat Registration and Safety Act);
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(b) certificate of title statute of another
| | jurisdiction (Section 2A-105); or
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(c) consumer protection statute of this State, or
| | final consumer protection decision of a court of this State existing on the effective date of this Article.
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(2) In case of conflict between this Article, other than Sections
2A-105, 2A-304(3), and 2A-305(3), and a statute or decision referred to in
subsection (1), the statute or decision controls.
(3) Failure to comply with an applicable law has only the effect
specified therein.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-105
(810 ILCS 5/2A-105) (from Ch. 26, par. 2A-105)
Sec. 2A-105.
Territorial application of Article to goods covered by
certificate of title. Subject to the provisions of Sections 2A-304(3) and
2A-305(3), with respect to goods covered by a certificate of title issued
under a statute of this State or of another jurisdiction, compliance and
the effect of compliance or noncompliance with a certificate of title
statute are governed by the law (including the conflict of laws rules) of
the jurisdiction issuing the certificate until the earlier of (a) surrender
of the certificate or (b) 4 months after the goods are removed from that
jurisdiction and thereafter until a new certificate of title is issued by
another jurisdiction.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-106
(810 ILCS 5/2A-106) (from Ch. 26, par. 2A-106)
Sec. 2A-106.
Limitation on power of parties to
consumer lease to choose applicable law and judicial
forum.
(1) If the law chosen by the parties to a consumer lease
is that of a jurisdiction other than a jurisdiction in which the
lessee resides at the time the lease agreement becomes
enforceable or within 30 days thereafter or in which the goods
are to be used, the choice is not enforceable.
(2) If the judicial forum chosen by the parties to a
consumer lease is a forum that would not otherwise have
jurisdiction over the lessee, the choice is not enforceable.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-107 (810 ILCS 5/2A-107) (from Ch. 26, par. 2A-107) (Text of Section before amendment by P.A. 103-1036) Sec. 2A-107. Waiver or renunciation of claim or right after default. Any claim or right arising out of an alleged default or breach
of warranty may be discharged in whole or in part without
consideration by a written waiver or renunciation signed and
delivered by the aggrieved party.(Source: P.A. 87-493.) (Text of Section after amendment by P.A. 103-1036) Sec. 2A-107. Waiver or renunciation of claim or right after default. Any claim or right arising out of an alleged default or breach of warranty may be discharged in whole or in part without consideration by a waiver or renunciation in a signed record delivered by the aggrieved party.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/2A-108
(810 ILCS 5/2A-108) (from Ch. 26, par. 2A-108)
Sec. 2A-108.
Unconscionability.
(1) If the court as a matter of law finds a lease contract
or any clause of a lease contract to have been unconscionable at
the time it was made, the court may refuse to enforce the lease
contract, or it may enforce the remainder of the lease contract
without the unconscionable clause, or it may so limit the
application of any unconscionable clause as to avoid any
unconscionable result.
(2) With respect to a consumer lease, if the court as a
matter of law finds that a lease contract or any clause of a lease
contract has been induced by unconscionable conduct or that
unconscionable conduct has occurred in the collection of a claim
arising from a lease contract, the court may grant appropriate
relief.
(3) Before making a finding of unconscionability under
subsection (1) or (2), the court, on its own motion or that of a
party, shall afford the parties a reasonable opportunity to
present evidence as to the setting, purpose, and effect of the
lease contract or clause thereof, or of the conduct.
(4) In an action in which the lessee claims
unconscionability with respect to a consumer lease:
(a) If the court finds unconscionability under | | subsection (1) or (2), the court shall award reasonable attorney's fees to the lessee.
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(b) If the court does not find unconscionability and
| | the lessee claiming unconscionability has brought or maintained an action he or she knew to be groundless, the court shall award reasonable attorney's fees to the party against whom the claim is made.
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(c) In determining attorney's fees, the amount of the
| | recovery on behalf of the claimant under subsections (1) and (2) is not controlling.
|
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(Source: P.A. 87-493.)
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810 ILCS 5/2A-109
(810 ILCS 5/2A-109) (from Ch. 26, par. 2A-109)
Sec. 2A-109.
Option to accelerate at will.
(1) A term providing that one party or his or her
successor in interest may accelerate payment or performance or
require collateral or additional collateral "at will" or "when he
or she deems himself or herself insecure" or in words of
similar import must be construed to mean that he or she has
power to do so only if he or she in good faith believes that
the prospect of payment or performance is impaired.
(2) With respect to a consumer lease, the burden of
establishing good faith under subsection (1) is on the party who
exercised the power; otherwise the burden of establishing lack
of good faith is on the party against whom the power has been
exercised.
(Source: P.A. 87-493.)
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810 ILCS 5/Art. 2A Pt. 2
(810 ILCS 5/Art. 2A Pt. 2 heading)
PART 2.
FORMATION AND CONSTRUCTION OF LEASE CONTRACT
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810 ILCS 5/2A-201 (810 ILCS 5/2A-201) (from Ch. 26, par. 2A-201) (Text of Section before amendment by P.A. 103-1036) Sec. 2A-201. Statute of frauds. (1) A lease contract is not enforceable by way of action
or defense unless: (a) the total payments to be made under the lease | | contract, excluding payments for options to renew or buy, are less than $1,000; or
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| (b) there is a writing, signed by the party against
| | whom enforcement is sought or by that party's authorized agent, sufficient to indicate that a lease contract has been made between the parties and to describe the goods leased and the lease term.
|
| (2) Any description of leased goods or of the lease term
is sufficient and satisfies subsection (1)(b), whether or not it is
specific, if it reasonably identifies what is described.
(3) A writing is not insufficient because it omits or
incorrectly states a term agreed upon, but the lease contract is
not enforceable under subsection (1)(b) beyond the lease term
and the quantity of goods shown in the writing.
(4) A lease contract that does not satisfy the
requirements of subsection (1), but which is valid in other
respects, is enforceable:
(a) if the goods are to be specially manufactured or
| | obtained for the lessee and are not suitable for lease or sale to others in the ordinary course of the lessor's business, and the lessor, before notice of repudiation is received and under circumstances that reasonably indicate that the goods are for the lessee, has made either a substantial beginning of their manufacture or commitments for their procurement;
|
| (b) if the party against whom enforcement is sought
| | admits in that party's pleading, testimony, or otherwise in court that a lease contract was made, but the lease contract is not enforceable under this provision beyond the quantity of goods admitted; or
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| (c) with respect to goods that have been received and
| | (5) The lease term under a lease contract referred to in
subsection (4) is:
(a) if there is a writing signed by the party against
| | whom enforcement is sought or by that party's authorized agent specifying the lease term, the term so specified;
|
| (b) if the party against whom enforcement is sought
| | admits in that party's pleading, testimony, or otherwise in court a lease term, the term so admitted; or
|
| (c) a reasonable lease term.
(Source: P.A. 87-493.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 2A-201. Statute of frauds.
(1) A lease contract is not enforceable by way of action or defense unless:
(a) the total payments to be made under the lease
| | contract, excluding payments for options to renew or buy, are less than $1,000; or
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| (b) there is a record, signed by the party against
| | whom enforcement is sought or by that party's authorized agent, sufficient to indicate that a lease contract has been made between the parties and to describe the goods leased and the lease term.
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| (2) Any description of leased goods or of the lease term is sufficient and satisfies subsection (1)(b), whether or not it is specific, if it reasonably identifies what is described.
(3) A record is not insufficient because it omits or incorrectly states a term agreed upon, but the lease contract is not enforceable under subsection (1)(b) beyond the lease term and the quantity of goods shown in the record.
(4) A lease contract that does not satisfy the requirements of subsection (1), but which is valid in other respects, is enforceable:
(a) if the goods are to be specially manufactured or
| | obtained for the lessee and are not suitable for lease or sale to others in the ordinary course of the lessor's business, and the lessor, before notice of repudiation is received and under circumstances that reasonably indicate that the goods are for the lessee, has made either a substantial beginning of their manufacture or commitments for their procurement;
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| (b) if the party against whom enforcement is sought
| | admits in that party's pleading, testimony, or otherwise in court that a lease contract was made, but the lease contract is not enforceable under this provision beyond the quantity of goods admitted; or
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| (c) with respect to goods that have been received and
| | (5) The lease term under a lease contract referred to in subsection (4) is:
(a) if there is a record signed by the party against
| | whom enforcement is sought or by that party's authorized agent specifying the lease term, the term so specified;
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| (b) if the party against whom enforcement is sought
| | admits in that party's pleading, testimony, or otherwise in court a lease term, the term so admitted; or
|
| (c) a reasonable lease term.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/2A-202 (810 ILCS 5/2A-202) (from Ch. 26, par. 2A-202) (Text of Section before amendment by P.A. 103-1036) Sec. 2A-202. Final written expression; parol or
extrinsic evidence.
Terms with respect to which the confirmatory memoranda of
the parties agree or which are otherwise set forth in a writing
intended by the parties as a final expression of their agreement
with respect to such terms as are included therein may not be
contradicted by evidence of any prior agreement or of a
contemporaneous oral agreement but may be explained or
supplemented: (a) by course of dealing or usage of trade or by | | course of performance; and
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| (b) by evidence of consistent additional terms unless
| | the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
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| (Source: P.A. 87-493.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 2A-202. Final expression; parol or extrinsic evidence. Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a record intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:
(a) by course of dealing or usage of trade or by
| | course of performance; and
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| (b) by evidence of consistent additional terms unless
| | the court finds the record to have been intended also as a complete and exclusive statement of the terms of the agreement.
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| (Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/2A-203 (810 ILCS 5/2A-203) (from Ch. 26, par. 2A-203) (Text of Section before amendment by P.A. 103-1036) Sec. 2A-203. Seals inoperative. The affixing of a seal to a writing
evidencing a lease contract or an offer to enter into a lease contract does
not render the writing a sealed instrument and the law with respect to
sealed instruments does not apply to the lease contract or offer.(Source: P.A. 87-493.) (Text of Section after amendment by P.A. 103-1036) Sec. 2A-203. Seals inoperative. The affixing of a seal to a record evidencing a lease contract or an offer to enter into a lease contract does not render the record a sealed instrument and the law with respect to sealed instruments does not apply to the lease contract or offer.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/2A-204
(810 ILCS 5/2A-204) (from Ch. 26, par. 2A-204)
Sec. 2A-204.
Formation in general.
(1) A lease contract may be made in any manner
sufficient to show agreement, including conduct by both parties
which recognizes the existence of a lease contract.
(2) An agreement sufficient to constitute a lease contract
may be found although the moment of its making is
undetermined.
(3) Although one or more terms are left open, a lease
contract does not fail for indefiniteness if the parties have
intended to make a lease contract and there is a reasonably
certain basis for giving an appropriate remedy.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-205 (810 ILCS 5/2A-205) (from Ch. 26, par. 2A-205) (Text of Section before amendment by P.A. 103-1036) Sec. 2A-205. Firm offers. An offer by a merchant to lease goods to or
from another person in a signed writing that by its terms gives assurance
it will be held open is not revocable, for lack of consideration, during
the time stated or, if no time is stated, for a reasonable time, but in no
event may the period of irrevocability exceed 3 months. Any such term of
assurance on a form supplied by the offeree must be separately signed by
the offeror.(Source: P.A. 87-493.) (Text of Section after amendment by P.A. 103-1036) Sec. 2A-205. Firm offers. An offer by a merchant to lease goods to or from another person in a signed record that by its terms gives assurance it will be held open is not revocable, for lack of consideration, during the time stated or, if no time is stated, for a reasonable time, but in no event may the period of irrevocability exceed 3 months. Any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/2A-206
(810 ILCS 5/2A-206) (from Ch. 26, par. 2A-206)
Sec. 2A-206.
Offer and acceptance in formation of
lease contract.
(1) Unless otherwise unambiguously indicated by the
language or circumstances, an offer to make a lease contract
must be construed as inviting acceptance in any manner and by
any medium reasonable in the circumstances.
(2) If the beginning of a requested performance is a
reasonable mode of acceptance, an offeror who is not notified of
acceptance within a reasonable time may treat the offer as having
lapsed before acceptance.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-207
(810 ILCS 5/2A-207) (from Ch. 26, par. 2A-207)
Sec. 2A-207. (Blank).
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2A-208 (810 ILCS 5/2A-208) (from Ch. 26, par. 2A-208) (Text of Section before amendment by P.A. 103-1036) Sec. 2A-208. Modification, rescission, and waiver. (1) An agreement modifying a lease contract needs no
consideration to be binding. (2) A signed lease agreement that excludes modification or
rescission except by a signed writing may not be otherwise
modified or rescinded, but, except as between merchants, such a
requirement on a form supplied by a merchant must be
separately signed by the other party. (3) Although an attempt at modification or rescission does
not satisfy the requirements of subsection (2), it may operate as
a waiver. (4) A party who has made a waiver affecting an
executory portion of a lease contract may retract the waiver by
reasonable notification received by the other party that strict
performance will be required of any term waived, unless the
retraction would be unjust in view of a material change of
position in reliance on the waiver.(Source: P.A. 87-493.) (Text of Section after amendment by P.A. 103-1036) Sec. 2A-208. Modification, rescission, and waiver. (1) An agreement modifying a lease contract needs no consideration to be binding. (2) A signed lease agreement that excludes modification or rescission except by a signed record may not be otherwise modified or rescinded, but, except as between merchants, such a requirement on a form supplied by a merchant must be separately signed by the other party. (3) Although an attempt at modification or rescission does not satisfy the requirements of subsection (2), it may operate as a waiver. (4) A party who has made a waiver affecting an executory portion of a lease contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/2A-209
(810 ILCS 5/2A-209) (from Ch. 26, par. 2A-209)
Sec. 2A-209.
Lessee under finance lease as beneficiary
of supply contract.
(1) The benefit of a supplier's promises to the lessor
under the supply contract and of all warranties, whether
express or implied, including those of any third party provided in
connection with or as part of the supply contract, extends to the
lessee to the extent of the lessee's leasehold interest under a
finance lease related to the supply contract, but is subject to the
terms of the warranty and of the supply contract and all defenses
or claims arising therefrom.
(2) The extension of the benefit of a supplier's promises and of
warranties to the lessee (Section 2A-209(1)) does not: (i) modify the
rights and obligations of the parties to the supply contract, whether
arising therefrom or otherwise, or (ii) impose any duty or liability under
the supply contract on the lessee.
(3) Any modification or rescission of the supply contract by the
supplier and the lessor is effective between the supplier and the lessee
unless, before the modification or rescission, the supplier has received
notice that the lessee has entered into a finance lease related to the
supply contract. If the modification or rescission is effective between
the supplier and the lessee, the lessor is deemed to have assumed, in
addition to the obligations of the lessor to the lessee under the lease
contract, promises of the supplier to the lessor and warranties that were
so modified or rescinded as they existed and were available to the lessee
before modification or rescission.
(4) In addition to the extension of the benefit of the supplier's
promises and of warranties to the lessee under subsection (1), the
lessee retains all rights that the lessee may have against the supplier
which arise from an agreement between the lessee and the supplier or
under other law.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-210
(810 ILCS 5/2A-210) (from Ch. 26, par. 2A-210)
Sec. 2A-210.
Express warranties.
(1) Express warranties by the lessor are created as
follows:
(a) Any affirmation of fact or promise made by the | | lessor to the lessee which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods will conform to the affirmation or promise.
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(b) Any description of the goods which is made part
| | of the basis of the bargain creates an express warranty that the goods will conform to the description.
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(c) Any sample or model that is made part of the
| | basis of the bargain creates an express warranty that the whole of the goods will conform to the sample or model.
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(2) It is not necessary to the creation of an express
warranty that the lessor use formal words, such as "warrant" or
"guarantee", or that the lessor have a specific intention to make
a warranty, but an affirmation merely of the value of the goods
or a statement purporting to be merely the lessor's opinion or
commendation of the goods does not create a warranty.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-211
(810 ILCS 5/2A-211) (from Ch. 26, par. 2A-211)
Sec. 2A-211.
Warranties against interference and
against infringement; lessee's obligation against
infringement.
(1) There is in a lease contract a warranty that for the
lease term no person holds a claim to or interest in the goods
that arose from an act or omission of the lessor, other than a
claim by way of infringement or the like, which will interfere
with the lessee's enjoyment of its leasehold interest.
(2) Except in a finance lease, there is in a lease contract
by a lessor who is a merchant regularly dealing in goods of the
kind a warranty that the goods are delivered free of the rightful
claim of any person by way of infringement or the like.
(3) A lessee who furnishes specifications to a lessor or a
supplier shall hold the lessor and the supplier harmless against
any claim by way of infringement or the like that arises out of
compliance with the specifications.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-212
(810 ILCS 5/2A-212) (from Ch. 26, par. 2A-212)
Sec. 2A-212.
Implied warranty of merchantability.
(1) Except in a finance lease, a warranty that the goods
will be merchantable is implied in a lease contract if the lessor is
a merchant with respect to goods of that kind.
(2) Goods to be merchantable must be at least such as:
(a) pass without objection in the trade under the | | description in the lease agreement;
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(b) in the case of fungible goods, are of fair
| | average quality within the description;
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(c) are fit for the ordinary purposes for which goods
| |
(d) run, within the variation permitted by the lease
| | agreement, of even kind, quality, and quantity within each unit and among all units involved;
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(e) are adequately contained, packaged, and labeled
| | as the lease agreement may require; and
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(f) conform to any promises or affirmations of fact
| | made on the container or label.
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(3) Other implied warranties may arise from course of
dealing or usage of trade.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-213
(810 ILCS 5/2A-213) (from Ch. 26, par. 2A-213)
Sec. 2A-213.
Implied warranty of fitness for particular purpose.
Except in a finance lease, if the lessor at the time the lease
contract is made has reason to know of any particular purpose
for which the goods are required and that the lessee is relying
on the lessor's skill or judgment to select or furnish suitable
goods, there is in the lease contract an implied warranty that
the goods will be fit for that purpose.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-214
(810 ILCS 5/2A-214) (from Ch. 26, par. 2A-214)
Sec. 2A-214.
Exclusion or modification of warranties.
(1) Words or conduct relevant to the creation of an
express warranty and words or conduct tending to negate or
limit a warranty must be construed wherever reasonable as
consistent with each other; but, subject to the provisions of
Section 2A-202 on parol or extrinsic evidence, negation or
limitation is inoperative to the extent that the construction is
unreasonable.
(2) Subject to subsection (3), to exclude or modify the
implied warranty of merchantability or any part of it the
language must mention "merchantability", be by a writing, and
be conspicuous. Subject to subsection (3), to exclude or modify
any implied warranty of fitness the exclusion must be by
a writing and be conspicuous. Language to exclude all implied
warranties of fitness is sufficient if it is in writing, is conspicuous and
states, for example, "There is no warranty that the goods will be fit for a
particular purpose.".
(3) Notwithstanding subsection (2), but subject to
subsection (4),
(a) unless the circumstances indicate otherwise, all | | implied warranties are excluded by expressions like "as is" or "with all faults" or by other language that in common understanding calls the lessee's attention to the exclusion of warranties and makes plain that there is no implied warranty, if in writing and conspicuous;
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(b) if the lessee before entering into the lease
| | contract has examined the goods or the sample or model as fully as desired or has refused to examine the goods, there is no implied warranty with regard to defects that an examination ought in the circumstances to have revealed; and
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(c) an implied warranty may also be excluded or
| | modified by course of dealing, course of performance, or usage of trade.
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(4) To exclude or modify a warranty against interference
or against infringement (Section 2A-211) or any part of it, the
language must be specific, be by a writing, and be conspicuous,
unless the circumstances, including course of performance,
course of dealing, or usage of trade, give the lessee reason to
know that the goods are being leased subject to a claim or
interest of any person.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-215
(810 ILCS 5/2A-215) (from Ch. 26, par. 2A-215)
Sec. 2A-215.
Cumulation and conflict of warranties express or implied.
Warranties, whether express or implied, must be construed as
consistent with each other and as cumulative, but if that
construction is unreasonable, the intention of the parties
determines which warranty is dominant. In ascertaining that
intention the following rules apply:
(a) Exact or technical specifications displace an | | inconsistent sample or model or general language of description.
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(b) A sample from an existing bulk displaces
| | inconsistent general language of description.
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(c) Express warranties displace inconsistent implied
| | warranties other than an implied warranty of fitness for a particular purpose.
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(Source: P.A. 87-493.)
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810 ILCS 5/2A-216
(810 ILCS 5/2A-216) (from Ch. 26, par. 2A-216)
Sec. 2A-216.
Third-party beneficiaries of express and implied
warranties. A warranty to or for the benefit of a lessee under this
Article, whether express or implied, extends to any person who
may reasonably be expected to use, consume, or be affected by
the goods and who is injured by breach of the warranty. The
operation of this Section may not be excluded, modified, or
limited with respect to injury to the person of an individual to
whom the warranty extends, but an exclusion, modification, or
limitation of the warranty, including any with respect to rights
and remedies, effective against the lessee is also effective
against the beneficiary designated under this Section.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-217
(810 ILCS 5/2A-217) (from Ch. 26, par. 2A-217)
Sec. 2A-217.
Identification.
Identification of goods as goods to which a
lease contract refers may be made at any time and in any manner explicitly
agreed to by the parties. In the absence of explicit agreement,
identification occurs:
(a) when the lease contract is made if the lease | | contract is for a lease of goods that are existing and identified;
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(b) when the goods are shipped, marked, or otherwise
| | designated by the lessor as goods to which the lease contract refers, if the lease contract is for a lease of goods that are not existing and identified; or
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(c) when the young are conceived, if the lease
| | contract is for a lease of unborn young of animals.
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(Source: P.A. 87-493.)
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810 ILCS 5/2A-218
(810 ILCS 5/2A-218) (from Ch. 26, par. 2A-218)
Sec. 2A-218.
Insurance and proceeds.
(1) A lessee obtains an insurable interest when existing
goods are identified to the lease contract even though the goods
identified are nonconforming and the lessee has an option to
reject them.
(2) If a lessee has an insurable interest only by reason
of the lessor's identification of the goods, the lessor, until
default or insolvency or notification to the lessee that
identification is final, may substitute other goods for those
identified.
(3) Notwithstanding a lessee's insurable interest under
subsections (1) and (2), the lessor retains an insurable interest
until an option to buy has been exercised by the lessee and risk
of loss has passed to the lessee.
(4) Nothing in this Section impairs any insurable interest
recognized under any other statute or rule of law.
(5) The parties by agreement may determine that one or
more parties have an obligation to obtain and pay for insurance
covering the goods and by agreement may determine the
beneficiary of the proceeds of the insurance.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-219
(810 ILCS 5/2A-219) (from Ch. 26, par. 2A-219)
Sec. 2A-219.
Risk of loss.
(1) Except in the case of a finance lease, risk of loss is
retained by the lessor and does not pass to the lessee. In the
case of a finance lease, risk of loss passes to the lessee.
(2) Subject to the provisions of this Article on the effect
of default on risk of loss (Section 2A-220), if risk of loss is to
pass to the lessee and the time of passage is not stated, the
following rules apply:
(a) If the lease contract requires or authorizes the | | goods to be shipped by carrier
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(i) and it does not require delivery at a
| | particular destination, the risk of loss passes to the lessee when the goods are duly delivered to the carrier; but
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(ii) if it does require delivery at a particular
| | destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the lessee when the goods are there duly so tendered as to enable the lessee to take delivery.
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(b) If the goods are held by a bailee to be delivered
| | without being moved, the risk of loss passes to the lessee on acknowledgment by the bailee of the lessee's right to possession of the goods.
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(c) In any case not within paragraph (a) or (b), the
| | risk of loss passes to the lessee on the lessee's receipt of the goods if the lessor, or, in the case of a finance lease, the supplier, is a merchant; otherwise the risk passes to the lessee on tender of delivery.
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(Source: P.A. 87-493.)
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810 ILCS 5/2A-220
(810 ILCS 5/2A-220) (from Ch. 26, par. 2A-220)
Sec. 2A-220.
Effect of default on risk of loss.
(1) Where risk of loss is to pass to the lessee and the
time of passage is not stated:
(a) If a tender or delivery of goods so fails to | | conform to the lease contract as to give a right of rejection, the risk of their loss remains with the lessor, or, in the case of a finance lease, the supplier, until cure or acceptance.
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(b) If the lessee rightfully revokes acceptance, he
| | or she, to the extent of any deficiency in his or her effective insurance coverage, may treat the risk of loss as having remained with the lessor from the beginning.
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(2) Whether or not risk of loss is to pass to the lessee,
if the lessee as to conforming goods already identified to a lease
contract repudiates or is otherwise in default under the lease
contract, the lessor, or, in the case of a finance lease, the
supplier, to the extent of any deficiency in his or her
effective insurance coverage may treat the risk of loss as resting
on the lessee for a commercially reasonable time.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-221
(810 ILCS 5/2A-221) (from Ch. 26, par. 2A-221)
Sec. 2A-221.
Casualty to identified goods.
If a lease contract requires goods identified when the lease
contract is made, and the goods suffer casualty without fault of
the lessee, the lessor, or the supplier before delivery, or the
goods suffer casualty before risk of loss passes to the lessee
pursuant to the lease agreement or Section 2A-219, then:
(a) if the loss is total, the lease contract is avoided; and
(b) if the loss is partial or the goods have so deteriorated
as to no longer conform to the lease contract, the lessee may
nevertheless demand inspection and at his or her option either
treat the lease contract as avoided or, except in a finance lease
that is not a consumer lease, accept the goods with due
allowance from the rent payable for the balance of the lease term
for the deterioration or the deficiency in quantity but without
further right against the lessor.
(Source: P.A. 87-493.)
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810 ILCS 5/Art. 2A Pt. 3
(810 ILCS 5/Art. 2A Pt. 3 heading)
PART 3.
EFFECT OF LEASE CONTRACT
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810 ILCS 5/2A-301
(810 ILCS 5/2A-301) (from Ch. 26, par. 2A-301)
Sec. 2A-301.
Enforceability of lease contract.
Except as otherwise provided in this Article, a lease contract
is effective and enforceable according to its terms between the
parties, against purchasers of the goods and against creditors
of the parties.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-302
(810 ILCS 5/2A-302) (from Ch. 26, par. 2A-302)
Sec. 2A-302.
Title to and possession of goods.
Except as otherwise provided in this Article, each provision
of this Article applies whether the lessor or a third party has
title to the goods, and whether the lessor, the lessee, or a third
party has possession of the goods, notwithstanding any statute
or rule of law that possession or the absence of possession is
fraudulent.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-303
(810 ILCS 5/2A-303) (from Ch. 26, par. 2A-303)
Sec. 2A-303.
Alienability of party's interest under
lease contract or of lessor's residual interest in
goods; delegation of performance; transfer of
rights.
(1) As used in this Section, "creation of a security interest" includes
the sale of a lease contract that is subject to Article 9, Secured
Transactions, by reason of Section 9-109(a)(3).
(2) Except as provided in subsection (3) and Section
9-407, a provision in a
lease agreement which (i) prohibits the voluntary or involuntary transfer,
including a transfer by sale, sublease, creation or enforcement of a
security interest, or attachment, levy, or other judicial process, of an
interest of a party under the lease contract or of the lessor's residual
interest in the goods, or (ii) makes such a transfer an event of default,
gives rise to the rights and remedies provided in subsection (4),
but a
transfer that is prohibited or is an event of default under the lease
agreement is otherwise effective.
(3) A provision in a lease agreement which (i) prohibits a transfer of a
right to damages for default with respect to the whole lease contract or of
a right to payment arising out of the transferor's due performance of the
transferor's entire obligation, or (ii) makes such a transfer an event of
default, is not enforceable, and such a transfer is not a transfer that
materially impairs the prospect of obtaining return performance by,
materially changes the duty of, or materially increases the burden or risk
imposed on, the other party to the lease contract within the purview of
subsection (4).
(4) Subject to subsection (3) and Section
9-407:
(a) if a transfer is made which is made an event of | | default under a lease agreement, the party to the lease contract not making the transfer, unless that party waives the default or otherwise agrees, has the rights and remedies described in Section 2A-501(2);
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(b) if paragraph (a) is not applicable and if a
| | transfer is made that (i) is prohibited under a lease agreement or (ii) materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden of risk imposed on, the other party to the lease contract, unless the party not making the transfer agrees at any time to the transfer in the lease contract or otherwise, then, except as limited by contract, (i) the transferor is liable to the party not making the transfer for damages caused by the transfer to the extent that the damages could not reasonably be prevented by the party not making the transfer and (ii) a court having jurisdiction may grant other appropriate relief, including cancellation of the lease contract or an injunction against the transfer.
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(5) A transfer of "the lease" or of "all my rights
under the lease", or a transfer in similar general terms, is a
transfer of rights and, unless the language or the
circumstances, as in a transfer for security, indicate the
contrary, the transfer is a delegation of duties by the
transferor to the transferee. Acceptance by the transferee
constitutes a promise by the transferee to perform those duties.
The promise is enforceable by either the transferor or the other
party to the lease contract.
(6) Unless otherwise agreed by the lessor and the lessee,
a delegation of performance does not relieve the transferor as against the
other party of any duty to perform or of any liability for default.
(7) In a consumer lease, to prohibit the transfer of an
interest of a party under the lease contract or to make a transfer an event of
default, the language must be specific, by a writing, and conspicuous.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/2A-304
(810 ILCS 5/2A-304) (from Ch. 26, par. 2A-304)
Sec. 2A-304.
Subsequent lease of goods by lessor.
(1) Subject to Section 2A-303, a subsequent lessee from a lessor of
goods under an existing lease contract obtains, to the extent of the
leasehold interest transferred, the leasehold interest in the goods that
the lessor had or had power to transfer and, except as provided in
subsection (2) and Section 2A-527(4), takes subject to the existing lease
contract. A lessor with voidable title has power to transfer a good
leasehold interest to a good faith subsequent lessee for value, but only to
the extent set forth in the preceding sentence. If goods have been
delivered under a transaction of purchase, the lessor has that power
even though:
(a) the lessor's transferor was deceived as to the | |
(b) the delivery was in exchange for a check which is
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(c) it was agreed that the transaction was to be a
| |
(d) the delivery was procured through fraud
| | punishable as larcenous under the criminal law.
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(2) A subsequent lessee in the ordinary course of
business from a lessor who is a merchant dealing in goods of
that kind to whom the goods were entrusted by the existing
lessee of that lessor before the interest of the subsequent lessee became
enforceable against that lessor obtains, to the extent of the
leasehold interest transferred, all of that lessor's and the
existing lessee's rights to the goods, and takes free of the
existing lease contract.
(3) A subsequent lessee from the lessor of goods that are
subject to an existing lease contract and are covered by a
certificate of title issued under a statute of this State or of
another jurisdiction takes no greater rights than those provided
both by this Section and by the certificate of title statute.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-305
(810 ILCS 5/2A-305) (from Ch. 26, par. 2A-305)
Sec. 2A-305.
Sale or sublease of goods by lessee.
(1) Subject to the provisions of Section 2A-303, a buyer
or sublessee from the lessee of goods under an existing lease
contract obtains, to the extent of the interest transferred, the
leasehold interest in the goods that the lessee had or had power
to transfer and, except as provided in subsection (2) and
Section 2A-511(4), takes subject to the existing lease contract.
A lessee with a voidable leasehold interest has power to transfer
a good leasehold interest to a good faith buyer for value or a
good faith sublessee for value, but only to the extent set forth
in the preceding sentence. When goods have been delivered
under a transaction of lease the lessee has that power even
though:
(a) the lessor was deceived as to the identity of the | |
(b) the delivery was in exchange for a check which is
| |
(c) the delivery was procured through fraud
| | punishable as larcenous under the criminal law.
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(2) A buyer in the ordinary course of business or a
sublessee in the ordinary course of business from a lessee who
is a merchant dealing in goods of that kind to whom the goods
were entrusted by the lessor obtains, to the extent of the
interest transferred, all of the lessor's and lessee's rights to the
goods, and takes free of the existing lease contract.
(3) A buyer or sublessee from the lessee of goods that
are subject to an existing lease contract and are covered by a
certificate of title issued under a statute of this State or of
another jurisdiction takes no greater rights than those provided
both by this Section and by the certificate of title statute.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-306
(810 ILCS 5/2A-306) (from Ch. 26, par. 2A-306)
Sec. 2A-306.
Priority of certain liens arising by operation of law.
If a person in the ordinary course of his or her business
furnishes services or materials with respect to goods subject to a
lease contract, a lien upon those goods in the possession of that
person given by statute or rule of law for those materials or
services takes priority over any interest of the lessor or lessee under the
lease contract or this Article unless the lien is created by statute and
the statute provides otherwise or unless the lien is created by rule of law
and the rule of law provides otherwise.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-307
(810 ILCS 5/2A-307) (from Ch. 26, par. 2A-307)
Sec. 2A-307.
Priority of liens arising by attachment
or levy on, security interests in, and other claims to goods.
(1) Except as otherwise provided in Section 2A-306, a
creditor of a lessee takes subject to the lease contract.
(2) Except as otherwise provided in subsection (3) and in Sections 2A-306
and 2A-308, a creditor
of a lessor takes subject to the lease contract unless the creditor holds a
lien that attached to the
goods before the lease contract became enforceable.
(3) Except as otherwise provided in Sections 9-317, 9-321, and
9-323, a lessee takes a leasehold interest subject to a security interest held
by a creditor of the lessor.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/2A-308
(810 ILCS 5/2A-308) (from Ch. 26, par. 2A-308)
Sec. 2A-308.
Special rights of creditors.
(1) A creditor of a lessor in possession of goods subject
to a lease contract may treat the lease contract as void if as
against the creditor retention of possession by the lessor is
fraudulent under any statute or rule of law, but retention of
possession in good faith and current course of trade by the
lessor for a commercially reasonable time after the lease contract
becomes enforceable is not fraudulent.
(2) Nothing in this Article impairs the rights of creditors
of a lessor if the lease contract (a) becomes enforceable, not in
current course of trade but in satisfaction of or as security for
a pre-existing claim for money, security, or the like, and (b) is
made under circumstances which under any statute or rule of law
apart from this Article would constitute the transaction a
fraudulent transfer or voidable preference.
(3) A creditor of a seller may treat a sale or an
identification of goods to a contract for sale as void if as against
the creditor retention of possession by the seller is fraudulent
under any statute or rule of law, but retention of possession of
the goods pursuant to a lease contract entered into by the seller
as lessee and the buyer as lessor in connection with the sale or
identification of the goods is not fraudulent if the buyer bought
for value and in good faith.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-309
(810 ILCS 5/2A-309) (from Ch. 26, par. 2A-309)
Sec. 2A-309.
Lessor's and lessee's rights when goods become fixtures.
(1) In this Section:
(a) goods are "fixtures" when they become so related | | to particular real estate that an interest in them arises under real estate law;
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(b) a "fixture filing" is the filing, in the office
| | where a mortgage on the real estate would be filed or recorded, of a financing statement covering goods that are or are to become fixtures and conforming to the requirements of Section 9-502(a) and (b);
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(c) a lease is a "purchase money lease" unless the
| | lessee has possession or use of the goods or the right to possession or use of the goods before the lease agreement is enforceable;
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(d) a mortgage is a "construction mortgage" to the
| | extent it secures an obligation incurred for the construction of an improvement on land including the acquisition cost of the land, if the recorded writing so indicates; and
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(e) "encumbrance" includes real estate mortgages and
| | other liens on real estate and all other rights in real estate that are not ownership interests.
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(2) Under this Article a lease may be of goods that are
fixtures or may continue in goods that become fixtures, but no
lease exists under this Article of ordinary building materials
incorporated into an improvement on land.
(3) This Article does not prevent creation of a lease of
fixtures pursuant to real estate law.
(4) The perfected interest of a lessor of fixtures has
priority over a conflicting interest of an encumbrancer or owner
of the real estate if:
(a) the lease is a purchase money lease, the
| | conflicting interest of the encumbrancer or owner arises before the goods become fixtures, the interest of the lessor is perfected by a fixture filing before the goods become fixtures or within 10 days thereafter, and the lessee has an interest of record in the real estate or is in possession of the real estate; or
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(b) the interest of the lessor is perfected by a
| | fixture filing before the interest of the encumbrancer or owner is of record, the lessor's interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner, and the lessee has an interest of record in the real estate or is in possession of the real estate.
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(5) The interest of a lessor of fixtures, whether or not
perfected, has priority over the conflicting interest of an
encumbrancer or owner of the real estate if:
(a) the fixtures are readily removable factory or
| | office machines, readily removable equipment that is not primarily used or leased for use in the operation of the real estate, or readily removable replacements of domestic appliances that are goods subject to a consumer lease, and before the goods become fixtures the lease contract is enforceable; or
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(b) the conflicting interest is a lien on the real
| | estate obtained by legal or equitable proceedings after the lease contract is enforceable; or
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(c) the encumbrancer or owner has consented in
| | writing to the lease or has disclaimed an interest in the goods as fixtures; or
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(d) the lessee has a right to remove the goods as
| | against the encumbrancer or owner. If the lessee's right to remove terminates, the priority of the interest of the lessor continues for a reasonable time.
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(6) Notwithstanding subsection (4)(a) but
otherwise subject to subsections (4) and (5), the interest of a
lessor of fixtures, including the lessor's residual interest, is
subordinate to the conflicting interest of an
encumbrancer of the real estate under a construction mortgage
recorded before the goods become fixtures if the goods become
fixtures before the completion of the construction. To the
extent given to refinance a construction mortgage, the
conflicting interest of an encumbrancer of the real estate under
a mortgage has this priority to the same extent as the
encumbrancer of the real estate under the construction
mortgage.
(7) In cases not within the preceding subsections, priority between the
interest of a lessor of fixtures, including the lessor's residual interest,
and the conflicting interest of an encumbrancer or owner of the real estate
who is not the lessee is determined by the priority rules governing
conflicting interests in real estate.
(8) If the interest of a lessor of fixtures, including the lessor's
residual interest, has priority over all conflicting interests of all
owners and encumbrancers of the real estate, the lessor or the lessee may
(i) on default, expiration, termination, or cancellation of the lease
agreement but subject to the lease agreement and this Article, or (ii) if
necessary to enforce other rights and remedies of the lessor or lessee
under this Article, remove the goods from the real estate, free and clear
of all conflicting interests of all owners and encumbrancers of the real
estate, but the lessor or lessee must reimburse any encumbrancer or owner
of the real estate who is not the lessee and who has not otherwise agreed
for the cost of repair of any physical injury, but not for any diminution
in value of the real estate caused by the absence of the goods removed or
by any necessity of replacing them. A person entitled to reimbursement may
refuse permission to remove until the party seeking removal gives adequate
security for the performance of this obligation.
(9) Even though the lease agreement does not create a security interest,
the interest of a lessor of fixtures, including the lessor's residual
interest, is perfected by filing a financing statement as a fixture filing
for leased goods that are or are to become fixtures in accordance with the
relevant provisions of the Article on Secured Transactions (Article 9).
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/2A-310
(810 ILCS 5/2A-310) (from Ch. 26, par. 2A-310)
Sec. 2A-310.
Lessor's and lessee's rights when goods
become accessions.
(1) Goods are "accessions" when they are installed in or
affixed to other goods.
(2) The interest of a lessor or a lessee under a lease
contract entered into before the goods became accessions is
superior to all interests in the whole except as stated in
subsection (4).
(3) The interest of a lessor or a lessee under a lease
contract entered into at the time or after the goods became
accessions is superior to all subsequently acquired interests in
the whole except as stated in subsection (4) but is subordinate
to interests in the whole existing at the time the lease contract
was made unless the holders of such interests in the whole have
in writing consented to the lease or disclaimed an interest in the
goods as part of the whole.
(4) The interest of a lessor or a lessee under a lease
contract described in subsection (2) or (3) is subordinate to the
interest of:
(a) a buyer in the ordinary course of business or a | | lessee in the ordinary course of business of any interest in the whole acquired after the goods became accessions; or
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(b) a creditor with a security interest in the whole
| | perfected before the lease contract was made to the extent that the creditor makes subsequent advances without knowledge of the lease contract.
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(5) When under subsections (2) or (3) and (4) a lessor
or a lessee of accessions holds an interest that is superior to all
interests in the whole, the lessor or the lessee may (a) on
default, expiration, termination, or cancellation of the lease
contract by the other party but subject to the provisions of the
lease contract and this Article, or (b) if necessary to enforce
his or her other rights and remedies under this Article,
remove the goods from the whole, free and clear of all interests
in the whole, but he or she must reimburse any holder of an
interest in the whole who is not the lessee and who has not
otherwise agreed for the cost of repair of any physical injury
but not for any diminution in value of the whole caused by the
absence of the goods removed or by any necessity for replacing
them. A person entitled to reimbursement may refuse permission
to remove until the party seeking removal gives adequate
security for the performance of this obligation.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-311
(810 ILCS 5/2A-311) (from Ch. 26, par. 2A-311)
Sec. 2A-311.
Priority subject to subordination.
Nothing in this
Article prevents subordination by agreement by any person entitled to
priority.
(Source: P.A. 87-493.)
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810 ILCS 5/Art. 2A Pt. 4
(810 ILCS 5/Art. 2A Pt. 4 heading)
PART 4.
PERFORMANCE OF LEASE CONTRACT:
REPUDIATED, SUBSTITUTED, AND EXCUSED
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810 ILCS 5/2A-401
(810 ILCS 5/2A-401) (from Ch. 26, par. 2A-401)
Sec. 2A-401.
Insecurity; adequate assurance of
performance.
(1) A lease contract imposes an obligation on each party
that the other's expectation of receiving due performance will not
be impaired.
(2) If reasonable grounds for insecurity arise with
respect to the performance of either party, the insecure party
may demand in writing adequate assurance of due performance.
Until the insecure party receives that assurance, if commercially
reasonable the insecure party may suspend any performance for
which he or she has not already received the agreed return.
(3) A repudiation of the lease contract occurs if
assurance of due performance adequate under the circumstances
of the particular case is not provided to the insecure party
within a reasonable time, not to exceed 30 days after receipt of
a demand by the other party.
(4) Between merchants, the reasonableness of grounds for
insecurity and the adequacy of any assurance offered must be
determined according to commercial standards.
(5) Acceptance of any nonconforming delivery or payment
does not prejudice the aggrieved party's right to demand
adequate assurance of future performance.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-402
(810 ILCS 5/2A-402) (from Ch. 26, par. 2A-402)
Sec. 2A-402.
Anticipatory repudiation.
If either party repudiates a lease contract with respect to a
performance not yet due under the lease contract, the loss of
which performance will substantially impair the value of the lease
contract to the other, the aggrieved party may:
(a) for a commercially reasonable time, await retraction of
repudiation and performance by the repudiating party;
(b) make demand pursuant to Section 2A-401 and await
assurance of future performance adequate under the
circumstances of the particular case; or
(c) resort to any right or remedy upon default under the
lease contract or this Article, even though the aggrieved party
has notified the repudiating party that the aggrieved party
would await the repudiating party's performance and assurance
and has urged retraction. In addition, whether or not the
aggrieved party is pursuing one of the foregoing remedies, the
aggrieved party may suspend performance or, if the aggrieved
party is the lessor, proceed in accordance with the provisions of
this Article on the lessor's right to identify goods to the lease
contract notwithstanding default or to salvage unfinished goods
(Section 2A-524).
(Source: P.A. 87-493.)
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810 ILCS 5/2A-403
(810 ILCS 5/2A-403) (from Ch. 26, par. 2A-403)
Sec. 2A-403.
Retraction of anticipatory repudiation.
(1) Until the repudiating party's next performance is
due, the repudiating party can retract the repudiation unless,
since the repudiation, the aggrieved party has cancelled the
lease contract or materially changed the aggrieved party's
position or otherwise indicated that the aggrieved party
considers the repudiation final.
(2) Retraction may be by any method that clearly
indicates to the aggrieved party that the repudiating party
intends to perform under the lease contract and includes any
assurance demanded under Section 2A-401.
(3) Retraction reinstates a repudiating party's rights
under a lease contract with due excuse and allowance to the
aggrieved party for any delay occasioned by the repudiation.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-404
(810 ILCS 5/2A-404) (from Ch. 26, par. 2A-404)
Sec. 2A-404.
Substituted performance.
(1) If without fault of the lessee, the lessor and the
supplier, the agreed berthing, loading, or unloading facilities
fail or the agreed type of carrier becomes unavailable or the
agreed manner of delivery otherwise becomes commercially
impracticable, but a commercially reasonable substitute is
available, the substitute performance must be tendered and
accepted.
(2) If the agreed means or manner of payment fails
because of domestic or foreign governmental regulation:
(a) the lessor may withhold or stop delivery or cause | | the supplier to withhold or stop delivery unless the lessee provides a means or manner of payment that is commercially a substantial equivalent; and
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(b) if delivery has already been taken, payment by
| | the means or in the manner provided by the regulation discharges the lessee's obligation unless the regulation is discriminatory, oppressive, or predatory.
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(Source: P.A. 87-493.)
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810 ILCS 5/2A-405
(810 ILCS 5/2A-405) (from Ch. 26, par. 2A-405)
Sec. 2A-405.
Excused performance.
Subject to Section 2A-404 on
substituted performance, the following rules apply:
(a) Delay in delivery or nondelivery in whole or in part
by a lessor or a supplier who complies with paragraphs (b) and
(c) is not a default under the lease contract if performance as
agreed has been made impracticable by the occurrence of a
contingency the nonoccurrence of which was a basic assumption
on which the lease contract was made or by compliance in good
faith with any applicable foreign or domestic governmental
regulation or order, whether or not the regulation or order later
proves to be invalid.
(b) If the causes mentioned in paragraph (a) affect only
part of the lessor's or the supplier's capacity to perform, he or
she shall allocate production and deliveries among his or her
customers but at his or her option may include regular
customers not then under contract for sale or lease as well as
his or her own requirements for further manufacture. He or
she may so allocate in any manner that is fair and reasonable.
(c) The lessor seasonably shall notify the lessee and in
the case of a finance lease the supplier seasonably shall notify
the lessor and the lessee, if known, that there will be delay or
nondelivery and, if allocation is required under paragraph (b),
of the estimated quota thus made available for the lessee.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-406
(810 ILCS 5/2A-406) (from Ch. 26, par. 2A-406)
Sec. 2A-406.
Procedure on excused performance.
(1) If the lessee receives notification of a material or
indefinite delay or an allocation justified under Section 2A-405,
the lessee may by written notification to the lessor as to any
goods involved, and with respect to all of the goods if under an
installment lease contract the value of the whole lease contract is
substantially impaired (Section 2A-510):
(a) terminate the lease contract (Section 2A-505(2)); | |
(b) except in a finance lease that is not a consumer
| | lease, modify the lease contract by accepting the available quota in substitution, with due allowance from the rent payable for the balance of the lease term for the deficiency but without further right against the lessor.
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(2) If, after receipt of a notification from the lessor
under Section 2A-405, the lessee fails so to modify the lease
agreement within a reasonable time not exceeding 30 days, the
lease contract lapses with respect to any deliveries affected.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-407
(810 ILCS 5/2A-407) (from Ch. 26, par. 2A-407)
Sec. 2A-407.
Irrevocable promises; finance leases.
(1) In the case of a finance lease that is not a consumer
lease the lessee's promises under the lease contract become
irrevocable and independent upon the lessee's acceptance of the
goods.
(2) A promise that has become irrevocable and
independent under subsection (1):
(a) is effective and enforceable between the parties, | | and by or against third parties including assignees of the parties; and
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(b) is not subject to cancellation, termination,
| | modification, repudiation, excuse, or substitution without the consent of the party to whom the promise runs.
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(3) This Section does not affect the validity under any other law of a
covenant in any lease contract making the lessee's promises irrevocable
and independent upon the lessee's acceptance of the goods.
(Source: P.A. 87-493.)
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810 ILCS 5/Art. 2A Pt. 5
(810 ILCS 5/Art. 2A Pt. 5 heading)
PART 5.
DEFAULT
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810 ILCS 5/Art. 2A Pt. 5 Sub. A
(810 ILCS 5/Art. 2A Pt. 5 Sub. A heading)
A.
In General
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810 ILCS 5/2A-501
(810 ILCS 5/2A-501) (from Ch. 26, par. 2A-501)
Sec. 2A-501. Default; procedure.
(1) Whether the lessor or the lessee is in default under a
lease contract is determined by the lease agreement and this
Article.
(2) If the lessor or the lessee is in default under the
lease contract, the party seeking enforcement has rights and
remedies as provided in this Article and, except as limited by
this Article, as provided in the lease agreement.
(3) If the lessor or the lessee is in default under the
lease contract, the party seeking enforcement may reduce the
party's claim to judgment, or otherwise enforce the lease
contract by self-help or any available judicial procedure or
nonjudicial procedure, including administrative proceeding,
arbitration, or the like, in accordance with this Article.
(4) Except as otherwise provided in Section 1-305(a)
or this Article or
the lease agreement, the rights and remedies referred to in subsections (2)
and (3) are cumulative.
(5) If the lease agreement covers both real property and
goods, the party seeking enforcement may proceed under this
Part as to the goods, or under other applicable law as to both
the real property and the goods in accordance with that party's
rights and remedies in respect of the real property, in which
case this Part does not apply.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2A-502
(810 ILCS 5/2A-502) (from Ch. 26, par. 2A-502)
Sec. 2A-502.
Notice after default.
Except as otherwise provided in this Article or the lease
agreement, the lessor or lessee in default under the lease
contract is not entitled to notice of default or notice of
enforcement from the other party to the lease agreement.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-503
(810 ILCS 5/2A-503) (from Ch. 26, par. 2A-503)
Sec. 2A-503.
Modification or impairment of rights and
remedies.
(1) Except as otherwise provided in this Article, the
lease agreement may include rights and remedies for default in
addition to or in substitution for those provided in this Article
and may limit or alter the measure of damages recoverable under
this Article.
(2) Resort to a remedy provided under this Article or in
the lease agreement is optional unless the remedy is expressly
agreed to be exclusive. If circumstances cause an exclusive or
limited remedy to fail of its essential purpose, or provision for
an exclusive remedy is unconscionable, remedy may be had as
provided in this Article.
(3) Consequential damages may be liquidated under
Section 2A-504, or may otherwise be limited, altered, or
excluded unless the limitation, alteration, or exclusion is
unconscionable. Limitation, alteration, or exclusion of consequential
damages for injury to the person in the case of consumer goods is prima
facie unconscionable but limitation, alteration, or exclusion of damages
where the loss is commercial is not prima facie unconscionable.
(4) Rights and remedies on default by the lessor or the
lessee with respect to any obligation or promise collateral or
ancillary to the lease contract are not impaired by this Article.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-504
(810 ILCS 5/2A-504) (from Ch. 26, par. 2A-504)
Sec. 2A-504.
Liquidation of damages.
(1) Damages payable by either party for default, or any
other act or omission, including indemnity for loss or diminution
of anticipated tax benefits or loss or damage to lessor's residual
interest, may be liquidated in the lease agreement but only at an
amount or by a formula that is reasonable in light of the then
anticipated harm caused by the default or other act or omission.
(2) If the lease agreement provides for liquidation of
damages, and such provision does not comply with
subsection (1), or such provision is an exclusive or limited
remedy that circumstances cause to fail of its essential purpose,
remedy may be had as provided in this Article.
(3) If the lessor justifiably withholds or stops delivery of
goods because of the lessee's default or insolvency
(Section 2A-525 or 2A-526), the lessee is entitled to restitution
of any amount by which the sum of his or her payments
exceeds:
(a) the amount to which the lessor is entitled by | | virtue of terms liquidating the lessor's damages in accordance with subsection (1); or
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(b) in the absence of those terms, 20% of the then
| | present value of the total rent the lessee was obligated to pay for the balance of the lease term, or, in the case of a consumer lease, the lesser of such amount or $500.
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(4) A lessee's right to restitution under subsection (3) is
subject to offset to the extent the lessor establishes:
(a) a right to recover damages under the provisions
| | of this Article other than subsection (1); and
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(b) the amount or value of any benefits received by
| | the lessee directly or indirectly by reason of the lease contract.
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(Source: P.A. 87-493.)
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810 ILCS 5/2A-505
(810 ILCS 5/2A-505) (from Ch. 26, par. 2A-505)
Sec. 2A-505.
Cancellation and termination and effect
of cancellation, termination, rescission, or fraud
on rights and remedies.
(1) On cancellation of the lease contract, all obligations
that are still executory on both sides are discharged, but any
right based on prior default or performance survives, and the
cancelling party also retains any remedy for default of the whole
lease contract or any unperformed balance.
(2) On termination of the lease contract, all obligations
that are still executory on both sides are discharged but any
right based on prior default or performance survives.
(3) Unless the contrary intention clearly appears,
expressions of "cancellation", "rescission", or the like of the
lease contract may not be construed as a renunciation or
discharge of any claim in damages for an antecedent default.
(4) Rights and remedies for material misrepresentation or
fraud include all rights and remedies available under this Article
for default.
(5) Neither rescission nor a claim for rescission of the
lease contract nor rejection or return of the goods may bar or
be deemed inconsistent with a claim for damages or other right
or remedy.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-506
(810 ILCS 5/2A-506) (from Ch. 26, par. 2A-506)
Sec. 2A-506.
Statute of limitations.
(1) An action for default under a lease contract,
including breach of warranty or indemnity, must be commenced
within 4 years after the cause of action accrued. By the
original lease contract the parties may reduce the period of
limitation to not less than one year.
(2) A cause of action for default accrues when the act or
omission on which the default or breach of warranty is based is
or should have been discovered by the aggrieved party, or when
the default occurs, whichever is later. A cause of action for
indemnity accrues when the act or omission on which the claim
for indemnity is based is or should have been discovered by the
indemnified party, whichever is later.
(3) If an action commenced within the time limited by
subsection (1) is so terminated as to leave available a remedy by
another action for the same default or breach of warranty or
indemnity, the other action may be commenced after the expiration
of the time limited and within 6 months after the termination of
the first action unless the termination resulted from voluntary
discontinuance or from dismissal for failure or neglect to
prosecute.
(4) This Section does not alter the law on tolling of the
statute of limitations nor does it apply to causes of action that
have accrued before this Article becomes effective.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-507
(810 ILCS 5/2A-507) (from Ch. 26, par. 2A-507)
Sec. 2A-507.
Proof of market rent; time and place.
(1) Damages based on market rent (Section 2A-519 or
2A-528) are determined according to the rent for the use of the
goods concerned for a lease term identical to the remaining lease
term of the original lease agreement and prevailing at the times specified
in Sections 2A-519 and 2A-528.
(2) If evidence of rent for the use of the goods
concerned for a lease term identical to the remaining lease term
of the original lease agreement and prevailing at the times or
places described in this Article is not readily available, the rent
prevailing within any reasonable time before or after the time
described or at any other place or for a different lease term
which in commercial judgment or under usage of trade would
serve as a reasonable substitute for the one described may be
used, making any proper allowance for the difference, including
the cost of transporting the goods to or from the other place.
(3) Evidence of a relevant rent prevailing at a time or
place or for a lease term other than the one described in this
Article offered by one party is not admissible unless and until
he or she has given the other party notice the court finds
sufficient to prevent unfair surprise.
(4) If the prevailing rent or value of any goods regularly
leased in any established market is in issue, reports in official
publications or trade journals or in newspapers or periodicals of
general circulation published as the reports of that market are
admissible in evidence. The circumstances of the preparation of
the report may be shown to affect its weight but not its
admissibility.
(Source: P.A. 87-493.)
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810 ILCS 5/Art. 2A Pt. 5 Sub. B
(810 ILCS 5/Art. 2A Pt. 5 Sub. B heading)
B.
Default by Lessor
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810 ILCS 5/2A-508
(810 ILCS 5/2A-508) (from Ch. 26, par. 2A-508)
Sec. 2A-508.
Lessee's remedies.
(1) If a lessor fails to deliver the goods in conformity to
the lease contract (Section 2A-509) or repudiates the lease
contract (Section 2A-402), or a lessee rightfully rejects the
goods (Section 2A-509) or justifiably revokes acceptance of the
goods (Section 2A-517), then with respect to any goods
involved, and with respect to all of the goods if under an
installment lease contract the value of the whole lease contract is
substantially impaired (Section 2A-510), the lessor is in default
under the lease contract and the lessee may:
(a) cancel the lease contract (Section 2A-505(1));
(b) recover so much of the rent and security as has | | been paid and is just under the circumstances;
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(c) cover and recover damages as to all goods
| | affected whether or not they have been identified to the lease contract (Sections 2A-518 and 2A-520), or recover damages for nondelivery (Sections 2A-519 and 2A-520);
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(d) exercise any other rights or pursue any other
| | remedies provided in the lease contract.
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(2) If a lessor fails to deliver the goods in conformity to
the lease contract or repudiates the lease contract, the lessee may
also:
(a) if the goods have been identified, recover them
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(b) in a proper case, obtain specific performance or
| | replevy the goods (Section 2A-521).
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(3) If a lessor is otherwise in default under a lease
contract, the lessee may exercise the rights and pursue the remedies
provided in the lease contract, which may include a right to cancel the
lease, and in Section 2A-519(3).
(4) If a lessor has breached a warranty, whether express
or implied, the lessee may recover damages (Section 2A-519(4)).
(5) On rightful rejection or justifiable revocation of
acceptance, a lessee has a security interest in goods in the
lessee's possession or control for any rent and security that has
been paid and any expenses reasonably incurred in their
inspection, receipt, transportation, and care and custody and
may hold those goods and dispose of them in good faith and in a
commercially reasonable manner, subject to
Section 2A-527(5).
(6) Subject to the provisions of Section 2A-407, a lessee,
on notifying the lessor of the lessee's intention to do so, may
deduct all or any part of the damages resulting from any default
under the lease contract from any part of the rent still due
under the same lease contract.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-509
(810 ILCS 5/2A-509) (from Ch. 26, par. 2A-509)
Sec. 2A-509.
Lessee's rights on improper delivery;
rightful rejection.
(1) Subject to the provisions of Section 2A-510 on default
in installment lease contracts, if the goods or the tender or
delivery fail in any respect to conform to the lease contract, the
lessee may reject or accept the goods or accept any commercial
unit or units and reject the rest of the goods.
(2) Rejection of goods is ineffective unless it is within a
reasonable time after tender or delivery of the goods and the
lessee seasonably notifies the lessor.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-510
(810 ILCS 5/2A-510) (from Ch. 26, par. 2A-510)
Sec. 2A-510.
Installment lease contracts; rejection
and default.
(1) Under an installment lease contract, a lessee may
reject any delivery that is nonconforming if the nonconformity
substantially impairs the value of that delivery and cannot be
cured or the nonconformity is a defect in the required
documents; but if the nonconformity does not fall within
subsection (2) and the lessor or the supplier gives adequate
assurance of its cure, the lessee must accept that delivery.
(2) Whenever nonconformity or default with respect to one
or more deliveries substantially impairs the value of the
installment lease contract as a whole there is a default with
respect to the whole. But, the aggrieved party reinstates the
installment lease contract as a whole if the aggrieved party
accepts a nonconforming delivery without seasonably notifying of
cancellation or brings an action with respect only to past
deliveries or demands performance as to future deliveries.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-511
(810 ILCS 5/2A-511) (from Ch. 26, par. 2A-511)
Sec. 2A-511.
Merchant lessee's duties as to rightfully
rejected goods.
(1) Subject to any security interest of a lessee
(Section 2A-508(5)), if a lessor or a supplier has no agent or
place of business at the market of rejection, a merchant lessee,
after rejection of goods in his or her possession or control,
shall follow any reasonable instructions received from the lessor
or the supplier with respect to the goods. In the absence of
those instructions, a merchant lessee shall make reasonable
efforts to sell, lease, or otherwise dispose of the goods for the
lessor's account if they threaten to decline in value speedily.
Instructions are not reasonable if on demand indemnity for
expenses is not forthcoming.
(2) If a merchant lessee (subsection (1)) or any other
lessee (Section 2A-512) disposes of goods, he or she is
entitled to reimbursement either from the lessor or the supplier
or out of the proceeds for reasonable expenses of caring for and
disposing of the goods and, if the expenses include no
disposition commission, to such commission as is usual in the
trade or, if there is none, to a reasonable sum not exceeding
10% of the gross proceeds.
(3) In complying with this Section or Section 2A-512, the
lessee is held only to good faith. Good faith conduct hereunder
is neither acceptance or conversion nor the basis of an action
for damages.
(4) A purchaser who purchases in good faith from a
lessee pursuant to this Section or Section 2A-512 takes the goods
free of any rights of the lessor and the supplier even though
the lessee fails to comply with one or more of the requirements
of this Article.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-512
(810 ILCS 5/2A-512) (from Ch. 26, par. 2A-512)
Sec. 2A-512.
Lessee's duties as to rightfully rejected
goods.
(1) Except as otherwise provided with respect to goods
that threaten to decline in value speedily (Section 2A-511) and
subject to any security interest of a lessee (Section 2A-508(5)):
(a) the lessee, after rejection of goods in the | | lessee's possession, shall hold them with reasonable care at the lessor's or the supplier's disposition for a reasonable time after the lessee's seasonable notification of rejection;
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(b) if the lessor or the supplier gives no
| | instructions within a reasonable time after notification of rejection, the lessee may store the rejected goods for the lessor's or the supplier's account or ship them to the lessor or the supplier or dispose of them for the lessor's or the supplier's account with reimbursement in the manner provided in Section 2A-511; but
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(c) the lessee has no further obligations with regard
| | to goods rightfully rejected.
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(2) Action by the lessee pursuant to subsection (1) is not
acceptance or conversion.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-513
(810 ILCS 5/2A-513) (from Ch. 26, par. 2A-513)
Sec. 2A-513.
Cure by lessor of improper tender or
delivery; replacement.
(1) If any tender or delivery by the lessor or the
supplier is rejected because nonconforming and the time for
performance has not yet expired, the lessor or the supplier may
seasonably notify the lessee of the lessor's or the supplier's
intention to cure and may then make a conforming delivery
within the time provided in the lease contract.
(2) If the lessee rejects a nonconforming tender that the
lessor or the supplier had reasonable grounds to believe would
be acceptable with or without money allowance, the lessor or the
supplier may have a further reasonable time to substitute a
conforming tender if he or she seasonably notifies the lessee.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-514
(810 ILCS 5/2A-514) (from Ch. 26, par. 2A-514)
Sec. 2A-514. Waiver of lessee's objections.
(1) In rejecting goods, a lessee's failure to state a
particular defect that is ascertainable by reasonable inspection
precludes the lessee from relying on the defect to justify
rejection or to establish default:
(a) if, stated seasonably, the lessor or the supplier | | could have cured it (Section 2A-513); or
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(b) between merchants if the lessor or the supplier
| | after rejection has made a request in writing for a full and final written statement of all defects on which the lessee proposes to rely.
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(2) A lessee's failure to reserve rights when paying rent
or other consideration against documents precludes recovery of
the payment for defects apparent in
the documents.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2A-515
(810 ILCS 5/2A-515) (from Ch. 26, par. 2A-515)
Sec. 2A-515.
Acceptance of goods.
(1) Acceptance of goods occurs after the lessee has had a
reasonable opportunity to inspect the goods and
(a) the lessee signifies or acts with respect to the | | goods in a manner that signifies to the lessor or the supplier that the goods are conforming or that the lessee will take or retain them in spite of their nonconformity; or
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(b) the lessee fails to make an effective rejection
| | of the goods (Section 2A-509(2)).
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(2) Acceptance of a part of any commercial unit is
acceptance of that entire unit.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-516
(810 ILCS 5/2A-516) (from Ch. 26, par. 2A-516)
Sec. 2A-516.
Effect of acceptance of goods; notice of
default; burden of establishing default after
acceptance; notice of claim or litigation to person
answerable over.
(1) A lessee must pay rent for any goods accepted in
accordance with the lease contract, with due allowance for goods
rightfully rejected or not delivered.
(2) A lessee's acceptance of goods precludes rejection of
the goods accepted. In the case of a finance lease, if made with
knowledge of a nonconformity, acceptance cannot be revoked
because of it. In any other case, if made with knowledge of a
nonconformity, acceptance cannot be revoked because of it
unless the acceptance was on the reasonable assumption that the
nonconformity would be seasonably cured. Acceptance does not
of itself impair any other remedy provided by this Article or the
lease agreement for nonconformity.
(3) If a tender has been accepted:
(a) within a reasonable time after the lessee | | discovers or should have discovered any default, the lessee shall notify the lessor and the supplier, if any, or be barred from any remedy against the party not notified;
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(b) except in the case of a consumer lease, within a
| | reasonable time after the lessee receives notice of litigation for infringement or the like (Section 2A-211) the lessee shall notify the lessor or be barred from any remedy over for liability established by the litigation; and
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(c) the burden is on the lessee to establish any
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(4) If a lessee is sued for breach of a warranty or other
obligation for which a lessor or a supplier is answerable over the following apply:
(a) The lessee may give the lessor or the supplier,
| | or both, written notice of the litigation. If the notice states that the person notified may come in and defend and that if the person notified does not do so that person will be bound in any action against that person by the lessee by any determination of fact common to the 2 litigations, then unless the person notified after seasonable receipt of the notice does come in and defend that person is so bound.
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(b) The lessor or the supplier may demand in writing
| | that the lessee turn over control of the litigation including settlement if the claim is one for infringement or the like (Section 2A-211) or else be barred from any remedy over. If the demand states that the lessor or the supplier agrees to bear all expense and to satisfy any adverse judgment, then unless the lessee after seasonable receipt of the demand does turn over control the lessee is so barred.
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(5) Subsections (3) and (4) apply to
any obligation of a lessee to hold the lessor or the supplier
harmless against infringement or the like (Section 2A-211).
(Source: P.A. 87-493.)
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810 ILCS 5/2A-517
(810 ILCS 5/2A-517) (from Ch. 26, par. 2A-517)
Sec. 2A-517.
Revocation of acceptance of goods.
(1) A lessee may revoke acceptance of a lot or commercial
unit whose nonconformity substantially impairs its value to the
lessee if the lessee has accepted it:
(a) except in the case of a finance lease, on the | | reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or
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(b) without discovery of the nonconformity if the
| | lessee's acceptance was reasonably induced either by the lessor's assurances or, except in the case of a finance lease, by the difficulty of discovery before acceptance.
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(2) Except in the case of a finance lease that is not a consumer lease,
a lessee may revoke acceptance of a lot or commercial unit if the lessor
defaults under the lease contract and the default substantially impairs the
value of that lot or commercial unit to the lessee.
(3) If the lease agreement so provides, the lessee may revoke acceptance
of a lot or commercial unit because of other defaults by the lessor.
(4) Revocation of acceptance must occur within a
reasonable time after the lessee discovers or should have
discovered the ground for it and before any substantial change
in condition of the goods which is not caused by the
nonconformity. Revocation is not effective until the lessee
notifies the lessor.
(5) A lessee who so revokes has the same rights and
duties with regard to the goods involved as if the lessee had
rejected them.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-518
(810 ILCS 5/2A-518) (from Ch. 26, par. 2A-518)
Sec. 2A-518. Cover; substitute goods.
(1) After a default by a lessor under the lease contract
of the type described in Section 2A-508(1), or, if agreed, after other
default by the lessor, the lessee may cover by making any purchase or lease
of or contract to purchase or lease goods in substitution for those due
from the lessor.
(2) Except as otherwise provided with respect to damages liquidated in
the lease agreement (Section 2A-504) or otherwise determined pursuant to
agreement of the parties (Sections 1-302
and 2A-503), if a lessee's
cover is by a lease agreement substantially similar to the original lease
agreement and the new lease agreement is made in good faith and in a
commercially reasonable manner, the lessee may recover
from the lessor as damages (i) the present value, as of the date
of the commencement of the term of the new lease agreement, of the rent under
the new lease agreement applicable to that period of the new lease
term which is comparable to the then remaining term of the original lease
agreement minus the present value as of the same date of the total rent for the
then remaining lease term of the original lease agreement, and (ii) any
incidental or consequential damages, less expenses saved in
consequence of the lessor's default.
(3) If a lessee's cover is by lease agreement that for any reason does
not qualify for treatment under subsection (2), or is by purchase or
otherwise, the lessee may recover from the lessor as if the lessee had
elected not to cover and Section 2A-519 governs.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2A-519
(810 ILCS 5/2A-519) (from Ch. 26, par. 2A-519)
Sec. 2A-519. Lessee's damages for nondelivery, repudiation, default, and
breach of warranty in regard to accepted goods.
(1) Except as otherwise provided with respect to damages liquidated in the
lease agreement (Section 2A-504) or otherwise determined pursuant to
agreement of the parties (Sections 1-302
and 2A-503), if a lessee elects
not to cover or a lessee elects to cover and the cover is by lease
agreement that for any reason does not qualify for treatment under Section
2A-518(2), or is by purchase or otherwise, the measure of damages for
nondelivery or repudiation by the lessor or for rejection or revocation of
acceptance by the lessee is the present value, as of the date of the
default, of the then market rent minus the present value as of the same
date of the original rent, computed for the remaining lease term of the
original lease agreement, together with incidental and consequential
damages, less expenses saved in consequence of the lessor's default.
(2) Market rent is to be determined as of the place for
tender or, in cases of rejection after arrival or revocation of
acceptance, as of the place of arrival.
(3) Except as otherwise agreed, if the lessee has accepted goods and
given notification (Section 2A-516(3)), the measure of damages for
nonconforming tender or delivery or other default by a lessor is the loss
resulting in the ordinary course of events from the lessor's
default as determined in any manner that is reasonable together
with incidental and consequential damages, less expenses saved
in consequence of the lessor's default.
(4) Except as otherwise agreed, the measure of damages for breach of
warranty is the present value at the time and place of acceptance of the
difference between the value of the use of the goods accepted and the value
if they had been as warranted for the lease term, unless special
circumstances show proximate damages of a different amount, together with
incidental and consequential damages, less expenses saved in consequence of
the lessor's default or breach of warranty.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2A-520
(810 ILCS 5/2A-520) (from Ch. 26, par. 2A-520)
Sec. 2A-520.
Lessee's incidental and consequential
damages.
(1) Incidental damages resulting from a lessor's default
include expenses reasonably incurred in inspection, receipt,
transportation, and care and custody of goods rightfully rejected
or goods the acceptance of which is justifiably revoked, any
commercially reasonable charges, expenses, or commissions in
connection with effecting cover, and any other reasonable
expense incident to the default.
(2) Consequential damages resulting from a lessor's
default include:
(a) any loss resulting from general or particular | | requirements and needs of which the lessor at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
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(b) injury to person or property proximately
| | resulting from any breach of warranty.
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(Source: P.A. 87-493.)
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810 ILCS 5/2A-521
(810 ILCS 5/2A-521) (from Ch. 26, par. 2A-521)
Sec. 2A-521.
Lessee's right to specific performance or
replevin.
(1) Specific performance may be decreed if the goods are
unique or in other proper circumstances.
(2) A decree for specific performance may include any
terms and conditions as to payment of the rent, damages, or
other relief that the court deems just.
(3) A lessee has a right of replevin, detinue,
sequestration, claim and delivery, or the like for goods
identified to the lease contract if after reasonable effort the
lessee is unable to effect cover for those goods or the
circumstances reasonably indicate that the effort will be
unavailing.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-522
(810 ILCS 5/2A-522) (from Ch. 26, par. 2A-522)
Sec. 2A-522.
Lessee's right to goods on lessor's
insolvency.
(1) Subject to subsection (2) and even though the goods
have not been shipped, a lessee who has paid a part or all of
the rent and security for goods identified to a lease contract
(Section 2A-217) on making and keeping good a tender of any
unpaid portion of the rent and security due under the lease
contract may recover the goods identified from the lessor if the
lessor becomes insolvent within 10 days after receipt of the first
installment of rent and security.
(2) A lessee acquires the right to recover goods
identified to a lease contract only if they conform to the lease
contract.
(Source: P.A. 87-493.)
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810 ILCS 5/Art. 2A Pt. 5 Sub. C
(810 ILCS 5/Art. 2A Pt. 5 Sub. C heading)
C.
Default by Lessee
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810 ILCS 5/2A-523
(810 ILCS 5/2A-523) (from Ch. 26, par. 2A-523)
Sec. 2A-523.
Lessor's remedies.
(1) If a lessee wrongfully rejects or revokes acceptance
of goods or fails to make a payment when due or repudiates with
respect to a part or the whole, then, with respect to any goods
involved, and with respect to all of the goods if under an
installment lease contract the value of the whole lease contract is
substantially impaired (Section 2A-510), the lessee is in default
under the lease contract and the lessor may:
(a) cancel the lease contract (Section 2A-505(1));
(b) proceed respecting goods not identified to the | | lease contract (Section 2A-524);
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(c) withhold delivery of the goods and take
| | possession of goods previously delivered (Section 2A-525);
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(d) stop delivery of the goods by any bailee (Section
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(e) dispose of the goods and recover damages (Section
| | 2A-527), or retain the goods and recover damages (Section 2A-528), or in a proper case recover rent (Section 2A-529);
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(f) exercise any other rights or pursue any other
| | remedies provided in the lease contract.
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(2) If a lessor does not fully exercise a right or obtain a remedy to
which the lessor is entitled under subsection (1), the lessor may recover
the loss resulting in the ordinary course of events from the lessee's
default as determined in any reasonable manner, together with incidental
damages, less expenses saved in consequence of the lessee's default.
(3) If a lessee is otherwise in default under a lease
contract, the lessor may exercise the rights and pursue the remedies
provided in the lease contract, which may include a right to cancel the
lease. In addition, unless otherwise provided in the lease contract:
(a) if the default substantially impairs the value of
| | the lease contract to the lessor, the lessor may exercise the rights and pursue the remedies provided in subsections (1) or (2); or
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(b) if the default does not substantially impair the
| | value of the lease contract to the lessor, the lessor may recover as provided in subsection (2).
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(Source: P.A. 87-493.)
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810 ILCS 5/2A-524
(810 ILCS 5/2A-524) (from Ch. 26, par. 2A-524)
Sec. 2A-524.
Lessor's right to identify goods to lease
contract.
(1) A lessor aggrieved under Section 2A-523(1) may:
(a) identify to the lease contract conforming goods | | not already identified if at the time the lessor learned of the default they were in the lessor's or the supplier's possession or control; and
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(b) dispose of goods (Section 2A-527(1)) that
| | demonstrably have been intended for the particular lease contract even though those goods are unfinished.
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(2) If the goods are unfinished, in the exercise of
reasonable commercial judgment for the purposes of avoiding loss
and of effective realization, an aggrieved lessor or the supplier
may either complete manufacture and wholly identify the goods to
the lease contract or cease manufacture and lease, sell, or
otherwise dispose of the goods for scrap or salvage value or
proceed in any other reasonable manner.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-525
(810 ILCS 5/2A-525) (from Ch. 26, par. 2A-525)
Sec. 2A-525.
Lessor's right to possession of goods.
(1) If a lessor discovers the lessee to be insolvent, the
lessor may refuse to deliver the goods.
(2) After a default by the lessee under the lease contract of the type
described in Section 2A-523(1) or 2A-523(3)(a) or, if agreed, after other
default by the lessee, the lessor has the right to take possession of the
goods. If the lease contract so provides, the lessor may require the
lessee to assemble the goods and make them available to the lessor at a
place to be designated by the lessor which is reasonably
convenient to both parties. Without removal, the lessor may
render unusable any goods employed in trade or business, and
may dispose of goods on the lessee's premises (Section 2A-527).
(3) The lessor may proceed under subsection (2) without
judicial process if it can be done without breach of the peace
or the lessor may proceed by action.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-526
(810 ILCS 5/2A-526) (from Ch. 26, par. 2A-526)
Sec. 2A-526. Lessor's stoppage of delivery in transit
or otherwise.
(1) A lessor may stop delivery of goods in the possession
of a carrier or other bailee if the lessor discovers the lessee to
be insolvent and may stop delivery of carload, truckload,
planeload, or larger shipments of express or freight if the lessee
repudiates or fails to make a payment due before delivery,
whether for rent, security or otherwise under the lease
contract, or for any other reason the lessor has a right to
withhold or take possession of the goods.
(2) In pursuing its remedies under subsection (1), the
lessor may stop delivery until:
(a) receipt of the goods by the lessee;
(b) acknowledgment to the lessee by any bailee of the | | goods, except a carrier, that the bailee holds the goods for the lessee; or
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(c) such an acknowledgment to the lessee by a carrier
| | via reshipment or as a warehouse.
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(3)(a) To stop delivery, a lessor shall so notify as to
enable the bailee by reasonable diligence to prevent delivery of
the goods.
(b) After notification, the bailee shall hold and deliver
the goods according to the directions of the lessor, but the
lessor is liable to the bailee for any ensuing charges or
damages.
(c) A carrier who has issued a nonnegotiable bill of
lading is not obliged to obey a notification to stop received from
a person other than the consignor.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2A-527
(810 ILCS 5/2A-527) (from Ch. 26, par. 2A-527)
Sec. 2A-527. Lessor's rights to dispose of goods.
(1) After a default by a lessee under the lease contract
of the type described in Section 2A-523(1) or 2A-523(3)(a) or after the
lessor refuses to deliver or takes possession of goods (Section 2A-525 or
2A-526), or, if agreed, after other default by a lessee, the lessor may
dispose of the goods concerned or the undelivered balance thereof by lease,
sale, or otherwise.
(2) Except as otherwise provided with respect to damages liquidated in
the lease agreement (Section 2A-504) or otherwise determined pursuant to
agreement of the parties (Sections 1-302
and 2A-503), if the disposition
is by lease agreement substantially similar to the original lease agreement
and the new lease agreement is made in good faith and in a commercially
reasonable manner, the lessor may recover from the lessee as damages (i)
accrued and unpaid rent as of the date of the commencement of the term of
the new lease agreement, (ii) the present value, as of the same date, of
the total rent for the then remaining lease term of the original lease
agreement minus the present value, as of the same date, of the rent under
the new lease agreement applicable to that period of the new lease term
which is comparable to the then remaining term of the original lease
agreement, and (iii) any incidental damages allowed under Section 2A-530,
less expenses saved in consequence of the lessee's default.
(3) If the lessor's disposition is by lease agreement that for
any reason does not qualify for treatment under subsection (2),
or is by sale or otherwise, the lessor may recover from the
lessee as if the lessor had elected not to dispose of the goods
and Section 2A-528 governs.
(4) A subsequent buyer or lessee who buys or leases
from the lessor in good faith for value as a result of a
disposition under this Section takes the goods free of the
original lease contract and any rights of the original lessee even
though the lessor fails to comply with one or more of the
requirements of this Article.
(5) The lessor is not accountable to the lessee for any
profit made on any disposition. A lessee who has rightfully
rejected or justifiably revoked acceptance shall account to the
lessor for any excess over the amount of the lessee's security
interest (Section 2A-508(5)).
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2A-528
(810 ILCS 5/2A-528) (from Ch. 26, par. 2A-528)
Sec. 2A-528. Lessor's damages for nonacceptance, failure to pay,
repudiation, or other default.
(1) Except as otherwise provided with respect to damages liquidated in
the lease agreement (Section 2A-504) or otherwise determined pursuant to
agreement of the parties (Sections 1-302
and 2A-503), if a lessor elects
to retain the goods or a lessor elects to dispose of the goods
and the disposition is by lease agreement that for any reason does
not qualify for treatment under Section 2A-527(2), or is by sale
or otherwise, the lessor may recover from the lessee as damages
for a default of the type described in Section 2A-523(1) or 2A-523(3)(a)
or, if agreed, for other default of the lessee, (i) accrued and
unpaid rent as of the date of default if the lessee has never taken
possession of the goods, or, if the lessee has taken possession of the
goods, as of the date the lessor repossesses the goods or an earlier date
on which the lessee makes a tender of the goods to the lessor, (ii) the
present value as of the date determined under clause (i) of the total rent
for the then remaining lease term of the original lease agreement minus the
present value as of the same date of the market rent at the place where the
goods are located computed for the same lease term, and (iii) any
incidental damages allowed under Section 2A-530, less expenses saved in
consequence of the lessee's default.
(2) If the measure of damages provided in subsection (1) is inadequate
to put a lessor in as good a position as performance would have, the
measure of damages is the present value of the profit, including reasonable
overhead, the lessor would have made from full performance by the lessee,
together with any incidental damages allowed under Section 2A-530, due
allowance for costs reasonably incurred and due credit for payments or
proceeds of disposition.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/2A-529
(810 ILCS 5/2A-529) (from Ch. 26, par. 2A-529)
Sec. 2A-529.
Lessor's action for the rent.
(1) After default by the lessee under the lease contract
of the type described in Section 2A-523(1) or 2A-523(3)(a) or, if
agreed, after other default by the lessee, if the lessor complies with
subsection (2), the lessor may recover from the lessee as damages:
(a) for goods accepted by the lessee and not | | repossessed by or tendered to the lessor, and for conforming goods lost or damaged within a commercially reasonable time after risk of loss passes to the lessee (Section 2A-219), (i) accrued and unpaid rent as of the date of entry of judgment in favor of the lessor, (ii) the present value as of the same date of the rent for the then remaining lease term of the lease agreement, and (iii) any incidental damages allowed under Section 2A-530, less expenses saved in consequence of the lessee's default; and
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(b) for goods identified to the lease contract if the
| | lessor is unable after reasonable effort to dispose of them at a reasonable price or the circumstances reasonably indicate that effort will be unavailing, (i) accrued and unpaid rent as of the date of entry of judgment in favor of the lessor, (ii) the present value as of the same date of the rent for the then remaining lease term of the lease agreement, and (iii) any incidental damages allowed under Section 2A-530, less expenses saved in consequence of the lessee's default.
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(2) Except as provided in subsection (3), the lessor shall
hold for the lessee for the remaining lease term of the lease
agreement any goods that have been identified to the lease
contract and are in the lessor's control.
(3) The lessor may dispose of the goods at any time
before collection of the judgment for damages obtained pursuant
to subsection (1). If the disposition is before the end of the remaining
lease term of the lease agreement, the lessor's recovery against the lessee
for damages is governed by Section 2A-527 or 2A-528, and the lessor will
cause an appropriate credit to be provided against a judgment for damages
to the extent that the amount of the judgment exceeds the recovery
available pursuant to Section 2A-527 or 2A-528.
(4) Payment of the judgment for damages obtained
pursuant to subsection (1) entitles the lessee to the use and
possession of the goods not then disposed of for the remaining
lease term of and in accordance with the lease agreement.
(5) After a lessee has wrongfully rejected or revoked
acceptance of goods, has failed to pay rent then due, or has
repudiated (Section 2A-402), a lessor who is held not entitled to
rent under this Section must nevertheless be awarded damages
for nonacceptance under Sections 2A-527 and 2A-528.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-530
(810 ILCS 5/2A-530) (from Ch. 26, par. 2A-530)
Sec. 2A-530.
Lessor's incidental damages.
Incidental damages to an aggrieved lessor include any
commercially reasonable charges, expenses, or commissions
incurred in stopping delivery, in the transportation, care and
custody of goods after the lessee's default, in connection with
return or disposition of the goods, or otherwise resulting from
the default.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-531
(810 ILCS 5/2A-531) (from Ch. 26, par. 2A-531)
Sec. 2A-531.
Standing to sue third parties for injury
to goods.
(1) If a third party so deals with goods that have been
identified to a lease contract as to cause actionable injury to a
party to the lease contract (a) the lessor has a right of action
against the third party, and (b) the lessee also has a right of
action against the third party if the lessee:
(i) has a security interest in the goods;
(ii) has an insurable interest in the goods; or
(iii) bears the risk of loss under the lease contract | | or has since the injury assumed that risk as against the lessor and the goods have been converted or destroyed.
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(2) If at the time of the injury the party plaintiff did not
bear the risk of loss as against the other party to the lease
contract and there is no arrangement between them for
disposition of the recovery, his or her suit or settlement,
subject to his or her own interest, is as a fiduciary for the
other party to the lease contract.
(3) Either party with the consent of the other may sue
for the benefit of whom it may concern.
(Source: P.A. 87-493.)
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810 ILCS 5/2A-532
(810 ILCS 5/2A-532) (from Ch. 26, par. 2A-532)
Sec. 2A-532.
Lessor's rights to residual interest.
In addition to any
other recovery permitted by this Article or other law, the lessor may
recover from the lessee an amount that will fully compensate the lessor for
any loss of or damage to the lessor's residual interest in the goods caused
by the default of the lessee.
(Source: P.A. 87-493.)
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810 ILCS 5/Art. 3
(810 ILCS 5/Art. 3 heading)
ARTICLE 3.
NEGOTIABLE INSTRUMENTS
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810 ILCS 5/Art. 3 Pt. 1
(810 ILCS 5/Art. 3 Pt. 1 heading)
PART 1.
GENERAL PROVISIONS AND DEFINITIONS
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810 ILCS 5/3-101
(810 ILCS 5/3-101) (from Ch. 26, par. 3-101)
Sec. 3-101.
Short title.
This Article may be cited as Uniform Commercial
Code-Negotiable Instruments.
(Source: P.A. 87-582.)
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810 ILCS 5/3-102
(810 ILCS 5/3-102) (from Ch. 26, par. 3-102)
Sec. 3-102.
Subject matter.
(a) This Article applies to negotiable instruments. It does not apply
to money, to payment orders governed by Article 4A, or to securities
governed by Article 8.
(b) If there is conflict between this Article and Article 4 or 9, Articles 4
and 9 govern.
(c) Regulations of the Board of Governors of the Federal Reserve System
and operating circulars of the Federal Reserve Banks supersede any
inconsistent provision of this Article to the extent of the inconsistency.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-103
(810 ILCS 5/3-103) (from Ch. 26, par. 3-103)
Sec. 3-103. Definitions.
(a) In this Article:
(1) "Acceptor" means a drawee that has accepted a | |
(2) "Drawee" means a person ordered in a draft to
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(3) "Drawer" means a person who signs or is
| | identified in a draft as a person ordering payment.
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(4) "Good faith" means honesty in fact and the
| | observance of reasonable commercial standards of fair dealing.
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(5) "Maker" means a person who signs or is identified
| | in a note as a person undertaking to pay.
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(6) "Order" means a written instruction to pay money
| | signed by the person giving the instruction. The instruction may be addressed to any person, including the person giving the instruction, or to one or more persons jointly or in the alternative but not in succession. An authorization to pay is not an order unless the person authorized to pay is also instructed to pay.
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(7) "Ordinary care" in the case of a person engaged
| | in business means observance of reasonable commercial standards, prevailing in the area in which the person is located with respect to the business in which the person is engaged. In the case of a bank that takes an instrument for processing for collection or payment by automated means, reasonable commercial standards do not require the bank to examine the instrument if the failure to examine does not violate the bank's prescribed procedures and the bank's procedures do not vary unreasonably from general banking usage not disapproved by this Article or Article 4.
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(8) "Party" means a party to an instrument.
(9) "Promise" means a written undertaking to pay
| | money signed by the person undertaking to pay. An acknowledgment of an obligation by the obligor is not a promise unless the obligor also undertakes to pay the obligation.
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(10) "Prove" with respect to a fact means to meet the
| | burden of establishing the fact (Section 1-201(b)(8)).
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(11) "Remitter" means a person that purchases an
| | instrument from its issuer if the instrument is payable to an identified person other than the purchaser.
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(b) Other definitions applying to this Article and the Sections in which
they appear are:
|
"Acceptance" |
Section 3-409 |
"Accommodated party" |
Section 3-419 |
"Accommodation party" |
Section 3-419 |
"Alteration" |
Section 3-407 |
"Anomalous indorsement" |
Section 3-205 |
"Blank indorsement" |
Section 3-205 |
"Cashier's check" |
Section 3-104 |
"Certificate of deposit" |
Section 3-104 |
"Certified check" |
Section 3-409 |
"Check" |
Section 3-104 |
"Consideration" |
Section 3-303 |
"Draft" |
Section 3-104 |
"Holder in due course" |
Section 3-302 |
"Incomplete instrument" |
Section 3-115 |
"Indorsement" |
Section 3-204 |
"Indorser" |
Section 3-204 |
"Instrument" |
Section 3-104 |
"Issue" |
Section 3-105 |
"Issuer" |
Section 3-105 |
"Negotiable instrument" |
Section 3-104 |
"Negotiation" |
Section 3-201 |
"Note" |
Section 3-104 |
"Payable at a definite time" |
Section 3-108 |
"Payable on demand" |
Section 3-108 |
"Payable to bearer" |
Section 3-109 |
"Payable to order" |
Section 3-109 |
"Payment" |
Section 3-602 |
"Person entitled to enforce" |
Section 3-301 |
"Presentment" |
Section 3-501 |
"Reacquisition" |
Section 3-207 |
"Special indorsement" |
Section 3-205 |
"Teller's check" |
Section 3-104 |
"Transfer of instrument" |
Section 3-203 |
"Traveler's check" |
Section 3-104 |
"Value" |
Section 3-303 |
|
(c) The following definitions in other Articles apply to this Article:
| "Bank" | Section 4-105 | "Banking day" | Section 4-104 | "Clearing house" | Section 4-104 | "Collecting bank" | Section 4-105 | "Depositary bank" | Section 4-105 | "Documentary draft" | Section 4-104 | "Intermediary bank" | Section 4-105 | "Item" | Section 4-104 | "Payor bank" | Section 4-105 | "Suspends payments" | Section 4-104. |
| (d) In addition, Article 1 contains general definitions and principles
of construction and interpretation applicable throughout this Article.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/3-104 (810 ILCS 5/3-104) (from Ch. 26, par. 3-104) (Text of Section before amendment by P.A. 103-1036) Sec. 3-104. Negotiable instrument. (a) Except as provided in subsections (c) and (d), "negotiable
instrument" means an unconditional promise or order to pay
a fixed amount of money, with or without interest or other charges
described in the promise or order, if it: (1) is payable to bearer or to order at the time it | | is issued or first comes into possession of a holder;
|
| (2) is payable on demand or at a definite time; and
(3) does not state any other undertaking or
| | instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of any obligor.
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| (b) "Instrument" means a negotiable instrument.
(c) An order that meets all of the requirements of subsection (a), except
paragraph (1), and otherwise falls within the definition of "check" in
subsection (f) is a negotiable instrument and a check.
(d) A promise or order other than a check is not an instrument if, at the
time it is issued or first comes into possession of a holder, it contains a
conspicuous statement, however expressed, to the effect that the promise or
order is not negotiable or is not an instrument governed by this Article.
(e) An instrument is a "note" if it is a promise and is a "draft" if it
is an order. If an instrument falls within the definition of both "note"
and "draft", a person entitled to enforce the instrument may treat it as
either.
(f) "Check" means (i) a draft, other than a documentary draft, payable
on demand and drawn on a bank or (ii) a cashier's check or teller's check.
An instrument may be a check even though it is described on its face by
another term, such as "money order".
(g) "Cashier's check" means a draft with respect to which the drawer and
drawee are the same bank or branches of the same bank.
(h) "Teller's check" means a draft drawn by a bank (i) on another bank,
or (ii) payable at or through a bank.
(i) "Traveler's check" means an instrument that (i) is payable on
demand, (ii) is drawn on or payable at or through a bank, (iii) is
designated by the term "traveler's check" or by a substantially similar
term, and (iv) requires, as a condition to payment, a countersignature by a
person whose specimen signature appears on the instrument.
(j) "Certificate of deposit" means an instrument containing an
acknowledgment by a bank that a sum of money has been received by the bank
and a promise by the bank to repay the sum of money. A certificate of
deposit is a note of the bank.
(Source: P.A. 87-582; 87-1135.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 3-104. Negotiable instrument.
(a) Except as provided in subsections (c) and (d), "negotiable instrument" means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:
(1) is payable to bearer or to order at the time it
| | is issued or first comes into possession of a holder;
|
| (2) is payable on demand or at a definite time; and
(3) does not state any other undertaking or
| | instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, (iii) a waiver of the benefit of any law intended for the advantage or protection of any obligor, (iv) a term that specifies the law that governs the promise or order, or (v) an undertaking to resolve in a specified forum a dispute concerning the promise or order.
|
| (b) "Instrument" means a negotiable instrument.
(c) An order that meets all of the requirements of subsection (a), except paragraph (1), and otherwise falls within the definition of "check" in subsection (f) is a negotiable instrument and a check.
(d) A promise or order other than a check is not an instrument if, at the time it is issued or first comes into possession of a holder, it contains a conspicuous statement, however expressed, to the effect that the promise or order is not negotiable or is not an instrument governed by this Article.
(e) An instrument is a "note" if it is a promise and is a "draft" if it is an order. If an instrument falls within the definition of both "note" and "draft", a person entitled to enforce the instrument may treat it as either.
(f) "Check" means (i) a draft, other than a documentary draft, payable on demand and drawn on a bank or (ii) a cashier's check or teller's check. An instrument may be a check even though it is described on its face by another term, such as "money order".
(g) "Cashier's check" means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank.
(h) "Teller's check" means a draft drawn by a bank (i) on another bank, or (ii) payable at or through a bank.
(i) "Traveler's check" means an instrument that (i) is payable on demand, (ii) is drawn on or payable at or through a bank, (iii) is designated by the term "traveler's check" or by a substantially similar term, and (iv) requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the instrument.
(j) "Certificate of deposit" means an instrument containing an acknowledgment by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money. A certificate of deposit is a note of the bank.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/3-105 (810 ILCS 5/3-105) (from Ch. 26, par. 3-105) (Text of Section before amendment by P.A. 103-1036) Sec. 3-105. Issue of instrument. (a) "Issue" means the first delivery of an instrument by the maker or
drawer, whether to a holder or nonholder, for the purpose of giving rights
on the instrument to any person. (b) An unissued instrument, or an unissued incomplete instrument that is
completed, is binding on the maker or drawer, but nonissuance is a defense. An
instrument that is conditionally issued or is issued for a special purpose is
binding on the maker or drawer, but failure of the condition or special purpose
to be fulfilled is a defense. (c) "Issuer" applies to issued and unissued instruments and means a maker or
drawer of an instrument.(Source: P.A. 87-582; 87-1135.) (Text of Section after amendment by P.A. 103-1036) Sec. 3-105. Issue of instrument. (a) "Issue" means: (1) the first delivery of an instrument by the maker | | or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person; or
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| (2) if agreed by the payee, the first transmission by
| | the drawer to the payee of an image of an item and information derived from the item that enables the depositary bank to collect the item by transferring or presenting under federal law an electronic check.
|
| (b) An unissued instrument, or an unissued incomplete instrument that is completed, is binding on the maker or drawer, but nonissuance is a defense. An instrument that is conditionally issued or is issued for a special purpose is binding on the maker or drawer, but failure of the condition or special purpose to be fulfilled is a defense.
(c) "Issuer" applies to issued and unissued instruments and means a maker or drawer of an instrument.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/3-106
(810 ILCS 5/3-106) (from Ch. 26, par. 3-106)
Sec. 3-106.
Unconditional promise or order.
(a) Except as provided in this Section, for the purposes of Section
3-104(a), a promise or order is unconditional unless it states (i) an
express condition to payment, (ii) that the promise or order is subject
to or governed by another writing, or (iii) that rights or obligations with
respect to the promise or order are stated in another writing. A reference to
another writing does not of itself make the promise or order conditional.
(b) A promise or order is not made conditional (i) by a reference to
another writing for a statement of rights with respect to collateral,
prepayment, or acceleration, or (ii) because payment is limited to resort
to a particular fund or source.
(c) If a promise or order requires, as a condition to payment, a
countersignature by a person whose specimen signature appears on the
promise or order, the condition does not make the promise or order
conditional for the purposes of Section 3-104(a). If the person whose
specimen signature appears on an instrument fails to countersign the
instrument, the failure to countersign is a defense to the obligation of
the issuer, but the failure does not prevent a transferee of the instrument
from becoming a holder of the instrument.
(d) If a promise or order at the time it is issued or first comes into
possession of a holder contains a statement, required by applicable
statutory or administrative law, to the effect that the rights of a holder
or transferee are subject to claims or defenses that the issuer could assert
against the original payee, the promise or order is not thereby made
conditional for the purposes of Section 3-104(a); but if the promise or
order is an instrument, there cannot be a holder in due course of the
instrument.
(Source: P.A. 87-582; 87-1135.)
|
810 ILCS 5/3-107
(810 ILCS 5/3-107) (from Ch. 26, par. 3-107)
Sec. 3-107.
Instrument payable in foreign money.
Unless the instrument
otherwise provides, an instrument that states the amount payable in foreign
money may be paid in the foreign money or in an equivalent amount in
dollars calculated by using the current bank-offered spot rate at the place
of payment for the purchase of dollars on the day on which the instrument
is paid.
(Source: P.A. 87-582.)
|
810 ILCS 5/3-108
(810 ILCS 5/3-108) (from Ch. 26, par. 3-108)
Sec. 3-108.
Payable on demand or at a definite time.
(a) A promise or order is "payable on demand" if it (i) states that it is
payable on demand or at sight, or otherwise indicates that it is payable at
the will of the holder, or (ii) does not state any time of payment.
(b) A promise or order is "payable at a definite time" if it is payable
on elapse of a definite period of time after sight or acceptance or at a
fixed date or dates or at a time or times readily ascertainable at the time
the promise or order is issued, subject to rights of (i) prepayment, (ii)
acceleration, (iii) extension at the option of the holder, or (iv)
extension to a further definite time at the option of the maker or acceptor
or automatically upon or after a specified act or event.
(c) If an instrument, payable at a fixed date, is also payable upon
demand made before the fixed date, the instrument is payable on demand
until the fixed date and, if demand for payment is not made before that
date, becomes payable at a definite time on the fixed date.
(Source: P.A. 87-582; 87-1135.)
|
810 ILCS 5/3-109
(810 ILCS 5/3-109) (from Ch. 26, par. 3-109)
Sec. 3-109.
Payable to bearer or to order.
(a) A promise or order is payable to bearer if it:
(1) states that it is payable to bearer or to the | | order of bearer or otherwise indicates that the person in possession of the promise or order is entitled to payment;
|
|
(2) does not state a payee; or
(3) states that it is payable to or to the order of
| | cash or otherwise indicates that it is not payable to an identified person.
|
|
(b) A promise or order that is not payable to bearer is payable to order
if it is payable (i) to the order of an identified person or (ii) to an
identified person or order. A promise or order that is payable to order is
payable to the identified person.
(c) An instrument payable to bearer may become payable to an identified
person if it is specially indorsed pursuant to Section 3-205(a). An
instrument payable to an identified person may become payable to bearer if
it is indorsed in blank pursuant to Section 3-205(b).
(Source: P.A. 87-582; 87-1135.)
|
810 ILCS 5/3-110
(810 ILCS 5/3-110) (from Ch. 26, par. 3-110)
Sec. 3-110.
Identification of person to whom instrument is payable.
(a) The person to whom an instrument is initially payable is determined
by the intent of the person, whether or not authorized, signing as, or in
the name or behalf of, the issuer of the instrument. The instrument is
payable to the person intended by the signer even if that person is
identified in the instrument by a name or other identification that is not
that of the intended person. If more than one person signs in the name or
behalf of the issuer of an instrument and all the signers do not intend the
same person as payee, the instrument is payable to any person intended by
one or more of the signers.
(b) If the signature of the issuer of an instrument is made by automated
means, such as a checkwriting machine, the payee of the instrument is
determined by the intent of the person who supplied the name or
identification of the payee, whether or not authorized to do so.
(c) A person to whom an instrument is payable may be identified in any
way including by name, identifying number, office, or account number. For
the purpose of determining the holder of an instrument, the following rules
apply:
(1) If an instrument is payable to an account and the | | account is identified only by number, the instrument is payable to the person to whom the account is payable. If an instrument is payable to an account identified by number and by the name of a person, the instrument is payable to the named person, whether or not that person is the owner of the account identified by number.
|
|
(2) If an instrument is payable to:
(i) a trust, an estate, or a person described as
| | trustee or representative of a trust or estate, the instrument is payable to the trustee, the representative, or a successor of either, whether or not the beneficiary or estate is also named;
|
|
(ii) a person described as agent or similar
| | representative of a named or identified person, the instrument is payable to the represented person, the representative, or a successor of the representative;
|
|
(iii) a fund or organization that is not a legal
| | entity, the instrument is payable to a representative of the members of the fund or organization; or
|
|
(iv) an office or to a person described as
| | holding an office, the instrument is payable to the named person, the incumbent of the office, or a successor to the incumbent.
|
|
(d) If an instrument is payable to 2 or more persons alternatively, it
is payable to any of them and may be negotiated, discharged, or enforced by
any or all of them in possession of the instrument. If an instrument is
payable to 2 or more persons not alternatively, it is payable to all of
them and may be negotiated, discharged, or enforced only by all of them.
If an instrument payable to 2 or more persons is ambiguous as to whether it
is payable to the persons alternatively, the instrument is payable to the
persons alternatively.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-111
(810 ILCS 5/3-111) (from Ch. 26, par. 3-111)
Sec. 3-111.
Place of payment.
Except as otherwise provided for items in
Article 4, an instrument is payable at the place of payment stated in the
instrument. If no place of payment is stated, an instrument is payable at
the address of the drawee or maker stated in the instrument. If no address
is stated, the place of payment is the place of business of the drawee or
maker. If a drawee or maker has more than one place of business, the place
of payment is any place of business of the drawee or maker chosen by the
person entitled to enforce the instrument. If the drawee or maker has no
place of business, the place of payment is the residence of the drawee or
maker.
(Source: P.A. 87-582.)
|
810 ILCS 5/3-112
(810 ILCS 5/3-112) (from Ch. 26, par. 3-112)
Sec. 3-112.
Interest.
(a) Unless otherwise provided in the instrument, (i) an instrument is
not payable with interest, and (ii) interest on an interest-bearing
instrument is payable from the date of the instrument.
(b) Interest may be stated in an instrument as a fixed or variable
amount of money or it may be expressed as a fixed or variable rate or
rates. The amount or rate of interest may be stated or described in the
instrument in any manner and may require reference to information not
contained in the instrument. If an instrument provides for interest, but
the amount of interest payable cannot be ascertained from the description,
interest is payable at the judgment rate in effect at the place of payment
of the instrument and at the time interest first accrues.
(Source: P.A. 87-582; 87-1135.)
|
810 ILCS 5/3-113
(810 ILCS 5/3-113) (from Ch. 26, par. 3-113)
Sec. 3-113.
Date of instrument.
(a) An instrument may be antedated or postdated. The date stated
determines the time of payment if the instrument is payable at a fixed
period after date. Except as provided in Section 4-401(c), an instrument
payable on demand is not payable before the date of the instrument.
(b) If an instrument is undated, its date is the date of its issue or,
in the case of an unissued instrument, the date it first comes into
possession of a holder.
(Source: P.A. 87-582.)
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810 ILCS 5/3-114
(810 ILCS 5/3-114) (from Ch. 26, par. 3-114)
Sec. 3-114.
Contradictory terms of instrument.
If an instrument contains
contradictory terms, typewritten terms prevail over printed terms,
handwritten terms prevail over both, and words prevail over numbers.
(Source: P.A. 87-582.)
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810 ILCS 5/3-115
(810 ILCS 5/3-115) (from Ch. 26, par. 3-115)
Sec. 3-115.
Incomplete instrument.
(a) "Incomplete instrument" means a signed writing, whether or not
issued by the signer, the contents of which show at the time of signing
that it is incomplete but that the signer intended it to be completed by
the addition of words or numbers.
(b) Subject to subsection (c), if an incomplete instrument is an
instrument under Section 3-104, it may be enforced according to its
terms if it is not completed, or according to its terms as augmented
by completion. If an incomplete instrument is not an instrument under
Section 3-104, but, after completion, the requirements of Section 3-104 are
met, the instrument may be enforced according to its terms as augmented
by completion.
(c) If words or numbers are added to an incomplete instrument without
authority of the signer, there is an alteration of the incomplete
instrument under Section 3-407.
(d) The burden of establishing that words or numbers were added to an
incomplete instrument without authority of the signer is on the person
asserting the lack of authority.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-116
(810 ILCS 5/3-116) (from Ch. 26, par. 3-116)
Sec. 3-116.
Joint and several liability; contribution.
(a) Except as otherwise provided in the instrument, 2 or more persons
who have the same liability on an instrument as makers, drawers, acceptors,
indorsers who are indorsing joint payees, or anomalous indorsers are
jointly and severally liable in the capacity in which they sign.
(b) Except as provided in Section 3-419(e) or by agreement of the
affected parties, a party having joint and several liability that pays the
instrument is entitled to receive from any party having the same joint and
several liability contribution in accordance with applicable law.
(c) Discharge of one party having joint and several liability by a
person entitled to enforce the instrument does not affect the right under
subsection (b) of a party having the same joint and several liability to
receive contribution from the party discharged.
(Source: P.A. 87-582.)
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810 ILCS 5/3-117
(810 ILCS 5/3-117) (from Ch. 26, par. 3-117)
Sec. 3-117.
Other agreements affecting an instrument.
Subject to
applicable law regarding exclusion of proof of contemporaneous or previous
agreements, the obligation of a party to an instrument to pay the
instrument may be modified, supplemented, or nullified by a separate
agreement of the obligor and a person entitled to enforce the instrument,
if the instrument is issued or the obligation is incurred in reliance on the
agreement or as part of the same transaction giving rise to the agreement.
To the extent an obligation is modified, supplemented, or nullified by an
agreement under this Section, the agreement is a defense to the obligation.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-118
(810 ILCS 5/3-118) (from Ch. 26, par. 3-118)
Sec. 3-118.
Statute of limitations.
(a) (Blank).
(b) (Blank).
(c) Except as provided in subsection (d), an action to enforce the
obligation of a party to an unaccepted draft to pay the draft must be
commenced within 3 years after dishonor of the draft or 10 years after the
date of the draft, whichever period expires first.
(d) An action to enforce the obligation of the acceptor of a certified
check or the issuer of a teller's check, cashier's check, or traveler's
check must be commenced within 3 years after demand for payment is made to
the acceptor or issuer, as the case may be.
(e) An action to enforce the obligation of a party to a certificate of
deposit to pay the instrument must be commenced within 6 years after demand
for payment is made to the maker, but if the instrument states a due date
and the maker is not required to pay before that date, the 6-year period
begins when a demand for payment is in effect and the due date has passed.
(f) An action to enforce the obligation of a
party to pay an accepted draft, other than a certified check, must
be commenced (i) within 6 years after the due date or dates stated in the draft
or acceptance if the obligation of the acceptor is payable at a
definite time, or (ii) within 6 years after the date of the acceptance
if the obligation of the acceptor is payable on demand.
(g) Unless governed by other law regarding claims for indemnity or
contribution, an action (i) for conversion of an instrument, for money had
and received, or like action based on conversion, (ii) for breach of
warranty, or (iii) to enforce an obligation, duty, or right arising under
this Article and not governed by this Section must be commenced within 3
years after the cause of action accrues.
(Source: P.A. 90-451, eff. 1-1-98.)
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810 ILCS 5/3-119
(810 ILCS 5/3-119) (from Ch. 26, par. 3-119)
Sec. 3-119.
Notice of right to defend action.
In an action for breach
of an obligation for which a third person is answerable over pursuant to
this Article or Article 4, the defendant may give the third person written
notice of the litigation, and the person notified may then give similar
notice to any other person who is answerable over. If the notice states
(i) that the person notified may come in and defend and (ii) that failure
to do so will bind the person notified in an action later brought by the
person giving the notice as to any determination of fact common to the 2
litigations, the person notified is so bound unless after seasonable
receipt of the notice the person notified does come in and defend.
(Source: P.A. 87-582.)
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810 ILCS 5/Art. 3 Pt. 2
(810 ILCS 5/Art. 3 Pt. 2 heading)
PART 2.
NEGOTIATION, TRANSFER AND INDORSEMENT
|
810 ILCS 5/3-201
(810 ILCS 5/3-201) (from Ch. 26, par. 3-201)
Sec. 3-201.
Negotiation.
(a) "Negotiation" means a transfer of possession, whether voluntary or
involuntary, of an instrument by a person other than the issuer to a
person who thereby becomes its holder.
(b) Except for negotiation by a remitter, if an instrument is payable to
an identified person, negotiation requires transfer of possession of the
instrument and its indorsement by the holder. If an instrument is payable
to bearer, it may be negotiated by transfer of possession alone.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-202
(810 ILCS 5/3-202) (from Ch. 26, par. 3-202)
Sec. 3-202.
Negotiation subject to rescission.
(a) Negotiation is effective even if obtained (i) from an infant, a
corporation exceeding its powers, or a person without capacity, (ii) by
fraud, duress, or mistake, or (iii) in breach of duty or as part of an
illegal transaction.
(b) To the extent permitted by other law, negotiation may be rescinded
or may be subject to other remedies, but those remedies may not be asserted
against a subsequent holder in due course or a person paying the instrument
in good faith and without knowledge of facts that are a basis for
rescission or other remedy.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-203
(810 ILCS 5/3-203) (from Ch. 26, par. 3-203)
Sec. 3-203.
Transfer of instrument; rights acquired by transfer.
(a) An instrument is transferred when it is delivered by a person other
than its issuer for the purpose of giving to the person receiving delivery
the right to enforce the instrument.
(b) Transfer of an instrument, whether or not the transfer is a
negotiation, vests in the transferee any right of the transferor to enforce
the instrument, including any right as a holder in due course, but the
transferee cannot acquire rights of a holder in due course by a transfer,
directly or indirectly, from a holder in due course if the transferee
engaged in fraud or illegality affecting the instrument.
(c) Unless otherwise agreed, if an instrument is transferred for value
and the transferee does not become a holder because of lack of indorsement
by the transferor, the transferee has a specifically enforceable right to
the unqualified indorsement of the transferor, but negotiation of the
instrument does not occur until the indorsement is made.
(d) If a transferor purports to transfer less than the entire
instrument, negotiation of the instrument does not occur. The transferee
obtains no rights under this Article and has only the rights of a partial
assignee.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-204
(810 ILCS 5/3-204) (from Ch. 26, par. 3-204)
Sec. 3-204.
Indorsement.
(a) "Indorsement" means a signature, other than that of a signer as
maker, drawer, or acceptor, that alone or accompanied by other words is
made on an instrument for the purpose of (i) negotiating the instrument,
(ii) restricting payment of the instrument, or (iii) incurring indorser's
liability on the instrument, but regardless of the intent of the signer, a
signature and its accompanying words is an indorsement unless the
accompanying words, terms of the instrument, place of the
signature, or other circumstances unambiguously indicate that the signature
was made for a purpose other than indorsement. For the purpose of
determining whether a signature is made on an instrument, a paper affixed
to the instrument is a part of the instrument.
(b) "Indorser" means a person who makes an indorsement.
(c) For the purpose of determining whether the transferee of an
instrument is a holder, an indorsement that transfers a security interest in
the instrument is effective as an unqualified indorsement of the instrument.
(d) If an instrument is payable to a holder under a name that is not the
name of the holder, indorsement may be made by the holder in the name
stated in the instrument or in the holder's name or both, but signature in
both names may be required by a person paying or taking the instrument for
value or collection.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-205
(810 ILCS 5/3-205) (from Ch. 26, par. 3-205)
Sec. 3-205.
Special indorsement; blank indorsement; anomalous indorsement.
(a) If an indorsement is made by the holder of an instrument, whether
payable to an identified person or payable to bearer, and the indorsement
identifies a person to whom it makes the instrument payable, it is a
"special indorsement". When specially indorsed, an instrument becomes
payable to the identified person and may be negotiated only by the
indorsement of that person. The principles stated in Section 3-110 apply
to special indorsements.
(b) If an indorsement is made by the holder of an instrument and it is
not a special indorsement, it is a "blank indorsement". When indorsed in
blank, an instrument becomes payable to bearer and may be negotiated by
transfer of possession alone until specially indorsed.
(c) The holder may convert a blank indorsement that consists only of a
signature into a special indorsement by writing, above the signature of the
indorser, words identifying the person to whom the instrument is made payable.
(d) "Anomalous indorsement" means an indorsement made by a person that
is not the holder of the instrument. An anomalous indorsement does not
affect the manner in which the instrument may be negotiated.
(Source: P.A. 87-582.)
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810 ILCS 5/3-206
(810 ILCS 5/3-206) (from Ch. 26, par. 3-206)
Sec. 3-206.
Restrictive indorsement.
(a) An indorsement limiting payment to a particular person or otherwise
prohibiting further transfer or negotiation of the instrument is not
effective to prevent further transfer or negotiation of the instrument.
(b) An indorsement stating a condition to the right of the indorsee to
receive payment does not affect the right of the indorsee to enforce the
instrument. A person paying the instrument or taking it for value or
collection may disregard the condition, and the rights and liabilities of
that person are not affected by whether the condition has been fulfilled.
(c) If an instrument bears an indorsement (i) described in Section 4-201(b),
or (ii) in blank or to a particular bank using the words "for deposit", "for
collection", or other words indicating a purpose of having the instrument
collected by a bank for the indorser or for a particular account, the following
rules apply:
(1) A person, other than a bank, who purchases the | | instrument when so indorsed converts the instrument unless the amount paid for the instrument is received by the indorser or applied consistently with the indorsement.
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(2) A depositary bank that purchases the instrument
| | or takes it for collection when so indorsed converts the instrument unless the amount paid by the bank with respect to the instrument is received by the indorser or applied consistently with the indorsement.
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(3) A payor bank that is also the depositary bank or
| | that takes the instrument for immediate payment over the counter from a person other than a collecting bank converts the instrument unless the proceeds of the instrument are received by the indorser or applied consistently with the indorsement.
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(4) Except as otherwise provided in paragraph (3), a
| | payor bank or intermediary bank may disregard the indorsement and is not liable if the proceeds of the instrument are not received by the indorser or applied consistently with the indorsement.
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(d) Except for an indorsement covered by subsection (c), if an instrument
bears an indorsement using words to the effect that payment is to be made to
the indorsee as agent, trustee, or other fiduciary for the benefit of the
indorser or another person the following rules apply:
(1) Unless there is notice of breach of fiduciary
| | duty as provided in Section 3-307, a person who purchases the instrument from the indorsee or takes the instrument from the indorsee for collection or payment may pay the proceeds of payment or the value given for the instrument to the indorsee without regard to whether the indorsee violates a fiduciary duty to the indorser.
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(2) A later transferee of the instrument or person
| | who pays the instrument is neither given notice nor otherwise affected by the restriction in the indorsement unless the transferee or payor knows that the fiduciary dealt with the instrument or its proceeds in breach of fiduciary duty.
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(e) The presence on an instrument of an indorsement to which this
Section applies does not prevent a purchaser of the instrument from
becoming a holder in due course of the instrument unless the purchaser is a
converter under subsection (c) or has notice or knowledge of breach of
fiduciary duty as stated in subsection (d).
(f) In an action to enforce the obligation of a party to pay the
instrument, the obligor has a defense if payment would violate an
indorsement to which this Section applies and the payment is not permitted
by this Section.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-207
(810 ILCS 5/3-207) (from Ch. 26, par. 3-207)
Sec. 3-207.
Reacquisition.
Reacquisition of an instrument occurs if it is
transferred to a former holder, by negotiation or otherwise. A former holder
who reacquires the instrument may cancel indorsements made after the reacquirer
first became a holder of the instrument. If the cancellation causes the
instrument to be payable to the reacquirer or to bearer, the reacquirer may
negotiate the instrument. An indorser whose indorsement is canceled is
discharged, and the discharge is effective against any subsequent holder.
(Source: P.A. 87-582; 87-895; 87-1135.)
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810 ILCS 5/Art. 3 Pt. 3
(810 ILCS 5/Art. 3 Pt. 3 heading)
PART 3.
ENFORCEMENT OF INSTRUMENTS
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810 ILCS 5/3-301
(810 ILCS 5/3-301) (from Ch. 26, par. 3-301)
Sec. 3-301.
Person entitled to enforce instrument.
"Person
entitled to enforce" an instrument means (i) the holder of
the instrument, (ii) a nonholder in possession of the instrument
who has the rights of a holder, or (iii) a person not in possession
of the instrument who is entitled to enforce the instrument pursuant
to Section 3-309 or 3-418(d). A person may be a person entitled
to enforce the instrument even though the person is not the owner
of the instrument or is in wrongful possession of the
instrument.
(Source: P.A. 87-582.)
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810 ILCS 5/3-302
(810 ILCS 5/3-302) (from Ch. 26, par. 3-302)
Sec. 3-302.
Holder in due course.
(a) Subject to subsection (c) and Section 3-106(d), "holder in due
course" means the holder of an instrument if:
(1) the instrument when issued or negotiated to the | | holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity, and
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(2) the holder took the instrument (i) for value,
| | (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 3-306, and (vi) without notice that any party has a defense or claim in recoupment stated in Section 3-305(a).
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(b) Notice of discharge of a party, other than discharge in an
insolvency proceeding, is not notice of a defense under subsection (a), but
discharge is effective against a person who became a holder in due course
with notice of the discharge. Public filing or recording of a document
does not of itself constitute notice of a defense, claim in recoupment, or
claim to the instrument.
(c) Except to the extent a transferor or predecessor in interest has
rights as a holder in due course, a person does not acquire rights of a
holder in due course of an instrument taken (i) by legal process or by
purchase at an execution, bankruptcy, or creditor's sale or similar
proceeding, (ii) by purchase as part of a bulk transaction not in the ordinary
course of business of the transferor, or (iii) as the successor in interest
to an estate or other organization.
(d) If, under Section 3-303(a)(1), the promise of performance that is
the consideration for an instrument has been partially performed, the
holder may assert rights as a holder in due course of the instrument only
to the fraction of the amount payable under the instrument equal to the
value of the partial performance divided by the value of the promised
performance.
(e) If (i) the person entitled to enforce an instrument has only a
security interest in the instrument and (ii) the person obliged to pay the
instrument has a defense, claim in recoupment, or claim to the instrument
that may be asserted against the person who granted the security interest,
the person entitled to enforce the instrument may assert rights as a holder
in due course only to an amount payable under the instrument which, at the
time of enforcement of the instrument, does not exceed the amount of the
unpaid obligation secured.
(f) To be effective, notice must be received at a time and in a manner
that gives a reasonable opportunity to act on it.
(g) This Section is subject to any law limiting status as a holder in
due course in particular classes of transactions.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-303
(810 ILCS 5/3-303) (from Ch. 26, par. 3-303)
Sec. 3-303.
Value and consideration.
(a) An instrument is issued or transferred for value if:
(1) the instrument is issued or transferred for a | | promise of performance, to the extent the promise has been performed;
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(2) the transferee acquires a security interest or
| | other lien in the instrument other than a lien obtained by judicial proceeding;
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(3) the instrument is issued or transferred as
| | payment of, or as security for, an antecedent claim against any person, whether or not the claim is due;
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(4) the instrument is issued or transferred in
| | exchange for a negotiable instrument; or
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(5) the instrument is issued or transferred in
| | exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument.
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(b) "Consideration" means any consideration sufficient to support a
simple contract. The drawer or maker of an instrument has a defense if the
instrument is issued without consideration. If an instrument is issued for
a promise of performance, the issuer has a defense to the extent
performance of the promise is due and the promise has not been performed.
If an instrument is issued for value as stated in subsection (a), the
instrument is also issued for consideration.
(Source: P.A. 87-582.)
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810 ILCS 5/3-304
(810 ILCS 5/3-304) (from Ch. 26, par. 3-304)
Sec. 3-304.
Overdue instrument.
(a) An instrument payable on demand becomes overdue at the earliest of
the following times:
(1) on the day after the day demand for payment is | |
(2) if the instrument is a check, 90 days after its
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(3) if the instrument is not a check, when the
| | instrument has been outstanding for a period of time after its date which is unreasonably long under the circumstances of the particular case in light of the nature of the instrument and usage of the trade.
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(b) With respect to an instrument payable at a definite time the
following rules apply:
(1) If the principal is payable in installments and a
| | due date has not been accelerated, the instrument becomes overdue upon default under the instrument for nonpayment of an installment, and the instrument remains overdue until the default is cured.
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(2) If the principal is not payable in installments
| | and the due date has not been accelerated, the instrument becomes overdue on the day after the due date.
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(3) If a due date with respect to principal has been
| | accelerated, the instrument becomes overdue on the day after the accelerated due date.
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(c) Unless the due date of principal has been accelerated, an instrument
does not become overdue if there is default in payment of interest but no
default in payment of principal.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-305
(810 ILCS 5/3-305) (from Ch. 26, par. 3-305)
Sec. 3-305. Defenses and claims in recoupment.
(a) Except as stated in subsection (b), the right to enforce the
obligation of a party to pay an instrument is subject to the
following:
(1) a defense of the obligor based on (i) infancy of | | the obligor to the extent it is a defense to a simple contract, (ii) duress, lack of legal capacity, or illegality of the transaction which, under the law, nullifies the obligation of the obligor, (iii) fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to learn of its character or its essential terms, or (iv) discharge of the obligor in insolvency proceedings;
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(2) a defense of the obligor stated in another
| | Section of this Article or a defense of the obligor that would be available if the person entitled to enforce the instrument were enforcing a right to payment under a simple contract; and
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(3) a claim in recoupment of the obligor against the
| | original payee of the instrument if the claim arose from the transaction that gave rise to the instrument; but the claim of the obligor may be asserted against a transferee of the instrument only to reduce the amount owing on the instrument at the time the action is brought.
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(b) The right of a holder in due course to enforce the obligation of a
party to pay the instrument is subject to defenses of the obligor stated in
subsection (a)(1), but is not subject to defenses of the obligor stated in
subsection (a)(2) or claims in recoupment stated in subsection (a)(3)
against a person other than the holder.
(c) Except as stated in subsection (d), in an action to enforce the
obligation of a party to pay the instrument, the obligor may not assert
against the person entitled to enforce the instrument a defense, claim in
recoupment, or claim to the instrument (Section 3-306) of another person,
but the other person's claim to the instrument may be asserted by the
obligor if the other person is joined in the action and personally asserts
the claim against the person entitled to enforce the instrument. An
obligor is not obliged to pay the instrument if the person seeking
enforcement of the instrument does not have rights of a holder in due
course and the obligor proves that the instrument is a lost or stolen
instrument.
(d) In an action to enforce the obligation of an accommodation party to
pay an instrument, the accommodation party may assert against the person
entitled to enforce the instrument any defense or claim in recoupment under
subsection (a) that the accommodated party could assert against the person
entitled to enforce the instrument, except the defenses of discharge in
insolvency proceedings, infancy, or lack of legal capacity.
(Source: P.A. 97-813, eff. 7-13-12.)
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810 ILCS 5/3-306
(810 ILCS 5/3-306) (from Ch. 26, par. 3-306)
Sec. 3-306.
Claims to an instrument.
A person taking an instrument,
other than a person having rights of a holder in due course, is subject to
a claim of a property or possessory right in the instrument or its
proceeds, including a claim to rescind a negotiation and to recover the
instrument or its proceeds. A person having rights of a holder in due
course takes free of the claim to the instrument.
(Source: P.A. 87-582.)
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810 ILCS 5/3-307
(810 ILCS 5/3-307) (from Ch. 26, par. 3-307)
Sec. 3-307.
Notice of breach of fiduciary duty.
(a) In this Section:
(1) "Fiduciary" means an agent, trustee, partner, | | corporate officer or director, or other representative owing a fiduciary duty with respect to an instrument.
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(2) "Represented person" means the principal,
| | beneficiary, partnership, corporation, or other person to whom the duty stated in paragraph (1) is owed.
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(b) If (i) an instrument is taken from a fiduciary for payment or
collection or for value, (ii) the taker has knowledge of the fiduciary
status of the fiduciary, and (iii) the represented person makes a claim to
the instrument or its proceeds on the basis that the transaction of the
fiduciary is a breach of fiduciary duty, the following rules apply:
(1) Notice of breach of fiduciary duty by the
| | fiduciary is notice of the claim of the represented person.
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(2) In the case of an instrument payable to the
| | represented person or the fiduciary, as such, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.
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(3) If an instrument is issued by the represented
| | person or the fiduciary, as such, and made payable to the fiduciary personally, the taker does not have notice of the breach of fiduciary duty unless the taker knows of the breach of fiduciary duty.
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(4) If an instrument is issued by the represented
| | person or the fiduciary, as such, to the taker as payee, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.
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(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-308
(810 ILCS 5/3-308) (from Ch. 26, par. 3-308)
Sec. 3-308.
Proof of signatures and status as holder in due
course.
(a) In an action with respect to an instrument, the authenticity of, and
authority to make, each signature on the instrument is admitted unless
specifically denied in the pleadings. If the validity of a signature is
denied in the pleadings, the burden of establishing validity is on the
person claiming validity, but the signature is presumed to be authentic and
authorized unless the action is to enforce the liability of the purported
signer and the signer is dead or incompetent at the time of trial of the
issue of validity of the signature. If an action to enforce the instrument
is brought against a person as the undisclosed principal of a person who
signed the instrument as a party to the instrument, the plaintiff has the
burden of establishing that the defendant is liable on the instrument as a
represented person pursuant to Section 3-402(a).
(b) If the validity of signatures is admitted or proved and there is
compliance with subsection (a), a plaintiff producing the instrument is
entitled to payment if the plaintiff proves entitlement to enforce the
instrument under Section 3-301, unless the defendant proves a defense or
claim in recoupment. If a defense or claim in recoupment is proved, the
right to payment of the plaintiff is subject to the defense or claim, except
to the extent the plaintiff proves that the plaintiff has rights of a
holder in due course which are not subject to the defense or claim.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-309
(810 ILCS 5/3-309) (from Ch. 26, par. 3-309)
Sec. 3-309.
Enforcement of lost, destroyed, or stolen instrument.
(a) A person not in possession of an instrument is entitled to enforce
the instrument if (i) the person was in possession of the
instrument and entitled to enforce it when loss of possession occurred,
(ii) the loss of possession was not the result of a transfer by the person
or a lawful seizure, and (iii) the person cannot reasonably obtain
possession of the instrument because the instrument was destroyed, its
whereabouts cannot be determined, or it is in the wrongful possession of an
unknown person or a person that cannot be found or is not amenable to
service of process.
(b) A person seeking enforcement of an instrument under subsection
(a) must prove the terms of the instrument and the person's right to
enforce the instrument. If that proof is made, Section 3-308 applies to
the case as if the person seeking enforcement had produced the instrument.
The court may not enter judgment in favor of the person seeking enforcement
unless it finds that the person required to pay the instrument is
adequately protected against loss that might occur by reason of a claim by
another person to enforce the instrument. Adequate protection may be
provided by any reasonable means.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-310
(810 ILCS 5/3-310) (from Ch. 26, par. 3-310)
Sec. 3-310.
Effect of instrument on obligation for which taken.
(a) Unless otherwise agreed, if a certified check, cashier's check, or
teller's check is taken for an obligation, the obligation is discharged to
the same extent discharge would result if an amount of money equal to the
amount of the instrument were taken in payment of the obligation.
Discharge of the obligation does not affect any liability that the obligor
may have as an indorser of the instrument.
(b) Unless otherwise agreed and except as provided in subsection (a), if
a note or an uncertified check is taken for an obligation, the obligation is
suspended to the same extent the obligation would be discharged if an
amount of money equal to the amount of the instrument were taken, and the
following rules apply:
(1) In the case of an uncertified check, suspension | | of the obligation continues until dishonor of the check or until it is paid or certified. Payment or certification of the check results in discharge of the obligation to the extent of the amount of the check.
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(2) In the case of a note, suspension of the
| | obligation continues until dishonor of the note or until it is paid. Payment of the note results in discharge of the obligation to the extent of the payment.
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(3) Except as provided in paragraph (4), if the check
| | or note is dishonored and the obligee of the obligation for which the instrument was taken is the person entitled to enforce the instrument, the obligee may enforce either the instrument or the obligation. In the case of an instrument of a third person which is negotiated to the obligee by the obligor, discharge of the obligor on the instrument also discharges the obligation.
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(4) If the person entitled to enforce the instrument
| | taken for an obligation is a person other than the obligee, the obligee may not enforce the obligation to the extent the obligation is suspended. If the obligee is the person entitled to enforce the instrument but no longer has possession of it because it was lost, stolen, or destroyed, the obligation may not be enforced to the extent of the amount payable on the instrument, and to that extent the obligee's rights against the obligor are limited to enforcement of the instrument.
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(c) If an instrument other than one described in subsection (a) or (b)
is taken for an obligation, the effect is (i) that stated in subsection (a)
if the instrument is one on which a bank is liable as maker or acceptor, or
(ii) that stated in subsection (b) in any other case.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-311
(810 ILCS 5/3-311) (from Ch. 26, par. 3-311)
Sec. 3-311.
Accord and satisfaction by use of instrument.
(a) If a person against whom a claim is asserted
proves that (i) that person in good faith tendered an instrument to the
claimant as full satisfaction of the claim, (ii) the amount of the claim
was unliquidated or subject to a bona fide dispute, and (iii) the claimant
obtained payment of the instrument, the following subsections apply.
(b) Unless subsection (c) applies, the claim is discharged if the person
against whom the claim is asserted proves that the instrument or an
accompanying written communication contained a conspicuous statement to the
effect that the instrument was tendered as full satisfaction of the claim.
(c) Subject to subsection (d), a claim is not discharged under
subsection (b) if either of the following applies:
(1) The claimant, if an organization, proves that (i) | | within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office, or place, and (ii) the instrument or accompanying communication was not received by that designated person, office, or place.
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(2) The claimant, whether or not an organization,
| | proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the person against whom the claim is asserted. This paragraph does not apply if the claimant is an organization that sent a statement complying with paragraph (1)(i).
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(d) A claim is discharged if the person against whom the claim is
asserted proves that within a reasonable time before collection of the
instrument was initiated, the claimant or an agent of the claimant having
direct responsibility with respect to the disputed obligation knew that the
instrument was tendered in full satisfaction of the claim.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-312 (810 ILCS 5/3-312) (from Ch. 26, par. 3-312) (Text of Section before amendment by P.A. 103-1036) Sec. 3-312. Lost, destroyed, or stolen cashier's check, teller's
check, or certified check. (a) In this Section: (1) "Check" means a cashier's check, teller's check, | | (2) "Claimant" means a person who claims the right to
| | receive the amount of a cashier's check, teller's check, or certified check that was lost, destroyed, or stolen.
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| (3) "Declaration of loss" means a written statement,
| | made under penalty of perjury, to the effect that (i) the declarer lost possession of a check, (ii) the declarer is the drawer or payee of the check, in the case of a certified check, or the remitter or payee of the check, in the case of a cashier's check or teller's check, (iii) the loss of possession was not the result of a transfer by the declarer of a lawful seizure, and (iv) the declarer cannot reasonably obtain possession of the check because the check was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.
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| (4) "Obligated bank" means the issuer of a cashier's
| | check or teller's check or the acceptor of a certified check.
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| (b) A claimant may assert a claim to the amount of a check by a
communication to the obligated bank describing the check with reasonable
certainty and requesting payment of the amount of the check, if (i) the
claimant is the drawer or payee of a certified check or the remitter or
payee of a cashier's check or teller's check, (ii) the communication
contains or is accompanied by a declaration of loss of the claimant with
respect to the check, (iii) the communication is received at a time and in
a manner affording the bank a reasonable time to act on it before the check
is paid, and (iv) the claimant provides reasonable identification if
requested by the obligated bank. Delivery of a declaration
of loss is a warranty of the truth of the statements made in the
declaration. If a claim is asserted in compliance with this subsection, the
following rules apply:
(1) The claim becomes enforceable at the later of (i)
| | the time the claim is asserted, or (ii) the 90th day following the date of the check, in the case of a cashier's check or teller's check, or the 90th day following the date of the acceptance, in the case of a certified check.
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| (2) Until the claim becomes enforceable, it has no
| | legal effect and the obligated bank may pay the check or, in the case of a teller's check, may permit the drawee to pay the check. Payment to a person entitled to enforce the check discharges all liability of the obligated bank with respect to the check.
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| (3) If the claim becomes enforceable before the check
| | is presented for payment, the obligated bank is not obliged to pay the check.
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| (4) When the claim becomes enforceable, the obligated
| | bank becomes obliged to pay the amount of the check to the claimant if payment of the check has not been made to a person entitled to enforce the check. Subject to Section 4-302(a)(1), payment to the claimant discharges all liability of the obligated bank with respect to the check.
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| (c) If the obligated bank pays the amount of a check to a claimant under
subsection (b)(4) and the check is presented for payment by a person having
rights of a holder in due course, the claimant is obliged to (i) refund the
payment to the obligated bank if the check is paid, or (ii) pay the amount
of the check to the person having rights of a holder in due course if the
check is dishonored.
(d) If a claimant has the right to assert a claim under subsection (b)
and is also a person entitled to enforce a cashier's check, teller's check,
or certified check that is lost, destroyed, or stolen, the claimant may
assert rights with respect to the check either under this Section or
Section 3-309.
(Source: P.A. 87-582; 87-895; 87-1135.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 3-312. Lost, destroyed, or stolen cashier's check, teller's check, or certified check.
(a) In this Section:
(1) "Check" means a cashier's check, teller's check,
| | (2) "Claimant" means a person who claims the right to
| | receive the amount of a cashier's check, teller's check, or certified check that was lost, destroyed, or stolen.
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| (3) "Declaration of loss" means a written statement,
| | made under penalty of perjury, to the effect that (i) the declarer lost possession of a check, (ii) the declarer is the drawer or payee of the check, in the case of a certified check, or the remitter or payee of the check, in the case of a cashier's check or teller's check, (iii) the loss of possession was not the result of a transfer by the declarer or a lawful seizure, and (iv) the declarer cannot reasonably obtain possession of the check because the check was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.
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| (4) "Obligated bank" means the issuer of a cashier's
| | check or teller's check or the acceptor of a certified check.
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| (b) A claimant may assert a claim to the amount of a check by a communication to the obligated bank describing the check with reasonable certainty and requesting payment of the amount of the check, if (i) the claimant is the drawer or payee of a certified check or the remitter or payee of a cashier's check or teller's check, (ii) the communication contains or is accompanied by a declaration of loss of the claimant with respect to the check, (iii) the communication is received at a time and in a manner affording the bank a reasonable time to act on it before the check is paid, and (iv) the claimant provides reasonable identification if requested by the obligated bank. Delivery of a declaration of loss is a warranty of the truth of the statements made in the declaration. If a claim is asserted in compliance with this subsection, the following rules apply:
(1) The claim becomes enforceable at the later of (i)
| | the time the claim is asserted, or (ii) the 90th day following the date of the check, in the case of a cashier's check or teller's check, or the 90th day following the date of the acceptance, in the case of a certified check.
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| (2) Until the claim becomes enforceable, it has no
| | legal effect and the obligated bank may pay the check or, in the case of a teller's check, may permit the drawee to pay the check. Payment to a person entitled to enforce the check discharges all liability of the obligated bank with respect to the check.
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| (3) If the claim becomes enforceable before the check
| | is presented for payment, the obligated bank is not obliged to pay the check.
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| (4) When the claim becomes enforceable, the obligated
| | bank becomes obliged to pay the amount of the check to the claimant if payment of the check has not been made to a person entitled to enforce the check. Subject to Section 4-302(a)(1), payment to the claimant discharges all liability of the obligated bank with respect to the check.
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| (c) If the obligated bank pays the amount of a check to a claimant under subsection (b)(4) and the check is presented for payment by a person having rights of a holder in due course, the claimant is obliged to (i) refund the payment to the obligated bank if the check is paid, or (ii) pay the amount of the check to the person having rights of a holder in due course if the check is dishonored.
(d) If a claimant has the right to assert a claim under subsection (b) and is also a person entitled to enforce a cashier's check, teller's check, or certified check that is lost, destroyed, or stolen, the claimant may assert rights with respect to the check either under this Section or Section 3-309.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/Art. 3 Pt. 4
(810 ILCS 5/Art. 3 Pt. 4 heading)
PART 4.
LIABILITY OF PARTIES
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810 ILCS 5/3-401 (810 ILCS 5/3-401) (from Ch. 26, par. 3-401) (Text of Section before amendment by P.A. 103-1036) Sec. 3-401. Signature. (a) A person is not liable on an instrument unless (i) the person
signed the instrument, or (ii) the person is represented by an agent or
representative who signed the instrument and the signature is binding on
the represented person under Section 3-402. (b) A signature may be made (i) manually or by means of a device or
machine, and (ii) by the use of any name, including any trade or assumed
name, or by a word, mark, or symbol executed or adopted by a person
with present intention to authenticate a writing.(Source: P.A. 87-582; 87-1135.) (Text of Section after amendment by P.A. 103-1036) Sec. 3-401. Signature necessary for liability on instrument. A person is not liable on an instrument unless (i) the person signed the instrument, or (ii) the person is represented by an agent or representative who signed the instrument and the signature is binding on the represented person under Section 3-402.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/3-402
(810 ILCS 5/3-402) (from Ch. 26, par. 3-402)
Sec. 3-402.
Signature by representative.
(a) If a person acting, or purporting to act, as a representative signs
an instrument by signing either the name of the represented person or the
name of the signer, the represented person is bound by the signature to the
same extent the represented person would be bound if the signature were on
a simple contract. If the represented person is bound, the signature of
the representative is the "authorized signature of the represented person"
and the represented person is liable on the instrument, whether or not
identified in the instrument.
(b) If a representative signs the name of the representative to an
instrument and the signature is an authorized signature of the
represented
person, the following rules apply:
(1) If the form of the signature shows unambiguously | | that the signature is made on behalf of the represented person who is identified in the instrument, the representative is not liable on the instrument.
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(2) Subject to subsection (c), if (i) the form of the
| | signature does not show unambiguously that the signature is made in a representative capacity or (ii) the represented person is not identified in the instrument, the representative is liable on the instrument to a holder in due course that took the instrument without notice that the representative was not intended to be liable on the instrument. With respect to any other person, the representative is liable on the instrument unless the representative proves that the original parties did not intend the representative to be liable on the instrument.
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(c) If a representative signs the name of the representative as drawer
of a check without indication of the representative status and the check is
payable from an account of the represented person who is identified on the
check, the signer is not liable on the check if the signature is an
authorized signature of the represented person.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-403
(810 ILCS 5/3-403) (from Ch. 26, par. 3-403)
Sec. 3-403.
Unauthorized signature.
(a) Unless otherwise provided in this Article or Article 4, an
unauthorized signature is ineffective except as the signature of the
unauthorized signer in favor of a person who in good faith pays the
instrument or takes it for value. An unauthorized signature may be
ratified for all purposes of this Article.
(b) If the signature of more than one person is required to constitute
the authorized signature of an organization, the signature of the
organization is unauthorized if one of the required signatures is missing.
(c) The civil or criminal liability of a person who makes an
unauthorized signature is not affected by any provision of this Article
which makes the unauthorized signature effective for the purposes
of this Article.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-404
(810 ILCS 5/3-404) (from Ch. 26, par. 3-404)
Sec. 3-404.
Impostors; fictitious payees.
(a) If an impostor, by use of the mails or otherwise, induces the issuer
of an instrument to issue the instrument to the impostor, or to a person
acting in concert with the impostor, by impersonating the payee of the
instrument or a person authorized to act for the payee, an indorsement of
the instrument by any person in the name of the payee is effective as the
indorsement of the payee in favor of a person who in good faith, pays the
instrument or takes it for value or for collection.
(b) If (i) a person whose intent determines to whom an instrument is
payable (Section 3-110(a) or (b)) does not intend the person identified as
payee to have any interest in the instrument, or (ii) the person identified
as payee of an instrument is a fictitious person, the following rules apply
until the instrument is negotiated by special indorsement:
(1) Any person in possession of the instrument is its | |
(2) An indorsement by any person in the name of the
| | payee stated in the instrument is effective as the indorsement of the payee in favor of a person who in good faith, pays the instrument or takes it for value or for collection.
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(c) Under subsection (a) or (b), an indorsement is made in the name of a
payee if (i) it is made in a name substantially similar to that of the
payee or (ii) the instrument, whether or not indorsed, is deposited in a
depositary bank to an account in a name substantially similar to that of
the payee.
(d) With respect to an instrument to which subsection (a) or (b)
applies, if a person paying the instrument or taking it for value or for
collection fails to exercise ordinary care in paying or taking the
instrument and that failure substantially contributes to loss resulting
from payment of the instrument, the person bearing the loss may recover
from the person failing to exercise ordinary care to the extent the failure
to exercise ordinary care contributed to the loss.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-405
(810 ILCS 5/3-405) (from Ch. 26, par. 3-405)
Sec. 3-405.
Employer responsibility for fraudulent indorsement by employee.
(a) In this Section:
(1) "Employee" includes an independent contractor and | | employee of an independent contractor retained by the employer.
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(2) "Fraudulent indorsement" means (i) in the case of
| | an instrument payable to the employer, a forged indorsement purporting to be that of the employer, or (ii) in the case of an instrument with respect to which the employer is the issuer, a forged indorsement purporting to be that of the person identified as payee.
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(3) "Responsibility" with respect to instruments
| | means authority (i) to sign or indorse instruments on behalf of the employer, (ii) to process instruments received by the employer for bookkeeping purposes, for deposit to an account, or for other disposition, (iii) to prepare or process instruments for issue in the name of the employer, (iv) to supply information determining the names or addresses of payees of instruments to be issued in the name of the employer, (v) to control the disposition of instruments to be issued in the name of the employer, or (vi) to otherwise act with respect to instruments in a responsible capacity. "Responsibility" does not include authority that merely allows an employee to have access to instruments or blank or incomplete instrument forms that are being stored or transported or are part of incoming or outgoing mail, or similar access.
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(b) For the purpose of determining the rights and liabilities of a
person who, in good faith, pays an instrument or takes it for value or for
collection, if an employer entrusted an employee with responsibility with
respect to the instrument and the employee or a person acting in concert with
the employee makes a fraudulent indorsement of the instrument, the indorsement
is effective as the indorsement of the person to whom the instrument is payable
if it is made in the name of that person. If the person paying the instrument
or taking it for value or for collection fails to exercise ordinary care in
paying or taking the instrument and that failure substantially contributes to
loss resulting from the fraud, the person bearing the loss may recover from the
person failing to exercise ordinary care to the extent the failure to exercise
ordinary care contributed to the loss.
(c) Under subsection (b), an indorsement is made in the name of the
person to whom an instrument is payable if (i) it is made in a name
substantially similar to the name of that person or (ii) the instrument,
whether or not indorsed, is deposited in a depositary bank to an account in
a name substantially similar to the name of that person.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-406
(810 ILCS 5/3-406) (from Ch. 26, par. 3-406)
Sec. 3-406.
Negligence contributing to forged signature or alteration of
instrument.
(a) A person whose failure to exercise ordinary care substantially
contributes to an alteration of an instrument or to the making of a forged
signature on an instrument is precluded from asserting the alteration or the
forgery against a person who, in good faith, pays the instrument or takes it
for value or for collection.
(b) Under subsection (a), if the person asserting the preclusion
fails to exercise ordinary care in paying or taking the instrument and that
failure substantially contributes to loss, the loss is allocated between the
person precluded and the person asserting the preclusion according to the
extent to which the failure of each to exercise ordinary care contributed to
the loss.
(c) Under subsection (a), the burden of proving failure to exercise
ordinary care is on the person asserting the preclusion. Under subsection
(b), the burden of proving failure to exercise ordinary care is on the person
precluded.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-407
(810 ILCS 5/3-407) (from Ch. 26, par. 3-407)
Sec. 3-407.
Alteration.
(a) "Alteration" means (i) an unauthorized change in an instrument that
purports to modify in any respect the obligation of a party, or (ii) an
unauthorized addition of words or numbers or other change to an incomplete
instrument relating to the obligation of a party.
(b) Except as provided in subsection (c), an alteration fraudulently
made discharges a party whose obligation is affected by the alteration
unless that party assents or is precluded from asserting the alteration.
No other alteration discharges a party, and the instrument may be enforced
according to its original terms.
(c) A payor bank or drawee paying a fraudulently altered instrument or a
person taking it for value, in good faith and without notice of the
alteration, may enforce rights with respect to the instrument (i) according
to its original terms, or (ii) in the case of an incomplete instrument
altered by unauthorized completion, according to its terms as completed.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-408
(810 ILCS 5/3-408) (from Ch. 26, par. 3-408)
Sec. 3-408.
Drawee not liable on unaccepted draft.
A check or other
draft does not of itself operate as an assignment of funds in the hands of
the drawee available for its payment, and the drawee is not liable on the
instrument until the drawee accepts it.
(Source: P.A. 87-582.)
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810 ILCS 5/3-409
(810 ILCS 5/3-409) (from Ch. 26, par. 3-409)
Sec. 3-409.
Acceptance of draft; certified check.
(a) "Acceptance" means the drawee's signed agreement to pay a draft as
presented. It must be written on the draft and may consist of the drawee's
signature alone. Acceptance may be made at any time and becomes effective
when notification pursuant to instructions is given or the accepted draft
is delivered for the purpose of giving rights on the acceptance to any person.
(b) A draft may be accepted although it has not been signed by the
drawer, is otherwise incomplete, is overdue, or has been dishonored.
(c) If a draft is payable at a fixed period after sight and the acceptor
fails to date the acceptance, the holder may complete the acceptance by
supplying a date in good faith.
(d) "Certified check" means a check accepted by the bank on which it is
drawn. Acceptance may be made as stated in subsection (a) or by a writing
on the check which indicates that the check is certified. The drawee of a
check has no obligation to certify the check, and refusal to certify is not
dishonor of the check.
(Source: P.A. 87-582.)
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810 ILCS 5/3-410
(810 ILCS 5/3-410) (from Ch. 26, par. 3-410)
Sec. 3-410.
Acceptance varying draft.
(a) If the terms of a drawee's acceptance vary from the terms of the
draft as presented, the holder may refuse the acceptance and treat the
draft as dishonored. In that case, the drawee may cancel the acceptance.
(b) The terms of a draft are not varied by an acceptance to pay at a
particular bank or place in the United States, unless the acceptance states
that the draft is to be paid only at that bank or place.
(c) If the holder assents to an acceptance varying the terms of a draft,
the obligation of each drawer and indorser that does not expressly assent
to the acceptance is discharged.
(Source: P.A. 87-582.)
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810 ILCS 5/3-411
(810 ILCS 5/3-411) (from Ch. 26, par. 3-411)
Sec. 3-411.
Refusal to pay cashier's checks, teller's checks, and
certified checks.
(a) In this Section, "obligated bank" means the acceptor of a certified
check or the issuer of a cashier's check or teller's check bought from
the issuer.
(b) If the obligated bank wrongfully (i) refuses to pay a cashier's
check or certified check, (ii) stops payment of a teller's check, or (iii)
refuses to pay a dishonored teller's check, the person asserting the right
to enforce the check is entitled to compensation for expenses and loss of
interest resulting from the nonpayment and may recover consequential
damages if the obligated bank refuses to pay after receiving notice of
particular circumstances giving rise to the damages.
(c) Expenses or consequential damages under subsection (b) are not
recoverable if the refusal of the obligated bank to pay occurs because (i)
the bank suspends payments, (ii) the obligated bank asserts a claim or
defense of the bank that it has reasonable grounds to believe is available
against the person entitled to enforce the instrument, (iii) the obligated
bank has a reasonable doubt whether the person demanding payment is the
person entitled to enforce the instrument, or (iv) payment is prohibited
by law.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-412
(810 ILCS 5/3-412) (from Ch. 26, par. 3-412)
Sec. 3-412.
Obligation of issuer of note or cashier's check.
The issuer of a note or cashier's check or other draft drawn
on the drawer is obliged to pay the instrument (i) according
to its terms at the time it was issued or, if not issued, at
the time it first came into possession of a holder, or (ii) if
the issuer signed an incomplete instrument, according to its
terms when completed, to the extent stated in Sections 3-115 and
3-407. The obligation is owed to a person entitled to enforce the
instrument or to an indorser who paid the instrument under Section 3-415.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-413
(810 ILCS 5/3-413) (from Ch. 26, par. 3-413)
Sec. 3-413.
Obligation of acceptor.
(a) The acceptor of a draft is obliged to pay the draft (i) according to
its terms at the time it was accepted, even though the acceptance states
that the draft is payable "as originally drawn" or equivalent terms, (ii)
if the acceptance varies the terms of the draft, according to the terms of
the draft as varied, or (iii) if the acceptance is of a draft that is an
incomplete instrument, according to its terms when completed, to the
extent stated in Sections 3-115 and 3-407. The obligation is owed to a person
entitled to enforce the draft or to the drawer or an indorser who paid the
draft under Section 3-414 or 3-415.
(b) If the certification of a check or other acceptance of a draft
states the amount certified or accepted, the obligation of the acceptor is
that amount. If (i) the certification or acceptance does not state an
amount, (ii) the amount of the instrument is subsequently raised, and (iii)
the instrument is then negotiated to a holder in due course, the obligation
of the acceptor is the amount of the instrument at the time it was taken by
the holder in due course.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-414
(810 ILCS 5/3-414) (from Ch. 26, par. 3-414)
Sec. 3-414.
Obligation of drawer.
(a) This Section does not apply to cashier's checks or other drafts
drawn on the drawer.
(b) If an unaccepted draft is dishonored, the drawer is obliged to pay
the draft (i) according to its terms at the time it was issued or, if not
issued, at the time it first came into possession of a holder, or (ii) if
the drawer signed an incomplete instrument, according to its terms when
completed as stated in Sections 3-115 and 3-407. The obligation is owed to
a person entitled to enforce the draft or to an indorser who paid the
draft under Section 3-415.
(c) If a draft is accepted by a bank, the drawer is discharged,
regardless of when or by whom acceptance was obtained.
(d) If a draft is accepted and the acceptor is not a bank, the
obligation of the drawer to pay the draft if the draft is dishonored by the
acceptor is the same as the obligation of an indorser under Section
3-415(a) and (c).
(e) If a draft states that it is drawn "without recourse" or otherwise
disclaims liability of the drawer to pay the draft, the drawer is not
liable under subsection (b) to pay the draft if the draft is not a check.
A disclaimer of the liability stated in subsection (b) is not effective if the
draft is a check.
(f) If (i) a check is not presented for payment or given to a depositary
bank for collection within 30 days after its date, (ii) the drawee suspends
payments after expiration of the 30-day period without paying the check,
and (iii) because of the suspension of payments, the drawer is deprived of
funds maintained with the drawee to cover payment of the check, the drawer
to the extent deprived of funds may discharge its obligation to pay the
check by assigning to the person entitled to enforce the check the rights
of the drawer against the drawee with respect to the funds.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-415
(810 ILCS 5/3-415) (from Ch. 26, par. 3-415)
Sec. 3-415.
Obligation of indorser.
(a) Subject to subsections (b), (c), and (d) and to Section 3-419(d), if
an instrument is dishonored, an indorser is obliged to pay the amount due
on the instrument (i) according to the terms of the instrument at the time
it was indorsed, or (ii) if the indorser indorsed an incomplete instrument,
according to its terms when completed to the extent stated in Sections 3-115
and 3-407. The obligation of the indorser is owed to a person entitled to
enforce the instrument or to a subsequent indorser who paid the instrument
under this Section.
(b) If an indorsement states that it is made "without recourse" or
otherwise disclaims liability of the indorser, the indorser is not liable
under subsection (a) to pay the instrument.
(c) If notice of dishonor of an instrument is required by Section 3-503
and notice of dishonor complying with that Section is not given to an
indorser, the liability of the indorser under subsection (a) is discharged.
(d) If a draft is accepted by a bank after an indorsement is made, the
liability of the indorser under subsection (a) is discharged.
(e) If an indorser of a check is liable under subsection (a) and the
check is not presented for payment, or given to a depositary bank for
collection, within 30 days after the day the indorsement was made, the
liability of the indorser under subsection (a) is discharged.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-416
(810 ILCS 5/3-416) (from Ch. 26, par. 3-416)
Sec. 3-416.
Transfer warranties.
(a) A person who transfers an instrument for consideration warrants to
the transferee and, if the transfer is by indorsement, to any subsequent
transferee that:
(1) the warrantor is a person entitled to enforce the | |
(2) all signatures on the instrument are authentic
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(3) the instrument has not been altered,
(4) the instrument is not subject to a defense or
| | claim in recoupment of any party which can be asserted against the warrantor, and
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(5) the warrantor has no knowledge of any insolvency
| | proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer.
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(b) A person to whom the warranties under subsection (a) are made and
who took the instrument in good faith may recover from the warrantor as
damages for breach of warranty an amount equal to the loss suffered as a
result of the breach, but not more than the amount of the instrument plus
expenses and loss of interest incurred as a result of the breach.
(c) The warranties stated in subsection (a) cannot be disclaimed with
respect to checks. Unless notice of a claim for breach of warranty is
given to the warrantor within 30 days after the claimant has reason to know
of the breach and the identity of the warrantor, the liability of the
warrantor under subsection (b) is discharged to the extent of any loss
caused by the delay in giving notice of the claim.
(d) A cause of action for breach of warranty under this Section accrues
when the claimant has reason to know of the breach.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-417
(810 ILCS 5/3-417) (from Ch. 26, par. 3-417)
Sec. 3-417.
Presentment warranties.
(a) If an unaccepted draft is presented to the drawee for payment or
acceptance and the drawee pays or accepts the draft, (i) the person
obtaining payment or acceptance, at the time of presentment, and (ii) a
previous transferor of the draft, at the time of transfer, warrant to the
drawee making payment or accepting the draft in good faith that:
(1) the warrantor is or was, at the time the | | warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment or acceptance of the draft on behalf of a person entitled to enforce the draft;
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(2) the draft has not been altered; and
(3) the warrantor has no knowledge that the signature
| | of the purported drawer of the draft is unauthorized.
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(b) A drawee making payment may recover from any warrantor damages for
breach of warranty equal to the amount paid by the drawee less the amount
the drawee received or is entitled to receive from the drawer because of
the payment. In addition the drawee is entitled to compensation for
expenses and loss of interest resulting from the breach. The right of the
drawee to recover damages under this subsection is not affected by any
failure of the drawee to exercise ordinary care in making payment. If the
drawee accepts the draft, breach of warranty is a defense to the obligation
of the acceptor. If the acceptor makes payment with respect to the draft,
the acceptor is entitled to recover from any warrantor for breach of
warranty the amounts stated in this subsection.
(c) If a drawee asserts a claim for breach of warranty under subsection
(a) based on an unauthorized indorsement of the draft or an alteration of
the draft, the warrantor may defend by proving that the indorsement is
effective under Section 3-404 or 3-405 or the drawer is precluded under
Section 3-406 or 4-406 from asserting against the drawee the unauthorized
indorsement or alteration.
(d) If (i) a dishonored draft is presented for payment to the drawer or
an indorser or (ii) any other instrument is presented for payment to a
party obliged to pay the instrument, and (iii) payment is received, the
following rules apply:
(1) The person obtaining payment and a prior
| | transferor of the instrument warrant to the person making payment in good faith that the warrantor is or was, at the time the warrantor transferred the instrument, a person entitled to enforce the instrument or authorized to obtain payment on behalf of a person entitled to enforce the instrument.
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(2) The person making payment may recover from any
| | warrantor for breach of warranty an amount equal to the amount paid plus expenses and loss of interest resulting from the breach.
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(e) The warranties stated in subsections (a) and (d) cannot be
disclaimed with respect to checks. Unless notice of a claim for breach of
warranty is given to the warrantor within 30 days after the claimant has
reason to know of the breach and the identity of the warrantor, the
liability of the warrantor under subsection (b) or (d) is discharged to the
extent of any loss caused by the delay in giving notice of the claim.
(f) A cause of action for breach of warranty under this Section accrues
when the claimant has reason to know of the breach.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-418
(810 ILCS 5/3-418) (from Ch. 26, par. 3-418)
Sec. 3-418.
Payment or acceptance by mistake.
(a) Except as provided in subsection (c), if the drawee of a draft pays
or accepts the draft and the drawee acted on the mistaken belief that (i)
payment of the draft had not been stopped under Section 4-403 or (ii) the
signature of the drawer of the draft was authorized, the drawee
may recover the amount of the draft from the person to whom or for whose
benefit payment was made or, in the case of acceptance, may revoke the
acceptance. Rights of the drawee under this subsection are not affected by
failure of the drawee to exercise ordinary care in paying or accepting
the draft.
(b) Except as provided in subsection (c), if an instrument has been paid
or accepted by mistake and the case is not covered by subsection (a), the
person paying or accepting may, to the extent permitted by the law
governing mistake and restitution, (i) recover the payment from the person
to whom or for whose benefit payment was made or (ii) in the case of
acceptance, may revoke the acceptance.
(c) The remedies provided by subsection (a) or (b) may not be asserted
against a person who took the instrument in good faith and for value or who
in good faith changed position in reliance on the payment or acceptance.
This subsection does not limit remedies provided by Section 3-417 or 4-407.
(d) Notwithstanding Section 4-215, if an instrument is paid or accepted
by mistake and the payor or acceptor recovers payment or revokes acceptance
under subsection (a) or (b), the instrument is deemed not to have been paid
or accepted and is treated as dishonored, and the person from whom payment
is recovered has rights as a person entitled to enforce the dishonored
instrument.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-419
(810 ILCS 5/3-419) (from Ch. 26, par. 3-419)
Sec. 3-419.
Instruments signed for accommodation.
(a) If an instrument is issued for value given for the benefit of a
party to the instrument ("accommodated party") and another party to the
instrument ("accommodation party") signs the instrument for the purpose of
incurring liability on the instrument without being a direct beneficiary of
the value given for the instrument, the instrument is signed by the
accommodation party "for accommodation".
(b) An accommodation party may sign the instrument as maker, drawer,
acceptor, or indorser and, subject to subsection (d), is obliged to pay the
instrument in the capacity in which the accommodation party signs. The
obligation of an accommodation party may be enforced notwithstanding any
statute of frauds and whether or not the accommodation
party receives consideration for the accommodation.
(c) A person signing an instrument is presumed to be an accommodation
party and there is notice that the instrument is signed for accommodation
if the signature is an anomalous indorsement or is accompanied by words
indicating that the signer is acting as surety or guarantor with respect to
the obligation of another party to the instrument. Except as provided in
Section 3-605, the obligation of an accommodation party to pay the
instrument is not affected by the fact that the person enforcing the
obligation had notice when the instrument was taken by that person that the
accommodation party signed the instrument for accommodation.
(d) If the signature of a party to an instrument is accompanied by words
indicating unambiguously that the party is guaranteeing collection rather
than payment of the obligation of another party to the instrument, the
signer is obliged to pay the amount due on the instrument to a person
entitled to enforce the instrument only if (i) execution of judgment
against the other party has been returned unsatisfied, (ii) the other party
is insolvent or in an insolvency proceeding, (iii) the other party cannot
be served with process, or (iv) it is otherwise apparent that payment
cannot be obtained from the other party.
(e) An accommodation party who pays the instrument is entitled to
reimbursement from the accommodated party and is entitled to enforce the
instrument against the accommodated party. An accommodated party that pays
the instrument has no right of recourse against, and is not entitled to
contribution from, an accommodation party.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-420
(810 ILCS 5/3-420) (from Ch. 26, par. 3-420)
Sec. 3-420.
Conversion of instrument.
(a) The law applicable to conversion of personal property applies to
instruments. An instrument is also converted if it is taken by transfer,
other than a negotiation, from a person not entitled to enforce the instrument
or a bank makes or obtains payment with respect to the instrument for a person
not entitled to enforce the instrument or receive payment. An action for
conversion of an instrument may not be brought by (i) the issuer or acceptor of
the instrument or (ii) a payee or indorsee who did not receive delivery of the
instrument either directly or through delivery to an agent or a co-payee.
(b) In an action under subsection (a), the measure of liability is
presumed to be the amount payable on the instrument, but recovery may not
exceed the amount of the plaintiff's interest in the instrument.
(c) A representative, other than a depositary bank, that has in good
faith dealt with an instrument or its proceeds on behalf of one who was not
the person entitled to enforce the instrument is not liable in conversion
to that person beyond the amount of any proceeds that it has not paid out.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/Art. 3 Pt. 5
(810 ILCS 5/Art. 3 Pt. 5 heading)
PART 5.
DISHONOR
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810 ILCS 5/3-501
(810 ILCS 5/3-501) (from Ch. 26, par. 3-501)
Sec. 3-501.
Presentment.
(a) "Presentment" means a demand made by or on behalf of a person
entitled to enforce an instrument (i) to pay the instrument made to the
drawee or a party obliged to pay the instrument or, in the case of a note
or accepted draft payable at a bank, to the bank or (ii) to accept a draft
made to the drawee.
(b) The following rules are subject to Article 4, agreement of the
parties, and clearing-house rules and the like:
(1) Presentment may be made at the place of payment | | of the instrument and must be made at the place of payment if the instrument is payable at a bank in the United States; may be made by any commercially reasonable means, including an oral, written, or electronic communication; is effective when the demand for payment or acceptance is received by the person to whom presentment is made; is effective if made to any one of 2 or more makers, acceptors, drawees or other payors.
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(2) Upon demand of the person to whom presentment is
| | made, the person making presentment must (i) exhibit the instrument, (ii) give reasonable identification and, if presentment is made on behalf of another person, reasonable evidence of authority to do so, and (iii) sign a receipt on the instrument for any payment made or surrender the instrument if full payment is made.
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(3) Without dishonoring the instrument, the party to
| | whom presentment is made may (i) return the instrument for lack of a necessary endorsement, or (ii) refuse payment or acceptance for failure of the presentment to comply with the terms of the instrument, an agreement of the parties, or other applicable law or rule.
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(4) The party to whom presentment is made may treat
| | presentment as occurring on the next business day after the day of presentment if the party to whom presentment is made has established a cut-off hour not earlier than 2 p.m. for the receipt and processing of instruments presented for payment or acceptance and presentment is made after the cut-off hour.
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(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-502
(810 ILCS 5/3-502) (from Ch. 26, par. 3-502)
Sec. 3-502.
Dishonor.
(a) Dishonor of a note is governed by the following rules:
(1) If the note is payable on demand, the note is | | dishonored if presentment is duly made to the maker and the note is not paid on the day of presentment.
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(2) If the note is not payable on demand and is
| | payable at or through a bank or the terms of the note require presentment, the note is dishonored if presentment is duly made and the note is not paid on the day it becomes payable or the day of presentment, whichever is later.
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(3) If the note is not payable on demand and
| | paragraph (2) does not apply, the note is dishonored if it is not paid on the day it becomes payable.
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(b) Dishonor of an unaccepted draft other than a documentary draft is
governed by the following rules:
(1) If a check is duly presented for payment to the
| | payor bank otherwise than for immediate payment over the counter, the check is dishonored if the payor bank makes timely return of the check or sends timely notice of dishonor or nonpayment under Section 4-301 or 4-302, or becomes accountable for the amount of the check under Section 4-302.
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(2) If a draft is payable on demand and paragraph (1)
| | does not apply, the draft is dishonored if presentment for payment is duly made to the drawee and the draft is not paid on the day of presentment.
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(3) If a draft is payable on a date stated in the
| | draft, the draft is dishonored if (i) presentment for payment is duly made to the drawee and payment is not made on the day the draft becomes payable or the day of presentment, whichever is later, or (ii) presentment for acceptance is duly made before the day the draft becomes payable and the draft is not accepted on the day of presentment.
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(4) If a draft is payable on elapse of a period of
| | time after sight or acceptance, the draft is dishonored if presentment for acceptance is duly made and the draft is not accepted on the day of presentment.
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(c) Dishonor of an unaccepted documentary draft occurs according to the
rules stated in subsection (b)(2), (3), and (4), except that
payment or acceptance may be delayed without dishonor until no later than
the close of the third business day of the drawee following the day on
which payment or acceptance is required by those paragraphs.
(d) Dishonor of an accepted draft is governed by the following rules:
(1) If the draft is payable on demand, the draft is
| | dishonored if presentment for payment is duly made to the acceptor and the draft is not paid on the day of presentment.
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(2) If the draft is not payable on demand, the draft
| | is dishonored if presentment for payment is duly made to the acceptor and payment is not made on the day it becomes payable or the day of presentment, whichever is later.
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(e) In any case in which presentment is otherwise required for dishonor
under this Section and presentment is excused under Section 3-504, dishonor
occurs without presentment if the instrument is not duly accepted or paid.
(f) If a draft is dishonored because timely acceptance of the draft was
not made and the person entitled to demand acceptance consents to a late
acceptance, from the time of acceptance the draft is treated as never
having been dishonored.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-503
(810 ILCS 5/3-503) (from Ch. 26, par. 3-503)
Sec. 3-503.
Notice of dishonor.
(a) The obligation of an indorser stated in Section 3-415(a)
and the obligation of a drawer stated in Section 3-414(d) may not be
enforced unless (i) the indorser or drawer is given notice of dishonor of
the instrument complying with this Section or (ii) notice of dishonor is
excused under Section 3-504(b).
(b) Notice of dishonor may be given by any person; may be given by any
commercially reasonable means, including an oral, written, or electronic
communication; and is sufficient if it reasonably identifies the instrument
and indicates that the instrument has been dishonored or has not been paid or
accepted. Return of an instrument given to a bank for collection is a
sufficient notice of dishonor.
(c) Subject to Section 3-504(c), with respect to an instrument taken
for collection by a collecting bank, notice of dishonor must be given (i)
by the bank before midnight of the next banking day following the banking
day on which the bank receives notice of dishonor of the instrument, or
(ii) by any other person within 30 days following the day on which the
person receives notice of dishonor. With respect to any other instrument,
notice of dishonor must be given within 30 days following the day on which
dishonor occurs.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-504
(810 ILCS 5/3-504) (from Ch. 26, par. 3-504)
Sec. 3-504.
Excused presentment and notice of dishonor.
(a) Presentment for payment or acceptance of an instrument is excused if
(i) the person entitled to present the instrument cannot with reasonable
diligence make presentment, (ii) the maker or acceptor has repudiated an
obligation to pay the instrument or is dead or in insolvency proceedings,
(iii) by the terms of the instrument presentment is not necessary to enforce
the obligation of indorsers or the drawer, (iv) the drawer or indorser whose
obligation is being enforced has waived presentment or otherwise has no reason
to expect or right to require that the instrument be paid or accepted, or
(v) the drawer instructed the drawee not to pay or accept the draft or the
drawee was not obligated to the drawer to pay the draft.
(b) Notice of dishonor is excused if (i) by the terms of the instrument
notice of dishonor is not necessary to enforce the obligation of a party to
pay the instrument, or (ii) the party whose obligation is
being enforced waived notice of dishonor. A waiver of presentment is also
a waiver of notice of dishonor.
(c) Delay in giving notice of dishonor is excused if the delay was
caused by circumstances beyond the control of the person giving the notice
and the person giving the notice exercised reasonable diligence after the
cause of the delay ceased to operate.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-505
(810 ILCS 5/3-505) (from Ch. 26, par. 3-505)
Sec. 3-505.
Evidence of dishonor.
(a) The following are admissible as evidence and create a presumption of
dishonor and of any notice of dishonor stated:
(1) a document regular in form as provided in | | subsection (b) which purports to be a protest;
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(2) a purported stamp or writing of the drawee, payor
| | bank, or presenting bank on or accompanying the instrument stating that acceptance or payment has been refused unless reasons for the refusal are stated and the reasons are not consistent with dishonor;
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(3) a book or record of the drawee, payor bank, or
| | collecting bank, kept in the usual course of business which shows dishonor, even if there is no evidence of who made the entry.
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(b) A protest is a certificate of dishonor made by a United States
consul or vice consul, or a notary public or other person authorized to
administer oaths by the law of the place where dishonor occurs. It may be
made upon information satisfactory to that person. The protest must
identify the instrument and certify either that presentment has been made
or, if not made, the reason why it was not made, and that the instrument has
been dishonored by nonacceptance or nonpayment. The protest may also
certify that notice of dishonor has been given to some or all parties.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-505A
(810 ILCS 5/3-505A) (from Ch. 26, par. 3-505A)
Sec. 3-505A.
Provision of credit card number as a condition of check
cashing or acceptance prohibited.
(1) No person may record the number of a credit card given as
identification or given as proof of creditworthiness when payment for goods
or services is made by check or draft other than a transaction in which the
check or draft is issued in payment of the credit card designated by the
credit card number.
(2) This Section shall not prohibit a person from requesting a purchaser
to display a credit card as indication of creditworthiness and financial
responsibility or as additional identification, but the only information
concerning a credit card which may be recorded is the type of credit card
so displayed and the issuer of the credit card. This Section shall not
require acceptance of a check or draft whether or not a credit card is
presented.
(3) This Section shall not prohibit a person from requesting or receiving
a credit card number or expiration date and recording the number or date,
or both, in lieu of a deposit to secure payment in the event of default,
loss, damage, or other occurrence.
(4) This Section shall not prohibit a person from recording a credit card
number and expiration date as a condition for cashing or accepting a check
or draft if that person, firm, partnership or association has agreed with
the card issuer to cash or accept checks and share drafts from the issuer's
cardholders and the issuer guarantees cardholder checks and drafts cashed
or accepted by that person.
(5) Recording a credit card number in connection with a sale of goods or
services in which the purchaser pays by check or draft, or in connection
with the acceptance of a check or draft, is a business offense with a fine
not to exceed $500.
As used in this Section, credit card has the meaning as
defined in Section 17-0.5 of the Criminal Code of 2012.
(Source: P.A. 96-1551, eff. 7-1-11; 97-1150, eff. 1-25-13.)
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810 ILCS 5/Art. 3 Pt. 6
(810 ILCS 5/Art. 3 Pt. 6 heading)
PART 6.
DISCHARGE AND PAYMENT
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810 ILCS 5/3-601
(810 ILCS 5/3-601) (from Ch. 26, par. 3-601)
Sec. 3-601.
Discharge and effect of discharge.
(a) The obligation of a party to pay the instrument is discharged as
stated in this Article or by an act or agreement with the party which would
discharge an obligation to pay money under a simple contract.
(b) Discharge of the obligation of a party is not effective against a
person acquiring rights of a holder in due course of the instrument without
notice of the discharge.
(Source: P.A. 87-582.)
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810 ILCS 5/3-602
(810 ILCS 5/3-602) (from Ch. 26, par. 3-602)
Sec. 3-602.
Payment.
(a) Subject to subsection (b), an instrument is paid to the extent
payment is made (i) by or on behalf of a party obliged to pay the
instrument, and (ii) to a person entitled to enforce the instrument. To
the extent of the payment, the obligation of the party obliged to pay the
instrument is discharged even though payment is made with knowledge of a
claim to the instrument under Section 3-306 by another person.
(b) The obligation of a party to pay the instrument is not discharged
under subsection (a) if:
(1) a claim to the instrument under Section 3-306 is | | enforceable against the party receiving payment and (i) payment is made with knowledge by the payor that payment is prohibited by injunction or similar process of a court of competent jurisdiction, or (ii) in the case of an instrument other than a cashier's check, teller's check, or certified check, the party making payment accepted, from the person having a claim to the instrument, indemnity against loss resulting from refusal to pay the person entitled to enforce the instrument, or
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(2) the person making payment knows that the
| | instrument is a stolen instrument and pays a person it knows is in wrongful possession of the instrument.
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(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/3-603
(810 ILCS 5/3-603) (from Ch. 26, par. 3-603)
Sec. 3-603.
Tender of payment.
(a) If tender of payment of an obligation to pay an instrument is made
to a person entitled to enforce the instrument, the effect of tender is
governed by principles of law applicable to tender of payment under a simple
contract.
(b) If tender of payment of an obligation to pay an instrument is made
to a person entitled to enforce the instrument and the tender is refused,
there is discharge, to the extent of the amount of the tender, of the
obligation of an indorser or accommodation party having a right of recourse
with respect to the obligation to which the tender relates.
(c) If tender of payment of an amount due on an instrument is made to
the person entitled to enforce the instrument, the obligation of the
obligor to pay interest after the due date on the amount tendered is
discharged. If presentment is required with respect to an instrument and
the obligor is able and ready to pay on the due date at every place of
payment stated in the instrument, the obligor is deemed to have made tender
of payment on the due date to the person entitled to enforce the instrument.
(Source: P.A. 87-582.)
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810 ILCS 5/3-604 (810 ILCS 5/3-604) (from Ch. 26, par. 3-604) (Text of Section before amendment by P.A. 103-1036) Sec. 3-604. Discharge by cancellation or renunciation. (a) A person entitled to enforce an instrument, with or without
consideration, may discharge the obligation of a party to pay the instrument
(i) by an intentional voluntary act, such as surrender of the instrument to
the party, destruction, mutilation, or cancellation of the instrument,
cancellation or striking out of the party's signature, or the addition of
words to the instrument indicating discharge, or (ii) by agreeing not to
sue or otherwise renouncing rights against the party by a signed writing. (b) Cancellation or striking out of an indorsement pursuant to
subsection (a) does not affect the status and rights of a party derived
from the indorsement.(Source: P.A. 87-582; 87-1135.) (Text of Section after amendment by P.A. 103-1036) Sec. 3-604. Discharge by cancellation or renunciation. (a) A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument (i) by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, cancellation or striking out of the party's signature, or the addition of words to the instrument indicating discharge, or (ii) by agreeing not to sue or otherwise renouncing rights against the party by a signed record. The obligation of a party to pay a check is not discharged solely by destruction of the check in connection with a process in which information is extracted from the check and an image of the check is made and, subsequently, the information and image are transmitted for payment. (b) Cancellation or striking out of an indorsement pursuant to subsection (a) does not affect the status and rights of a party derived from the indorsement.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/3-605
(810 ILCS 5/3-605) (from Ch. 26, par. 3-605)
Sec. 3-605.
Discharge of indorsers and accommodation parties.
(a) In this Section, the term "indorser" includes a drawer having the
obligation described in Section 3-414(d).
(b) Discharge, under Section 3-604, of the obligation of a party to pay
an instrument does not discharge the obligation of an indorser or
accommodation party having a right of recourse against the discharged party.
(c) If a person entitled to enforce an instrument agrees, with or
without consideration, to an extension of the due date of the obligation of
a party to pay the instrument, the extension discharges an indorser or
accommodation party having a right of recourse against the party whose
obligation is extended to the extent the indorser or accommodation party
proves that the extension caused loss to the indorser or accommodation
party with respect to the right of recourse.
(d) If a person entitled to enforce an instrument agrees, with or
without consideration, to a material modification of the obligation of a party
other than an extension of the due date, the modification discharges the
obligation of an indorser or accommodation party having a right of recourse
against the person whose obligation is modified to the extent the modification
causes loss to the indorser or accommodation party with respect to the right of
recourse. The loss suffered by the indorser or accommodation party as a result
of the modification is equal to the amount of the right of recourse unless the
person enforcing the instrument proves that no loss was caused by the
modification or that the loss caused by the modification was an amount less
than the amount of the right of recourse.
(e) If the obligation of a party to pay an instrument is secured by an
interest in collateral and a person entitled to enforce the instrument
impairs the value of the interest in collateral, the obligation of an
indorser or accommodation party having a right of recourse against the
obligor is discharged to the extent of the impairment. The value of an
interest in collateral is impaired to the extent (i) the value of the
interest is reduced to an amount less than the amount of the right of
recourse of the party asserting discharge, or (ii) the reduction in value
of the interest causes an increase in the amount by which the amount of the
right of recourse exceeds the value of the interest. The burden of proving
impairment is on the party asserting discharge.
(f) If the obligation of a party is secured by an interest in collateral
not provided by an accommodation party and a person entitled to enforce the
instrument impairs the value of the interest in collateral, the obligation
of any party who is jointly and severally liable with respect to the
secured obligation is discharged to the extent the impairment causes the
party asserting discharge to pay more than that party would have been
obliged to pay, taking into account rights of contribution, if impairment
had not occurred. If the party asserting discharge is an accommodation
party not entitled to discharge under subsection (e), the party is deemed
to have a right to contribution based on joint and several liability rather
than a right to reimbursement. The burden of proving impairment is on the
party asserting discharge.
(g) Under subsection (e) or (f), impairing value of an interest in
collateral includes (i) failure to obtain or maintain perfection or
recordation of the interest in collateral, (ii) release of collateral
without substitution of collateral of equal value, (iii) failure to perform
a duty to preserve the value of collateral owed, under Article 9 or other
law, to a debtor or surety or other person secondarily liable, or (iv)
failure to comply with applicable law in disposing of collateral.
(h) An accommodation party is not discharged under subsection (c), (d),
or (e) unless the person entitled to enforce the instrument knows of the
accommodation or has notice under Section 3-419(c) that the instrument was
signed for accommodation.
(i) A party is not discharged under this Section if (i) the party
asserting discharge consents to the event or conduct that is the basis of
the discharge, or (ii) the instrument or a separate agreement of the party
provides for waiver or discharge under this Section either specifically or
by general language indicating that parties waive defenses based on
suretyship or impairment of collateral.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/Art. 3 Pt. 8
(810 ILCS 5/Art. 3 Pt. 8 heading)
PART 8.
MISCELLANEOUS
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810 ILCS 5/3-806
(810 ILCS 5/3-806) (from Ch. 26, par. 3-806)
Sec. 3-806.
Any person who issues a check or other draft that is not
honored upon presentment because the drawer does not have an account with
the drawee, or because the drawer does not have sufficient funds in his
account, or because the drawer does not have sufficient credit with the
drawee, shall be liable in the amount of $25, or for all costs and
expenses, including reasonable attorney's fees, incurred by any person in
connection with the collection of the amount for which the check or other
draft was written, whichever is greater, and shall be liable for interest
upon the amount of the check or other draft at the rate provided in
subsection (1) of Section 4 of the Interest Act. Costs and expenses shall
include reasonable costs and expenses incurred in the nonlitigated
collection of the check or other draft.
A person who undertakes a nonlitigated collection against the person who
issued a check or other draft that is not honored upon presentment shall
make a written demand by certified mail, return receipt requested, delivered
to the last known address of that person in order to become eligible for
any costs and expenses in excess of $25. The written demand shall demand
payment within 30 days of the mailing of the demand and shall include
notice of liability for the costs and expenses.
A fee or charge not to exceed $4.50 may be assessed to any person or
owner of a commercial checking account or other similar commercial account
where a check or other draft that is deposited into the account is
dishonored upon presentment because of insufficient funds or because the
drawer does not have an account with the drawee; provided, however, that,
the limitation on the fee or charge specified in this paragraph does not
apply to any fee or charge assessed to any bank or other depository
institution or to any non-commercial checking account or other similar
non-commercial account.
(Source: P.A. 87-582; 87-624.)
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810 ILCS 5/Art. 4
(810 ILCS 5/Art. 4 heading)
ARTICLE 4
BANK DEPOSITS AND COLLECTIONS
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810 ILCS 5/Art. 4 Pt. 1
(810 ILCS 5/Art. 4 Pt. 1 heading)
PART 1.
GENERAL PROVISIONS AND DEFINITIONS
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810 ILCS 5/4-101
(810 ILCS 5/4-101) (from Ch. 26, par. 4-101)
Sec. 4-101.
Short title.
This Article may be cited as Uniform Commercial
Code--Bank Deposits and Collections.
(Source: P.A. 87-1135.)
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810 ILCS 5/4-102
(810 ILCS 5/4-102) (from Ch. 26, par. 4-102)
Sec. 4-102.
Applicability.
(a) To the extent that items within this Article are also within Articles 3
and 8, they are subject to those Articles. If there is conflict, this Article
governs Article 3, but Article 8 governs this Article.
(b) The liability of a bank for action or non-action with respect to an
item handled by it for purpose of presentment, payment, or collection is
governed by the law of the place where the bank is located. In the case of
action or non-action by or at a branch or separate office of a bank, its
liability is governed by the law of the place where the branch or separate
office is located.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-103
(810 ILCS 5/4-103) (from Ch. 26, par. 4-103)
Sec. 4-103.
Variation by agreement; measure of damages; action
constituting ordinary care.
(a) The effect of the provisions of this Article may be varied by
agreement, but the parties to the agreement cannot disclaim a bank's
responsibility for its lack of good faith or failure to exercise
ordinary care or limit the measure of damages for the lack or failure.
However, the parties may determine by agreement the standards by which the
bank's responsibility is to be measured if those standards are not
manifestly unreasonable.
(b) Federal Reserve regulations and operating circulars, clearing-house
rules, and the like have the effect of agreements under subsection (a),
whether or not specifically assented to by all parties interested in items
handled.
(c) Action or non-action approved by this Article or pursuant to Federal
Reserve regulations or operating circulars is the exercise of
ordinary care and, in the absence of special instructions, action or
non-action consistent with clearing-house rules and the like or with a
general banking usage not disapproved by this Article, is prima
facie the exercise of ordinary care.
(d) The specification or approval of certain procedures by this Article
is not disapproval of other procedures that may be reasonable
under the circumstances.
(e) The measure of damages for failure to exercise ordinary care in
handling an item is the amount of the item reduced by an amount that could
not have been realized by the exercise of ordinary care. If there is also
bad faith it includes any other damages the party suffered as a proximate
consequence.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-104
(810 ILCS 5/4-104) (from Ch. 26, par. 4-104)
Sec. 4-104. Definitions and index of definitions.
(a) In this Article, unless the context otherwise requires:
(1) "Account" means any deposit or credit account | | with a bank, including a demand, time, savings, passbook, share draft, or like account, other than an account evidenced by a certificate of deposit;
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(2) "Afternoon" means the period of a day between
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(3) "Banking day" means the part of a day on which a
| | bank is open to the public for carrying on substantially all of its banking functions, except that any day that is not a banking day for purposes of Federal Reserve Regulation CC (as may be amended from time to time) shall not be a banking day for purposes of this Article or Article 3;
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(4) "Clearing house" means an association of banks or
| | other payors regularly clearing items;
|
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(5) "Customer" means a person having an account with
| | a bank or for whom a bank has agreed to collect items, including a bank that maintains an account at another bank;
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(6) "Documentary draft" means a draft to be presented
| | for acceptance or payment if specified documents, certificated securities (Section 8-102) or instructions for uncertificated securities (Section 8-102), or other certificates, statements, or the like are to be received by the drawee or other payor before acceptance or payment of the draft;
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(7) "Draft" means a draft as defined in Section 3-104
| | or an item, other than an instrument, that is an order;
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(8) "Drawee" means a person ordered in a draft to
| |
(9) "Item" means an instrument or a promise or order
| | to pay money handled by a bank for collection or payment. The term does not include a payment order governed by Article 4A or a credit or debit card slip;
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(10) "Midnight deadline" with respect to a bank is
| | midnight on its next banking day following the banking day on which it receives the relevant item or notice or from which the time for taking action commences to run, whichever is later;
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(11) "Settle" means to pay in cash, by clearing-house
| | settlement, in a charge or credit or by remittance, or otherwise as agreed. A settlement may be either provisional or final;
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(12) "Suspends payments" with respect to a bank means
| | that it has been closed by order of the supervisory authorities, that a public officer has been appointed to take it over, or that it ceases or refuses to make payments in the ordinary course of business.
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(b) Other definitions applying to this Article and the Sections in which
they appear are:
|
"Agreement for electronic |
|
presentment" | Section 4-110. |
"Bank" |
Section 4-105. |
"Collecting bank" |
Section 4-105. |
"Depositary bank" |
Section 4-105. |
"Intermediary bank" |
Section 4-105. |
"Payor bank" |
Section 4-105. |
"Presenting bank" |
Section 4-105. |
"Presentment notice" |
Section 4-110. |
|
(c) "Control" as provided in Section 7-106 and the
following definitions in other Articles apply to this Article:
| "Acceptance" | Section 3-409. | "Alteration" | Section 3-407. | "Cashier's check" | Section 3-104. | "Certificate of deposit" | Section 3-104. | "Certified check" | Section 3-409. | "Check" | Section 3-104. | "Good faith" | Section 3-103. | "Holder in due course" | Section 3-302. | "Instrument" | Section 3-104. | "Notice of dishonor" | Section 3-503. | "Order" | Section 3-103. | "Ordinary care" | Section 3-103. | "Person entitled to enforce" | Section 3-301. | "Presentment" | Section 3-501. | "Promise" | Section 3-103. | "Prove" | Section 3-103. | "Teller's check" | Section 3-104. | "Unauthorized signature" | Section 3-403. |
| (d) In addition Article 1 contains general definitions and principles of
construction and interpretation applicable throughout this Article.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/4-105
(810 ILCS 5/4-105) (from Ch. 26, par. 4-105)
Sec. 4-105.
"Bank"; "Depositary Bank"; "Payor Bank"; "Intermediary Bank";
"Collecting Bank"; "Presenting Bank".
In this Article:
(1) "Bank" means any person engaged in the business of banking,
including a savings bank, savings and loan association, credit union,
or trust company;
(2) "Depositary bank" means the first bank to take an item even
though it is also the payor bank, unless the item is presented for
immediate payment over the counter;
(3) "Payor bank" means a bank that is the drawee of a
draft;
(4) "Intermediary bank" means a bank to which an item is
transferred in course of collection except the depositary or payor bank;
(5) "Collecting bank" means a bank handling an item for collection except
the payor bank;
(6) "Presenting bank" means a bank presenting an item except a
payor bank.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-106
(810 ILCS 5/4-106) (from Ch. 26, par. 4-106)
Sec. 4-106.
Payable through or payable at bank; collecting bank.
(a) If an item states that it is "payable through" a bank identified
in the item, (i) the item designates the bank as a collecting bank and does
not by itself authorize the bank to pay the item, and (ii) the item may be
presented for payment only by or through the bank.
(b) If an item states that it is "payable at" a bank identified in the
item, (i) the item designates the bank as a collecting bank and does
not by itself authorize the bank to pay the item, and (ii) the item may be
presented for payment only by or through the bank.
(c) If a draft names a nonbank drawee and it is unclear whether a bank
named in the draft is a co-drawee or a collecting bank, the bank is a
collecting bank.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-107
(810 ILCS 5/4-107) (from Ch. 26, par. 4-107)
Sec. 4-107.
Separate office of bank.
A branch or separate office of a
bank is a separate bank for the purpose of computing the time within which
and determining the place at or to which action may be taken or notice or
orders must be given under this Article and under Article 3.
(Source: P.A. 87-582.)
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810 ILCS 5/4-108
(810 ILCS 5/4-108) (from Ch. 26, par. 4-108)
Sec. 4-108.
Time of receipt of items.
(a) For the purpose of allowing time to process items, prove balances,
and make the necessary entries on its books to determine its position for
the day, a bank may fix an afternoon hour of 2:00 P.M. or later as a
cutoff hour for the handling of money and items and the making of entries
on its books.
(b) An item or deposit of money received on any day after a cutoff
hour so fixed or after the close of the banking day may be treated as being
received at the opening of the next banking day.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-109
(810 ILCS 5/4-109) (from Ch. 26, par. 4-109)
Sec. 4-109.
Delays.
(a) Unless otherwise instructed, a collecting bank in a good faith
effort to secure payment of a specific item drawn on a payor other than a
bank, and with or without the approval of any person involved, may waive,
modify, or extend time limits imposed or permitted by this Act for a period
not exceeding 2 additional banking days without discharge of drawers or
indorsers or liability to its transferor or a prior party.
(b) Delay by a collecting bank or payor bank beyond time limits
prescribed or permitted by this Act or by instructions is excused if (i)
the delay is caused by interruption of communication or computer
facilities, suspension of payments by another bank, war, emergency
conditions, failure of equipment, or other circumstances beyond the control
of the bank, and (ii) the bank exercises such diligence as the circumstances
require.
(Source: P.A. 87-582.)
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810 ILCS 5/4-110
(810 ILCS 5/4-110) (from Ch. 26, par. 4-110)
Sec. 4-110.
Electronic presentment.
(a) "Agreement for electronic presentment" means an agreement,
clearing-house rule, or Federal Reserve regulation or operating circular,
providing that presentment of an item may be made by transmission of an
image of an item or information describing the item ("presentment notice")
rather than delivery of the item itself. The agreement may provide for
procedures governing retention, presentment, payment, dishonor, and other
matters concerning items subject to the agreement.
(b) Presentment of an item pursuant to an electronic presentment
agreement is made when the presentment notice is received.
(c) If presentment is made by presentment notice, a reference to "item"
or "check" in this Article means the presentment notice unless the context
otherwise indicates.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-111
(810 ILCS 5/4-111) (from Ch. 26, par. 4-111)
Sec. 4-111.
Statute of limitations.
An action to enforce an
obligation, duty or right arising under this Article must be commenced
within 3 years after the cause of action accrues.
(Source: P.A. 87-582.)
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810 ILCS 5/Art. 4 Pt. 2
(810 ILCS 5/Art. 4 Pt. 2 heading)
PART 2.
COLLECTION OF ITEMS: DEPOSITARY AND COLLECTING BANKS
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810 ILCS 5/4-201
(810 ILCS 5/4-201) (from Ch. 26, par. 4-201)
Sec. 4-201.
Status of collecting bank as agent and provisional status of
credits; applicability of Article; item indorsed "pay any bank".
(a) Unless a contrary intent clearly appears and before the time that
a settlement given by a collecting bank for an item is or becomes final,
the bank, with respect to the item, is an agent or sub-agent of the owner of
the item and any settlement given for the item is provisional. This
provision applies regardless of the form of indorsement or lack of
indorsement and even though credit given for the item is subject to
immediate withdrawal as of right or is in fact withdrawn; but the
continuance of ownership of an item by its owner and any rights of the
owner to proceeds of the item are subject to rights of a collecting bank,
such as those resulting from outstanding advances on the item and
rights of recoupment or setoff. If an item is handled by banks
for purpose of presentment, payment, collection, or return, the
relevant provisions of this Article apply even though action of the parties
clearly establishes that a particular bank has purchased the item and is the
owner of it.
(b) After an item has been indorsed with the words "pay any bank" or the
like, only a bank may acquire the rights of a holder until the item has been:
(1) returned to the customer initiating collection; or
(2) specially indorsed by a bank to a person who is | |
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-202
(810 ILCS 5/4-202) (from Ch. 26, par. 4-202)
Sec. 4-202.
Responsibility for collection or return; when action timely.
(a) A collecting bank must exercise ordinary care in:
(1) presenting an item or sending it for presentment;
(2) sending notice of dishonor or nonpayment or | | returning an item other than a documentary draft to the bank's transferor after learning that the item has not been paid or accepted, as the case may be;
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(3) settling for an item when the bank receives final
| |
(4) notifying its transferor of any loss or delay in
| | transit within a reasonable time after discovery thereof.
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|
(b) A collecting bank exercises ordinary care under subsection (a) by
taking proper action before its midnight deadline following receipt of an
item, notice, or settlement. Taking proper action within a reasonably
longer time may constitute the exercise of ordinary care, but the bank has
the burden of establishing timeliness.
(c) Subject to subsection (a) (1), a bank is not liable for the
insolvency, neglect, misconduct, mistake, or default of another bank or
person or for loss or destruction of an item in the
possession of others or in transit.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-203
(810 ILCS 5/4-203) (from Ch. 26, par. 4-203)
Sec. 4-203.
Effect of instructions.
Subject to Article
3 concerning conversion of instruments (Section 3-420) and restrictive
indorsements (Section 3-206), only a collecting bank's transferor can give
instructions which affect the bank or constitute notice to it, and a
collecting bank is not liable to prior parties for any action taken
pursuant to the instructions or in accordance with any agreement
with its transferor.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-204
(810 ILCS 5/4-204) (from Ch. 26, par. 4-204)
Sec. 4-204.
Methods of sending and presenting; sending directly to
payor bank.
(a) A collecting bank shall send items by a reasonably prompt method, taking
into consideration relevant instructions, the nature of the item, the number of
those items on hand, the cost of collection involved, and the method generally
used by it or others to present those items.
(b) A collecting bank may send:
(1) an item directly to the payor bank;
(2) an item to a nonbank payor if authorized by its | |
(3) an item other than documentary drafts to a
| | nonbank payor, if authorized by Federal Reserve regulation or operating circular, clearing-house rule, or the like.
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(c) Presentment may be made by a presenting bank at a place where the
payor bank or other payor has requested that presentment be made.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-205
(810 ILCS 5/4-205) (from Ch. 26, par. 4-205)
Sec. 4-205.
Depositary bank holder of unindorsed item.
If a customer
delivers an item to a depositary bank for collection:
(1) the depositary bank becomes a holder of the item at the time it receives
the item for collection if the customer at the time of delivery was a holder of
the item, whether or not the customer indorses the item, and, if the bank
satisfies the other requirements of Section 3-302, it may be a holder in due
course; and
(2) the depositary bank warrants to collecting banks, the
payor bank or other payor, and the drawer that the amount of the item was
paid to the customer or deposited to the customer's account.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-206
(810 ILCS 5/4-206) (from Ch. 26, par. 4-206)
Sec. 4-206.
Transfer between banks.
Any agreed method that identifies the
transferor bank is sufficient for the item's further transfer to another bank.
(Source: P.A. 87-582.)
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810 ILCS 5/4-207
(810 ILCS 5/4-207) (from Ch. 26, par. 4-207)
Sec. 4-207.
Transfer warranties.
(a) A customer or collecting bank that transfers an item and receives a
settlement or other consideration warrants to the transferee and to any
subsequent collecting bank that:
(1) the warrantor is a person entitled to enforce the | |
(2) all signatures on the item are authentic and
| |
(3) the item has not been altered;
(4) the item is not subject to a defense or claim in
| | recoupment (Section 3-305(a)) of any party that can be asserted against the warrantor; and
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(5) the warrantor has no knowledge of any insolvency
| | proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer.
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(b) If an item is dishonored, a customer or collecting bank transferring
the item and receiving settlement or other consideration is obliged to pay
the amount due on the item (i) according to the terms of the item at the
time it was transferred, or (ii) if the transfer was of an incomplete item,
according to its terms when completed as stated in Sections 3-115 and
3-407. The obligation of a transferor is owed to the transferee and to any
subsequent collecting bank that takes the item in good faith. A transferor
may not disclaim its obligation under this subsection by an indorsement
stating that it is made "without recourse" or otherwise disclaiming liability.
(c) A person to whom the warranties under subsection (a) are made and
who took the item in good faith may recover from the warrantor as damages
for breach of warranty an amount equal to the loss suffered as a result of
the breach, but not more than the amount of the item plus expenses and loss
of interest incurred as a result of the breach.
(d) The warranties stated in subsection (a) cannot be disclaimed with
respect to checks. Unless notice of a claim for breach of warranty is
given to the warrantor within 30 days after the claimant has reason to know
of the breach and the identity of the warrantor, the warrantor is
discharged to the extent of any loss caused by the delay in giving notice
of the claim.
(e) A cause of action for breach of warranty under this Section accrues
when the claimant has reason to know of the breach.
(Source: P.A 87-582.)
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810 ILCS 5/4-208
(810 ILCS 5/4-208) (from Ch. 26, par. 4-208)
Sec. 4-208.
Presentment warranties.
(a) If an unaccepted draft is presented to the drawee for payment or
acceptance and the drawee pays or accepts the draft, (i) the person
obtaining payment or acceptance, at the time of presentment, and (ii) a
previous transferor of the draft, at the time of transfer, warrant to the
drawee that pays or accepts the draft in good faith that:
(1) the warrantor is or was, at the time the | | warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment or acceptance of the draft on behalf of a person entitled to enforce the draft;
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(2) the draft has not been altered; and
(3) the warrantor has no knowledge that the signature
| | of the purported drawer of the draft is unauthorized.
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(b) A drawee making payment may recover from any warrantor damages for
breach of warranty equal to the amount paid by the drawee less the amount the
drawee received or is entitled to receive from the drawer because of the
payment. In addition, the drawee is entitled to compensation for expenses and
loss of interest resulting from the breach. The right of the drawee to recover
damages under this subsection is not affected by any failure of the drawee to
exercise ordinary care in making payment. If the drawee accepts the draft (i)
breach of warranty is a defense to the obligation of the acceptor, and (ii) if
the acceptor makes payment with respect to the draft, the acceptor is entitled
to recover from any warrantor for breach of warranty the amounts stated in this
subsection.
(c) If a drawee asserts a claim for breach of warranty under subsection
(a) based on an unauthorized indorsement of the draft or an alteration of
the draft, the warrantor may defend by proving that the indorsement is
effective under Section 3-404 or 3-405 or the drawer is precluded under
Section 3-406 or 4-406 from asserting against the drawee the unauthorized
indorsement or alteration.
(d) If (i) a dishonored draft is presented for payment to the drawer or an
indorser or (ii) any other item is presented for payment to a party obliged to
pay the item, and the item is paid, the person obtaining payment and a prior
transferor of the item warrant to the person making payment in good faith that
the warrantor is or was, at the time the warrantor transferred the item, a
person entitled to enforce the item or authorized to obtain payment on behalf
of a person entitled to enforce the item. The person making payment may recover
from any warrantor for breach of warranty an amount equal to the amount paid
plus expenses and loss of interest resulting from the breach.
(e) The warranties stated in subsections (a) and (d) cannot be
disclaimed with respect to checks. Unless notice of a claim for breach of
warranty is given to the warrantor within 30 days after the claimant has
reason to know of the breach and the identity of the warrantor, the
warrantor is discharged to the extent of any loss caused by the delay in
giving notice of the claim.
(f) A cause of action for breach of warranty under this Section accrues
when the claimant has reason to know of the breach.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-209
(810 ILCS 5/4-209) (from Ch. 26, par. 4-209)
Sec. 4-209.
Encoding and retention warranties.
(a) A person that encodes information on or with respect to an item
after issue warrants to any subsequent collecting bank and to the payor
bank or other payor that the information is correctly encoded.
If the customer of a depositary bank encodes, that bank also makes the
warranty.
(b) A person who undertakes to retain an item pursuant to an agreement for
electronic presentment warrants to any subsequent collecting bank and to the
payor bank or other payor that retention and presentment of the item comply
with the agreement. If a customer of a depositary bank undertakes to retain
an item, that bank also makes this warranty.
(c) A person to whom warranties are made under this Section and who took
the item in good faith may recover from the warrantor as damages for breach
of warranty an amount equal to the loss suffered as a result of the breach,
plus expenses and loss of interest incurred as a result of the breach.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-210
(810 ILCS 5/4-210) (from Ch. 26, par. 4-210)
Sec. 4-210. Security interest of collecting bank in items, accompanying
documents and proceeds.
(a) A collecting bank has a security interest in an item and any
accompanying documents or the proceeds of either:
(1) in case of an item deposited in an account, to | | the extent to which credit given for the item has been withdrawn or applied;
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(2) in case of an item for which it has given credit
| | available for withdrawal as of right, to the extent of the credit given, whether or not the credit is drawn upon or there is a right of charge-back; or
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(3) if it makes an advance on or against the item.
(b) If credit given for several items received at one time or pursuant
to a single agreement is withdrawn or applied in part, the security
interest remains upon all the items, any accompanying documents or the
proceeds of either. For the purpose of this Section, credits first given
are first withdrawn.
(c) Receipt by a collecting bank of a final settlement for an item is a
realization on its security interest in the item, accompanying documents,
and proceeds. So long as the bank does not receive final
settlement for the item or give up possession of the item or possession or control of the accompanying
documents for purposes other than collection, the security interest
continues to that extent and is subject to Article 9, but:
(1) no security agreement is necessary to make the
| | security interest enforceable (Section 9-203(b)(3)(A));
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(2) no filing is required to perfect the security
| |
(3) the security interest has priority over
| | conflicting perfected security interests in the item, accompanying documents, or proceeds.
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(Source: P.A. 95-895, eff. 1-1-09; 96-328, eff. 8-11-09.)
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810 ILCS 5/4-211
(810 ILCS 5/4-211) (from Ch. 26, par. 4-211)
Sec. 4-211.
When bank gives value for purposes of holder in due course.
For purposes of determining its status as a holder in due course, a bank
has given value to the extent it has a security interest in an item,
if the bank otherwise complies with the requirements of Section 3-302
on what constitutes a holder in due course.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-212
(810 ILCS 5/4-212) (from Ch. 26, par. 4-212)
Sec. 4-212.
Presentment by notice of item not payable by, through, or at
bank; liability of drawer or indorser.
(a) Unless otherwise instructed, a collecting bank may present an item
not payable by, through, or at a bank by sending to the party to accept or
pay a written notice that the bank holds the item for acceptance or payment.
The notice must be sent in time to be received on or before the day when
presentment is due and the bank must meet any requirement of the party to
accept or pay under Section 3-501 by the close of the bank's next banking
day after it knows of the requirement.
(b) If presentment is made by notice and payment, acceptance,
or request for compliance with a requirement under Section 3-501 is
not received by the close of business on the day after maturity or,
in the case of demand items, by the close of business on the third banking day
after notice was sent, the presenting bank may treat the item as dishonored and
charge any drawer or indorser by sending it notice of the facts.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-213
(810 ILCS 5/4-213) (from Ch. 26, par. 4-213)
Sec. 4-213.
Medium and time of settlement by bank.
(a) With respect to settlement by a bank, the medium and time of
settlement may be prescribed by Federal Reserve regulations or circulars,
clearing-house rules, and the like, or agreement. In the absence of such
prescription:
(1) the medium of settlement is cash or credit to an | | account in a Federal Reserve Bank of or specified by the person to receive settlement; and
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(2) the time of settlement is:
(i) with respect to tender of settlement by cash,
| | a cashier's check, or teller's check, when the cash or check is sent or delivered;
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(ii) with respect to tender of settlement by
| | credit in an account in a Federal Reserve Bank, when the credit is made;
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(iii) with respect to tender of settlement by a
| | credit or debit to an account in a bank, when the credit or debit is made or, in the case of tender of settlement by authority to charge an account, when the authority is sent or delivered; or
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(iv) with respect to tender of settlement by a
| | funds transfer, when payment is made pursuant to Section 4A-406(a) to the person receiving settlement.
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(b) If the tender of settlement is not by a medium authorized by
subsection (a) or the time of settlement is not fixed by subsection (a), no
settlement occurs until the tender of settlement is accepted by the person
receiving settlement.
(c) If settlement for an item is made by cashier's check or teller's
check and the person receiving settlement, before its midnight deadline:
(1) presents or forwards the check for collection,
| | settlement is final when the check is finally paid; or
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(2) fails to present or forward the check for
| | collection, settlement is final at the midnight deadline of the person receiving settlement.
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(d) If settlement for an item is made by giving authority to charge the
account of the bank giving settlement in the bank receiving settlement,
settlement is final when the charge is made by the bank receiving
settlement if there are funds available in the account for the amount of
the item.
(Source: P.A. 87-582.)
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810 ILCS 5/4-214
(810 ILCS 5/4-214) (from Ch. 26, par. 4-214)
Sec. 4-214.
Right of charge-back or refund; liability of collecting
bank; return of item.
(a) If a collecting bank has made provisional settlement with its
customer for an item and fails by reason of dishonor, suspension of
payments by a bank, or otherwise to receive settlement for the item which
is or becomes final, the bank may revoke the settlement given by it, charge
back the amount of any credit given for the item to its customer's account,
or obtain refund from its customer, whether or not it is able to return the
item, if by its midnight deadline or within a longer reasonable time after
it learns the facts it returns the item or sends notification of the facts.
If the return or notice is delayed beyond the bank's midnight deadline or
a longer reasonable time after it learns the facts, the bank may revoke the
settlement, charge back the credit, or obtain refund from its customer, but
is liable for any loss resulting from the delay. These rights to revoke,
charge back, and obtain refund terminate if and when a settlement for the
item received by the bank is or becomes final.
(b) A collecting bank returns an item when it is sent or delivered to the
bank's customer or transferor or pursuant to its instructions.
(c) A depositary bank that is also the payor may charge back the amount
of an item to its customer's account or obtain refund in accordance with the
Section governing return of an item received by a payor bank for credit on
its books (Section 4-301).
(d) The right to charge back is not affected by:
(1) previous use of a credit given for the item; or
(2) failure by any bank to exercise ordinary care | | with respect to the item, but a bank so failing remains liable.
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(e) A failure to charge back or claim refund does not affect other
rights of the bank against the customer or any other party.
(f) If credit is given in dollars as the equivalent of the value of an
item payable in foreign money, the dollar amount of any charge-back or
refund must be calculated on the basis of the bank-offered spot rate for
the foreign money prevailing on the day when the person entitled to the
charge-back or refund learns that it will not receive payment in ordinary
course.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-215
(810 ILCS 5/4-215) (from Ch. 26, par. 4-215)
Sec. 4-215.
Final payment of item by payor bank; when provisional
debits and credits become final; when certain credits become available
for withdrawal.
(a) An item is finally paid by a payor bank when the bank has first done
any of the following:
(1) paid the item in cash;
(2) settled for the item without having a right to | | revoke the settlement under statute, clearing-house rule, or agreement; or
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(3) made a provisional settlement for the item and
| | failed to revoke the settlement in the time and manner permitted by statute, clearing-house rule, or agreement.
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(b) If provisional settlement for an item does not become final, the
item is not finally paid.
(c) If provisional settlement for an item between the presenting and
payor banks is made through a clearing house or by debits or credits in an
account between them, then to the extent that provisional debits or credits
for the item are entered in accounts between the presenting and payor banks
or between the presenting and successive prior collecting banks seriatim,
they become final upon final payment of the items by the payor bank.
(d) If a collecting bank receives a settlement for an item which is or
becomes final, the bank is accountable to its customer for the amount of
the item and any provisional credit given for the item in an account with
its customer becomes final.
(e) Subject to (i) applicable law stating a time for availability of
funds and (ii) right of the bank to apply the credit to an obligation of the
customer, credit given by a bank for an item in a customer's account
becomes available for withdrawal as of right:
(1) if the bank has received a provisional settlement
| | for the item, when the settlement becomes final and the bank has had a reasonable time to receive return of the item and the item has not been received within that time;
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(2) if the bank is both the depositary bank and the
| | payor bank, and the item is finally paid, at the opening of the bank's second banking day following receipt of the item.
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(f) Subject to applicable law stating a time for availability of
funds and any right of a bank to apply a deposit to an obligation of
the depositor, a deposit of money becomes available for withdrawal as of
right at the opening of the bank's next banking day after receipt of the
deposit.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-216
(810 ILCS 5/4-216) (from Ch. 26, par. 4-216)
Sec. 4-216.
Insolvency and preference.
(a) If an item is in or comes into the possession of a payor or collecting
bank that suspends payment and the item has not been finally paid, the item
must be returned by the receiver, trustee, or agent in charge of the closed
bank to the presenting bank or the closed bank's customer.
(b) If a payor bank finally pays an item and suspends payments without
making a settlement for the item with its customer or the presenting bank
which settlement is or becomes final, the owner of the item has a preferred
claim against the payor bank.
(c) If a payor bank gives or a collecting bank gives or receives a
provisional settlement for an item and thereafter suspends payments, the
suspension does not prevent or interfere with the settlement's becoming final
if the finality occurs automatically upon the lapse of certain time or the
happening of certain events.
(d) If a collecting bank receives from subsequent parties settlement for
an item, which settlement is or becomes final and the bank suspends
payments without making a settlement for the item with its customer which
settlement is or becomes final, the owner of the item has a preferred claim
against the collecting bank.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/Art. 4 Pt. 3
(810 ILCS 5/Art. 4 Pt. 3 heading)
PART 3.
COLLECTION OF ITEMS: PAYOR BANKS
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810 ILCS 5/4-301
(810 ILCS 5/4-301) (from Ch. 26, par. 4-301)
Sec. 4-301.
Deferred posting; Recovery of payment by return of items;
time of dishonor; return of items by payor bank.
(a) If a payor bank settles for a demand item other than a documentary draft
presented otherwise than for immediate payment over the counter before midnight
of the banking day of receipt, the payor bank may revoke the settlement and
recover the settlement if, before it has made final payment and before its
midnight deadline, it:
(1) returns the item; or
(2) sends written notice of dishonor or nonpayment if | | the item is unavailable for return.
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(b) If a demand item is received by a payor bank for credit on its books, it
may return the item or send notice of dishonor and may revoke any credit given
or recover the amount thereof withdrawn by its customer, if it acts within the
time limit and in the manner specified in subsection (a).
(c) Unless previous notice of dishonor has been sent, an item is
dishonored at the time when for purposes of dishonor it is returned or
notice sent in accordance with this Section.
(d) An item is returned:
(1) as to an item presented through a clearing-house,
| | when it is delivered to the presenting or last collecting bank or to the clearing-house or is sent or delivered in accordance with clearing-house rules; or
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(2) in all other cases, when it is sent or delivered
| | to the bank's customer or transferor or pursuant to instructions.
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(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-302
(810 ILCS 5/4-302) (from Ch. 26, par. 4-302)
Sec. 4-302.
Payor bank's responsibility for late return of item.
(a) If an item is presented to and received by a payor
bank, the bank is accountable for the amount of:
(1) a demand item, other than a documentary draft, | | whether properly payable or not, if the bank, in any case in which it is not also the depositary bank, retains the item beyond midnight of the banking day of receipt without settling for it or, whether or not it is also the depositary bank, does not pay or return the item or send notice of dishonor until after its midnight deadline; or
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(2) any other properly payable item unless, within
| | the time allowed for acceptance or payment of that item, the bank either accepts or pays the item or returns it and accompanying documents.
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(b) The liability of a payor bank to pay an item pursuant to
subsection (a) is
subject to defenses based on breach of a presentment
warranty (Section 4-208) or proof that the person seeking enforcement of
the liability presented or transferred the item for the purpose of
defrauding the payor bank.
(Source: P.A. 87-582; 87-1135; 87-1242; 88-123.)
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810 ILCS 5/4-303
(810 ILCS 5/4-303) (from Ch. 26, par. 4-303)
Sec. 4-303.
When items subject to notice, stop-payment order, legal process,
or setoff; order in which items may be charged or certified.
(a) Any knowledge, notice, or stop-payment order received by, legal process
served upon, or setoff exercised by a payor bank comes too late to terminate,
suspend, or modify the bank's right or duty to pay an item or to charge its
customer's account for the item if the knowledge, notice, stop-payment order,
or legal process is received or served and a reasonable time for the bank to
act thereon expires or the setoff is exercised after the earliest of the
following:
(1) the bank accepts or certifies the item;
(2) the bank pays the item in cash;
(3) the bank settles for the item without having a | | right to revoke the settlement under statute, clearing-house rule, or agreement;
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(4) the bank becomes accountable for the amount of
| | the item under Section 4-302 dealing with the payor bank's responsibility for late return of items; or
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(5) with respect to checks, a cutoff hour no earlier
| | than one hour after the opening of the next banking day after the banking day on which the bank received the check and no later than the close of that next banking day or, if no cutoff hour is fixed, the close of the next banking day after the banking day on which the bank received the check.
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(b) Subject to subsection (a), items may be accepted, paid, certified, or
charged to the indicated account of its customer in any order.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/Art. 4 Pt. 4
(810 ILCS 5/Art. 4 Pt. 4 heading)
PART 4.
RELATIONSHIP BETWEEN PAYOR BANK AND ITS CUSTOMER
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810 ILCS 5/4-401
(810 ILCS 5/4-401) (from Ch. 26, par. 4-401)
Sec. 4-401.
When bank may charge customer's account.
(a) A bank may charge against the account of a customer an item that is
properly payable from that account even though the charge creates an
overdraft. An item is properly payable if it is authorized by the customer
and is in accordance with any agreement between the customer and bank.
(b) A customer is not liable for the amount of an overdraft if the
customer neither signed the item nor benefited from the proceeds of the item.
(c) A bank may charge against the account of a customer a check that is
otherwise properly payable from the account, even though payment was made
before the date of the check, unless the customer has given notice to the
bank of the postdating describing the check with reasonable certainty. The
notice is effective for the period stated in Section 4-403(b) for stop-payment
orders, and must be received at such time and in such manner as to afford the
bank a reasonable opportunity to act on it before any action by the bank with
respect to the check described in Section 4-303. If a bank charges against the
account of a customer a check before the date stated in the notice of
postdating, the bank is liable for damages for the loss resulting from its act.
The loss may include damages for dishonor of subsequent items under Section
4-402.
(d) A bank that in good faith makes payment to a holder may charge the
indicated account of its customer according to:
(1) the original terms of the altered item; or
(2) the terms of the completed item, even though the | | bank knows the item has been completed unless the bank has notice that the completion was improper.
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(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-402
(810 ILCS 5/4-402) (from Ch. 26, par. 4-402)
Sec. 4-402.
Bank's liability to customer for wrongful dishonor; time
of determining insufficiency of account.
(a) Except as otherwise provided in this Article, a payor bank
wrongfully dishonors an item if it dishonors an item that is properly
payable, but a bank may dishonor an item that would create an overdraft
unless it had agreed to pay the overdraft.
(b) A payor bank is liable to its customer for damages proximately caused by
the wrongful dishonor of an item. Liability is limited to actual damages
proved and may include damages for an arrest or prosecution of the customer
or other consequential damages. Whether any consequential damages are
proximately caused by the wrongful dishonor is a question of fact to be
determined in each case.
(c) A payor bank's determination of the customer's account balance on
which a decision to dishonor for insufficiency of available funds is based
may be made at any time between the time the item is received by the payor
bank and the time that the payor bank returns the item or gives notice in
lieu of return, and no more than one determination need be made. If,
at the election of the payor bank, a subsequent balance determination is
made for the purpose of reevaluating the bank's decision to dishonor the
item, the account balance at that time is determinative of whether a
dishonor for insufficiency of available funds is wrongful.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-403
(810 ILCS 5/4-403) (from Ch. 26, par. 4-403)
Sec. 4-403.
Customer's right to stop payment; burden of proof of loss.
(a) A customer or any person authorized to draw on the account if there is
more than one person may stop payment of any item drawn on the customer's
account or close the account by an order to the bank describing the item or
account with reasonable certainty received at a time and in a manner that
affords the bank a reasonable opportunity to act on it before any action by the
bank with respect to the item described in Section 4-303. If the signature of
more than one person is required to draw on an account, any of these persons
may stop payment or close the account.
(b) A stop-payment order is effective for 6 months, but it lapses after 14
calendar days if the original order was oral and was not confirmed in writing
within that period. A stop-payment order may be renewed for additional
six-month periods by a writing given to the bank within a period during which
the stop-payment order is effective.
(c) The burden of establishing the fact and amount of loss resulting
from the payment of an item contrary to a stop payment order or order to close
an account is on the customer. The loss from payment of an item contrary to a
stop payment order may include damages for dishonor of subsequent items
pursuant to Section 4-402.
(d) When a bank sends to its customer a statement of account
accompanied by items paid in good faith in support of the debit entries or
holds the statement of account and items pursuant to a request or
instructions of its customer or otherwise in a reasonable manner makes the
statement and items available to the customer or, in lieu of returning such
items, sends its customer a statement of account which includes the
identifying number of each item paid in good faith or otherwise
specifically identifying such items or holds such statement pursuant to a
request or instructions of its customer or otherwise in a reasonable manner
makes such statement available to the customer, the customer must exercise
reasonable care and promptness to examine the items and statement to
discover any items improperly paid by the bank over the customer's properly
lodged stop payment order and must notify the bank promptly after discovery
thereof. Failure of the customer to notify the bank within one year of
either receipt of the item improperly paid by the bank over a properly
lodged stop payment order or, in lieu of receipt of the improperly paid
item, receipt of a statement containing the debit entry for said item and
specifically identifying said item shall preclude the customer from
asserting against the bank the improper payment.
(Source: P.A. 86-583; 87-582; 87-1135.)
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810 ILCS 5/4-404
(810 ILCS 5/4-404) (from Ch. 26, par. 4-404)
Sec. 4-404.
Bank
not obligated to pay check more than six months old.
A bank is under no obligation to a customer having a checking account to
pay a check, other than a certified check, which is presented more than 6
months after its date, but it may charge its customer's account for a
payment made thereafter in good faith.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/4-405
(810 ILCS 5/4-405) (from Ch. 26, par. 4-405)
Sec. 4-405.
Death or incompetence of customer.
(a) A payor or collecting bank's authority to accept, pay, or collect an
item or to account for proceeds of its collection, if otherwise effective, is
not rendered ineffective by incompetence of a customer of either bank existing
at the time the item is issued or its collection is undertaken if the bank does
not know of an adjudication of incompetence. Neither death nor incompetence of
a customer revokes the authority to accept, pay, collect, or account until the
bank knows of the fact of death or of an adjudication of incompetence and has
reasonable opportunity to act on it.
(b) Even with knowledge, a bank may for 10 days after the date of death
pay or certify checks drawn on or before that date unless ordered to stop
payment by a person claiming an interest in the account.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-406
(810 ILCS 5/4-406) (from Ch. 26, par. 4-406)
Sec. 4-406.
Customer's duty to discover and report unauthorized signature
or alteration.
(a) A bank that sends or makes available to a customer a statement of
account showing payment of items for the account shall either return or
make available to the customer the items paid or provide information in the
statement of account sufficient to allow the customer to identify the items
paid. The statement of account provides sufficient information if the item
is described by item number, amount, and date of payment.
(b) If the items are not returned to the customer, the person retaining
the items shall either retain the items or, if the items are destroyed,
maintain the capacity to furnish legible copies of the items until the
expiration of 7 years after receipt of the items. A customer may
request an item from the bank that paid the item, and that bank must
provide in a reasonable time either the item or, if the item has been
destroyed or is not otherwise obtainable, a legible copy of the item.
(c) If a bank sends or makes available a statement of account or items
pursuant to subsection (a), the customer must exercise reasonable
promptness in examining the statement or the items to determine whether
any payment was not authorized because of an alteration of an item or
because a purported signature by or on behalf of the customer was not
authorized. If, based on the statement or items provided, the customer
should reasonably have discovered the unauthorized payment, the customer
must promptly notify the bank of the relevant facts.
(d) If the bank proves that the customer failed, with respect to an
item, to comply with the duties imposed on the customer by subsection (c),
the customer is precluded from asserting against the bank:
(1) the customer's unauthorized signature or any | | alteration on the item, if the bank also proves that it suffered a loss by reason of the failure; and
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(2) the customer's unauthorized signature or
| | alteration by the same wrongdoer on any other item paid in good faith by the bank if the payment was made before the bank received notice from the customer of the unauthorized signature or alteration and after the customer had been afforded a reasonable period of time, not exceeding 30 days, in which to examine the item or statement of account and notify the bank.
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(e) If subsection (d) applies and the customer proves that the bank
failed to exercise ordinary care in paying the item and that the failure
substantially contributed to loss, the loss is allocated between the
customer precluded and the bank asserting the preclusion according to the
extent to which the failure of the customer to comply with subsection (c)
and the failure of the bank to exercise ordinary care contributed
to the loss. If the customer proves that the bank did not pay the item in
good faith, the preclusion under subsection (d) does not apply.
(f) Without regard to care or lack of care of either the customer or the
bank, a customer who does not within one year after the statement
or items are made available to the customer (subsection (a)) discover and
report the customer's unauthorized signature on or any alteration on
the item is precluded
from asserting against the bank the unauthorized signature or alteration.
If there is a preclusion under this subsection, the payor bank may not
recover for breach of warranty under Section 4-208 with respect to the
unauthorized signature or alteration to which the preclusion applies.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-407
(810 ILCS 5/4-407) (from Ch. 26, par. 4-407)
Sec. 4-407.
Payor bank's right to subrogation on improper payment.
If a payor bank has paid an item over the order of the drawer or maker to stop
payment, or after an account has been closed, or otherwise under circumstances
giving a basis for objection by the drawer or maker, to prevent unjust
enrichment and only to the extent necessary to prevent loss to the bank by
reason of its payment of the item, the payor bank is subrogated to the rights:
(1) of any holder in due course on the item against the drawer or
maker;
(2) of the payee or any other holder of the item against the drawer
or maker either on the item or under the transaction out of which the
item arose; and
(3) of the drawer or maker against the payee or any other holder of
the item with respect to the transaction out of which the item arose.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/Art. 4 Pt. 5
(810 ILCS 5/Art. 4 Pt. 5 heading)
PART 5.
COLLECTION OF DOCUMENTARY DRAFTS
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810 ILCS 5/4-501
(810 ILCS 5/4-501) (from Ch. 26, par. 4-501)
Sec. 4-501.
Handling of documentary drafts; duty to send for presentment and
to notify customer of dishonor.
A bank that takes a documentary draft for collection shall present or send
the draft and accompanying documents for presentment and, upon learning that
the draft has not been paid or accepted in due course, shall seasonably notify
its customer of the fact even though it may have discounted or bought the draft
or extended credit available for withdrawal as of right.
(Source: P.A. 87-1135.)
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810 ILCS 5/4-502
(810 ILCS 5/4-502) (from Ch. 26, par. 4-502)
Sec. 4-502.
Presentment of "on arrival" drafts.
If a draft or the relevant instructions require presentment "on
arrival", "when goods arrive" or the like, the collecting bank need not
present until in its judgment a reasonable time for arrival of the goods
has expired. Refusal to pay or accept because the goods have not arrived is
not dishonor; the bank must notify its transferor of the refusal but need
not present the draft again until it is instructed to do so or learns of
the arrival of the goods.
(Source: P.A. 87-1135.)
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810 ILCS 5/4-503
(810 ILCS 5/4-503) (from Ch. 26, par. 4-503)
Sec. 4-503.
Responsibility of presenting bank for documents and goods;
report of reasons for dishonor; referee in case of need. Unless otherwise
instructed and except as provided in Article 5, a bank presenting a
documentary draft:
(1) must deliver the documents to the drawee on acceptance of the
draft if it is payable more than 3 days after presentment; otherwise, only
on payment; and
(2) upon dishonor, either in the case of presentment for acceptance
or presentment for payment, may seek and follow instructions from any
referee in case of need designated in the draft or, if the presenting bank
does not choose to utilize the referee's services, it must use diligence
and
good faith to ascertain the reason for dishonor, must notify its transferor of
the dishonor and of the results of its effort to ascertain the reasons
therefor, and must request instructions.
However, the presenting bank is under no obligation with respect to goods
represented by the documents except to follow any reasonable instructions
seasonably received; it has a right to reimbursement for any expense incurred
in following instructions and to prepayment of or indemnity for those expenses.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/4-504
(810 ILCS 5/4-504) (from Ch. 26, par. 4-504)
Sec. 4-504.
Privilege of Presenting Bank to Deal With Goods; Security
Interest for Expenses.
(a) A presenting bank that, following the dishonor of a documentary
draft, has seasonably requested instructions but does not receive them
within a reasonable time may store, sell, or otherwise deal with the goods
in any reasonable manner.
(b) For its reasonable expenses incurred by action under subsection (a)
the presenting bank has a lien upon the goods or their proceeds, which may
be foreclosed in the same manner as an unpaid seller's lien.
(Source: P.A. 87-582; 87-1135.)
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810 ILCS 5/Art. 4A
(810 ILCS 5/Art. 4A heading)
ARTICLE 4A.
FUNDS TRANSFERS
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810 ILCS 5/Art. 4A Pt. 1
(810 ILCS 5/Art. 4A Pt. 1 heading)
PART 1.
SUBJECT MATTER AND DEFINITIONS
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810 ILCS 5/4A-101
(810 ILCS 5/4A-101) (from Ch. 26, par. 4A-101)
Sec. 4A-101.
Short title.
This Article may be cited as Uniform
Commercial Code-Funds Transfers.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-102
(810 ILCS 5/4A-102) (from Ch. 26, par. 4A-102)
Sec. 4A-102.
Subject matter.
Except as otherwise provided in Section
4A-108, this Article applies to funds transfers defined in Section 4A-104.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-103 (810 ILCS 5/4A-103) (from Ch. 26, par. 4A-103) (Text of Section before amendment by P.A. 103-1036) Sec. 4A-103. Payment order; definitions. (a) In this Article: (1) "Payment order" means an instruction of a sender | | to a receiving bank, transmitted orally, electronically, or in writing, to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary if:
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| (i) the instruction does not state a condition to
| | payment to the beneficiary other than time of payment,
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| (ii) the receiving bank is to be reimbursed by
| | debiting an account of, or otherwise receiving payment from, the sender, and
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| (iii) the instruction is transmitted by the
| | sender directly to the receiving bank or to an agent, funds transfer system, or communication system for transmittal to the receiving bank.
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| (2) "Beneficiary" means the person to be paid by the
| | (3) "Beneficiary's bank" means the bank identified in
| | a payment order in which an account of the beneficiary is to be credited pursuant to the order or which otherwise is to make payment to the beneficiary if the order does not provide for payment to an account.
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| (4) "Receiving bank" means the bank to which the
| | sender's instruction is addressed.
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| (5) "Sender" means the person giving the instruction
| | (b) If an instruction complying with subsection (a)(1) is to make more
than one payment to a beneficiary, the instruction is a separate payment
order with respect to each payment.
(c) A payment order is issued when it is sent to the receiving bank.
(Source: P.A. 86-1291.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 4A-103. Payment order; definitions.
(a) In this Article:
(1) "Payment order" means an instruction of a sender
| | to a receiving bank, transmitted orally or in a record, to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary if:
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| (i) the instruction does not state a condition to
| | payment to the beneficiary other than time of payment,
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| (ii) the receiving bank is to be reimbursed by
| | debiting an account of, or otherwise receiving payment from, the sender, and
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| (iii) the instruction is transmitted by the
| | sender directly to the receiving bank or to an agent, funds transfer system, or communication system for transmittal to the receiving bank.
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| (2) "Beneficiary" means the person to be paid by the
| | (3) "Beneficiary's bank" means the bank identified in
| | a payment order in which an account of the beneficiary is to be credited pursuant to the order or which otherwise is to make payment to the beneficiary if the order does not provide for payment to an account.
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| (4) "Receiving bank" means the bank to which the
| | sender's instruction is addressed.
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| (5) "Sender" means the person giving the instruction
| | (b) If an instruction complying with subsection (a)(1) is to make more than one payment to a beneficiary, the instruction is a separate payment order with respect to each payment.
(c) A payment order is issued when it is sent to the receiving bank.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/4A-104
(810 ILCS 5/4A-104) (from Ch. 26, par. 4A-104)
Sec. 4A-104.
Funds transfer; definitions.
In this Article:
(a) "Funds transfer" means the series of transactions, beginning with
the originator's payment order, made for the purpose of making payment to
the beneficiary of the order. The term includes any payment order issued
by the originator's bank or an intermediary bank intended to carry out the
originator's payment order. A funds transfer is completed by acceptance by
the beneficiary's bank of a payment order for the benefit of the
beneficiary of the originator's payment order.
(b) "Intermediary bank" means a receiving bank other than the
originator's bank or the beneficiary's bank.
(c) "Originator" means the sender of the first payment order in a
funds transfer.
(d) "Originator's bank" means (i) the receiving bank to which the
payment order of the originator is issued if the originator is not a bank,
or (ii) the originator if the originator is a bank.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-105
(810 ILCS 5/4A-105) (from Ch. 26, par. 4A-105)
Sec. 4A-105. Other definitions.
(a) In this Article:
(1) "Authorized account" means a deposit account of a | | customer in a bank designated by the customer as a source of payment of payment orders issued by the customer to the bank. If a customer does not so designate an account, any account of the customer is an authorized account if payment of a payment order from that account is not inconsistent with a restriction on the use of that account.
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(2) "Bank" means a person engaged in the business of
| | banking and includes a savings bank, savings and loan association, credit union, and trust company. A branch or separate office of a bank is a separate bank for purposes of this Article.
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(3) "Customer" means a person, including a bank,
| | having an account with a bank or from whom a bank has agreed to receive payment orders.
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(4) "Funds transfer business day" of a receiving bank
| | means the part of a day during which the receiving bank is open for the receipt, processing, and transmittal of payment orders and cancellations and amendments of payment orders.
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(5) "Funds transfer system" means a wire transfer
| | network, automated clearinghouse, or other communication system of a clearing house or other association of banks through which a payment order by a bank may be transmitted to the bank to which the order is addressed.
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(6) "Good faith" means honesty in fact and the
| | observance of reasonable commercial standards of fair dealing.
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(7) "Prove" with respect to a fact means to meet the
| | burden of establishing the fact (Section 1-201(b)(8)).
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(b) Other definitions applying to this Article and the Sections in which
they appear are:
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"Acceptance" |
Section 4A-209 |
"Beneficiary" |
Section 4A-103 |
"Beneficiary's bank" |
Section 4A-103 |
"Executed" |
Section 4A-301 |
"Execution date" |
Section 4A-301 |
"Funds transfer" |
Section 4A-104 |
"Funds transfer system rule" |
Section 4A-501 |
"Intermediary bank" |
Section 4A-104 |
"Originator" |
Section 4A-104 |
"Originator's bank" |
Section 4A-104 |
"Payment by beneficiary's bank |
|
to beneficiary" |
Section 4A-405 |
"Payment by originator to |
|
beneficiary" |
Section 4A-406 |
"Payment by sender |
|
to receiving bank" |
Section 4A-403 |
"Payment date" |
Section 4A-401 |
"Payment order" |
Section 4A-103 |
"Receiving bank" |
Section 4A-103 |
"Security procedure" |
Section 4A-201 |
"Sender" |
Section 4A-103 |
|
(c) The following definitions in Article 4 apply to this Article:
| "Clearing house" | Section 4-104 | "Item" | Section 4-104 | "Suspends payments" | Section 4-104 |
| (d) In addition, Article 1 contains general definitions and principles of
construction and interpretation applicable throughout this Article.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/4A-106
(810 ILCS 5/4A-106) (from Ch. 26, par. 4A-106)
Sec. 4A-106. Time payment order is received.
(a) The time of receipt of a payment order or communication cancelling
or amending a payment order is determined by the rules applicable to
receipt of a notice stated in Section 1-202. A receiving bank may fix
a cut-off time or times on a funds transfer business day for the receipt
and processing of payment orders and communications cancelling or amending
payment orders. Different cut-off times may apply to payment orders,
cancellations, or amendments, or to different categories of payment orders,
cancellations, or amendments. A cut-off time may apply to senders
generally or different cut-off times may apply to different senders or
categories of payment orders. If a payment order or communication
cancelling or amending a payment order is received after the close of a
funds transfer business day or after the appropriate cut-off time on a
funds transfer business day, the receiving bank may treat the payment
order or communication as received at the opening of the next funds
transfer business day.
(b) If this Article refers to an execution date or payment date or
states a day on which a receiving bank is required to take action, and the
date or day does not fall on a funds transfer business day, the next day
that is a funds transfer business day is treated as the date or day stated,
unless the contrary is stated in this Article.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/4A-107
(810 ILCS 5/4A-107) (from Ch. 26, par. 4A-107)
Sec. 4A-107.
Federal Reserve regulations and operating circulars.
Regulations of the Board of Governors of the Federal Reserve System and
operating circulars of the Federal Reserve Banks supersede any inconsistent
provision of this Article to the extent of the inconsistency.
(Source: P.A. 86-1291.)
|
810 ILCS 5/4A-108
(810 ILCS 5/4A-108) (from Ch. 26, par. 4A-108)
Sec. 4A-108. Exclusion of consumer transactions governed by federal
law. (a) Except as provided in subsection (b), this Article does not apply to a funds transfer any part
of which is governed by the Electronic Fund Transfer Act of 1978 (Title XX,
Public Law 95-630, 92 Stat. 3728, 15 U.S.C. Section 1693 et seq.) as
amended from time to time.
(b) This Article applies to a funds transfer that is a remittance transfer as defined in the Electronic Fund Transfer Act (15 U.S.C. Sec. 1693o-1), as amended from time to time, unless the remittance transfer is an electronic fund transfer as defined in the Electronic Fund Transfer Act (15 U.S.C. Sec. 1693a), as amended from time to time. (c) In a funds transfer to which this Article applies, in the event of an inconsistency between an applicable provision of this Article and an applicable provision of the Electronic Fund Transfer Act, the provision of the Electronic Fund Transfer Act governs to the extent of the inconsistency. (Source: P.A. 98-498, eff. 1-1-14.)
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810 ILCS 5/Art. 4A Pt. 2
(810 ILCS 5/Art. 4A Pt. 2 heading)
PART 2.
ISSUE AND ACCEPTANCE OF PAYMENT ORDER
|
810 ILCS 5/4A-201 (810 ILCS 5/4A-201) (from Ch. 26, par. 4A-201) (Text of Section before amendment by P.A. 103-1036) Sec. 4A-201. Security procedure. "Security procedure" means a
procedure established by agreement of a customer and a receiving bank for
the purpose of (i) verifying that a payment order or communication amending
or cancelling a payment order is that of the customer, or (ii) detecting
error in the transmission or the content of the payment order or
communication. A security procedure may require the use of algorithms or
other codes, identifying words or numbers, encryption, callback procedures,
or similar security devices. Comparison of a signature on a payment order
or communication with an authorized specimen signature of the customer is
not by itself a security procedure.(Source: P.A. 86-1291.) (Text of Section after amendment by P.A. 103-1036) Sec. 4A-201. Security procedure. "Security procedure" means a procedure established by agreement of a customer and a receiving bank for the purpose of (i) verifying that a payment order or communication amending or cancelling a payment order is that of the customer, or (ii) detecting error in the transmission or the content of the payment order or communication. A security procedure may impose an obligation on the receiving bank or the customer and may require the use of algorithms or other codes, identifying words, numbers, symbols, sounds, biometrics, encryption, callback procedures, or similar security devices. Comparison of a signature on a payment order or communication with an authorized specimen signature of the customer or requiring a payment order to be sent from a known email address, IP address, or telephone number is not by itself a security procedure.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/4A-202 (810 ILCS 5/4A-202) (from Ch. 26, par. 4A-202) (Text of Section before amendment by P.A. 103-1036) Sec. 4A-202. Authorized and verified payment orders. (a) A payment order received by the receiving bank is
the authorized order of the person identified as sender if that person
authorized the order or is otherwise bound by it under the law of agency. (b) If a bank and its customer have agreed that the authenticity of
payment orders issued to the bank in the name of the customer as sender
will be verified pursuant to a security procedure, a payment order received
by the receiving bank is effective as the order of the customer, whether or
not authorized, if (i) the security procedure is a commercially reasonable
method of providing security against unauthorized payment orders, and (ii)
the bank proves that it accepted the payment order in good faith and in
compliance with the security procedure and any written agreement or
instruction of the customer restricting acceptance of payment orders issued
in the name of the customer. The bank is not required to follow an
instruction that violates a written agreement with the customer or notice
of which is not received at a time and in a manner affording the bank a
reasonable opportunity to act on it before the payment order is accepted. (c) Commercial reasonableness of a security procedure is a question of
law to be determined by considering the wishes of the customer expressed to
the bank, the circumstances of the customer known to the bank, including
the size, type, and frequency of payment orders normally issued by the
customer to the bank, alternative security procedures offered to the
customer, and security procedures in general use by customers and receiving
banks similarly situated. A security procedure is deemed to be
commercially reasonable if (i) the security procedure was chosen by the
customer after the bank offered, and the customer refused, a security
procedure that was commercially reasonable for that customer, and (ii) the
customer expressly agreed in writing to be bound by any payment order,
whether or not authorized, issued in its name and accepted by the bank in
compliance with the security procedure chosen by the customer. (d) The term "sender" in this Article includes the customer in whose
name a payment order is issued if the order is the authorized order of the
customer under subsection (a), or it is effective as the order of the
customer under subsection (b). (e) This Section applies to amendments and cancellations of payment
orders to the same extent it applies to payment orders. (f) Except as provided in this Section and in Section 4A-203(a)(1),
rights and obligations arising under this Section or Section 4A-203 may not
be varied by agreement.(Source: P.A. 86-1291.) (Text of Section after amendment by P.A. 103-1036) Sec. 4A-202. Authorized and verified payment orders. (a) A payment order received by the receiving bank is the authorized order of the person identified as sender if that person authorized the order or is otherwise bound by it under the law of agency. (b) If a bank and its customer have agreed that the authenticity of payment orders issued to the bank in the name of the customer as sender will be verified pursuant to a security procedure, a payment order received by the receiving bank is effective as the order of the customer, whether or not authorized, if (i) the security procedure is a commercially reasonable method of providing security against unauthorized payment orders, and (ii) the bank proves that it accepted the payment order in good faith and in compliance with the bank's obligations under the security procedure and any agreement or instruction of the customer, evidenced by a record, restricting acceptance of payment orders issued in the name of the customer. The bank is not required to follow an instruction that violates an agreement with the customer, evidenced by a record, or notice of which is not received at a time and in a manner affording the bank a reasonable opportunity to act on it before the payment order is accepted. (c) Commercial reasonableness of a security procedure is a question of law to be determined by considering the wishes of the customer expressed to the bank, the circumstances of the customer known to the bank, including the size, type, and frequency of payment orders normally issued by the customer to the bank, alternative security procedures offered to the customer, and security procedures in general use by customers and receiving banks similarly situated. A security procedure is deemed to be commercially reasonable if (i) the security procedure was chosen by the customer after the bank offered, and the customer refused, a security procedure that was commercially reasonable for that customer, and (ii) the customer expressly agreed in a record to be bound by any payment order, whether or not authorized, issued in its name and accepted by the bank in compliance with the bank's obligations under the security procedure chosen by the customer. (d) The term "sender" in this Article includes the customer in whose name a payment order is issued if the order is the authorized order of the customer under subsection (a), or it is effective as the order of the customer under subsection (b). (e) This Section applies to amendments and cancellations of payment orders to the same extent it applies to payment orders. (f) Except as provided in this Section and in Section 4A-203(a)(1), rights and obligations arising under this Section or Section 4A-203 may not be varied by agreement.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/4A-203 (810 ILCS 5/4A-203) (from Ch. 26, par. 4A-203) (Text of Section before amendment by P.A. 103-1036) Sec. 4A-203. Unenforceability of certain verified payment orders. (a) If an accepted payment order is not, under Section
4A-202(a), an authorized order of a customer identified as sender, but is
effective as an order of the customer pursuant to Section 4A-202(b), the
following rules apply: (1) By express written agreement, the receiving bank | | may limit the extent to which it is entitled to enforce or retain payment of the payment order.
|
| (2) The receiving bank is not entitled to enforce or
| | retain payment of the payment order if the customer proves that the order was not caused, directly or indirectly, by a person (i) entrusted at any time with duties to act for the customer with respect to payment orders or the security procedure, or (ii) who obtained access to transmitting facilities of the customer or who obtained, from a source controlled by the customer and without authority of the receiving bank, information facilitating breach of the security procedure, regardless of how the information was obtained or whether the customer was at fault. Information includes any access device, computer software, or the like.
|
| (b) This Section applies to amendments of payment orders to the same
extent it applies to payment orders.
(Source: P.A. 86-1291.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 4A-203. Unenforceability of certain verified payment orders.
(a) If an accepted payment order is not, under Section 4A-202(a), an authorized order of a customer identified as sender, but is effective as an order of the customer pursuant to Section 4A-202(b), the following rules apply:
(1) By express agreement evidenced by a record, the
| | receiving bank may limit the extent to which it is entitled to enforce or retain payment of the payment order.
|
| (2) The receiving bank is not entitled to enforce or
| | retain payment of the payment order if the customer proves that the order was not caused, directly or indirectly, by a person (i) entrusted at any time with duties to act for the customer with respect to payment orders or the security procedure, or (ii) who obtained access to transmitting facilities of the customer or who obtained, from a source controlled by the customer and without authority of the receiving bank, information facilitating breach of the security procedure, regardless of how the information was obtained or whether the customer was at fault. Information includes any access device, computer software, or the like.
|
| (b) This Section applies to amendments of payment orders to the same extent it applies to payment orders.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/4A-204
(810 ILCS 5/4A-204) (from Ch. 26, par. 4A-204)
Sec. 4A-204. Refund of payment and duty of customer to report with
respect to an unauthorized payment order.
(a) If a receiving bank accepts a payment order issued
in the name of its customer as sender which is (i) not authorized and not
effective as the order of the customer under Section 4A-202, or (ii) not
enforceable, in whole or in part, against the customer under Section
4A-203, the bank shall refund any payment of the payment order received
from the customer to the extent the bank is not entitled to enforce payment
and shall pay interest on the refundable amount calculated from the date
the bank received payment to the date of the refund. However, the customer
is not entitled to interest from the bank on the amount to be refunded if
the customer fails to exercise ordinary care to determine that the order
was not authorized by the customer and to notify the bank of the relevant
facts within a reasonable time not exceeding 90 days after the date the
customer received notification from the bank that the order was accepted or
that the customer's account was debited with respect to the order. The
bank is not entitled to any recovery from the customer on account of a
failure by the customer to give notification as stated in this Section.
(b) Reasonable time under subsection (a) may be fixed by agreement as
stated in Section 1-302(b), but the obligation of a receiving bank to
refund payment as stated in subsection (a) may not otherwise be varied
by agreement.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/4A-205
(810 ILCS 5/4A-205) (from Ch. 26, par. 4A-205)
Sec. 4A-205.
Erroneous payment orders.
(a) If an accepted payment order was transmitted pursuant to a security
procedure for the detection of error and the payment order (i) erroneously
instructed payment to a beneficiary not intended by the sender, (ii)
erroneously instructed payment in an amount greater than the amount
intended by the sender, or (iii) was an erroneously transmitted duplicate
of a payment order previously sent by the sender, the following rules apply:
(1) If the sender proves that the sender or a person | | acting on behalf of the sender pursuant to Section 4A-206 complied with the security procedure and that the error would have been detected if the receiving bank had also complied, the sender is not obliged to pay the order to the extent stated in paragraphs (2) and (3).
|
|
(2) If the funds transfer is completed on the basis
| | of an erroneous payment order described in clause (i) or (iii) of subsection (a), the sender is not obliged to pay the order and the receiving bank is entitled to recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law governing mistake and restitution.
|
|
(3) If the funds transfer is completed on the basis
| | of a payment order described in clause (ii) of subsection (a), the sender is not obliged to pay the order to the extent the amount received by the beneficiary is greater than the amount intended by the sender. In that case, the receiving bank is entitled to recover from the beneficiary the excess amount received to the extent allowed by the law governing mistake and restitution.
|
|
(b) If (i) the sender of an erroneous payment order described in
subsection (a) is not obliged to pay all or part of the order, and (ii) the
sender receives notification from the receiving bank that the order was
accepted by the bank or that the sender's account was debited with respect
to the order, the sender has a duty to exercise ordinary care, on the basis
of information available to the sender, to discover the error with respect
to the order and to advise the bank of the relevant facts within a
reasonable time, not exceeding 90 days, after the bank's notification was
received by the sender. If the bank proves that the sender failed to
perform that duty, the sender is liable to the bank for the loss the bank
proves it incurred as a result of the failure, but the liability of the
sender may not exceed the amount of the sender's order.
(c) This Section applies to amendments to payment orders to the same
extent it applies to payment orders.
(Source: P.A. 86-1291.)
|
810 ILCS 5/4A-206
(810 ILCS 5/4A-206) (from Ch. 26, par. 4A-206)
Sec. 4A-206.
Transmission of payment order through funds transfer or
other communication system.
(a) If a payment order addressed to a receiving bank is
transmitted to a funds transfer system or other third-party communication
system for transmittal to the bank, the system is deemed to be an agent of
the sender for the purpose of transmitting the payment order to the bank.
If there is a discrepancy between the terms of the payment order transmitted
to the system and the terms of the payment order transmitted by the system
to the bank, the terms of the payment order of the sender are those
transmitted by the system. This Section does not apply to a funds transfer
system of the Federal Reserve Banks.
(b) This Section applies to cancellations and amendments of payment
orders to the same extent it applies to payment orders.
(Source: P.A. 86-1291.)
|
810 ILCS 5/4A-207 (810 ILCS 5/4A-207) (from Ch. 26, par. 4A-207) (Text of Section before amendment by P.A. 103-1036) Sec. 4A-207. Misdescription of beneficiary. (a) Subject to subsection (b), if, in a payment order
received by the beneficiary's bank, the name, bank
account number, or other identification of the beneficiary refers to a
nonexistent or unidentifiable person or account, no person has rights as a
beneficiary of the order and acceptance of the order cannot occur. (b) If a payment order received by the beneficiary's bank identifies the
beneficiary both by name and by an identifying or bank account number and
the name and number identify different persons, the following rules apply: (1) Except as otherwise provided in subsection (c), | | if the beneficiary's bank does not know that the name and number refer to different persons, it may rely on the number as the proper identification of the beneficiary of the order. The beneficiary's bank need not determine whether the name and number refer to the same person.
|
| (2) If the beneficiary's bank pays the person
| | identified by name or knows that the name and number identify different persons, no person has rights as beneficiary except the person paid by the beneficiary's bank if that person was entitled to receive payment from the originator of the funds transfer. If no person has rights as beneficiary, acceptance of the order cannot occur.
|
| (c) If (i) a payment order described in subsection (b) is accepted, (ii)
the originator's payment order described the beneficiary inconsistently by
name and number, and (iii) the beneficiary's bank pays the person
identified by number as permitted by subsection (b)(1), the following
rules apply:
(1) If the originator is a bank, the originator is
| | obligated to pay its order.
|
| (2) If the originator is not a bank and proves that
| | the person identified by number was not entitled to receive payment from the originator, the originator is not obliged to pay its order unless the originator's bank proves that the originator, before acceptance of the originator's order, had notice that payment of a payment order issued by the originator might be made by the beneficiary's bank on the basis of an identifying or bank account number event if it identifies a person different from the named beneficiary. Proof of notice may be made by any admissible evidence. The originator's bank satisfies the burden as proof if it proves that the originator, before the payment order was accepted, signed a writing stating the information to which the notice relates.
|
| (d) In a case governed by subsection (b)(1), if the beneficiary's bank
rightfully pays the person identified by number and that person was not
entitled to receive payment from the originator, the amount paid may be
recovered from that person to the extent allowed by the law governing
mistake and restitution as follows:
(1) If the originator is obligated to pay its payment
| | order as stated in subsection (c), the originator has the right to recover.
|
| (2) If the originator is not a bank and is not
| | obligated to pay its payment order, the originator's bank has the right to recover.
|
| (Source: P.A. 86-1291.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 4A-207. Misdescription of beneficiary.
(a) Subject to subsection (b), if, in a payment order received by the beneficiary's bank, the name, bank account number, or other identification of the beneficiary refers to a nonexistent or unidentifiable person or account, no person has rights as a beneficiary of the order and acceptance of the order cannot occur.
(b) If a payment order received by the beneficiary's bank identifies the beneficiary both by name and by an identifying or bank account number and the name and number identify different persons, the following rules apply:
(1) Except as otherwise provided in subsection (c),
| | if the beneficiary's bank does not know that the name and number refer to different persons, it may rely on the number as the proper identification of the beneficiary of the order. The beneficiary's bank need not determine whether the name and number refer to the same person.
|
| (2) If the beneficiary's bank pays the person
| | identified by name or knows that the name and number identify different persons, no person has rights as beneficiary except the person paid by the beneficiary's bank if that person was entitled to receive payment from the originator of the funds transfer. If no person has rights as beneficiary, acceptance of the order cannot occur.
|
| (c) If (i) a payment order described in subsection (b) is accepted, (ii) the originator's payment order described the beneficiary inconsistently by name and number, and (iii) the beneficiary's bank pays the person identified by number as permitted by subsection (b)(1), the following rules apply:
(1) If the originator is a bank, the originator is
| | obligated to pay its order.
|
| (2) If the originator is not a bank and proves that
| | the person identified by number was not entitled to receive payment from the originator, the originator is not obliged to pay its order unless the originator's bank proves that the originator, before acceptance of the originator's order, had notice that payment of a payment order issued by the originator might be made by the beneficiary's bank on the basis of an identifying or bank account number event if it identifies a person different from the named beneficiary. Proof of notice may be made by any admissible evidence. The originator's bank satisfies the burden of proof if it proves that the originator, before the payment order was accepted, signed a record stating the information to which the notice relates.
|
| (d) In a case governed by subsection (b)(1), if the beneficiary's bank rightfully pays the person identified by number and that person was not entitled to receive payment from the originator, the amount paid may be recovered from that person to the extent allowed by the law governing mistake and restitution as follows:
(1) If the originator is obligated to pay its payment
| | order as stated in subsection (c), the originator has the right to recover.
|
| (2) If the originator is not a bank and is not
| | obligated to pay its payment order, the originator's bank has the right to recover.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/4A-208 (810 ILCS 5/4A-208) (from Ch. 26, par. 4A-208) (Text of Section before amendment by P.A. 103-1036) Sec. 4A-208. Misdescription of intermediary bank or beneficiary's bank. (a) This subsection applies to a payment order identifying an
intermediary bank or the beneficiary's bank only by an identifying number. (1) The receiving bank may rely on the number as the | | proper identification of the intermediary or beneficiary's bank and need not determine whether the number identifies a bank.
|
| (2) The sender is obliged to compensate the receiving
| | bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order.
|
| (b) This subsection applies to a payment order identifying an
intermediary bank or the beneficiary's bank both by name and an identifying
number if the name and number identify different persons.
(1) If the sender is a bank, the receiving bank may
| | rely on the number as the proper identification of the intermediary or beneficiary's bank if the receiving bank, when it executes the sender's order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person or whether the number refers to a bank. The sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order.
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| (2) If the sender is not a bank and the receiving
| | bank proves that the sender, before the payment order was accepted, had notice that the receiving bank might rely on the number as the proper identification of the intermediary or beneficiary's bank even if it identifies a person different from the bank identified by name, the rights and obligations of the sender and the receiving bank are governed by subsection (b)(1), as though the sender were a bank. Proof of notice may be made by any admissible evidence. The receiving bank satisfies the burden of proof if it proves that the sender, before the payment order was accepted, signed a writing stating the information to which the notice relates.
|
| (3) Regardless of whether the sender is a bank, the
| | receiving bank may rely on the name as the proper identification of the intermediary or beneficiary's bank if the receiving bank, at the time it executes the sender's order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person.
|
| (4) If the receiving bank knows that the name and
| | number identify different persons, reliance on either the name or the number in executing the sender's payment order is a breach of the obligation stated in Section 4A-302(a)(1).
|
| (Source: P.A. 86-1291.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 4A-208. Misdescription of intermediary bank or beneficiary's bank.
(a) This subsection applies to a payment order identifying an intermediary bank or the beneficiary's bank only by an identifying number.
(1) The receiving bank may rely on the number as the
| | proper identification of the intermediary or beneficiary's bank and need not determine whether the number identifies a bank.
|
| (2) The sender is obliged to compensate the receiving
| | bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order.
|
| (b) This subsection applies to a payment order identifying an intermediary bank or the beneficiary's bank both by name and an identifying number if the name and number identify different persons.
(1) If the sender is a bank, the receiving bank may
| | rely on the number as the proper identification of the intermediary or beneficiary's bank if the receiving bank, when it executes the sender's order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person or whether the number refers to a bank. The sender is obliged to compensate the receiving bank for any loss and expenses incurred by the receiving bank as a result of its reliance on the number in executing or attempting to execute the order.
|
| (2) If the sender is not a bank and the receiving
| | bank proves that the sender, before the payment order was accepted, had notice that the receiving bank might rely on the number as the proper identification of the intermediary or beneficiary's bank even if it identifies a person different from the bank identified by name, the rights and obligations of the sender and the receiving bank are governed by subsection (b)(1), as though the sender were a bank. Proof of notice may be made by any admissible evidence. The receiving bank satisfies the burden of proof if it proves that the sender, before the payment order was accepted, signed a record stating the information to which the notice relates.
|
| (3) Regardless of whether the sender is a bank, the
| | receiving bank may rely on the name as the proper identification of the intermediary or beneficiary's bank if the receiving bank, at the time it executes the sender's order, does not know that the name and number identify different persons. The receiving bank need not determine whether the name and number refer to the same person.
|
| (4) If the receiving bank knows that the name and
| | number identify different persons, reliance on either the name or the number in executing the sender's payment order is a breach of the obligation stated in Section 4A-302(a)(1).
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/4A-209
(810 ILCS 5/4A-209) (from Ch. 26, par. 4A-209)
Sec. 4A-209.
Acceptance of payment order.
(a) Subject to subsection (d), a receiving bank other than the
beneficiary's bank accepts a payment order when it executes the order.
(b) Subject to subsections (c) and (d), a beneficiary's bank accepts a
payment order at the earliest of the following times:
(1) when the bank (i) pays the beneficiary as stated | | in Section 4A-405(a) or 4A-405(b), or (ii) notifies the beneficiary of receipt of the order or that the account of the beneficiary has been credited with respect to the order unless the notice indicates that the bank is rejecting the order or that funds with respect to the order may not be withdrawn or used until receipt of payment from the sender of the order;
|
|
(2) when the bank receives payment of the entire
| | amount of the sender's order pursuant to Section 4A-403 (a)(1) or 4A-403(a)(2); or
|
|
(3) the opening of the next funds transfer business
| | day of the bank following the payment date of the order if, at that time, the amount of the sender's order is fully covered by a withdrawable credit balance in an authorized account of the sender or the bank has otherwise received full payment from the sender, unless the order was rejected before that time or is rejected within (i) one hour after that time, or (ii) one hour after the opening of the next business day of the sender following the payment date if that time is later. If notice of rejection is received by the sender after the payment date and the authorized account of the sender does not bear interest, the bank is obliged to pay interest to the sender on the amount of the order for the number of days elapsing after the payment date to the day the sender receives notice or learns that the order was not accepted, counting that day as an elapsed day. If the withdrawable credit balance during that period falls below the amount of the order, the amount of interest payable is reduced accordingly.
|
|
(c) Acceptance of a payment order cannot occur before the order is
received by the receiving bank. Acceptance does not occur under subsection
(b)(2) or (b)(3) if the beneficiary of the payment order does not have an
account with the receiving bank, the account has been closed, or the
receiving bank is not permitted by law to receive credits for the
beneficiary's account.
(d) A payment order issued to the originator's bank cannot be accepted
until the payment date if the bank is the beneficiary's bank, or the
execution date if the bank is not the beneficiary's bank. If the
originator's bank executes the originator's payment order before the
execution date or pays the beneficiary of the originator's payment order
before the payment date and the payment order is subsequently canceled
pursuant to Section 4A-211(b), the bank may recover from the beneficiary
any payment received to the extent allowed by the law governing mistake
and restitution.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-210 (810 ILCS 5/4A-210) (from Ch. 26, par. 4A-210) (Text of Section before amendment by P.A. 103-1036) Sec. 4A-210. Rejection of payment order. (a) A payment order is rejected by the receiving bank by a notice of
rejection transmitted to the sender orally, electronically, or in writing.
A notice of rejection need not use any particular words and is sufficient
if it indicates that the receiving bank is rejecting the order or will not
execute or pay the order. Rejection is effective when the notice is given
if transmission is by a means that is reasonable in the circumstances. If
notice of rejection is given by a means that is not reasonable, rejection
is effective when the notice is received. If an agreement of the sender and
receiving bank establishes the means to be used to reject a payment order,
(i) any means complying with the agreement is reasonable and (ii) any means
not complying is not reasonable unless no significant delay in receipt of
the notice resulted from the use of the noncomplying means. (b) This subsection applies if a receiving bank other than the
beneficiary's bank fails to execute a payment order despite the existence
on the execution date of a withdrawable credit balance in an authorized
account of the sender sufficient to cover the order. If the sender does not
receive notice of rejection of the order on the execution date and the
authorized account of the sender does not bear interest, the bank is
obliged to pay interest to the sender on the amount of the order for the
number of days elapsing after the execution date to the earlier of the day
the order is canceled pursuant to Section 4A-211(d) or the day the sender
receives notice or learns that the order was not executed, counting the
final day of the period as an elapsed day. If the withdrawable credit
balance during that period falls below the amount of the order, the amount
of interest is reduced accordingly. (c) If a receiving bank suspends payments, all unaccepted payment orders
issued to it are deemed rejected at the time the bank suspends payments. (d) Acceptance of a payment order precludes a later rejection of the
order. Rejection of a payment order precludes a later acceptance of the order.(Source: P.A. 86-1291.) (Text of Section after amendment by P.A. 103-1036) Sec. 4A-210. Rejection of payment order. (a) A payment order is rejected by the receiving bank by a notice of rejection transmitted to the sender orally or in a record. A notice of rejection need not use any particular words and is sufficient if it indicates that the receiving bank is rejecting the order or will not execute or pay the order. Rejection is effective when the notice is given if transmission is by a means that is reasonable in the circumstances. If notice of rejection is given by a means that is not reasonable, rejection is effective when the notice is received. If an agreement of the sender and receiving bank establishes the means to be used to reject a payment order, (i) any means complying with the agreement is reasonable and (ii) any means not complying is not reasonable unless no significant delay in receipt of the notice resulted from the use of the noncomplying means. (b) This subsection applies if a receiving bank other than the beneficiary's bank fails to execute a payment order despite the existence on the execution date of a withdrawable credit balance in an authorized account of the sender sufficient to cover the order. If the sender does not receive notice of rejection of the order on the execution date and the authorized account of the sender does not bear interest, the bank is obliged to pay interest to the sender on the amount of the order for the number of days elapsing after the execution date to the earlier of the day the order is canceled pursuant to Section 4A-211(d) or the day the sender receives notice or learns that the order was not executed, counting the final day of the period as an elapsed day. If the withdrawable credit balance during that period falls below the amount of the order, the amount of interest is reduced accordingly. (c) If a receiving bank suspends payments, all unaccepted payment orders issued to it are deemed rejected at the time the bank suspends payments. (d) Acceptance of a payment order precludes a later rejection of the order. Rejection of a payment order precludes a later acceptance of the order.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/4A-211 (810 ILCS 5/4A-211) (from Ch. 26, par. 4A-211) (Text of Section before amendment by P.A. 103-1036) Sec. 4A-211. Cancellation and amendment of payment order. (a) A communication of the sender of a payment order cancelling or
amending the order may be transmitted to the receiving bank orally,
electronically, or in writing. If a security procedure is in effect between
the sender and the receiving bank, the communication is not effective to
cancel or amend the order unless the communication is verified pursuant to
the security procedure or the bank agrees to the cancellation or amendment. (b) Subject to subsection (a), a communication by the sender cancelling
or amending a payment order is effective to cancel or amend the order if
notice of the communication is received at a time and in a manner affording
the receiving bank a reasonable opportunity to act on the communication
before the bank accepts the payment order. (c) After a payment order has been accepted, cancellation or amendment
of the order is not effective unless the receiving bank agrees or a
funds transfer system rule allows cancellation or amendment without
agreement of the bank. (1) With respect to a payment order accepted by a | | receiving bank other than the beneficiary's bank, cancellation or amendment is not effective unless a conforming cancellation or amendment of the payment order issued by the receiving bank is also made.
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| (2) With respect to a payment order accepted by the
| | beneficiary's bank, cancellation or amendment is not effective unless the order was issued in execution of an unauthorized payment order, or because of a mistake by a sender in the funds transfer which resulted in the issuance of a payment order (i) that is a duplicate of a payment order previously issued by the sender, (ii) that orders payment to a beneficiary not entitled to receive payment from the originator, or (iii) that orders payment in an amount greater than the amount the beneficiary was entitled to receive from the originator. If the payment order is canceled or amended, the beneficiary's bank is entitled to recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law governing mistake and restitution.
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| (d) An unaccepted payment order is canceled by operation of law at the
close of the fifth funds transfer business day of the receiving bank after
the execution date or payment date of the order.
(e) A canceled payment order cannot be accepted. If an accepted payment
order is canceled, the acceptance is nullified and no person has any right
or obligation based on the acceptance. Amendment of a payment order is
deemed to be cancellation of the original order at the time of amendment
and issue of a new payment order in the amended form at the same time.
(f) Unless otherwise provided in an agreement of the parties or in a
funds transfer system rule, if the receiving bank, after accepting a
payment order, agrees to cancellation or amendment of the order by the
sender or is bound by a funds transfer system rule allowing cancellation or
amendment without the bank's agreement, the sender, whether or not
cancellation or amendment is effective, is liable to the bank for any loss
and expenses, including reasonable attorney's fees, incurred by the bank as
a result of the cancellation or amendment or attempted cancellation or
amendment.
(g) A payment order is not revoked by the death or legal incapacity of
the sender unless the receiving bank knows of the death or of an
adjudication of incapacity by a court of competent jurisdiction and has
reasonable opportunity to act before acceptance of the order.
(h) A funds transfer system rule is not effective to the extent it
conflicts with subsection (c)(2).
(Source: P.A. 97-813, eff. 7-13-12.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 4A-211. Cancellation and amendment of payment order.
(a) A communication of the sender of a payment order cancelling or amending the order may be transmitted to the receiving bank orally or in a record. If a security procedure is in effect between the sender and the receiving bank, the communication is not effective to cancel or amend the order unless the communication is verified pursuant to the security procedure or the bank agrees to the cancellation or amendment.
(b) Subject to subsection (a), a communication by the sender cancelling or amending a payment order is effective to cancel or amend the order if notice of the communication is received at a time and in a manner affording the receiving bank a reasonable opportunity to act on the communication before the bank accepts the payment order.
(c) After a payment order has been accepted, cancellation or amendment of the order is not effective unless the receiving bank agrees or a funds transfer system rule allows cancellation or amendment without agreement of the bank.
(1) With respect to a payment order accepted by a
| | receiving bank other than the beneficiary's bank, cancellation or amendment is not effective unless a conforming cancellation or amendment of the payment order issued by the receiving bank is also made.
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| (2) With respect to a payment order accepted by the
| | beneficiary's bank, cancellation or amendment is not effective unless the order was issued in execution of an unauthorized payment order, or because of a mistake by a sender in the funds transfer which resulted in the issuance of a payment order (i) that is a duplicate of a payment order previously issued by the sender, (ii) that orders payment to a beneficiary not entitled to receive payment from the originator, or (iii) that orders payment in an amount greater than the amount the beneficiary was entitled to receive from the originator. If the payment order is canceled or amended, the beneficiary's bank is entitled to recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law governing mistake and restitution.
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| (d) An unaccepted payment order is canceled by operation of law at the close of the fifth funds transfer business day of the receiving bank after the execution date or payment date of the order.
(e) A canceled payment order cannot be accepted. If an accepted payment order is canceled, the acceptance is nullified and no person has any right or obligation based on the acceptance. Amendment of a payment order is deemed to be cancellation of the original order at the time of amendment and issue of a new payment order in the amended form at the same time.
(f) Unless otherwise provided in an agreement of the parties or in a funds transfer system rule, if the receiving bank, after accepting a payment order, agrees to cancellation or amendment of the order by the sender or is bound by a funds transfer system rule allowing cancellation or amendment without the bank's agreement, the sender, whether or not cancellation or amendment is effective, is liable to the bank for any loss and expenses, including reasonable attorney's fees, incurred by the bank as a result of the cancellation or amendment or attempted cancellation or amendment.
(g) A payment order is not revoked by the death or legal incapacity of the sender unless the receiving bank knows of the death or of an adjudication of incapacity by a court of competent jurisdiction and has reasonable opportunity to act before acceptance of the order.
(h) A funds transfer system rule is not effective to the extent it conflicts with subsection (c)(2).
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/4A-212
(810 ILCS 5/4A-212) (from Ch. 26, par. 4A-212)
Sec. 4A-212.
Liability and duty of receiving bank regarding unaccepted
payment order. If a receiving bank fails to accept a payment order that it
is obliged by express agreement to accept, the bank is liable for breach of
the agreement to the extent provided in the agreement or in this Article,
but does not otherwise have any duty to accept a payment order or, before
acceptance, to take any action, or refrain from taking action, with respect
to the order except as provided in this Article or by express agreement.
Liability based on acceptance arises only when acceptance occurs as stated
in Section 4A-209, and liability is limited to that provided in this
Article. A receiving bank is not the agent of the sender or beneficiary of
the payment order it accepts, or of any other party to the funds transfer,
and the bank owes no duty to any party to the funds transfer except as
provided in this Article or by express agreement.
(Source: P.A. 86-1291.)
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810 ILCS 5/Art. 4A Pt. 3
(810 ILCS 5/Art. 4A Pt. 3 heading)
PART 3.
EXECUTION OF SENDER'S PAYMENT ORDER BY RECEIVING BANK
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810 ILCS 5/4A-301
(810 ILCS 5/4A-301) (from Ch. 26, par. 4A-301)
Sec. 4A-301.
Execution and execution date.
(a) A payment order is "executed" by the receiving bank
when it issues a payment order intended to carry out the payment order
received by the bank. A payment order received by the beneficiary's bank
can be accepted but cannot be executed.
(b) "Execution date" of a payment order means the day on which the
receiving bank may properly issue a payment order in execution of the
sender's order. The execution date may be determined by instruction of the
sender but cannot be earlier than the day the order is received and, unless
otherwise determined, is the day the order is received. If the sender's
instruction states a payment date, the execution date is the payment date
or an earlier date on which the execution is reasonably necessary to
allow payment to the beneficiary on the payment date.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-302
(810 ILCS 5/4A-302) (from Ch. 26, par. 4A-302)
Sec. 4A-302.
Obligations of receiving bank in execution of payment order.
(a) Except as provided in subsections (b) through (d), if
the receiving bank accepts a payment order pursuant to Section 4A-209(a),
the bank has the following obligations in executing the order:
(1) The receiving bank is obliged to issue, on the | | execution date, a payment order complying with the sender's order and to follow the sender's instructions concerning (i) any intermediary bank or funds transfer system to be used in carrying out the funds transfer, or (ii) the means by which payment orders are to be transmitted in the funds transfer. If the originator's bank issues a payment order to an intermediary bank, the originator's bank is obliged to instruct the intermediary bank according to the instruction of the originator. An intermediary bank in the funds transfer is similarly bound by an instruction given to it by the sender of the payment order it accepts.
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(2) If the sender's instruction states that the funds
| | transfer is to be carried out telephonically or by wire transfer or otherwise indicates that the funds transfer is to be carried out by the most expeditious means, the receiving bank is obliged to transmit its payment order by the most expeditious available means, and to instruct any intermediary bank accordingly. If a sender's instruction states a payment date, the receiving bank is obliged to transmit its payment order at a time and by means reasonably necessary to allow payment to the beneficiary on the payment date or as soon thereafter as is feasible.
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(b) Unless otherwise instructed, a receiving bank executing a payment
order may (i) use any funds transfer system if use of
that system is reasonable in the circumstances, and (ii) issue a payment
order to the beneficiary's bank or to an intermediary bank through which a
payment order conforming to the sender's order can expeditiously be issued
to the beneficiary's bank if the receiving bank exercises ordinary care in
the selection of the intermediary bank. A receiving bank is not required
to follow an instruction of the sender designating a funds transfer system
to be used in carrying out the funds transfer if the receiving bank, in
good faith, determines that it is not feasible to follow the instruction or
that following the instruction would unduly delay completion of the funds transfer.
(c) Unless subsection (a)(2) applies or the receiving bank is otherwise
instructed, the bank may execute a payment order by transmitting its
payment order by first class mail or by any means reasonable in the
circumstances. If the receiving bank is instructed to execute the sender's
order by transmitting its payment order by a particular means, the receiving
bank may issue its payment order by the means stated or by any means as
expeditious as the means stated.
(d) Unless instructed by the sender, (i) the receiving bank may not
obtain payment of its charges for services and expenses in connection with
the execution of the sender's order by issuing a payment order in an amount
equal to the amount of the sender's order less the amount of the charges,
and (ii) may not instruct a subsequent receiving bank to obtain payment of
its charges in the same manner.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-303
(810 ILCS 5/4A-303) (from Ch. 26, par. 4A-303)
Sec. 4A-303.
Erroneous execution of payment order.
(a) A receiving bank that (i) executes the payment order
of the sender by issuing a payment order in an amount greater than the
amount of the sender's order, or (ii) issues a payment order in execution
of the sender's order and then issues a duplicate order, is entitled to
payment of the amount of the sender's order under Section 4A-402(c) if that
subsection is otherwise satisfied. The bank is entitled to recover from the
beneficiary of the erroneous order the excess payment received to the
extent allowed by the law governing mistake and restitution.
(b) A receiving bank that executes the payment order of the sender by
issuing a payment order in an amount less than the amount of the sender's
order is entitled to payment of the amount of the sender's order under
Section 4A-402(c) if (i) that subsection is otherwise satisfied and (ii)
the bank corrects its mistake by issuing an additional payment order for
the benefit of the beneficiary of the sender's order. If the error is not
corrected, the issuer of the erroneous order is entitled to receive or
retain payment from the sender of the order it accepted only to the extent
of the amount of the erroneous order. This subsection does not apply if
the receiving bank executes the sender's payment order by issuing a payment
order in an amount less than the amount of the sender's order
for the purpose of obtaining payment of its charges for services and
expenses pursuant to the instruction of the sender.
(c) If a receiving bank executes the payment order of the sender by
issuing a payment order to a beneficiary different from the beneficiary of
the sender's order and the funds transfer is completed on the basis of that
error, the sender of the payment order that was erroneously executed and
all previous senders in the funds transfer are not obliged to pay the
payment orders they issued. The issuer of the erroneous order is entitled
to recover from the beneficiary of the order the payment received to the
extent allowed by the law governing mistake and restitution.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-304
(810 ILCS 5/4A-304) (from Ch. 26, par. 4A-304)
Sec. 4A-304.
Duty of sender to report erroneously executed payment order.
If the sender of a payment order that is erroneously executed as stated
in Section 4A-303 receives notification from the receiving bank that the
order was executed or that the sender's account was debited with
respect to the order, the sender has a duty to exercise ordinary care to
determine, on the basis of information available to the sender, that the
order was erroneously executed and to notify the bank of the relevant facts
within a reasonable time not exceeding 90 days after the notification from
the bank was received by the sender. If the sender fails to perform that
duty, the bank is not obliged to pay interest on any amount refundable to
the sender under Section 4A-402(d) for the period before the bank learns of
the execution error. The bank is not entitled to any recovery from the
sender on account of a failure by the sender to perform the duty stated
in this Section.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-305 (810 ILCS 5/4A-305) (from Ch. 26, par. 4A-305) (Text of Section before amendment by P.A. 103-1036) Sec. 4A-305. Liability for late or improper execution or failure to
execute payment order. (a) If a funds transfer is completed but execution of a payment order by
the receiving bank in breach of Section 4A-302 results in delay in payment
to the beneficiary, the bank is obliged to pay interest to either the
originator or the beneficiary of the funds transfer for the period of delay
caused by the improper execution. Except as provided in subsection (c),
additional damages are not recoverable. (b) If execution of a payment order by a receiving bank in breach of
Section 4A-302 results in (i) noncompletion of the funds transfer, (ii)
failure to use an intermediary bank designated by the originator, or (iii)
issuance of a payment order that does not comply with the terms of the
payment order of the originator, the bank is liable to the originator for
its expenses in the funds transfer and for incidental expenses and interest
losses, to the extent not covered by subsection (a), resulting from the
improper execution. Except as provided in subsection (c), additional
damages are not recoverable. (c) In addition to the amounts payable under subsections (a) and (b),
damages, including consequential damages, are recoverable to the extent
provided in an express written agreement of the receiving bank. (d) If a receiving bank fails to execute a payment order it was obliged
by express agreement to execute, the receiving bank is liable to the sender
for its expenses in the transaction and for incidental expenses and
interest losses resulting from the failure to execute. Additional damages,
including consequential damages, are recoverable to the extent provided in
an express written agreement of the receiving bank, but are not
otherwise recoverable. (e) Reasonable attorney's fees are recoverable if demand for
compensation under subsection (a) or (b) is made and refused before an
action is brought on the claim. If a claim is made for breach of an
agreement under subsection (d) and the agreement does not provide for
damages, reasonable attorney's fees are recoverable if demand for
compensation under subsection (d) is made and refused before an action is
brought on the claim. (f) Except as stated in this Section, the liability of a receiving bank
under subsections (a) and (b) may not be varied by agreement.(Source: P.A. 86-1291.) (Text of Section after amendment by P.A. 103-1036) Sec. 4A-305. Liability for late or improper execution or failure to execute payment order. (a) If a funds transfer is completed but execution of a payment order by the receiving bank in breach of Section 4A-302 results in delay in payment to the beneficiary, the bank is obliged to pay interest to either the originator or the beneficiary of the funds transfer for the period of delay caused by the improper execution. Except as provided in subsection (c), additional damages are not recoverable. (b) If execution of a payment order by a receiving bank in breach of Section 4A-302 results in (i) noncompletion of the funds transfer, (ii) failure to use an intermediary bank designated by the originator, or (iii) issuance of a payment order that does not comply with the terms of the payment order of the originator, the bank is liable to the originator for its expenses in the funds transfer and for incidental expenses and interest losses, to the extent not covered by subsection (a), resulting from the improper execution. Except as provided in subsection (c), additional damages are not recoverable. (c) In addition to the amounts payable under subsections (a) and (b), damages, including consequential damages, are recoverable to the extent provided in an express agreement of the receiving bank, evidenced by a record. (d) If a receiving bank fails to execute a payment order it was obliged by express agreement to execute, the receiving bank is liable to the sender for its expenses in the transaction and for incidental expenses and interest losses resulting from the failure to execute. Additional damages, including consequential damages, are recoverable to the extent provided in an express agreement of the receiving bank, evidenced by a record, but are not otherwise recoverable. (e) Reasonable attorney's fees are recoverable if demand for compensation under subsection (a) or (b) is made and refused before an action is brought on the claim. If a claim is made for breach of an agreement under subsection (d) and the agreement does not provide for damages, reasonable attorney's fees are recoverable if demand for compensation under subsection (d) is made and refused before an action is brought on the claim. (f) Except as stated in this Section, the liability of a receiving bank under subsections (a) and (b) may not be varied by agreement.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/Art. 4A Pt. 4
(810 ILCS 5/Art. 4A Pt. 4 heading)
PART 4.
PAYMENT
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810 ILCS 5/4A-401
(810 ILCS 5/4A-401) (from Ch. 26, par. 4A-401)
Sec. 4A-401.
Payment date.
"Payment date" of a payment order means the
day on which the amount of the order is payable to the beneficiary by the
beneficiary's bank. The payment date may be determined by instruction of
the sender but cannot be earlier than the day the order is received by the
beneficiary's bank and, unless otherwise determined, is the day the order
is received by the beneficiary's bank.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-402
(810 ILCS 5/4A-402) (from Ch. 26, par. 4A-402)
Sec. 4A-402.
Obligation of sender to pay receiving bank.
(a) This Section is subject to Sections 4A-205 and 4A-207.
(b) With respect to a payment order issued to the beneficiary's bank,
acceptance of the order by the bank obliges the sender to pay the bank the
amount of the order, but payment is not due until the payment date of
the order.
(c) This subsection is subject to subsection (e) and to Section 4A-303.
With respect to a payment order issued to a receiving bank other than the
beneficiary's bank, acceptance of the order by the receiving bank obliges
the sender to pay the bank the amount of the sender's order. Payment by the
sender is not due until the execution date of the sender's order. The
obligation of that sender to pay its payment order is excused if the funds
transfer is not completed by acceptance by the beneficiary's bank of a
payment order instructing payment to the beneficiary of that sender's
payment order.
(d) If the sender of a payment order pays the order and was not obliged
to pay all or part of the amount paid, the bank receiving payment is
obliged to refund payment to the extent the sender was not obliged to pay.
Except as provided in Sections 4A-204 and 4A-304, interest is payable on
the refundable amount from the date of payment.
(e) If a funds transfer is not completed as stated in subsection (c) and
an intermediary bank is obliged to refund payment as stated in subsection
(d) but is unable to do so because not permitted by applicable law or
because the bank suspends payments, a sender in the funds transfer that
executed a payment order in compliance with an instruction, as stated in
Section 4A-302(a)(1), to route the funds transfer through that intermediary
bank is entitled to receive or retain payment from the sender of the
payment order that it accepted. The first sender in the funds transfer that
issued an instruction requiring routing through that intermediary bank is
subrogated to the right of the bank that paid the intermediary bank to
refund as stated in subsection (d).
(f) The right of the sender of a payment order to be excused from the
obligation to pay the order as stated in subsection (c) or to receive
refund under subsection (d) may not be varied by agreement.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-403
(810 ILCS 5/4A-403) (from Ch. 26, par. 4A-403)
Sec. 4A-403.
Payment by sender to receiving bank.
(a) Payment of the sender's obligation under Section 4A-402 to pay the
receiving bank occurs as follows:
(1) If the sender is a bank, payment occurs when the | | receiving bank receives final settlement of the obligation through a Federal Reserve Bank or through a funds transfer system.
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(2) If the sender is a bank and the sender (i)
| | credited an account of the receiving bank with the sender, or (ii) caused an account of the receiving bank in another bank to be credited, payment occurs when the credit is withdrawn or, if not withdrawn, at midnight of the day on which the credit is withdrawable and the receiving bank learns of that fact.
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(3) If the receiving bank debits an account of the
| | sender with the receiving bank, payment occurs when the debit is made to the extent the debit is covered by a withdrawable credit balance in the account.
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(b) If the sender and receiving bank are members of a funds transfer
system that nets obligations multilaterally among participants, the
receiving bank receives final settlement when settlement is complete in
accordance with the rules of the system. The obligation of the sender to
pay the amount of a payment order transmitted through the funds transfer
system may be satisfied, to the extent permitted by the rules of the
system, by setting off and applying against the sender's obligation the
right of the sender to receive payment from the receiving bank of the
amount of any other payment order transmitted to the sender by the
receiving bank through the funds transfer system. The aggregate balance of
obligations owed by each sender to each receiving bank in the
funds transfer system may be satisfied, to the extent permitted by the
rules of the system, by setting off and applying against that balance the
aggregate balance of obligations owed to the sender by other members of the
system. The aggregate balance is determined after the right of setoff
stated in the second sentence of this subsection has been exercised.
(c) If 2 banks transmit payment orders to each other under an agreement
that settlement of the obligations of each bank to the other under Section
4A-402 will be made at the end of the day or other period, the total amount
owed with respect to all orders transmitted by one bank shall be set off
against the total amount owed with respect to all orders transmitted by the
other bank. To the extent of the setoff, each bank has made payment to the
other.
(d) In a case not covered by subsection (a), the time when payment of
the sender's obligation under Section 4A-402(b) or 4A-402(c) occurs is
governed by applicable principles of law that determine when an obligation
is satisfied.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-404
(810 ILCS 5/4A-404) (from Ch. 26, par. 4A-404)
Sec. 4A-404.
Obligation of beneficiary's bank to pay and give notice
to beneficiary.
(a) Subject to Sections 4A-211(e), 4A-405(d), and
4A-405(e), if a beneficiary's bank accepts a payment order, the bank is
obliged to pay the amount of the order to the beneficiary of the order.
Payment is due on the payment date of the order, but if acceptance occurs
on the payment date after the close of the funds transfer business day of
the bank, payment is due on the next funds transfer business day. If the
bank refuses to pay after demand by the beneficiary and receipt of notice
of particular circumstances that will give rise to consequential damages as
a result of nonpayment, the beneficiary may recover damages resulting from
the refusal to pay to the extent the bank had notice of the damages, unless
the bank proves that it did not pay because of a reasonable doubt
concerning the right of the beneficiary to payment.
(b) If a payment order accepted by the beneficiary's bank instructs
payment to an account of the beneficiary, the bank is obliged to notify the
beneficiary of receipt of the order before midnight of the next
funds transfer business day following the payment date. If the payment
order does not instruct payment to an account of the beneficiary, the bank
is required to notify the beneficiary only if notice is required by the
order. Notice may be given by first class mail or any other means
reasonable in the circumstances. If the bank fails to give the required
notice, the bank is obliged to pay interest to the beneficiary on the
amount of the payment order from the day notice should have been given
until the day the beneficiary learned of receipt of the payment order by
the bank. No other damages are recoverable. Reasonable attorney's fees
are also recoverable if demand for interest is made and refused before an
action is brought on the claim.
(c) The right of a beneficiary to receive payment and damages as stated
in subsection (a) may not be varied by agreement or a funds transfer system
rule. The right of a beneficiary to be notified as stated in subsection
(b) may be varied by agreement of the beneficiary or by a funds transfer
system rule if the beneficiary is notified of the rule before initiation of
the funds transfer.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-405
(810 ILCS 5/4A-405) (from Ch. 26, par. 4A-405)
Sec. 4A-405.
Payment by beneficiary's bank to beneficiary.
(a) If the beneficiary's bank credits an account of the beneficiary of a
payment order, payment of the bank's obligation under Section
4A-404(a) occurs when and to the extent (i) the beneficiary is notified of
the right to withdraw the credit, (ii) the bank lawfully applies the credit
to a debt of the beneficiary, or (iii) funds with respect to the order are
otherwise made available to the beneficiary by the bank.
(b) If the beneficiary's bank does not credit an account of the
beneficiary of a payment order, the time when payment of the bank's
obligation under Section 4A-404(a) occurs is governed by principles of law
that determine when an obligation is satisfied.
(c) Except as stated in subsections (d) and (e), if the beneficiary's
bank pays the beneficiary of a payment order under a condition to payment
or agreement of the beneficiary giving the bank the right to recover
payment from the beneficiary if the bank does not receive payment of the
order, the condition to payment or agreement is not enforceable.
(d) A funds transfer system rule may provide that payments made to
beneficiaries of funds transfers made through the system are provisional
until receipt of payment by the beneficiary's bank of the payment order it
accepted. A beneficiary's bank that makes a payment that is provisional
under the rule is entitled to refund from the beneficiary if (i) the rule
requires that both the beneficiary and the originator be given notice of
the provisional nature of the payment before the funds transfer is
initiated, (ii) the beneficiary, the beneficiary's bank and the
originator's bank agreed to be bound by the rule, and (iii) the
beneficiary's bank did not receive payment of the payment order that it
accepted. If the beneficiary is obliged to refund payment to the
beneficiary's bank, acceptance of the payment order by the beneficiary's
bank is nullified and no payment by the originator of the funds transfer to
the beneficiary occurs under Section 4A-406.
(e) This subsection applies to a funds transfer that includes a payment
order transmitted over a funds transfer system that (i) nets obligations
multilaterally among participants, and (ii) has in effect a loss sharing
agreement among participants for the purpose of providing funds necessary
to complete settlement of the obligations of one or more participants that
do not meet their settlement obligations. If the beneficiary's bank in the
funds transfer accepts a payment order and the system fails to complete
settlement pursuant to its rules with respect to any payment order in the
funds transfer, (i) the acceptance by the beneficiary's bank is nullified
and no person has any right or obligation based on the acceptance, (ii) the
beneficiary's bank is entitled to recover payment from the beneficiary,
(iii) no payment by the originator to the beneficiary occurs under Section
4A-406, and (iv) subject to Section 4A-402(e), each sender in the funds
transfer is excused from its obligation to pay its payment order under
Section 4A-402(c) because the funds transfer has not been completed.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-406
(810 ILCS 5/4A-406) (from Ch. 26, par. 4A-406)
Sec. 4A-406.
Payment by originator to beneficiary; discharge of
underlying obligation.
(a) Subject to Sections 4A-211(e), 4A-405(d), and
4A-405(e), the originator of a funds transfer pays the beneficiary of the
originator's payment order (i) at the time a payment order for the benefit
of the beneficiary is accepted by the beneficiary's bank in the funds
transfer and (ii) in an amount equal to the amount of the order accepted by
the beneficiary's bank, but not more than the amount of the originator's order.
(b) If payment under subsection (a) is made to satisfy an obligation, the
obligation is discharged to the same extent discharge would result from
payment to the beneficiary of the same amount in money, unless (i) the
payment under subsection (a) was made by a means prohibited by the contract
of the beneficiary with respect to the obligation, (ii) the beneficiary,
within a reasonable time after receiving notice of receipt of the order by
the beneficiary's bank, notified the originator of the beneficiary's
refusal of the payment, (iii) funds with respect to the order were not
withdrawn by the beneficiary or applied to a debt of the beneficiary, and
(iv) the beneficiary would suffer a loss that could reasonably have been
avoided if payment had been made by a means complying with the contract.
If payment by the originator does not result in discharge under this
Section the originator is subrogated to the rights of the beneficiary to
receive payment from the beneficiary's bank under Section 4A-404(a).
(c) For the purpose of determining whether discharge of an obligation
occurs under subsection (b), if the beneficiary's bank accepts a payment
order in an amount equal to the amount of the originator's payment order
less charges of one or more receiving banks in the funds transfer, payment
to the beneficiary is deemed to be in the amount of the originator's order
unless upon demand by the beneficiary the originator does not pay the
beneficiary the amount of the deducted charges.
(d) Rights of the originator or of the beneficiary of the funds transfer
under this Section may be varied only by agreement of the originator and
the beneficiary.
(Source: P.A. 86-1291.)
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810 ILCS 5/Art. 4A Pt. 5
(810 ILCS 5/Art. 4A Pt. 5 heading)
PART 5.
MISCELLANEOUS PROVISIONS
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810 ILCS 5/4A-501
(810 ILCS 5/4A-501) (from Ch. 26, par. 4A-501)
Sec. 4A-501.
Variation by agreement and effect of funds transfer
system rule.
(a) Except as otherwise provided in this Article, the
rights and obligations of a party to a funds transfer may be varied by
agreement of the affected party.
(b) "Funds transfer system rule" means a rule of an association of banks
(i) governing transmission of payment orders by means of a funds transfer
system of the association or rights and obligations with respect to those
orders, or (ii) to the extent the rule governs rights and obligations
between banks that are parties to a funds transfer in which a Federal
Reserve Bank, acting as an intermediary bank, sends a payment order to the
beneficiary's bank. Except as otherwise provided in this Article, a
funds transfer system rule governing rights and obligations between
participating banks using the system may be effective even if the rule
conflicts with this Article and indirectly affects another party to the
funds transfer who does not consent to the rule. A funds transfer system
rule may also govern rights and obligations of parties other than
participating banks using the system to the extent stated in Sections
4A-404(c), 4A-405(d), and 4A-507(c).
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-502
(810 ILCS 5/4A-502) (from Ch. 26, par. 4A-502)
Sec. 4A-502.
Creditor process served on receiving bank; setoff by
beneficiary's bank.
(a) As used in this Section, "creditor process" means levy, attachment,
garnishment, notice of lien, sequestration, or similar process issued by or
on behalf of a creditor or other claimant with respect to an account.
(b) This subsection applies to creditor process with respect to an
authorized account of the sender of a payment order if the creditor process
is served on the receiving bank. For the purpose of determining rights with
respect to the creditor process, if the receiving bank accepts the payment
order the balance in the authorized account is deemed to be reduced by the
amount of the payment order to the extent the bank did not otherwise
receive payment of the order, unless the creditor process is served at a
time and in a manner affording the bank a reasonable opportunity to act on
it before the bank accepts the payment order.
(c) If a beneficiary's bank has received a payment order for payment to
the beneficiary's account in the bank, the following rules apply:
(1) The bank may credit the beneficiary's account. | | The amount credited may be set off against an obligation owed by the beneficiary to the bank or may be applied to satisfy creditor process served on the bank with respect to the account.
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(2) The bank may credit the beneficiary's account and
| | allow withdrawal of the amount credited unless creditor process with respect to the account is served at a time and in a manner affording the bank a reasonable opportunity to act to prevent withdrawal.
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(3) If creditor process with respect to the
| | beneficiary's account has been served and the bank has had a reasonable opportunity to act on it, the bank may not reject the payment order except for a reason unrelated to the service of process.
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(d) Creditor process with respect to a payment by the originator to the
beneficiary pursuant to a funds transfer may be served only on the
beneficiary's bank with respect to the debt owed by that bank to the
beneficiary. Any other bank served with the creditor process is not obliged
to act with respect to the process.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-503
(810 ILCS 5/4A-503) (from Ch. 26, par. 4A-503)
Sec. 4A-503.
Injunction or restraining order with respect to funds
transfer. For proper cause and in compliance with applicable law, a court
may restrain (i) a person from issuing a payment order to initiate a funds
transfer, (ii) an originator's bank from executing the payment order of the
originator, or (iii) the beneficiary's bank from releasing funds to the
beneficiary or the beneficiary from withdrawing the funds. A court may not
otherwise restrain a person from issuing a payment order, paying or
receiving payment of a payment order, or otherwise acting with respect to a
funds transfer.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-504
(810 ILCS 5/4A-504) (from Ch. 26, par. 4A-504)
Sec. 4A-504.
Order in which items and payment orders may be charged to
account; order of withdrawals from account.
(a) If a receiving bank has received more than one payment order of the
sender or one or more payment orders and other items that are payable from
the sender's account, the bank may charge the sender's account with respect
to the various orders and items in any sequence.
(b) In determining whether a credit to an account has been withdrawn by
the holder of the account or applied to a debt of the holder of the
account, credits first made to the account are first withdrawn or applied.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-505
(810 ILCS 5/4A-505) (from Ch. 26, par. 4A-505)
Sec. 4A-505.
Preclusion of objection to debit of customer's
account. If a receiving bank has received payment from its
customer with respect to a payment order issued in the name
of the customer as sender and accepted by the bank, and the
customer received notification reasonably identifying the order,
the customer is precluded from asserting that the bank is not
entitled to retain the payment unless the customer notifies the
bank of the customer's objection to the payment within one year
after the notification was received by the customer.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-506
(810 ILCS 5/4A-506) (from Ch. 26, par. 4A-506)
Sec. 4A-506.
Rate of interest.
(a) If, under this Article, a receiving
bank is obliged to pay interest with respect to a payment order issued to
the bank, the amount payable may be determined (i) by agreement of the
sender and receiving bank, or (ii) by a funds transfer system rule if the
payment order is transmitted through a funds transfer system.
(b) If the amount of interest is not determined by an agreement or rule
as stated in subsection (a), the amount is calculated by multiplying the
applicable Federal Funds rate by the amount on which interest is payable,
and then multiplying the product by the number of days for which interest
is payable. The applicable Federal Funds rate is the average of the Federal
Funds rates published by the Federal Reserve Bank of New York for each of
the days for which interest is payable divided by 360. The Federal Funds
rate for any day on which a published rate is not available is the same as
the published rate for the next preceding day for which there is a
published rate. If a receiving bank that accepted a payment order is
required to refund payment to the sender of the order because the funds
transfer was not completed, but the failure to complete was not due to any
fault by the bank, the interest payable is reduced by a percentage equal to
the reserve requirement on deposits of the receiving bank.
(Source: P.A. 86-1291.)
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810 ILCS 5/4A-507
(810 ILCS 5/4A-507) (from Ch. 26, par. 4A-507)
Sec. 4A-507. Choice of law.
(a) The following rules apply unless the
affected parties otherwise agree or subsection (c) applies:
(1) The rights and obligations between the sender of | | a payment order and the receiving bank are governed by the law of the jurisdiction in which the receiving bank is located.
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(2) The rights and obligations between the
| | beneficiary's bank and the beneficiary are governed by the law of the jurisdiction in which the beneficiary's bank is located.
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(3) The issue of when payment is made pursuant to a
| | funds transfer by the originator to the beneficiary is governed by the law of the jurisdiction in which the beneficiary's bank is located.
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(b) If the parties described in each paragraph of subsection (a) have
made an agreement selecting the law of a particular jurisdiction to govern
rights and obligations between each other, the law of that jurisdiction
governs those rights and obligations, whether or not the payment order or
the funds transfer bears a reasonable relation to that jurisdiction.
(c) A funds transfer system rule may select the law of a particular
jurisdiction to govern (i) rights and obligations between participating
banks with respect to payment orders transmitted or processed through the
system, or (ii) the rights and obligations of some or all parties to a
funds transfer any part of which is carried out by means of the system. A
choice of law made pursuant to clause (i) is binding on participating
banks. A choice of law made pursuant to clause (ii) is binding on the
originator, other sender, or a receiving bank having notice that the
funds transfer system might be used in the funds transfer and of the choice
of law by the system when the originator, other sender, or receiving bank
issued or accepted a payment order. The beneficiary of a funds transfer is
bound by the choice of law if, when the funds transfer is initiated, the
beneficiary has notice that the funds transfer system might be used in the
funds transfer and of the choice of law by the system. The law of a
jurisdiction selected pursuant to this subsection may govern, whether or
not that law bears a reasonable relation to the matter in issue.
(d) In the event of inconsistency between an agreement under subsection
(b) and a choice of law rule under subsection (c), the agreement under
subsection (b) prevails.
(e) If a funds transfer is made by use of more than one funds transfer
system and there is inconsistency between choice of law rules of the
systems, the matter in issue is governed by the law of the selected
jurisdiction that has the most significant relationship to the matter in issue.
(Source: P.A. 97-813, eff. 7-13-12.)
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810 ILCS 5/Art. 5
(810 ILCS 5/Art. 5 heading)
ARTICLE 5
LETTERS OF CREDIT
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810 ILCS 5/5-101
(810 ILCS 5/5-101) (from Ch. 26, par. 5-101)
Sec. 5-101.
Short title.
This Article may be cited as Uniform Commercial
Code--Letters of Credit.
(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/5-102
(810 ILCS 5/5-102) (from Ch. 26, par. 5-102)
Sec. 5-102.
Definitions.
(a) In this Article:
(1) "Adviser" means a person who, at the request of | | the issuer, a confirmer, or another adviser, notifies or requests another adviser to notify the beneficiary that a letter of credit has been issued, confirmed, or amended.
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(2) "Applicant" means a person at whose request or
| | for whose account a letter of credit is issued. The term includes a person who requests an issuer to issue a letter of credit on behalf of another if the person making the request undertakes an obligation to reimburse the issuer.
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(3) "Beneficiary" means a person who under the terms
| | of a letter of credit is entitled to have its complying presentation honored. The term includes a person to whom drawing rights have been transferred under a transferable letter of credit.
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(4) "Confirmer" means a nominated person who
| | undertakes, at the request or with the consent of the issuer, to honor a presentation under a letter of credit issued by another.
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(5) "Dishonor" of a letter of credit means failure
| | timely to honor or to take an interim action, such as acceptance of a draft, that may be required by the letter of credit.
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(6) "Document" means a draft or other demand,
| | document of title, investment security, certificate, invoice, or other record, statement, or representation of fact, law, right, or opinion (i) which is presented in a written or other medium permitted by the letter of credit or, unless prohibited by the letter of credit, by the standard practice referred to in Section 5-108(e) and (ii) which is capable of being examined for compliance with the terms and conditions of the letter of credit. A document may not be oral.
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(7) "Good faith" means honesty in fact in the conduct
| | or transaction concerned.
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(8) "Honor" of a letter of credit means performance
| | of the issuer's undertaking in the letter of credit to pay or deliver an item of value. Unless the letter of credit otherwise provides, "honor" occurs
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(i) upon payment,
(ii) if the letter of credit provides for
| | acceptance, upon acceptance of a draft and, at maturity, its payment, or
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(iii) if the letter of credit provides for
| | incurring a deferred obligation, upon incurring the obligation and, at maturity, its performance.
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(9) "Issuer" means a bank or other person that issues
| | a letter of credit, but does not include an individual who makes an engagement for personal, family, or household purposes.
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(10) "Letter of credit" means a definite undertaking
| | that satisfies the requirements of Section 5-104 by an issuer to a beneficiary at the request or for the account of an applicant or, in the case of a financial institution, to itself or for its own account, to honor a documentary presentation by payment or delivery of an item of value.
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(11) "Nominated person" means a person whom the
| | issuer (i) designates or authorizes to pay, accept, negotiate, or otherwise give value under a letter of credit and (ii) undertakes by agreement or custom and practice to reimburse.
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(12) "Presentation" means delivery of a document to
| | an issuer or nominated person for honor or giving of value under a letter of credit.
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(13) "Presenter" means a person making a presentation
| | as or on behalf of a beneficiary or nominated person.
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(14) "Record" means information that is inscribed on
| | a tangible medium, or that is stored in an electronic or other medium and is retrievable in perceivable form.
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(15) "Successor of a beneficiary" means a person who
| | succeeds to substantially all of the rights of a beneficiary by operation of law, including a corporation with or into which the beneficiary has been merged or consolidated, an administrator, executor, personal representative, trustee in bankruptcy, debtor in possession, liquidator, and receiver.
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(b) Definitions in other Articles applying to this Article and the
Sections in which they appear are:
"Accept" or "Acceptance" Section 3-409
"Value" Sections 3-303, 4-211
(c) Article 1 contains certain additional general definitions and
principles of construction and interpretation applicable throughout this
Article.
(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/5-103
(810 ILCS 5/5-103) (from Ch. 26, par. 5-103)
Sec. 5-103. Scope.
(a) This Article applies to letters of credit and to certain rights and
obligations arising out of transactions involving letters of credit.
(b) The statement of a rule in this Article does not by itself require,
imply, or negate application of the same or a different rule to a situation not
provided for, or to a person not specified, in this Article.
(c) With the exception of this subsection, subsections (a) and (d),
Sections 5-102(a)(9) and (10), 5-106(d), and 5-114(d), and except to the
extent prohibited in Sections 1-302
and 5-117(d), the effect of this Article
may be varied by agreement or by a provision stated or incorporated by
reference in an undertaking. A term in an agreement or undertaking
generally excusing liability or generally limiting remedies for failure to
perform obligations is not sufficient to vary obligations prescribed by this
Article.
(d) Rights and obligations of an issuer to a beneficiary or a
nominated person under a letter of credit are independent of the existence,
performance, or nonperformance of a contract or arrangement out of which
the letter of credit arises or which underlies it, including contracts or
arrangements between the issuer and the applicant and between the
applicant and the beneficiary.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/5-104 (810 ILCS 5/5-104) (from Ch. 26, par. 5-104) (Text of Section before amendment by P.A. 103-1036) Sec. 5-104. Formal requirements.
A letter of credit,
confirmation, advice, transfer, amendment, or cancellation may be issued in
any form that is a record and is authenticated (i) by a signature or (ii) in
accordance with the agreement of the parties or the standard practice
referred to in Section 5-108(e).(Source: P.A. 89-534, eff. 1-1-97.) (Text of Section after amendment by P.A. 103-1036) Sec. 5-104. Formal requirements. A letter of credit, confirmation, advice, transfer, amendment, or cancellation may be issued in any form that is a signed record.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/5-105
(810 ILCS 5/5-105) (from Ch. 26, par. 5-105)
Sec. 5-105.
Consideration.
Consideration is not required to issue, amend,
transfer, or cancel a letter of credit, advice, or confirmation.
(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/5-106
(810 ILCS 5/5-106) (from Ch. 26, par. 5-106)
Sec. 5-106.
Issuance, amendment, cancellation, and duration.
(a) A letter of credit is issued and becomes enforceable according
to its terms against the issuer when the issuer sends or otherwise transmits it
to the person requested to advise or to the beneficiary. A letter of credit is
revocable only if it so provides.
(b) After a letter of credit is issued, rights and obligations of a
beneficiary, applicant, confirmer, and issuer are not affected by an
amendment or cancellation to which that person has not consented except to
the extent the letter of credit provides that it is revocable or that the
issuer may amend or cancel the letter of credit without that consent.
(c) If there is no stated expiration date or other provision that
determines its duration, a letter of credit expires one year after its stated
date of issuance or, if none is stated, after the date on which it is issued.
(d) A letter of credit that states that it is perpetual expires 5
years after its stated date of issuance, or if none is stated, after the date
on which it is issued.
(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/5-107
(810 ILCS 5/5-107) (from Ch. 26, par. 5-107)
Sec. 5-107.
Confirmer, nominated person, and
adviser.
(a) A confirmer is directly obligated on a letter of credit and has
the rights and obligations of an issuer to the extent of its confirmation. The
confirmer also has rights against and obligations to the issuer as if the
issuer were an applicant and the confirmer had issued the letter of credit at
the request and for the account of the issuer.
(b) A nominated person who is not a confirmer is not obligated to
honor or otherwise give value for a presentation.
(c) A person requested to advise may decline to act as an adviser.
An adviser that is not a confirmer is not obligated to honor or give value for
a presentation. An adviser undertakes to the issuer and to the beneficiary
accurately to advise the terms of the letter of credit, confirmation,
amendment, or advice received by that person and undertakes to the
beneficiary to check the apparent authenticity of the request to advise. Even
if the advice is inaccurate, the letter of credit, confirmation, or amendment
is enforceable as issued.
(d) A person who notifies a transferee beneficiary of the terms of a
letter of credit, confirmation, amendment, or advice has the rights and
obligations of an adviser under subsection (c). The terms in the notice to
the transferee beneficiary may differ from the terms in any notice to the
transferor beneficiary to the extent permitted by the letter of credit,
confirmation, amendment, or advice received by the person who so notifies.
(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/5-108
(810 ILCS 5/5-108) (from Ch. 26, par. 5-108)
Sec. 5-108.
Issuer's rights and obligations.
(a) Except as otherwise provided in Section 5-109, an issuer shall
honor a presentation that, as determined by the standard practice referred to
in subsection (e), appears on its face strictly to comply with the terms and
conditions of the letter of credit. Except as otherwise provided in Section
5-113 and unless otherwise agreed with the applicant, an issuer shall
dishonor a presentation that does not appear so to comply.
(b) An issuer has a reasonable time after presentation, but not
beyond the end of the seventh business day of the issuer after the day of its
receipt of documents:
(1) to honor,
(2) if the letter of credit provides for honor to be | | completed more than seven business days after presentation, to accept a draft or incur a deferred obligation, or
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(3) to give notice to the presenter of discrepancies
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(c) Except as otherwise provided in subsection (d), an issuer is
precluded from asserting as a basis for dishonor any discrepancy if timely
notice is not given, or any discrepancy not stated in the notice if timely
notice is given.
(d) Failure to give the notice specified in subsection (b) or to
mention fraud, forgery, or expiration in the notice does not preclude the
issuer from asserting as a basis for dishonor fraud or forgery as described in
Section 5-109(a) or expiration of the letter of credit before presentation.
(e) An issuer shall observe standard practice of financial institutions
that regularly issue letters of credit. Determination of the issuer's
observance of the standard practice is a matter of interpretation for the
court. The court shall offer the parties a reasonable opportunity to present
evidence of the standard practice.
(f) An issuer is not responsible for:
(1) the performance or nonperformance of the
| | underlying contract, arrangement, or transaction,
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(2) an act or omission of others, or
(3) observance or knowledge of the usage of a
| | particular trade other than the standard practice referred to in subsection (e).
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(g) If an undertaking constituting a letter of credit under Section
5-102(a)(10) contains nondocumentary conditions, an issuer shall disregard
the nondocumentary conditions and treat them as if they were not stated.
(h) An issuer that has dishonored a presentation shall return the
documents or hold them at the disposal of, and send advice to that effect to,
the presenter.
(i) An issuer that has honored a presentation as permitted or
required by this Article:
(1) is entitled to be reimbursed by the applicant in
| | immediately available funds not later than the date of its payment of funds;
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(2) takes the documents free of claims of the
| | beneficiary or presenter;
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(3) is precluded from asserting a right of recourse
| | on a draft under Sections 3-414 and 3-415;
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(4) except as otherwise provided in Sections 5-110
| | and 5-117, is precluded from restitution of money paid or other value given by mistake to the extent the mistake concerns discrepancies in the documents or tender which are apparent on the face of the presentation; and
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(5) is discharged to the extent of its performance
| | under the letter of credit unless the issuer honored a presentation in which a required signature of a beneficiary was forged.
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(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/5-109
(810 ILCS 5/5-109) (from Ch. 26, par. 5-109)
Sec. 5-109.
Fraud and forgery.
(a) If a presentation is made that appears on its face strictly to
comply with the terms and conditions of the letter of credit, but a required
document is forged or materially fraudulent, or honor of the presentation
would facilitate a material fraud by the beneficiary on the issuer or
applicant:
(1) the issuer shall honor the presentation, if honor | | is demanded by (i) a nominated person who has given value in good faith and without notice of forgery or material fraud, (ii) a confirmer who has honored its confirmation in good faith, (iii) a holder in due course of a draft drawn under the letter of credit which was taken after acceptance by the issuer or nominated person, or (iv) an assignee of the issuer's or nominated person's deferred obligation that was taken for value and without notice of forgery or material fraud after the obligation was incurred by the issuer or nominated person; and
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(2) the issuer, acting in good faith, may honor or
| | dishonor the presentation in any other case.
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(b) If an applicant claims that a required document is forged or
materially fraudulent or that honor of the presentation would facilitate a
material fraud by the beneficiary on the issuer or applicant, a court of
competent jurisdiction may temporarily or permanently enjoin the issuer
from honoring a presentation or grant similar relief against the issuer or
other persons only if the court finds that:
(1) the relief is not prohibited under the law
| | applicable to an accepted draft or deferred obligation incurred by the issuer;
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(2) a beneficiary, issuer, or nominated person who
| | may be adversely affected is adequately protected against loss that it may suffer because the relief is granted;
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(3) all of the conditions to entitle a person to the
| | relief under the law of this State have been met; and
|
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(4) on the basis of the information submitted to the
| | court, the applicant is more likely than not to succeed under its claim of forgery or material fraud and the person demanding honor does not qualify for protection under subsection (a)(1).
|
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(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/5-110
(810 ILCS 5/5-110) (from Ch. 26, par. 5-110)
Sec. 5-110.
Warranties.
(a) If its presentation is honored, the beneficiary warrants:
(1) to the issuer, any other person to whom | | presentation is made, and the applicant that there is no fraud or forgery of the kind described in Section 5-109(a); and
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(2) to the applicant that the drawing does not
| | violate any agreement between the applicant and beneficiary or any other agreement intended by them to be augmented by the letter of credit.
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(b) The warranties in subsection (a) are in addition to warranties
arising under Articles 3, 4, 7, and 8 because of the presentation or transfer
of
documents covered by any of those Articles.
(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/5-111
(810 ILCS 5/5-111) (from Ch. 26, par. 5-111)
Sec. 5-111.
Remedies.
(a) If an issuer wrongfully dishonors or repudiates its obligation to
pay money under a letter of credit before presentation, the beneficiary,
successor, or nominated person presenting on its own behalf may recover
from the issuer the amount that is the subject of the dishonor or repudiation.
If the issuer's obligation under the letter of credit is not for the payment of
money, the claimant may obtain specific performance or, at the claimant's
election, recover an amount equal to the value of performance from the
issuer. In either case, the claimant may also recover incidental but not
consequential damages. The claimant is not obligated to take action to
avoid damages that might be due from the issuer under this subsection. If,
although not obligated to do so, the claimant avoids damages, the claimant's
recovery from the issuer must be reduced by the amount of damages
avoided. The issuer has the burden of proving the amount of damages
avoided. In the case of repudiation the claimant need not present any
document.
(b) If an issuer wrongfully dishonors a draft or demand presented
under a letter of credit or honors a draft or demand in breach of its
obligation to the applicant, the applicant may recover damages resulting
from the breach, including incidental but not consequential damages, less any
amount saved as a result of the breach.
(c) If an adviser or nominated person other than a confirmer
breaches an obligation under this Article or an issuer breaches an obligation
not covered in subsection (a) or (b), a person to whom the obligation is
owed may recover damages resulting from the breach, including incidental
but not consequential damages, less any amount saved as a result of the
breach. To the extent of the confirmation, a confirmer has the liability of an
issuer specified in this subsection and subsections (a) and (b).
(d) An issuer, nominated person, or adviser who is found liable
under subsection (a), (b), or (c) shall pay interest on the amount owed
thereunder from the date of wrongful dishonor or other appropriate date.
(e) Reasonable attorney's fees and other expenses of litigation must
be awarded to the prevailing party in an action in which a remedy is sought
under this Article.
(f) Damages that would otherwise be payable by a party for breach
of an obligation under this Article may be liquidated by agreement or
undertaking, but only in an amount or by a formula that is reasonable in
light of the harm anticipated.
(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/5-112
(810 ILCS 5/5-112) (from Ch. 26, par. 5-112)
Sec. 5-112.
Transfer of letter of credit.
(a) Except as otherwise provided in Section 5-113, unless a letter of
credit provides that it is transferable, the right of a beneficiary to draw or
otherwise demand performance under a letter of credit may not be
transferred.
(b) Even if a letter of credit provides that it is transferable, the
issuer may refuse to recognize or carry out a transfer if:
(1) the transfer would violate applicable law; or
(2) the transferor or transferee has failed to comply | | with any requirement stated in the letter of credit or any other requirement relating to transfer imposed by the issuer which is within the standard practice referred to in Section 5-108(e) or is otherwise reasonable under the circumstances.
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(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/5-113
(810 ILCS 5/5-113) (from Ch. 26, par. 5-113)
Sec. 5-113.
Transfer by operation of law.
(a) A successor of a beneficiary may consent to amendments, sign
and present documents, and receive payment or other items of value in the
name of the beneficiary without disclosing its status as a successor.
(b) A successor of a beneficiary may consent to amendments, sign
and present documents, and receive payment or other items of value in its
own name as the disclosed successor of the beneficiary. Except as otherwise
provided in subsection (e), an issuer shall recognize a disclosed successor of
a beneficiary as beneficiary in full substitution for its predecessor upon
compliance with the requirements for recognition by the issuer of a transfer
of drawing rights by operation of law under the standard practice referred to
in Section 5-108(e) or, in the absence of such a practice, compliance with
other reasonable procedures sufficient to protect the issuer.
(c) An issuer is not obliged to determine whether a purported
successor is a successor of a beneficiary or whether the signature of a
purported successor is genuine or authorized.
(d) Honor of a purported successor's apparently complying
presentation under subsection (a) or (b) has the consequences specified in
Section 5-108(i) even if the purported successor is not the successor of a
beneficiary. Documents signed in the name of the beneficiary or of a
disclosed successor by a person who is neither the beneficiary nor the
successor of the beneficiary are forged documents for the purposes of
Section 5-109.
(e) An issuer whose rights of reimbursement are not covered by
subsection (d) or substantially similar law and any confirmer or nominated
person may decline to recognize a presentation under subsection (b).
(f) A beneficiary whose name is changed after the issuance of a
letter of credit has the same rights and obligations as a successor of a
beneficiary under this Section.
(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/5-114
(810 ILCS 5/5-114) (from Ch. 26, par. 5-114)
Sec. 5-114.
Assignment of proceeds.
(a) In this Section, "proceeds of a letter of credit" means the cash,
check, accepted draft, or other item of value paid or delivered upon honor
or giving of value by the issuer or any nominated person under the letter of
credit. The term does not include a beneficiary's drawing rights or
documents presented by the beneficiary.
(b) A beneficiary may assign its right to part or all of the proceeds
of a letter of credit. The beneficiary may do so before presentation as a
present assignment of its right to receive proceeds contingent upon its
compliance with the terms and conditions of the letter of credit.
(c) An issuer or nominated person need not recognize an
assignment of proceeds of a letter of credit until it consents to the
assignment.
(d) An issuer or nominated person has no obligation to give or
withhold its consent to an assignment of proceeds of a letter of credit, but
consent may not be unreasonably withheld if the assignee possesses and
exhibits the letter of credit and presentation of the letter of credit is a
condition to honor.
(e) Rights of a transferee beneficiary or nominated person are
independent of the beneficiary's assignment of the proceeds of a letter of
credit and are superior to the assignee's right to the proceeds.
(f) Neither the rights recognized by this Section between an assignee
and an issuer, transferee beneficiary, or nominated person nor the issuer's or
nominated person's payment of proceeds to an assignee or a third person
affect the rights between the assignee and any person other than the issuer,
transferee beneficiary, or nominated person. The mode of creating and
perfecting a security interest in or granting an assignment of a beneficiary's
rights to proceeds is governed by Article 9 or other law. Against persons
other than the issuer, transferee beneficiary, or nominated person, the rights
and obligations arising upon the creation of a security interest or other
assignment of a beneficiary's right to proceeds and its perfection are
governed by Article 9 or other law.
(Source: P.A. 89-364, eff. 1-1-96; 89-534, eff. 1-1-97.)
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810 ILCS 5/5-115
(810 ILCS 5/5-115) (from Ch. 26, par. 5-115)
Sec. 5-115.
Statute of limitations.
An action to enforce
a right or obligation arising under this Article must be commenced within one
year after the expiration date of the relevant letter of credit or one year
after the cause of action accrues, whichever
occurs later. A cause of action accrues when
the breach occurs, regardless of the aggrieved party's lack of knowledge of the
breach.
(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/5-116 (810 ILCS 5/5-116) (from Ch. 26, par. 5-116) (Text of Section before amendment by P.A. 103-1036) Sec. 5-116. Choice of law and forum. (a) The liability of an issuer, nominated person, or adviser for
action or omission is governed by the law of the jurisdiction chosen by an
agreement in the form of a record signed or otherwise authenticated by the
affected parties in the manner provided in Section 5-104 or by a provision in
the person's letter of credit, confirmation, or other undertaking. The
jurisdiction whose law is chosen need not bear any relation to the
transaction. (b) Unless subsection (a) applies, the liability of an issuer,
nominated person, or adviser for action or omission is governed by the law
of the jurisdiction in which the person is located. The person is considered
to be located at the address indicated in the person's undertaking. If more
than one address is indicated, the person is considered to be located at the
address from which the person's undertaking was issued. For the purpose of
jurisdiction, choice of law, and recognition of interbranch letters of credit,
but not enforcement of a judgment, all branches of a bank are considered
separate juridical entities and a bank is considered to be located at the place
where its relevant branch is considered to be located under this subsection. (c) Except as otherwise provided in this subsection, the liability of
an issuer, nominated person, or adviser is governed by any rules of custom
or practice, such as the Uniform Customs and Practice for Documentary
Credits, to which the letter of credit, confirmation, or other undertaking is
expressly made subject. If (i) this Article would govern the liability of an
issuer, nominated person, or adviser under subsection (a) or (b), (ii) the
relevant undertaking incorporates rules of custom or practice, and (iii) there
is conflict between this Article and those rules as applied to that
undertaking, those rules govern except to the extent of any conflict with the
nonvariable provisions specified in Section 5-103(c). (d) If there is conflict between this Article and Article 3, 4, 4A, or
9, this Article governs. (e) The forum for settling disputes arising out of an undertaking
within this Article may be chosen in the manner and with the binding effect
that governing law may be chosen in accordance with subsection (a).(Source: P.A. 89-534, eff. 1-1-97.) (Text of Section after amendment by P.A. 103-1036) Sec. 5-116. Choice of law and forum. (a) The liability of an issuer, nominated person, or adviser for action or omission is governed by the law of the jurisdiction chosen by an agreement in the form of a record signed by the affected parties or by a provision in the person's letter of credit, confirmation, or other undertaking. The jurisdiction whose law is chosen need not bear any relation to the transaction. (b) Unless subsection (a) applies, the liability of an issuer, nominated person, or adviser for action or omission is governed by the law of the jurisdiction in which the person is located. The person is considered to be located at the address indicated in the person's undertaking. If more than one address is indicated, the person is considered to be located at the address from which the person's undertaking was issued. (c) For the purpose of jurisdiction, choice of law, and recognition of interbranch letters of credit, but not enforcement of a judgment, all branches of a bank are considered separate juridical entities and a bank is considered to be located at the place where its relevant branch is considered to be located under subsection (d). (d) A branch of a bank is considered to be located at the address indicated in the branch's undertaking. If more than one address is indicated, the branch is considered to be located at the address from which the undertaking was issued. (e) Except as otherwise provided in this subsection, the liability of an issuer, nominated person, or adviser is governed by any rules of custom or practice, such as the Uniform Customs and Practice for Documentary Credits, to which the letter of credit, confirmation, or other undertaking is expressly made subject. If (i) this Article would govern the liability of an issuer, nominated person, or adviser under subsection (a) or (b), (ii) the relevant undertaking incorporates rules of custom or practice, and (iii) there is conflict between this Article and those rules as applied to that undertaking, those rules govern except to the extent of any conflict with the nonvariable provisions specified in Section 5-103(c). (f) If there is conflict between this Article and Article 3, 4, 4A, or 9, this Article governs. (g) The forum for settling disputes arising out of an undertaking within this Article may be chosen in the manner and with the binding effect that governing law may be chosen in accordance with subsection (a).(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/5-117
(810 ILCS 5/5-117) (from Ch. 26, par. 5-117)
Sec. 5-117.
Subrogation of issuer, applicant, and nominated person.
(a) An issuer that honors a beneficiary's presentation is subrogated
to the rights of the beneficiary to the same extent as if the issuer were a
secondary obligor of the underlying obligation owed to the beneficiary and of
the applicant to the same extent as if the issuer were the secondary obligor
of the underlying obligation owed to the applicant.
(b) An applicant that reimburses an issuer is subrogated to the
rights of the issuer against any beneficiary, presenter, or nominated person
to the same extent as if the applicant were the secondary obligor of the
obligations owed to the issuer and has the rights of subrogation of the issuer
to the rights of the beneficiary stated in subsection (a).
(c) A nominated person who pays or gives value against a draft or
demand presented under a letter of credit is subrogated to the rights of:
(1) the issuer against the applicant to the same | | extent as if the nominated person were a secondary obligor of the obligation owed to the issuer by the applicant;
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(2) the beneficiary to the same extent as if the
| | nominated person were a secondary obligor of the underlying obligation owed to the beneficiary; and
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(3) the applicant to the same extent as if the
| | nominated person were a secondary obligor of the underlying obligation owed to the applicant.
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(d) Notwithstanding any agreement or term to the contrary, the
rights of subrogation stated in subsections (a) and (b) do not arise until the
issuer honors the letter of credit or otherwise pays and the rights in
subsection (c) do not arise until the nominated person pays or otherwise
gives value. Until then, the issuer, nominated person, and the applicant do
not derive under this Section present or prospective rights forming the basis
of a claim, defense, or excuse.
(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/5-118
(810 ILCS 5/5-118)
Sec. 5-118.
Security interest of issuer or nominated person.
(a) An issuer or nominated person has a security interest in a
document presented under a letter of credit to the extent that the issuer or
nominated person honors or gives value for the presentation.
(b) So long as and to the extent that an issuer or nominated person
has not been reimbursed or has not otherwise recovered the value given with
respect to a security interest in a document under subsection (a), the security
interest continues and is subject to Article 9, but:
(1) a security agreement is not necessary to make the | | security interest enforceable under Section 9-203(b)(3);
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(2) if the document is presented in a medium other
| | than a written or other tangible medium, the security interest is perfected; and
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(3) if the document is presented in a written or
| | other tangible medium and is not a certificated security, chattel paper, a document of title, an instrument, or a letter of credit, the security interest is perfected and has priority over a conflicting security interest in the document so long as the debtor does not have possession of the document.
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(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/Art. 7
(810 ILCS 5/Art. 7 heading)
ARTICLE 7
DOCUMENTS OF TITLE
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/Art. 7 Pt. 1
(810 ILCS 5/Art. 7 Pt. 1 heading)
PART 1
GENERAL
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/7-101
(810 ILCS 5/7-101) (from Ch. 26, par. 7-101)
Sec. 7-101. Short title.
This Article may be cited as Uniform Commercial Code-Documents of Title.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-102 (810 ILCS 5/7-102) (from Ch. 26, par. 7-102) (Text of Section before amendment by P.A. 103-1036) Sec. 7-102. Definitions and index of definitions. (a) In this Article, unless the context otherwise requires: (1) "Bailee" means a person that by a warehouse | | receipt, bill of lading, or other document of title acknowledges possession of goods and contracts to deliver them.
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| (2) "Carrier" means a person that issues a bill of
| | (3) "Consignee" means a person named in a bill of
| | lading to which or to whose order the bill promises delivery.
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| (4) "Consignor" means a person named in a bill of
| | lading as the person from which the goods have been received for shipment.
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| (5) "Delivery order" means a record that contains an
| | order to deliver goods directed to a warehouse, carrier, or other person that in the ordinary course of business issues warehouse receipts or bills of lading.
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| (6) "Good faith" means honesty in fact and the
| | observance of reasonable commercial standards of fair dealing.
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| (7) "Goods" means all things that are treated as
| | movable for the purposes of a contract for storage or transportation.
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| (8) "Issuer" means a bailee that issues a document of
| | title or, in the case of an unaccepted delivery order, the person that orders the possessor of goods to deliver. The term includes a person for which an agent or employee purports to act in issuing a document if the agent or employee has real or apparent authority to issue documents, even if the issuer did not receive any goods, the goods were misdescribed, or in any other respect the agent or employee violated the issuer's instructions.
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| (9) "Person entitled under the document" means the
| | holder, in the case of a negotiable document of title, or the person to which delivery of the goods is to be made by the terms of, or pursuant to instructions in a record under, a nonnegotiable document of title.
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| (10) "Record" means information that is inscribed on
| | a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
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| (11) "Sign" means, with present intent to
| | authenticate or adopt a record:
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| (A) to execute or adopt a tangible symbol; or
(B) to attach to or logically associate with the
| | record an electronic sound, symbol, or process.
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| (12) "Shipper" means a person that enters into a
| | contract of transportation with a carrier.
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| (13) "Warehouse" means a person engaged in the
| | business of storing goods for hire. The owner of a self-service storage facility as defined in the Self-Service Storage Facility Act is not a warehouse for the purposes of this Article.
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| (b) Definitions in other Articles applying to this Article and the Sections in which they appear are:
(1) "Contract for sale", Section 2-106.
(2) "Lessee in the ordinary course of business",
| | (3) "Receipt" of goods, Section 2-103.
(c) In addition, Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.
(Source: P.A. 95-895, eff. 1-1-09.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 7-102. Definitions and index of definitions.
(a) In this Article, unless the context otherwise requires:
(1) "Bailee" means a person that by a warehouse
| | receipt, bill of lading, or other document of title acknowledges possession of goods and contracts to deliver them.
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| (2) "Carrier" means a person that issues a bill of
| | (3) "Consignee" means a person named in a bill of
| | lading to which or to whose order the bill promises delivery.
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| (4) "Consignor" means a person named in a bill of
| | lading as the person from which the goods have been received for shipment.
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| (5) "Delivery order" means a record that contains an
| | order to deliver goods directed to a warehouse, carrier, or other person that in the ordinary course of business issues warehouse receipts or bills of lading.
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| (6) "Good faith" means honesty in fact and the
| | observance of reasonable commercial standards of fair dealing.
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| (7) "Goods" means all things that are treated as
| | movable for the purposes of a contract for storage or transportation.
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| (8) "Issuer" means a bailee that issues a document of
| | title or, in the case of an unaccepted delivery order, the person that orders the possessor of goods to deliver. The term includes a person for which an agent or employee purports to act in issuing a document if the agent or employee has real or apparent authority to issue documents, even if the issuer did not receive any goods, the goods were misdescribed, or in any other respect the agent or employee violated the issuer's instructions.
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| (9) "Person entitled under the document" means the
| | holder, in the case of a negotiable document of title, or the person to which delivery of the goods is to be made by the terms of, or pursuant to instructions in a record under, a nonnegotiable document of title.
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| (10) (Reserved).
(11) (Reserved).
(12) "Shipper" means a person that enters into a
| | contract of transportation with a carrier.
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| (13) "Warehouse" means a person engaged in the
| | business of storing goods for hire. The owner of a self-service storage facility as defined in the Self-Service Storage Facility Act is not a warehouse for the purposes of this Article.
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| (b) Definitions in other Articles applying to this Article and the Sections in which they appear are:
(1) "Contract for sale", Section 2-106.
(2) "Lessee in the ordinary course of business",
| | (3) "Receipt" of goods, Section 2-103.
(c) In addition, Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/7-103
(810 ILCS 5/7-103) (from Ch. 26, par. 7-103)
Sec. 7-103. Relation of Article to treaty or statute.
(a) This Article is subject to any treaty or statute of the United States or regulatory statute of this State to the extent the treaty, statute, or regulatory statute is applicable. (b) This Article does not modify or repeal any law prescribing the form or content of a document of title or the services or facilities to be afforded by a bailee, or otherwise regulating a bailee's business in respects not specifically treated in this Article. However, violation of such a law does not affect the status of a document of title that otherwise is within the definition of a document of title. (c) This Act modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. Section 7001, et seq.) but does not modify, limit, or supersede Section 101(c) of that Act (15 U.S.C. Section 7001(c)) or authorize electronic delivery of any of the notices described in Section 103(b) of that Act (15 U.S.C. Section 7003(b)). (d) (Blank).
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-104
(810 ILCS 5/7-104) (from Ch. 26, par. 7-104)
Sec. 7-104. Negotiable and nonnegotiable document of title.
(a) Except as otherwise provided in subsection (c), a document of title is negotiable if by its terms the goods are to be delivered to bearer or to the order of a named person. (b) A document of title other than one described in subsection (a) is nonnegotiable. A bill of lading that states that the goods are consigned to a named person is not made negotiable by a provision that the goods are to be delivered only against an order in a record signed by the same or another named person. (c) A document of title is nonnegotiable if, at the time it is issued, the document has a conspicuous legend, however expressed, that it is nonnegotiable.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-105
(810 ILCS 5/7-105) (from Ch. 26, par. 7-105)
Sec. 7-105. Reissuance in alternative medium.
(a) Upon request of a person entitled under an electronic document of title, the issuer of the electronic document may issue a tangible document of title as a substitute for the electronic document if: (1) the person entitled under the electronic document | | surrenders control of the document to the issuer; and
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| (2) the tangible document when issued contains a
| | statement that it is issued in substitution for the electronic document.
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| (b) Upon issuance of a tangible document of title in substitution for an electronic document of title in accordance with subsection (a):
(1) the electronic document ceases to have any effect
| | (2) the person that procured issuance of the
| | tangible document warrants to all subsequent persons entitled under the tangible document that the warrantor was a person entitled under the electronic document when the warrantor surrendered control of the electronic document to the issuer.
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| (c) Upon request of a person entitled under a tangible document of title, the issuer of the tangible document may issue an electronic document of title as a substitute for the tangible document if:
(1) the person entitled under the tangible document
| | surrenders possession of the document to the issuer; and
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| (2) the electronic document when issued contains a
| | statement that it is issued in substitution for the tangible document.
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| (d) Upon issuance of an electronic document of title in substitution for a tangible document of title in accordance with subsection (c):
(1) the tangible document ceases to have any effect
| | (2) the person that procured issuance of the
| | electronic document warrants to all subsequent persons entitled under the electronic document that the warrantor was a person entitled under the tangible document when the warrantor surrendered possession of the tangible document to the issuer.
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|
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-106 (810 ILCS 5/7-106) (Text of Section before amendment by P.A. 103-1036) Sec. 7-106. Control of electronic document of title. (a) A person has control of an electronic document of title if a system employed for evidencing the transfer of interests in the electronic document reliably establishes that person as the person to which the electronic document was issued or transferred. (b) A system satisfies subsection (a), and a person is deemed to have control of an electronic document of title, if the document is created, stored, and assigned in such a manner that: (1) a single authoritative copy of the document | | exists which is unique, identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable;
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| (2) the authoritative copy identifies the person
| | (A) the person to which the document was issued;
| | (B) if the authoritative copy indicates that the
| | document has been transferred, the person to which the document was most recently transferred;
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| (3) the authoritative copy is communicated to and
| | maintained by the person asserting control or its designated custodian;
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| (4) copies or amendments that add or change an
| | identified assignee of the authoritative copy can be made only with the consent of the person asserting control;
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| (5) each copy of the authoritative copy and any copy
| | of a copy is readily identifiable as a copy that is not the authoritative copy; and
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| (6) any amendment of the authoritative copy is
| | readily identifiable as authorized or unauthorized.
|
| (Source: P.A. 95-895, eff. 1-1-09.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 7-106. Control of electronic document of title.
(a) A person has control of an electronic document of title if a system employed for evidencing the transfer of interests in the electronic document reliably establishes that person as the person to which the electronic document was issued or transferred.
(b) A system satisfies subsection (a), and a person has control of an electronic document of title, if the document is created, stored, and transferred in a manner that:
(1) a single authoritative copy of the document
| | exists which is unique, identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable;
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| (2) the authoritative copy identifies the person
| | (A) the person to which the document was issued;
| | (B) if the authoritative copy indicates that the
| | document has been transferred, the person to which the document was most recently transferred;
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| (3) the authoritative copy is communicated to and
| | maintained by the person asserting control or its designated custodian;
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| (4) copies or amendments that add or change an
| | identified transferee of the authoritative copy can be made only with the consent of the person asserting control;
|
| (5) each copy of the authoritative copy and any copy
| | of a copy is readily identifiable as a copy that is not the authoritative copy; and
|
| (6) any amendment of the authoritative copy is
| | readily identifiable as authorized or unauthorized.
|
| (c) A system satisfies subsection (a), and a person has control of an electronic document of title, if an authoritative electronic copy of the document, a record attached to or logically associated with the electronic copy, or a system in which the electronic copy is recorded:
(1) enables the person readily to identify each
| | electronic copy as either an authoritative copy or a nonauthoritative copy;
|
| (2) enables the person readily to identify itself in
| | any way, including by name, identifying number, cryptographic key, office, or account number, as the person to which each authoritative electronic copy was issued or transferred; and
|
| (3) gives the person exclusive power, subject to
| | (A) prevent others from adding or changing the
| | person to which each authoritative electronic copy has been issued or transferred; and
|
| (B) transfer control of each authoritative
| | (d) Subject to subsection (e), a power is exclusive under subsection (c)(3)(A) and (B) even if:
(1) the authoritative electronic copy, a record
| | attached to or logically associated with the authoritative electronic copy, or a system in which the authoritative electronic copy is recorded limits the use of the document of title or has a protocol that is programmed to cause a change, including a transfer or loss of control; or
|
| (2) the power is shared with another person.
(e) A power of a person is not shared with another person under subsection (d)(2) and the person's power is not exclusive if:
(1) the person can exercise the power only if the
| | power also is exercised by the other person; and
|
| (2) the other person:
(A) can exercise the power without exercise of
| | the power by the person; or
|
| (B) is the transferor to the person of an
| | interest in the document of title.
|
| (f) If a person has the powers specified in subsection (c)(3)(A) and (B), the powers are presumed to be exclusive.
(g) A person has control of an electronic document of title if another person, other than the transferor to the person of an interest in the document:
(1) has control of the document and acknowledges that
| | it has control on behalf of the person; or
|
| (2) obtains control of the document after having
| | acknowledged that it will obtain control of the document on behalf of the person.
|
| (h) A person that has control under this Section is not required to acknowledge that it has control on behalf of another person.
(i) If a person acknowledges that it has or will obtain control on behalf of another person, unless the person otherwise agrees or law other than this Article or Article 9 otherwise provides, the person does not owe any duty to the other person and is not required to confirm the acknowledgment to any other person.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/Art. 7 Pt. 2
(810 ILCS 5/Art. 7 Pt. 2 heading)
PART 2
WAREHOUSE RECEIPTS: SPECIAL PROVISIONS
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/7-201
(810 ILCS 5/7-201) (from Ch. 26, par. 7-201)
Sec. 7-201. Person that may issue a warehouse receipt; storage under bond.
(a) A warehouse receipt may be issued by any warehouse. (b) If goods, including distilled spirits and agricultural commodities, are stored under a statute requiring a bond against withdrawal or a license for the issuance of receipts in the nature of warehouse receipts, a receipt issued for the goods is deemed to be a warehouse receipt even if issued by a person that is the owner of the goods and is not a warehouse.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-202
(810 ILCS 5/7-202) (from Ch. 26, par. 7-202)
Sec. 7-202. Form of warehouse receipt; effect of omission.
(a) A warehouse receipt need not be in any particular form. (b) Unless a warehouse receipt provides for each of the following, the warehouse is liable for damages caused to a person injured by its omission: (1) a statement of the location of the warehouse | | facility where the goods are stored;
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| (2) the date of issue of the receipt;
(3) the unique identification code of the receipt;
(4) a statement whether the goods received will be
| | delivered to the bearer, to a named person, or to a named person or its order;
|
| (5) the rate of storage and handling charges, unless
| | goods are stored under a field warehousing arrangement, in which case a statement of that fact is sufficient on a nonnegotiable receipt;
|
| (6) a description of the goods or the packages
| | (7) the signature of the warehouse or its agent;
(8) if the receipt is issued for goods that the
| | warehouse owns, either solely, jointly, or in common with others, a statement of the fact of that ownership; and
|
| (9) a statement of the amount of advances made and of
| | liabilities incurred for which the warehouse claims a lien or security interest, unless the precise amount of advances made or liabilities incurred, at the time of the issue of the receipt, is unknown to the warehouse or to its agent that issued the receipt, in which case a statement of the fact that advances have been made or liabilities incurred and the purpose of the advances or liabilities is sufficient.
|
| (c) A warehouse may insert in its receipt any terms that are not contrary to the Uniform Commercial Code and do not impair its obligation of delivery under Section 7-403 or its duty of care under Section 7-204. Any contrary provision is ineffective.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-203
(810 ILCS 5/7-203) (from Ch. 26, par. 7-203)
Sec. 7-203. Liability for non-receipt or misdescription. A party to or purchaser for value in good faith of a document of title, other than a bill of lading, that relies upon the description of the goods in the document may recover from the issuer damages caused by the nonreceipt or misdescription of the goods, except to the extent that: (1) the document conspicuously indicates that the | | issuer does not know whether all or part of the goods in fact were received or conform to the description, such as a case in which the description is in terms of marks or labels or kind, quantity, or condition, or the receipt or description is qualified by "contents, condition, and quality unknown", "said to contain", or words of similar import, if the indication is true; or
|
| (2) the party or purchaser otherwise has notice of
| | the nonreceipt or misdescription.
|
|
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-204
(810 ILCS 5/7-204) (from Ch. 26, par. 7-204)
Sec. 7-204. Duty
of care; contractual limitation of warehouse's liability.
(a) A warehouse is liable for damages for loss of or injury to the goods caused by its failure to exercise care with regard to the goods that a reasonably careful person would exercise under similar circumstances. Unless otherwise agreed, the warehouse is not liable for damages that could not have been avoided by the exercise of that care. (b) Damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in case of loss or damage beyond which the warehouse is not liable. Such a limitation is not effective with respect to the warehouse's liability for conversion to its own use. On request of the bailor in a record at the time of signing the storage agreement or within a reasonable time after receipt of the warehouse receipt, the warehouse's liability may be increased on part or all of the goods covered by the storage agreement or the warehouse receipt. In this event, increased rates may be charged based on an increased valuation of the goods. (c) Reasonable provisions as to the time and manner of presenting claims and commencing actions based on the bailment may be included in the warehouse receipt or storage agreement. (d) (Blank).
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-205
(810 ILCS 5/7-205) (from Ch. 26, par. 7-205)
Sec. 7-205. Title under warehouse receipt defeated in certain cases. A buyer in ordinary course of business of fungible goods sold and delivered by a warehouse that is also in the business of buying and selling such goods takes the goods free of any claim under a warehouse receipt even if the receipt is negotiable and has been duly negotiated.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-206
(810 ILCS 5/7-206) (from Ch. 26, par. 7-206)
Sec. 7-206. Termination of storage at warehouse's option.
(a) A warehouse, by giving notice to the person on whose account the goods are held and any other person known to claim an interest in the goods, may require payment of any charges and removal of the goods from the warehouse at the termination of the period of storage fixed by the document of title or, if a period is not fixed, within a stated period not less than 30 days after the warehouse gives notice. If the goods are not removed before the date specified in the notice, the warehouse may sell them pursuant to Section 7-210. (b) If a warehouse in good faith believes that goods are about to deteriorate or decline in value to less than the amount of its lien within the time provided in subsection (a) and Section 7-210, the warehouse may specify in the notice given under subsection (a) any reasonable shorter time for removal of the goods and, if the goods are not removed, may sell them at public sale held not less than one week after a single advertisement or posting. (c) If, as a result of a quality or condition of the goods of which the warehouse did not have notice at the time of deposit, the goods are a hazard to other property, the warehouse facilities, or other persons, the warehouse may sell the goods at public or private sale without advertisement or posting on reasonable notification to all persons known to claim an interest in the goods. If the warehouse, after a reasonable effort, is unable to sell the goods, it may dispose of them in any lawful manner and does not incur liability by reason of that disposition. (d) A warehouse shall deliver the goods to any person entitled to them under this Article upon due demand made at any time before sale or other disposition under this Section. (e) A warehouse may satisfy its lien from the proceeds of any sale or disposition under this Section but shall hold the balance for delivery on the demand of any person to which the warehouse would have been bound to deliver the goods.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-207
(810 ILCS 5/7-207) (from Ch. 26, par. 7-207)
Sec. 7-207. Goods must be kept separate; fungible goods.
(a) Unless the warehouse receipt provides otherwise, a warehouse shall keep separate the goods covered by each receipt so as to permit at all times identification and delivery of those goods. However, different lots of fungible goods may be commingled. (b) If different lots of fungible goods are commingled, the goods are owned in common by the persons entitled thereto and the warehouse is severally liable to each owner for that owner's share. If, because of overissue, a mass of fungible goods is insufficient to meet all the receipts the warehouse has issued against it, the persons entitled include all holders to which overissued receipts have been duly negotiated.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-208
(810 ILCS 5/7-208) (from Ch. 26, par. 7-208)
Sec. 7-208. Altered warehouse receipts. If a blank in a negotiable tangible warehouse receipt has been filled in without authority, a good-faith purchaser for value and without notice of the lack of authority may treat the insertion as authorized. Any other unauthorized alteration leaves any tangible or electronic warehouse receipt enforceable against the issuer according to its original tenor.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-209
(810 ILCS 5/7-209) (from Ch. 26, par. 7-209)
Sec. 7-209. Lien of warehouse.
(a) A warehouse has a lien against the bailor on the goods covered by a warehouse receipt or storage agreement or on the proceeds thereof in its possession for charges for storage or transportation, including demurrage and terminal charges, insurance, labor, or other charges, present or future, in relation to the goods, and for expenses necessary for preservation of the goods or reasonably incurred in their sale pursuant to law. If the person on whose account the goods are held is liable for similar charges or expenses in relation to other goods whenever deposited and it is stated in the warehouse receipt or storage agreement that a lien is claimed for charges and expenses in relation to other goods, the warehouse also has a lien against the goods covered by the warehouse receipt or storage agreement or on the proceeds thereof in its possession for those charges and expenses, whether or not the other goods have been delivered by the warehouse. However, as against a person to which a negotiable warehouse receipt is duly negotiated, a warehouse's lien is limited to charges in an amount or at a rate specified in the warehouse receipt or, if no charges are so specified, to a reasonable charge for storage of the specific goods covered by the receipt subsequent to the date of the receipt. (b) A warehouse may also reserve a security interest against the bailor for the maximum amount specified on the receipt for charges other than those specified in subsection (a), such as for money advanced and interest. The security interest is governed by Article 9. (c) A warehouse's lien for charges and expenses under subsection (a) or a security interest under subsection (b) is also effective against any person that so entrusted the bailor with possession of the goods that a pledge of them by the bailor to a good-faith purchaser for value would have been valid. However, the lien or security interest is not effective against a person that before issuance of a document of title had a legal interest or a perfected security interest in the goods and that did not: (1) deliver or entrust the goods or any document of | | title covering the goods to the bailor or the bailor's nominee with:
|
| (A) actual or apparent authority to ship, store,
| | (B) power to obtain delivery under Section
| | (C) power of disposition under Sections 2-403,
| | 2A-304(2), 2A-305(2), 9-320, or 9-321(c) or other statute or rule of law; or
|
| (2) acquiesce in the procurement by the bailor or its
| | (d) A warehouse's lien on household goods for charges and expenses in relation to the goods under subsection (a) is also effective against all persons if the depositor was the legal possessor of the goods at the time of deposit. In this subsection, "household goods" means furniture, furnishings, or personal effects used by the depositor in a dwelling.
(e) A warehouse loses its lien on any goods that it voluntarily delivers or unjustifiably refuses to deliver.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-210
(810 ILCS 5/7-210) (from Ch. 26, par. 7-210)
Sec. 7-210. Enforcement of warehouse's lien.
(a) Except as otherwise provided in subsection (b), a warehouse's lien may be enforced by public or private sale of the goods, in bulk or in packages, at any time or place and on any terms that are commercially reasonable, after notifying all persons known to claim an interest in the goods. The notification must include a statement of the amount due, the nature of the proposed sale, and the time and place of any public sale. The fact that a better price could have been obtained by a sale at a different time or in a method different from that selected by the warehouse is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. The warehouse sells in a commercially reasonable manner if the warehouse sells the goods in the usual manner in any recognized market therefore, sells at the price current in that market at the time of the sale, or otherwise sells in conformity with commercially reasonable practices among dealers in the type of goods sold. A sale of more goods than apparently necessary to be offered to ensure satisfaction of the obligation is not commercially reasonable, except in cases covered by the preceding sentence. (b) A warehouse may enforce its lien on goods, other than goods stored by a merchant in the course of its business, only if the following requirements are satisfied: (1) All persons known to claim an interest in the | | (2) The notification must include an itemized
| | statement of the claim, a description of the goods subject to the lien, a demand for payment within a specified time not less than 10 days after receipt of the notification, and a conspicuous statement that unless the claim is paid within that time the goods will be advertised for sale and sold by auction at a specified time and place.
|
| (3) The sale must conform to the terms of the
| | (4) The sale must be held at the nearest suitable
| | place to where the goods are held or stored.
|
| (5) After the expiration of the time given in the
| | notification, an advertisement of the sale must be published once a week for two weeks consecutively in a newspaper of general circulation where the sale is to be held. The advertisement must include a description of the goods, the name of the person on whose account the goods are being held, and the time and place of the sale. The sale must take place at least 15 days after the first publication. If there is no newspaper of general circulation where the sale is to be held, the advertisement must be posted at least 10 days before the sale in not fewer than six conspicuous places in the neighborhood of the proposed sale.
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| (c) Before any sale pursuant to this Section, any person claiming a right in the goods may pay the amount necessary to satisfy the lien and the reasonable expenses incurred in complying with this Section. In that event, the goods may not be sold but must be retained by the warehouse subject to the terms of the receipt and this Article.
(d) A warehouse may buy at any public sale held pursuant to this Section.
(e) A purchaser in good faith of goods sold to enforce a warehouse's lien takes the goods free of any rights of persons against which the lien was valid, despite the warehouse's noncompliance with this Section.
(f) A warehouse may satisfy its lien from the proceeds of any sale pursuant to this Section but shall hold the balance, if any, for delivery on demand to any person to which the warehouse would have been bound to deliver the goods.
(g) The rights provided by this Section are in addition to all other rights allowed by law to a creditor against a debtor.
(h) If a lien is on goods stored by a merchant in the course of its business, the lien may be enforced in accordance with subsection (a) or (b).
(i) A warehouse is liable for damages caused by failure to comply with the requirements for sale under this Section and, in case of willful violation, is liable for conversion.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/Art. 7 Pt. 3
(810 ILCS 5/Art. 7 Pt. 3 heading)
PART 3
BILLS OF LADING: SPECIAL PROVISIONS
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/7-301
(810 ILCS 5/7-301) (from Ch. 26, par. 7-301)
Sec. 7-301. Liability for nonreceipt or misdescription; "said to contain"; "shipper's weight, load, and count"; improper handling.
(a) A consignee of a nonnegotiable bill of lading which has given value in good faith, or a holder to which a negotiable bill has been duly negotiated, relying upon the description of the goods in the bill or upon the date shown in the bill, may recover from the issuer damages caused by the misdating of the bill or the nonreceipt or misdescription of the goods, except to the extent that the bill indicates that the issuer does not know whether any part or all of the goods in fact were received or conform to the description, such as in a case in which the description is in terms of marks or labels or kind, quantity, or condition or the receipt or description is qualified by "contents or condition of contents of packages unknown", "said to contain", "shipper's weight, load, and count", or words of similar import, if that indication is true. (b) If goods are loaded by the issuer of a bill of lading: (1) the issuer shall count the packages of goods if | | shipped in packages and ascertain the kind and quantity if shipped in bulk; and
|
| (2) words such as "shipper's weight, load, and
| | count", or words of similar import indicating that the description was made by the shipper are ineffective except as to goods concealed in packages.
|
| (c) If bulk goods are loaded by a shipper that makes available to the issuer of a bill of lading adequate facilities for weighing those goods, the issuer shall ascertain the kind and quantity within a reasonable time after receiving the shipper's request in a record to do so. In that case, "shipper's weight" or words of similar import are ineffective.
(d) The issuer of a bill of lading, by including in the bill the words "shipper's weight, load, and count", or words of similar import, may indicate that the goods were loaded by the shipper, and, if that statement is true, the issuer is not liable for damages caused by the improper loading. However, omission of such words does not imply liability for damages caused by improper loading.
(e) A shipper guarantees to an issuer the accuracy at the time of shipment of the description, marks, labels, number, kind, quantity, condition, and weight, as furnished by the shipper, and the shipper shall indemnify the issuer against damage caused by inaccuracies in those particulars. This right of indemnity does not limit the issuer's responsibility or liability under the contract of carriage to any person other than the shipper.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-302
(810 ILCS 5/7-302) (from Ch. 26, par. 7-302)
Sec. 7-302. Through bills of lading and similar documents of title.
(a) The issuer of a through bill of lading, or other document of title embodying an undertaking to be performed in part by a person acting as its agent or by a performing carrier, is liable to any person entitled to recover on the bill or other document for any breach by the other person or the performing carrier of its obligation under the bill or other document. However, to the extent that the bill or other document covers an undertaking to be performed overseas or in territory not contiguous to the continental United States or an undertaking including matters other than transportation, this liability for breach by the other person or the performing carrier may be varied by agreement of the parties. (b) If goods covered by a through bill of lading or other document of title embodying an undertaking to be performed in part by a person other than the issuer are received by that person, the person is subject, with respect to its own performance while the goods are in its possession, to the obligation of the issuer. The person's obligation is discharged by delivery of the goods to another person pursuant to the bill or other document and does not include liability for breach by any other person or by the issuer. (c) The issuer of a through bill of lading or other document of title described in subsection (a) is entitled to recover from the performing carrier, or other person in possession of the goods when the breach of the obligation under the bill or other document occurred: (1) the amount it may be required to pay to any | | person entitled to recover on the bill or other document for the breach, as may be evidenced by any receipt, judgment, or transcript of judgment; and
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| (2) the amount of any expense reasonably incurred by
| | the issuer in defending any action commenced by any person entitled to recover on the bill or other document for the breach.
|
|
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-303
(810 ILCS 5/7-303) (from Ch. 26, par. 7-303)
Sec. 7-303. Diversion; reconsignment; change of instructions.
(a) Unless the bill of lading otherwise provides, a carrier may deliver the goods to a person or destination other than that stated in the bill or may otherwise dispose of the goods, without liability for misdelivery, on instructions from: (1) the holder of a negotiable bill; (2) the consignor on a nonnegotiable bill, even if | | the consignee has given contrary instructions;
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| (3) the consignee on a nonnegotiable bill in the
| | absence of contrary instructions from the consignor, if the goods have arrived at the billed destination or if the consignee is in possession of the tangible bill or in control of the electronic bill; or
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| (4) the consignee on a nonnegotiable bill, if the
| | consignee is entitled as against the consignor to dispose of the goods.
|
| (b) Unless instructions described in subsection (a) are included in a negotiable bill of lading, a person to which the bill is duly negotiated may hold the bailee according to the original terms.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-304
(810 ILCS 5/7-304) (from Ch. 26, par. 7-304)
Sec. 7-304. Tangible bills of lading in a set.
(a) Except as customary in international transportation, a tangible bill of lading may not be issued in a set of parts. The issuer is liable for damages caused by violation of this subsection. (b) If a tangible bill of lading is lawfully issued in a set of parts, each of which contains an identification code and is expressed to be valid only if the goods have not been delivered against any other part, the whole of the parts constitutes one bill. (c) If a tangible negotiable bill of lading is lawfully issued in a set of parts and different parts are negotiated to different persons, the title of the holder to which the first due negotiation is made prevails as to both the document of title and the goods even if any later holder may have received the goods from the carrier in good faith and discharged the carrier's obligation by surrendering its part. (d) A person that negotiates or transfers a single part of a tangible bill of lading issued in a set is liable to holders of that part as if it were the whole set. (e) The bailee shall deliver in accordance with Part 4 against the first presented part of a tangible bill of lading lawfully issued in a set. Delivery in this manner discharges the bailee's obligation on the whole bill.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-305
(810 ILCS 5/7-305) (from Ch. 26, par. 7-305)
Sec. 7-305. Destination bills.
(a) Instead of issuing a bill of lading to the consignor at the place of shipment, a carrier, at the request of the consignor, may procure the bill to be issued at destination or at any other place designated in the request. (b) Upon request of any person entitled as against a carrier to control the goods while in transit and on surrender of possession or control of any outstanding bill of lading or other receipt covering the goods, the issuer, subject to Section 7-105, may procure a substitute bill to be issued at any place designated in the request.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-306
(810 ILCS 5/7-306) (from Ch. 26, par. 7-306)
Sec. 7-306.
Altered bills of lading.
An unauthorized alteration or filling in of a blank in a bill of lading
leaves the bill enforceable according to its original tenor.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/7-307
(810 ILCS 5/7-307) (from Ch. 26, par. 7-307)
Sec. 7-307. Lien
of carrier.
(a) A carrier has a lien on the goods covered by a bill of lading or on the proceeds thereof in its possession for charges after the date of the carrier's receipt of the goods for storage or transportation, including demurrage and terminal charges, and for expenses necessary for preservation of the goods incident to their transportation or reasonably incurred in their sale pursuant to law. However, against a purchaser for value of a negotiable bill of lading, a carrier's lien is limited to charges stated in the bill or the applicable tariffs or, if no charges are stated, a reasonable charge. (b) A lien for charges and expenses under subsection (a) on goods that the carrier was required by law to receive for transportation is effective against the consignor or any person entitled to the goods unless the carrier had notice that the consignor lacked authority to subject the goods to those charges and expenses. Any other lien under subsection (a) is effective against the consignor and any person that permitted the bailor to have control or possession of the goods unless the carrier had notice that the bailor lacked authority. (c) A carrier loses its lien on any goods that it voluntarily delivers or unjustifiably refuses to deliver.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-308
(810 ILCS 5/7-308) (from Ch. 26, par. 7-308)
Sec. 7-308. Enforcement of carrier's lien.
(a) A carrier's lien on goods may be enforced by public or private sale of the goods, in bulk or in packages, at any time or place and on any terms that are commercially reasonable, after notifying all persons known to claim an interest in the goods. The notification must include a statement of the amount due, the nature of the proposed sale, and the time and place of any public sale. The fact that a better price could have been obtained by a sale at a different time or in a method different from that selected by the carrier is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. The carrier sells goods in a commercially reasonable manner if the carrier sells the goods in the usual manner in any recognized market therefor, sells at the price current in that market at the time of the sale, or otherwise sells in conformity with commercially reasonable practices among dealers in the type of goods sold. A sale of more goods than apparently necessary to be offered to ensure satisfaction of the obligation is not commercially reasonable, except in cases covered by the preceding sentence. (b) Before any sale pursuant to this Section, any person claiming a right in the goods may pay the amount necessary to satisfy the lien and the reasonable expenses incurred in complying with this Section. In that event, the goods may not be sold but must be retained by the carrier, subject to the terms of the bill of lading and this Article. (c) A carrier may buy at any public sale pursuant to this Section. (d) A purchaser in good faith of goods sold to enforce a carrier's lien takes the goods free of any rights of persons against which the lien was valid, despite the carrier's noncompliance with this Section. (e) A carrier may satisfy its lien from the proceeds of any sale pursuant to this Section but shall hold the balance, if any, for delivery on demand to any person to which the carrier would have been bound to deliver the goods. (f) The rights provided by this Section are in addition to all other rights allowed by law to a creditor against a debtor. (g) A carrier's lien may be enforced pursuant to either subsection (a) or the procedure set forth in Section 7-210(b). (h) A carrier is liable for damages caused by failure to comply with the requirements for sale under this Section and, in case of willful violation, is liable for conversion.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/7-309
(810 ILCS 5/7-309) (from Ch. 26, par. 7-309)
Sec. 7-309. Duty of care; contractual limitation of carrier's
liability. (a) A carrier that issues a bill of lading, whether negotiable or nonnegotiable, shall exercise the degree of care in relation to the goods which a reasonably careful person would exercise under similar circumstances. This subsection does not affect any statute, regulation, or rule of law that imposes liability upon a common carrier for damages not caused by its negligence. (b) Damages may be limited by a term in the bill of lading or in a transportation agreement that the carrier's liability may not exceed a value stated in the bill or transportation agreement if the carrier's rates are dependent upon value and the consignor is afforded an opportunity to declare a higher value and the consignor is advised of the opportunity. However, such a limitation is not effective with respect to the carrier's liability for conversion to its own use. (c) Reasonable provisions as to the time and manner of presenting claims and commencing actions based on the shipment may be included in a bill of lading or a transportation agreement.
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/Art. 7 Pt. 4
(810 ILCS 5/Art. 7 Pt. 4 heading)
PART 4
WAREHOUSE RECEIPTS AND BILLS OF LADING: GENERAL OBLIGATIONS
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/7-401
(810 ILCS 5/7-401) (from Ch. 26, par. 7-401)
Sec. 7-401. Irregularities in issue of receipt or bill or conduct of issuer. The obligations imposed by this Article on an issuer apply to a document of title even if:
(1) the document does not comply with the | | requirements of this Article or of any other statute, rule, or regulation regarding its issuance, form, or content;
|
| (2) the issuer violated laws regulating the conduct
| | (3) the goods covered by the document were owned by
| | the bailee when the document was issued; or
|
| (4) the person issuing the document is not a
| | warehouse but the document purports to be a warehouse receipt.
|
|
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/7-402
(810 ILCS 5/7-402) (from Ch. 26, par. 7-402)
Sec. 7-402. Duplicate document of title; overissue.
A duplicate or any other document of title purporting to cover goods already represented by an outstanding document of the same issuer does not confer any right in the goods, except as provided in the case of tangible bills of lading in a set of parts, overissue of documents for fungible goods, substitutes for lost, stolen, or destroyed documents, or substitute documents issued pursuant to Section 7-105. The issuer is liable for damages caused by its overissue or failure to identify a duplicate document by a conspicuous notation.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/7-403
(810 ILCS 5/7-403) (from Ch. 26, par. 7-403)
Sec. 7-403. Obligation of bailee to deliver; excuse.
(a) A bailee shall deliver the goods to a person entitled under a document of title if the person complies with subsections (b) and (c), unless and to the extent that the bailee establishes any of the following: (1) delivery of the goods to a person whose receipt | | was rightful as against the claimant;
|
| (2) damage to or delay, loss, or destruction of the
| | goods for which the bailee is not liable;
|
| (3) previous sale or other disposition of the goods
| | in lawful enforcement of a lien or on a warehouse's lawful termination of storage;
|
| (4) the exercise by a seller of its right to stop
| | delivery pursuant to Section 2-705 or by a lessor of its right to stop delivery pursuant to Section 2A-526;
|
| (5) a diversion, reconsignment, or other disposition
| | pursuant to Section 7-303;
|
| (6) release, satisfaction, or any other personal
| | defense against the claimant; or
|
| (7) any other lawful excuse.
(b) A person claiming goods covered by a document of title shall satisfy the bailee's lien if the bailee so requests or if the bailee is prohibited by law from delivering the goods until the charges are paid.
(c) Unless a person claiming the goods is a person against which the document of title does not confer a right under Section 7-503(a):
(1) the person claiming under a document shall
| | surrender possession or control of any outstanding negotiable document covering the goods for cancellation or indication of partial deliveries; and
|
| (2) the bailee shall cancel the document or
| | conspicuously indicate in the document the partial delivery or the bailee is liable to any person to which the document is duly negotiated.
|
|
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/7-404
(810 ILCS 5/7-404) (from Ch. 26, par. 7-404)
Sec. 7-404. No liability for good-faith delivery pursuant to document of title.
A bailee that in good faith has received goods and delivered or otherwise disposed of the goods according to the terms of a document of title or pursuant to this Article is not liable for the goods even if: (1) the person from which the bailee received the | | goods did not have authority to procure the document or to dispose of the goods; or
|
| (2) the person to which the bailee delivered the
| | goods did not have authority to receive the goods.
|
|
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/Art. 7 Pt. 5
(810 ILCS 5/Art. 7 Pt. 5 heading)
PART 5
WAREHOUSE RECEIPTS AND BILLS OF LADING: NEGOTIATION AND TRANSFER
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/7-501
(810 ILCS 5/7-501) (from Ch. 26, par. 7-501)
Sec. 7-501. Form
of negotiation and requirements of due negotiation.
(a) The following rules apply to a negotiable tangible document of title: (1) If the document's original terms run to the order | | of a named person, the document is negotiated by the named person's indorsement and delivery. After the named person's indorsement in blank or to bearer, any person may negotiate the document by delivery alone.
|
| (2) If the document's original terms run to bearer,
| | it is negotiated by delivery alone.
|
| (3) If the document's original terms run to the order
| | of a named person and it is delivered to the named person, the effect is the same as if the document had been negotiated.
|
| (4) Negotiation of the document after it has been
| | indorsed to a named person requires indorsement by the named person and delivery.
|
| (5) A document is duly negotiated if it is negotiated
| | in the manner stated in this subsection to a holder that purchases it in good faith, without notice of any defense against or claim to it on the part of any person, and for value, unless it is established that the negotiation is not in the regular course of business or financing or involves receiving the document in settlement or payment of a monetary obligation.
|
| (b) The following rules apply to a negotiable electronic document of title:
(1) If the document's original terms run to the order
| | of a named person or to bearer, the document is negotiated by delivery of the document to another person. Indorsement by the named person is not required to negotiate the document.
|
| (2) If the document's original terms run to the order
| | of a named person and the named person has control of the document, the effect is the same as if the document had been negotiated.
|
| (3) A document is duly negotiated if it is negotiated
| | in the manner stated in this subsection to a holder that purchases it in good faith, without notice of any defense against or claim to it on the part of any person, and for value, unless it is established that the negotiation is not in the regular course of business or financing or involves taking delivery of the document in settlement or payment of a monetary obligation.
|
| (c) Indorsement of a nonnegotiable document of title neither makes it negotiable nor adds to the transferee's rights.
(d) The naming in a negotiable bill of lading of a person to be notified of the arrival of the goods does not limit the negotiability of the bill or constitute notice to a purchaser of the bill of any interest of that person in the goods.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/7-502
(810 ILCS 5/7-502) (from Ch. 26, par. 7-502)
Sec. 7-502. Rights acquired by due negotiation.
(a) Subject to Sections 7-205 and 7-503, a holder to which a negotiable document of title has been duly negotiated acquires thereby: (1) title to the document; (2) title to the goods; (3) all rights accruing under the law of agency or | | estoppel, including rights to goods delivered to the bailee after the document was issued; and
|
| (4) the direct obligation of the issuer to hold or
| | deliver the goods according to the terms of the document free of any defense or claim by the issuer except those arising under the terms of the document or under this Article, but in the case of a delivery order, the bailee's obligation accrues only upon the bailee's acceptance of the delivery order and the obligation acquired by the holder is that the issuer and any indorser will procure the acceptance of the bailee.
|
| (b) Subject to Section 7-503, title and rights acquired by due negotiation are not defeated by any stoppage of the goods represented by the document of title or by surrender of the goods by the bailee and are not impaired even if:
(1) the due negotiation or any prior due negotiation
| | constituted a breach of duty;
|
| (2) any person has been deprived of possession of a
| | negotiable tangible document or control of a negotiable electronic document by misrepresentation, fraud, accident, mistake, duress, loss, theft, or conversion; or
|
| (3) a previous sale or other transfer of the goods or
| | document has been made to a third person.
|
|
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/7-503
(810 ILCS 5/7-503) (from Ch. 26, par. 7-503)
Sec. 7-503. Document of title to goods defeated in certain cases.
(a) A document of title confers no right in goods against a person that before issuance of the document had a legal interest or a perfected security interest in the goods and that did not: (1) deliver or entrust the goods or any document of | | title covering the goods to the bailor or the bailor's nominee with:
|
| (A) actual or apparent authority to ship, store,
| | (B) power to obtain delivery under Section 7-403;
| | (C) power of disposition under Section 2-403,
| | 2A-304(2), 2A-305(2), 9-320, or 9-321(c) or other statute or rule of law; or
|
| (2) acquiesce in the procurement by the bailor or its
| | (b) Title to goods based upon an unaccepted delivery order is subject to the rights of any person to which a negotiable warehouse receipt or bill of lading covering the goods has been duly negotiated. That title may be defeated under Section 7-504 to the same extent as the rights of the issuer or a transferee from the issuer.
(c) Title to goods based upon a bill of lading issued to a freight forwarder is subject to the rights of any person to which a bill issued by the freight forwarder is duly negotiated. However, delivery by the carrier in accordance with Part 4 pursuant to its own bill of lading discharges the carrier's obligation to deliver.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/7-504
(810 ILCS 5/7-504) (from Ch. 26, par. 7-504)
Sec. 7-504. Rights acquired in absence of due negotiation; effect of diversion; stoppage of delivery.
(a) A transferee of a document of title, whether negotiable or nonnegotiable, to which the document has been delivered but not duly negotiated, acquires the title and rights that its transferor had or had actual authority to convey. (b) In the case of a transfer of a nonnegotiable document of title, until but not after the bailee receives notice of the transfer, the rights of the transferee may be defeated: (1) by those creditors of the transferor which could | | treat the transfer as void under Section 2-402 or 2A-308;
|
| (2) by a buyer from the transferor in ordinary course
| | of business if the bailee has delivered the goods to the buyer or received notification of the buyer's rights;
|
| (3) by a lessee from the transferor in ordinary
| | course of business if the bailee has delivered the goods to the lessee or received notification of the lessee's rights; or
|
| (4) as against the bailee, by good-faith dealings of
| | the bailee with the transferor.
|
| (c) A diversion or other change of shipping instructions by the consignor in a nonnegotiable bill of lading which causes the bailee not to deliver the goods to the consignee defeats the consignee's title to the goods if the goods have been delivered to a buyer in ordinary course of business or a lessee in ordinary course of business and, in any event, defeats the consignee's rights against the bailee.
(d) Delivery of the goods pursuant to a nonnegotiable document of title may be stopped by a seller under Section 2-705 or a lessor under Section 2A-526, subject to the requirements of due notification in those Sections. A bailee that honors the seller's or lessor's instructions is entitled to be indemnified by the seller or lessor against any resulting loss or expense.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/7-505
(810 ILCS 5/7-505) (from Ch. 26, par. 7-505)
Sec. 7-505. Indorser not a guarantor for other parties. The indorsement of a tangible document of title issued by a bailee does not make the indorser liable for any default by the bailee or previous indorsers.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/7-506
(810 ILCS 5/7-506) (from Ch. 26, par. 7-506)
Sec. 7-506. Delivery without indorsement: right to compel indorsement. The transferee of a negotiable tangible document of title has a specifically enforceable right to have its transferor supply any necessary indorsement, but the transfer becomes a negotiation only as of the time the indorsement is supplied.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/7-507
(810 ILCS 5/7-507) (from Ch. 26, par. 7-507)
Sec. 7-507. Warranties on negotiation or delivery of document of title.
If a person negotiates or delivers a document of title for value, otherwise than as a mere intermediary under Section 7-508, unless otherwise agreed, the transferor, in addition to any warranty made in selling or leasing the goods, warrants to its immediate purchaser only that: (1) the document is genuine; (2) the transferor does not have knowledge of any | | fact that would impair the document's validity or worth; and
|
| (3) the negotiation or delivery is rightful and fully
| | effective with respect to the title to the document and the goods it represents.
|
|
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/7-508
(810 ILCS 5/7-508) (from Ch. 26, par. 7-508)
Sec. 7-508. Warranties of collecting bank as to documents of title.
A collecting bank or other intermediary known to be entrusted with documents of title on behalf of another or with collection of a draft or other claim against delivery of documents warrants by the delivery of the documents only its own good faith and authority even if the collecting bank or other intermediary has purchased or made advances against the claim or draft to be collected.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/7-509
(810 ILCS 5/7-509) (from Ch. 26, par. 7-509)
Sec. 7-509. Adequate compliance with commercial contract.
Whether a document of title is adequate to fulfill the obligations of a contract for sale, a contract for lease, or the conditions of a letter of credit is determined by Article 2, 2A, or 5.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/Art. 7 Pt. 6
(810 ILCS 5/Art. 7 Pt. 6 heading)
PART 6
WAREHOUSE RECEIPTS AND BILLS OF
LADING: MISCELLANEOUS PROVISIONS
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/7-601
(810 ILCS 5/7-601) (from Ch. 26, par. 7-601)
Sec. 7-601. Lost, stolen, or destroyed documents of title.
(a) If a document of title is lost, stolen, or destroyed, a court may order delivery of the goods or issuance of a substitute document and the bailee may without liability to any person comply with the order. If the document was negotiable, a court may not order delivery of the goods or issuance of a substitute document without the claimant's posting security unless it finds that any person that may suffer loss as a result of nonsurrender of possession or control of the document is adequately protected against the loss. If the document was nonnegotiable, the court may require security. The court may also order payment of the bailee's reasonable costs and attorney's fees in any action under this subsection. (b) A bailee that, without a court order, delivers goods to a person claiming under a missing negotiable document of title is liable to any person injured thereby. If the delivery is not in good faith, the bailee is liable for conversion. Delivery in good faith is not conversion if the claimant posts security with the bailee in an amount at least double the value of the goods at the time of posting to indemnify any person injured by the delivery which files a notice of claim within one year after the delivery.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/7-602
(810 ILCS 5/7-602) (from Ch. 26, par. 7-602)
Sec. 7-602. Judicial process against goods covered by negotiable document of title.
Unless a document of title was originally issued upon delivery of the goods by a person that did not have power to dispose of them, a lien does not attach by virtue of any judicial process to goods in the possession of a bailee for which a negotiable document of title is outstanding unless possession or control of the document is first surrendered to the bailee or the document's negotiation is enjoined. The bailee may not be compelled to deliver the goods pursuant to process until possession or control of the document is surrendered to the bailee or to the court. A purchaser of the document for value without notice of the process or injunction takes free of the lien imposed by judicial process.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/7-603
(810 ILCS 5/7-603) (from Ch. 26, par. 7-603)
Sec. 7-603. Conflicting Claims; Interpleader. If more than one person claims title to or possession of the goods, the bailee is excused from delivery until the bailee has a reasonable time to ascertain the validity of the adverse claims or to commence an action for interpleader. The bailee may assert an interpleader either in defending an action for nondelivery of the goods or by original action.
(Source: P.A. 95-895, eff. 1-1-09.)
|
810 ILCS 5/Art. 7 Pt. 7
(810 ILCS 5/Art. 7 Pt. 7 heading)
PART 7MISCELLANEOUS PROVISIONS
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/7-701 (810 ILCS 5/7-701)
Sec. 7-701. Effective date. (Blank).
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/7-702 (810 ILCS 5/7-702)
Sec. 7-702. Repeals. Section 10-104 of the Uniform Commercial Code is repealed.
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/7-703 (810 ILCS 5/7-703)
Sec. 7-703. Applicability. This amendatory Act of the 95th General Assembly
applies to a document of title that is issued or a bailment that arises on or after the effective date of this amendatory Act of the 95th General Assembly. This amendatory Act of the 95th General Assembly does not apply to a document of title that is issued or a bailment that arises before the effective date of this amendatory Act of the 95th General Assembly even if the document of title or bailment would be subject to this amendatory Act of the 95th General Assembly if the document of title had been issued or bailment had arisen on or after the effective date of this amendatory Act of the 95th General Assembly. This amendatory Act of the 95th General Assembly does not apply to a right of action that has accrued before the effective date of this amendatory Act of the 95th General Assembly.
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/7-704 (810 ILCS 5/7-704)
Sec. 7-704. Savings clause. A document of title issued or a bailment that arises before the effective date of this amendatory Act of the 95th General Assembly and the rights, obligations, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this amendatory Act of the 95th General Assembly as if amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule.
(Source: P.A. 95-895, eff. 1-1-09.) |
810 ILCS 5/Art. 8
(810 ILCS 5/Art. 8 heading)
REVISED ARTICLE 8
INVESTMENT SECURITIES
|
810 ILCS 5/Art. 8 Pt. 1
(810 ILCS 5/Art. 8 Pt. 1 heading)
PART 1.
SHORT TITLE AND GENERAL MATTERS
|
810 ILCS 5/8-101
(810 ILCS 5/8-101) (from Ch. 26, par. 8-101)
Sec. 8-101.
Short title.
This Article may be cited as Uniform Commercial
Code--Investment Securities.
(Source: P.A. 89-364, eff. 1-1-96.)
|
810 ILCS 5/8-102 (810 ILCS 5/8-102) (from Ch. 26, par. 8-102) (Text of Section before amendment by P.A. 103-1036) Sec. 8-102. Definitions. (a) In this Article: (1) "Adverse claim" means a claim that a claimant has | | a property interest in a financial asset and that it is a violation of the rights of the claimant for another person to hold, transfer, or deal with the financial asset.
|
| (2) "Bearer form," as applied to a certificated
| | security, means a form in which the security is payable to the bearer of the security certificate according to its terms but not by reason of an indorsement.
|
| (3) "Broker" means a person defined as a broker or
| | dealer under the federal securities laws, but without excluding a bank acting in that capacity.
|
| (4) "Certificated security" means a security that is
| | represented by a certificate.
|
| (5) "Clearing corporation" means:
(i) a person that is registered as a "clearing
| | agency" under the federal securities laws;
|
| (ii) a federal reserve bank; or
(iii) any other person that provides clearance or
| | settlement services with respect to financial assets that would require it to register as a clearing agency under the federal securities laws but for an exclusion or exemption from the registration requirement, if its activities as a clearing corporation, including promulgation of rules, are subject to regulation by a federal or state governmental authority.
|
| (6) "Communicate" means to:
(i) send a signed writing; or
(ii) transmit information by any mechanism agreed
| | upon by the persons transmitting and receiving the information.
|
| (7) "Entitlement holder" means a person identified in
| | the records of a securities intermediary as the person having a security entitlement against the securities intermediary. If a person acquires a security entitlement by virtue of Section 8-501(b)(2) or (3), that person is the entitlement holder.
|
| (8) "Entitlement order" means a notification
| | communicated to a securities intermediary directing transfer or redemption of a financial asset to which the entitlement holder has a security entitlement.
|
| (9) "Financial asset," except as otherwise provided
| | (i) a security;
(ii) an obligation of a person or a share,
| | participation, or other interest in a person or in property or an enterprise of a person, which is, or is of a type, dealt in or traded on financial markets, or which is recognized in any area in which it is issued or dealt in as a medium for investment; or
|
| (iii) any property that is held by a securities
| | intermediary for another person in a securities account if the securities intermediary has expressly agreed with the other person that the property is to be treated as a financial asset under this Article. As context requires, the term means either the interest itself or the means by which a person's claim to it is evidenced, including a certificated or uncertificated security, a security certificate, or a security entitlement.
|
| (10) "Good faith," for purposes of the obligation of
| | good faith in the performance or enforcement of contracts or duties within this Article, means honesty in fact and the observance of reasonable commercial standards of fair dealing.
|
| (11) "Indorsement" means a signature that alone or
| | accompanied by other words is made on a security certificate in registered form or on a separate document for the purpose of assigning, transferring, or redeeming the security or granting a power to assign, transfer, or redeem it.
|
| (12) "Instruction" means a notification communicated
| | to the issuer of an uncertificated security which directs that the transfer of the security be registered or that the security be redeemed.
|
| (13) "Registered form," as applied to a certificated
| | security, means a form in which:
|
| (i) the security certificate specifies a person
| | entitled to the security; and
|
| (ii) a transfer of the security may be registered
| | upon books maintained for that purpose by or on behalf of the issuer, or the security certificate so states.
|
| (14) "Securities intermediary" means:
(i) a clearing corporation; or
(ii) a person, including a bank or broker, that
| | in the ordinary course of its business maintains securities accounts for others and is acting in that capacity.
|
| (15) "Security," except as otherwise provided in
| | Section 8-103, means an obligation of an issuer or a share, participation, or other interest in an issuer or in property or an enterprise of an issuer:
|
| (i) which is represented by a security
| | certificate in bearer or registered form, or the transfer of which may be registered upon books maintained for that purpose by or on behalf of the issuer;
|
| (ii) which is one of a class or series or by its
| | terms is divisible into a class or series of shares, participations, interests, or obligations; and
|
| (iii) which:
(A) is, or is of a type, dealt in or traded
| | on securities exchanges or securities markets; or
|
| (B) is a medium for investment and by its
| | terms expressly provides that it is a security governed by this Article.
|
| (16) "Security certificate" means a certificate
| | (17) "Security entitlement" means the rights and
| | property interest of an entitlement holder with respect to a financial asset specified in Part 5.
|
| (18) "Uncertificated security" means a security that
| | is not represented by a certificate.
|
| (b) Other definitions applying to this Article and the Sections in
which they appear are:
Appropriate person Section 8-107
Control Section 8-106
Delivery Section 8-301
Investment company security Section 8-103
Issuer Section 8-201
Overissue Section 8-210
Protected purchaser Section 8-303
Securities account Section 8-501
(c) In addition, Article 1 contains general definitions and principles of
construction and interpretation applicable throughout this Article.
(d) The characterization of a person, business, or transaction for
purposes of this Article does not determine the characterization of the
person, business, or transaction for purposes of any other law, regulation, or
rule.
(Source: P.A. 89-364, eff. 1-1-96.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 8-102. Definitions.
(a) In this Article:
(1) "Adverse claim" means a claim that a claimant has
| | a property interest in a financial asset and that it is a violation of the rights of the claimant for another person to hold, transfer, or deal with the financial asset.
|
| (2) "Bearer form," as applied to a certificated
| | security, means a form in which the security is payable to the bearer of the security certificate according to its terms but not by reason of an indorsement.
|
| (3) "Broker" means a person defined as a broker or
| | dealer under the federal securities laws, but without excluding a bank acting in that capacity.
|
| (4) "Certificated security" means a security that is
| | represented by a certificate.
|
| (5) "Clearing corporation" means:
(i) a person that is registered as a "clearing
| | agency" under the federal securities laws;
|
| (ii) a federal reserve bank; or
(iii) any other person that provides clearance or
| | settlement services with respect to financial assets that would require it to register as a clearing agency under the federal securities laws but for an exclusion or exemption from the registration requirement, if its activities as a clearing corporation, including promulgation of rules, are subject to regulation by a federal or state governmental authority.
|
| (6) "Communicate" means to:
(i) send a signed record; or
(ii) transmit information by any mechanism agreed
| | upon by the persons transmitting and receiving the information.
|
| (7) "Entitlement holder" means a person identified in
| | the records of a securities intermediary as the person having a security entitlement against the securities intermediary. If a person acquires a security entitlement by virtue of Section 8-501(b)(2) or (3), that person is the entitlement holder.
|
| (8) "Entitlement order" means a notification
| | communicated to a securities intermediary directing transfer or redemption of a financial asset to which the entitlement holder has a security entitlement.
|
| (9) "Financial asset," except as otherwise provided
| | (i) a security;
(ii) an obligation of a person or a share,
| | participation, or other interest in a person or in property or an enterprise of a person, which is, or is of a type, dealt in or traded on financial markets, or which is recognized in any area in which it is issued or dealt in as a medium for investment; or
|
| (iii) any property that is held by a securities
| | intermediary for another person in a securities account if the securities intermediary has expressly agreed with the other person that the property is to be treated as a financial asset under this Article. As context requires, the term means either the interest itself or the means by which a person's claim to it is evidenced, including a certificated or uncertificated security, a security certificate, or a security entitlement.
|
| (10) "Good faith," for purposes of the obligation of
| | good faith in the performance or enforcement of contracts or duties within this Article, means honesty in fact and the observance of reasonable commercial standards of fair dealing.
|
| (11) "Indorsement" means a signature that alone or
| | accompanied by other words is made on a security certificate in registered form or on a separate document for the purpose of assigning, transferring, or redeeming the security or granting a power to assign, transfer, or redeem it.
|
| (12) "Instruction" means a notification communicated
| | to the issuer of an uncertificated security which directs that the transfer of the security be registered or that the security be redeemed.
|
| (13) "Registered form," as applied to a certificated
| | security, means a form in which:
|
| (i) the security certificate specifies a person
| | entitled to the security; and
|
| (ii) a transfer of the security may be registered
| | upon books maintained for that purpose by or on behalf of the issuer, or the security certificate so states.
|
| (14) "Securities intermediary" means:
(i) a clearing corporation; or
(ii) a person, including a bank or broker, that
| | in the ordinary course of its business maintains securities accounts for others and is acting in that capacity.
|
| (15) "Security," except as otherwise provided in
| | Section 8-103, means an obligation of an issuer or a share, participation, or other interest in an issuer or in property or an enterprise of an issuer:
|
| (i) which is represented by a security
| | certificate in bearer or registered form, or the transfer of which may be registered upon books maintained for that purpose by or on behalf of the issuer;
|
| (ii) which is one of a class or series or by its
| | terms is divisible into a class or series of shares, participations, interests, or obligations; and
|
| (iii) which:
(A) is, or is of a type, dealt in or traded
| | on securities exchanges or securities markets; or
|
| (B) is a medium for investment and by its
| | terms expressly provides that it is a security governed by this Article.
|
| (16) "Security certificate" means a certificate
| | (17) "Security entitlement" means the rights and
| | property interest of an entitlement holder with respect to a financial asset specified in Part 5.
|
| (18) "Uncertificated security" means a security that
| | is not represented by a certificate.
|
| (b) The following definitions in this Article and other Articles apply to this Article:
Appropriate person Section 8-107
Control Section 8-106
Controllable account Section 9-102
Controllable electronic
record Section 12-102
Controllable payment
intangible Section 9-102
Delivery Section 8-301
Investment company security Section 8-103
Issuer Section 8-201
Overissue Section 8-210
Protected purchaser Section 8-303
Securities account Section 8-501
(c) In addition, Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.
(d) The characterization of a person, business, or transaction for purposes of this Article does not determine the characterization of the person, business, or transaction for purposes of any other law, regulation, or rule.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/8-103 (810 ILCS 5/8-103) (from Ch. 26, par. 8-103) (Text of Section before amendment by P.A. 103-1036) Sec. 8-103. Rules for determining whether certain
obligations and interests are securities or financial
assets. (a) A share or similar equity interest issued by a corporation,
business trust, joint stock company, or similar entity is a security. (b) An "investment company security" is a security. "Investment
company security" means a share or similar equity interest issued by an
entity that is registered as an investment company under the federal
investment company laws, an interest in a unit investment trust that is so
registered, or a face-amount certificate issued by a face-amount certificate
company that is so registered. Investment company security does not
include an insurance policy or endowment policy or annuity contract issued
by an insurance company. (c) An interest in a partnership or limited liability company is not a
security unless it is dealt in or traded on securities exchanges or in
securities markets, its terms expressly provide that it is a security governed
by this
Article, or it is an investment company security. However, an interest in a
partnership or limited liability company is a financial asset if it is held in
a securities account. (d) A writing that is a security certificate is governed by this Article and
not by Article 3, even though it also meets the requirements of that
Article. However, a negotiable instrument governed by Article 3 is a financial
asset if it is held in a securities account. (e) An option or similar obligation issued by a clearing corporation
to its participants is not a security, but is a financial asset. (f) A commodity contract, as defined in Section 9-102(a)(15),
is not a
security or a financial asset. (g) A document of title is not a financial asset unless Section 8-102(a)(9)(iii) applies.
(Source: P.A. 95-895, eff. 1-1-09.) (Text of Section after amendment by P.A. 103-1036) Sec. 8-103. Rules for determining whether certain obligations and interests are securities or financial assets. (a) A share or similar equity interest issued by a corporation, business trust, joint stock company, or similar entity is a security. (b) An "investment company security" is a security. "Investment company security" means a share or similar equity interest issued by an entity that is registered as an investment company under the federal investment company laws, an interest in a unit investment trust that is so registered, or a face-amount certificate issued by a face-amount certificate company that is so registered. Investment company security does not include an insurance policy or endowment policy or annuity contract issued by an insurance company. (c) An interest in a partnership or limited liability company is not a security unless it is dealt in or traded on securities exchanges or in securities markets, its terms expressly provide that it is a security governed by this Article, or it is an investment company security. However, an interest in a partnership or limited liability company is a financial asset if it is held in a securities account. (d) A writing that is a security certificate is governed by this Article and not by Article 3, even though it also meets the requirements of that Article. However, a negotiable instrument governed by Article 3 is a financial asset if it is held in a securities account. (e) An option or similar obligation issued by a clearing corporation to its participants is not a security, but is a financial asset. (f) A commodity contract, as defined in Section 9-102(a)(15), is not a security or a financial asset. (g) A document of title is not a financial asset unless Section 8-102(a)(9)(iii) applies. (h) A controllable account, controllable electronic record, or controllable payment intangible is not a financial asset unless Section 8-102(a)(9)(iii) applies. (Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/8-104
(810 ILCS 5/8-104) (from Ch. 26, par. 8-104)
Sec. 8-104.
Acquisition of security or financial
asset or interest therein.
(a) A person acquires a security or an interest therein, under this
Article, if:
(1) the person is a purchaser to whom a security is | | delivered pursuant to Section 8-301; or
|
|
(2) the person acquires a security entitlement to the
| | security pursuant to Section 8-501.
|
|
(b) A person acquires a financial asset, other than a security, or an
interest therein, under this Article, if the person acquires a security
entitlement to the financial asset.
(c) A person who acquires a security entitlement to a security or
other financial asset has the rights specified in Part 5, but is a purchaser of
any security, security entitlement, or other financial asset held by the
securities intermediary only to the extent provided in Section 8-503.
(d) Unless the context shows that a different meaning is intended, a
person who is required by other law, regulation, rule, or agreement to
transfer, deliver, present, surrender, exchange, or otherwise put in the
possession of another person a security or financial asset satisfies that
requirement by causing the other person to acquire an interest in the
security or financial asset pursuant to subsection (a) or (b).
(Source: P.A. 89-364, eff. 1-1-96.)
|
810 ILCS 5/8-105
(810 ILCS 5/8-105) (from Ch. 26, par. 8-105)
Sec. 8-105.
Notice of adverse claim.
(a) A person has notice of an adverse claim if:
(1) the person knows of the adverse claim;
(2) the person is aware of facts sufficient to | | indicate that there is a significant probability that the adverse claim exists and deliberately avoids information that would establish the existence of the adverse claim; or
|
|
(3) the person has a duty, imposed by statute or
| | regulation, to investigate whether an adverse claim exists, and the investigation so required would establish the existence of the adverse claim.
|
|
(b) Having knowledge that a financial asset or interest therein is or
has been transferred by a representative imposes no duty of inquiry into the
rightfulness of a transaction and is not notice of an adverse claim. However,
a person who knows that a representative has transferred a financial asset or
interest therein in a transaction that is, or whose proceeds are being used,
for the individual benefit of the representative or otherwise in breach of
duty has notice of an adverse claim.
(c) An act or event that creates a right to immediate performance
of the principal obligation represented by a security certificate or sets a
date
on or after which the certificate is to be presented or surrendered for
redemption or exchange does not itself constitute notice of an adverse claim
except in the case of a transfer more than:
(1) one year after a date set for presentment or
| | surrender for redemption or exchange; or
|
|
(2) six months after a date set for payment of money
| | against presentation or surrender of the certificate, if money was available for payment on that date.
|
|
(d) A purchaser of a certificated security has notice of an adverse
claim if the security certificate:
(1) whether in bearer or registered form, has been
| | indorsed "for collection" or "for surrender" or for some other purpose not involving transfer; or
|
|
(2) is in bearer form and has on it an unambiguous
| | statement that it is the property of a person other than the transferor, but the mere writing of a name on the certificate is not such a statement.
|
|
(e) Filing of a financing statement under Article 9 is not notice of
an adverse claim to a financial asset.
(Source: P.A. 89-364, eff. 1-1-96.)
|
810 ILCS 5/8-106 (810 ILCS 5/8-106) (from Ch. 26, par. 8-106) (Text of Section before amendment by P.A. 103-1036) Sec. 8-106. Control. (a) A purchaser has "control" of a certificated security in bearer
form if the certificated security is delivered to the purchaser. (b) A purchaser has "control" of a certificated security in registered
form if the certificated security is delivered to the purchaser, and: (1) the certificate is indorsed to the purchaser or | | in blank by an effective indorsement; or
|
| (2) the certificate is registered in the name of the
| | purchaser, upon original issue or registration of transfer by the issuer.
|
| (c) A purchaser has "control" of an uncertificated security if:
(1) the uncertificated security is delivered to the
| | (2) the issuer has agreed that it will comply with
| | instructions originated by the purchaser without further consent by the registered owner.
|
| (d) A purchaser has "control" of a security entitlement if:
(1) the purchaser becomes the entitlement holder;
(2) the securities intermediary has agreed that it
| | will comply with entitlement orders originated by the purchaser without further consent by the entitlement holder; or
|
| (3) another person has control of the security
| | entitlement on behalf of the purchaser or, having previously acquired control of the security entitlement, acknowledges that it has control on behalf of the purchaser.
|
| (e) If an interest in a security entitlement is granted by the
entitlement holder to the entitlement holder's own securities intermediary,
the securities intermediary has control.
(f) A purchaser who has satisfied the requirements of subsection (c) or
(d) has control even if the registered owner in the case of subsection (c)
or the entitlement holder in the case of subsection (d) retains the right to
make substitutions for the uncertificated security or security entitlement,
to originate instructions or entitlement orders to the issuer or securities
intermediary, or otherwise to deal with the uncertificated security or
security entitlement.
(g) An issuer or a securities intermediary may not enter into an
agreement of the kind described in subsection (c)(2) or (d)(2) without the
consent of the registered owner or entitlement holder, but an issuer or a
securities intermediary is not required to enter into such an agreement even
though the registered owner or entitlement holder so directs. An issuer or
securities intermediary that has entered into such an agreement is not
required to confirm the existence of the agreement to another party unless
requested to do so by the registered owner or entitlement holder.
(Source: P.A. 95-331, eff. 8-21-07.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 8-106. Control.
(a) A purchaser has "control" of a certificated security in bearer form if the certificated security is delivered to the purchaser.
(b) A purchaser has "control" of a certificated security in registered form if the certificated security is delivered to the purchaser, and:
(1) the certificate is indorsed to the purchaser or
| | in blank by an effective indorsement; or
|
| (2) the certificate is registered in the name of the
| | purchaser, upon original issue or registration of transfer by the issuer.
|
| (c) A purchaser has "control" of an uncertificated security if:
(1) the uncertificated security is delivered to the
| | (2) the issuer has agreed that it will comply with
| | instructions originated by the purchaser without further consent by the registered owner.
|
| (d) A purchaser has "control" of a security entitlement if:
(1) the purchaser becomes the entitlement holder;
(2) the securities intermediary has agreed that it
| | will comply with entitlement orders originated by the purchaser without further consent by the entitlement holder; or
|
| (3) another person, other than the transferor to the
| | purchaser of an interest in the security entitlement:
|
| (A) has control of the security entitlement and
| | acknowledges that it has control on behalf of the purchaser; or
|
| (B) obtains control of the security entitlement
| | after having acknowledged that it will obtain control of the security entitlement on behalf of the purchaser.
|
| (e) If an interest in a security entitlement is granted by the entitlement holder to the entitlement holder's own securities intermediary, the securities intermediary has control.
(f) A purchaser who has satisfied the requirements of subsection (c) or (d) has control even if the registered owner in the case of subsection (c) or the entitlement holder in the case of subsection (d) retains the right to make substitutions for the uncertificated security or security entitlement, to originate instructions or entitlement orders to the issuer or securities intermediary, or otherwise to deal with the uncertificated security or security entitlement.
(g) An issuer or a securities intermediary may not enter into an agreement of the kind described in subsection (c)(2) or (d)(2) without the consent of the registered owner or entitlement holder, but an issuer or a securities intermediary is not required to enter into such an agreement even though the registered owner or entitlement holder so directs. An issuer or securities intermediary that has entered into such an agreement is not required to confirm the existence of the agreement to another party unless requested to do so by the registered owner or entitlement holder.
(h) A person that has control under this Section is not required to acknowledge that it has control on behalf of a purchaser.
(i) If a person acknowledges that it has or will obtain control on behalf of a purchaser, unless the person otherwise agrees or law other than this Article or Article 9 otherwise provides, the person does not owe any duty to the purchaser and is not required to confirm the acknowledgment to any other person.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/8-107
(810 ILCS 5/8-107) (from Ch. 26, par. 8-107)
Sec. 8-107.
Whether indorsement, instruction, or
entitlement order is effective.
(a) "Appropriate person" means:
(1) with respect to an indorsement, the person | | specified by a security certificate or by an effective special indorsement to be entitled to the security;
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(2) with respect to an instruction, the registered
| | owner of an uncertificated security;
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(3) with respect to an entitlement order, the
| |
(4) if the person designated in paragraph (1), (2),
| | or (3) is deceased, the designated person's successor taking under other law or the designated person's personal representative acting for the estate of the decedent; or
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|
(5) if the person designated in paragraph (1), (2),
| | or (3) lacks capacity, the designated person's guardian, conservator, or other similar representative who has power under other law to transfer the security or financial asset.
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|
(b) An indorsement, instruction, or entitlement order is effective if:
(1) it is made by the appropriate person;
(2) it is made by a person who has power under the
| | law of agency to transfer the security or financial asset on behalf of the appropriate person, including, in the case of an instruction or entitlement order, a person who has control under Section 8-106(c)(2) or (d)(2); or
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|
(3) the appropriate person has ratified it or is
| | otherwise precluded from asserting its ineffectiveness.
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|
(c) An indorsement, instruction, or entitlement order made by a
representative is effective even if:
(1) the representative has failed to comply with a
| | controlling instrument or with the law of the state having jurisdiction of the representative relationship, including any law requiring the representative to obtain court approval of the transaction; or
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|
(2) the representative's action in making the
| | indorsement, instruction, or entitlement order or using the proceeds of the transaction is otherwise a breach of duty.
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|
(d) If a security is registered in the name of or specially indorsed to
a person described as a representative, or if a securities account is
maintained in the name of a person described as a representative, an
indorsement, instruction, or entitlement order made by the person is
effective even though the person is no longer serving in the described
capacity.
(e) Effectiveness of an indorsement, instruction, or entitlement
order is determined as of the date the indorsement, instruction, or
entitlement order is made, and an indorsement, instruction, or entitlement
order does not become ineffective by reason of any later change of
circumstances.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-108
(810 ILCS 5/8-108) (from Ch. 26, par. 8-108)
Sec. 8-108.
Warranties in direct holding.
(a) A person who transfers a certificated security to a purchaser for
value warrants to the purchaser, and an indorser, if the transfer is by
indorsement, warrants to any subsequent purchaser, that:
(1) the certificate is genuine and has not been | |
(2) the transferor or indorser does not know of any
| | fact that might impair the validity of the security;
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|
(3) there is no adverse claim to the security;
(4) the transfer does not violate any restriction on
| |
(5) if the transfer is by indorsement, the
| | indorsement is made by an appropriate person, or if the indorsement is by an agent, the agent has actual authority to act on behalf of the appropriate person; and
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|
(6) the transfer is otherwise effective and rightful.
(b) A person who originates an instruction for registration of
transfer of an uncertificated security to a purchaser for value warrants to the
purchaser that:
(1) the instruction is made by an appropriate person,
| | or if the instruction is by an agent, the agent has actual authority to act on behalf of the appropriate person;
|
|
(2) the security is valid;
(3) there is no adverse claim to the security; and
(4) at the time the instruction is presented to the
| |
(i) the purchaser will be entitled to the
| | registration of transfer;
|
|
(ii) the transfer will be registered by the
| | issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction;
|
|
(iii) the transfer will not violate any
| | restriction on transfer; and
|
|
(iv) the requested transfer will otherwise be
| |
(c) A person who transfers an uncertificated security to a purchaser
for value and does not originate an instruction in connection with the
transfer warrants that:
(1) the uncertificated security is valid;
(2) there is no adverse claim to the security;
(3) the transfer does not violate any restriction on
| |
(4) the transfer is otherwise effective and rightful.
(d) A person who indorses a security certificate warrants to the
issuer that:
(1) there is no adverse claim to the security; and
(2) the indorsement is effective.
(e) A person who originates an instruction for registration of
transfer of an uncertificated security warrants to the issuer that:
(1) the instruction is effective; and
(2) at the time the instruction is presented to the
| | issuer the purchaser will be entitled to the registration of transfer.
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|
(f) A person who presents a certificated security for registration of
transfer or for payment or exchange warrants to the issuer that the person is
entitled to the registration, payment, or exchange, but a purchaser for value
and without notice of adverse claims to whom transfer is registered warrants
only that the person has no knowledge of any unauthorized signature in a
necessary indorsement.
(g) If a person acts as agent of another in delivering a certificated
security to a purchaser, the identity of the principal was known to the person
to whom the certificate was delivered, and the certificate delivered by the
agent was received by the agent from the principal or received by the agent
from another person at the direction of the principal, the person delivering
the security certificate warrants only that the delivering person has authority
to act for the principal and does not know of any adverse claim to the
certificated security.
(h) A secured party who redelivers a security certificate received, or
after payment and on order of the debtor delivers the security certificate to
another person, makes only the warranties of an agent under subsection (g).
(i) Except as otherwise provided in subsection (g), a broker acting
for a customer makes to the issuer and a purchaser the warranties provided
in subsections (a) through (f). A broker that delivers a security certificate
to
its customer, or causes its customer to be registered as the owner of an
uncertificated security, makes to the customer the warranties provided in
subsection (a) or (b), and has the rights and privileges of a purchaser under
this Section. The warranties of and in favor of the broker acting as an agent
are in addition to applicable warranties given by and in favor of the
customer.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-109
(810 ILCS 5/8-109)
Sec. 8-109.
Warranties in indirect holding.
(a) A person who originates an entitlement order to a securities
intermediary warrants to the securities intermediary that:
(1) the entitlement order is made by an appropriate | | person, or if the entitlement order is by an agent, the agent has actual authority to act on behalf of the appropriate person; and
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(2) there is no adverse claim to the security
| |
(b) A person who delivers a security certificate to a securities
intermediary for credit to a securities account or originates an instruction
with respect to an uncertificated security directing that the uncertificated
security be credited to a securities account makes to the securities
intermediary the warranties specified in Section 8-108(a) or (b).
(c) If a securities intermediary delivers a security certificate to its
entitlement holder or causes its entitlement holder to be registered as the
owner of an uncertificated security, the securities intermediary makes to the
entitlement holder the warranties specified in Section 8-108(a) or (b).
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-110 (810 ILCS 5/8-110) (Text of Section before amendment by P.A. 103-1036) Sec. 8-110. Applicability; choice of law. (a) The local law of the issuer's jurisdiction, as specified in
subsection (d), governs: (1) the validity of a security; (2) the rights and duties of the issuer with respect | | to registration of transfer;
|
| (3) the effectiveness of registration of transfer by
| | (4) whether the issuer owes any duties to an adverse
| | claimant to a security; and
|
| (5) whether an adverse claim can be asserted against
| | a person to whom transfer of a certificated or uncertificated security is registered or a person who obtains control of an uncertificated security.
|
| (b) The local law of the securities intermediary's jurisdiction, as
specified in subsection (e), governs:
(1) acquisition of a security entitlement from the
| | (2) the rights and duties of the securities
| | intermediary and entitlement holder arising out of a security entitlement;
|
| (3) whether the securities intermediary owes any
| | duties to an adverse claimant to a security entitlement; and
|
| (4) whether an adverse claim can be asserted against
| | a person who acquires a security entitlement from the securities intermediary or a person who purchases a security entitlement or interest therein from an entitlement holder.
|
| (c) The local law of the jurisdiction in which a security certificate is
located at the time of delivery governs whether an adverse claim can be
asserted against a person to whom the security certificate is delivered.
(d) "Issuer's jurisdiction" means the jurisdiction under which the
issuer of the security is organized or, if permitted by the law of that
jurisdiction, the law of another jurisdiction specified by the issuer. An
issuer
organized under the law of this State may specify the law of another
jurisdiction as the law governing the matters specified in subsection (a)(2)
through (5).
(e) The following rules determine a "securities intermediary's
jurisdiction" for purposes of this Section:
(1) If an agreement between the securities
| | intermediary and its entitlement holder governing the securities account expressly provides that a particular jurisdiction is the securities intermediary's jurisdiction for purposes of this Part, this Article, or this Act, that jurisdiction is the securities intermediary's jurisdiction.
|
| (2) If paragraph (1) does not apply and an agreement
| | between the securities intermediary and its entitlement holder governing the securities account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction.
|
| (3) If neither paragraph (1) nor paragraph (2)
| | applies and an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that the securities account is maintained at an office in a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction.
|
| (4) If none of the preceding paragraphs applies, the
| | securities intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the entitlement holder's account is located.
|
| (5) If none of the preceding paragraphs applies, the
| | securities intermediary's jurisdiction is the jurisdiction in which the chief executive office of the securities intermediary is located.
|
| (f) A securities intermediary's jurisdiction is not determined by the
physical location of certificates representing financial assets, or by the
jurisdiction in which is organized the issuer of the financial asset with
respect to which an entitlement holder has a security entitlement, or by the
location of facilities for data processing or other record keeping concerning
the account.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 8-110. Applicability; choice of law.
(a) The local law of the issuer's jurisdiction, as specified in subsection (d), governs:
(1) the validity of a security;
(2) the rights and duties of the issuer with respect
| | to registration of transfer;
|
| (3) the effectiveness of registration of transfer by
| | (4) whether the issuer owes any duties to an adverse
| | claimant to a security; and
|
| (5) whether an adverse claim can be asserted against
| | a person to whom transfer of a certificated or uncertificated security is registered or a person who obtains control of an uncertificated security.
|
| (b) The local law of the securities intermediary's jurisdiction, as specified in subsection (e), governs:
(1) acquisition of a security entitlement from the
| | (2) the rights and duties of the securities
| | intermediary and entitlement holder arising out of a security entitlement;
|
| (3) whether the securities intermediary owes any
| | duties to an adverse claimant to a security entitlement; and
|
| (4) whether an adverse claim can be asserted against
| | a person who acquires a security entitlement from the securities intermediary or a person who purchases a security entitlement or interest therein from an entitlement holder.
|
| (c) The local law of the jurisdiction in which a security certificate is located at the time of delivery governs whether an adverse claim can be asserted against a person to whom the security certificate is delivered.
(d) "Issuer's jurisdiction" means the jurisdiction under which the issuer of the security is organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified by the issuer. An issuer organized under the law of this State may specify the law of another jurisdiction as the law governing the matters specified in subsection (a)(2) through (5).
(e) The following rules determine a "securities intermediary's jurisdiction" for purposes of this Section:
(1) If an agreement between the securities
| | intermediary and its entitlement holder governing the securities account expressly provides that a particular jurisdiction is the securities intermediary's jurisdiction for purposes of this Part, this Article, or this Act, that jurisdiction is the securities intermediary's jurisdiction.
|
| (2) If paragraph (1) does not apply and an agreement
| | between the securities intermediary and its entitlement holder governing the securities account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction.
|
| (3) If neither paragraph (1) nor paragraph (2)
| | applies and an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that the securities account is maintained at an office in a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction.
|
| (4) If none of the preceding paragraphs applies, the
| | securities intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the entitlement holder's account is located.
|
| (5) If none of the preceding paragraphs applies, the
| | securities intermediary's jurisdiction is the jurisdiction in which the chief executive office of the securities intermediary is located.
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| (f) A securities intermediary's jurisdiction is not determined by the physical location of certificates representing financial assets, or by the jurisdiction in which is organized the issuer of the financial asset with respect to which an entitlement holder has a security entitlement, or by the location of facilities for data processing or other record keeping concerning the account.
(g) The local law of the issuer's jurisdiction or the securities intermediary's jurisdiction governs a matter or transaction specified in subsection (a) or (b) even if the matter or transaction does not bear any relation to the jurisdiction.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/8-111
(810 ILCS 5/8-111)
Sec. 8-111.
Clearing corporation rules.
A rule
adopted by a clearing corporation governing rights and obligations among
the clearing corporation and its participants in the clearing corporation is
effective even if the rule conflicts with this Code and affects another
party who does not consent to the rule.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-112
(810 ILCS 5/8-112)
Sec. 8-112.
Creditor's legal process.
(a) The interest of a debtor in a certificated security may be
reached by a creditor only by actual seizure of the security certificate by the
officer making the attachment or levy, except as otherwise provided in
subsection (d). However, a certificated security for which the certificate has
been surrendered to the issuer may be reached by a creditor by legal process
upon the issuer.
(b) The interest of a debtor in an uncertificated security may be
reached by a creditor only by legal process upon the issuer at its chief
executive office in the United States, except as otherwise provided in
subsection (d).
(c) The interest of a debtor in a security entitlement may be
reached by a creditor only by legal process upon the securities intermediary
with whom the debtor's securities account is maintained, except as otherwise
provided in subsection (d).
(d) The interest of a debtor in a certificated security for which the
certificate is in the possession of a secured party, or in an uncertificated
security registered in the name of a secured party, or a security entitlement
maintained in the name of a secured party, may be reached by a creditor by
legal process upon the secured party.
(e) A creditor whose debtor is the owner of a certificated security,
uncertificated security, or security entitlement is entitled to aid from a
court
of competent jurisdiction, by injunction or otherwise, in reaching the
certificated security, uncertificated security, or security entitlement or in
satisfying the claim by means allowed at law or in equity in regard to
property that cannot readily be reached by other legal process.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-113
(810 ILCS 5/8-113)
Sec. 8-113.
Statute of frauds inapplicable.
A contract
or modification of a contract for the sale or purchase of a security is
enforceable whether or not there is a writing signed or record authenticated
by a party against whom enforcement is sought, even if the contract or
modification is not capable of performance within one year of its making.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-114
(810 ILCS 5/8-114)
Sec. 8-114.
Evidentiary rules concerning
certificated securities.
The following rules apply in an action on a
certificated security against the issuer:
(1) Unless specifically denied in the pleadings, each | | signature on a security certificate or in a necessary indorsement is admitted.
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(2) If the effectiveness of a signature is put in
| | issue, the burden of establishing effectiveness is on the party claiming under the signature, but the signature is presumed to be genuine or authorized.
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(3) If signatures on a security certificate are
| | admitted or established, production of the certificate entitles a holder to recover on it unless the defendant establishes a defense or a defect going to the validity of the security.
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(4) If it is shown that a defense or defect exists,
| | the plaintiff has the burden of establishing that the plaintiff or some person under whom the plaintiff claims is a person against whom the defense or defect cannot be asserted.
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(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-115
(810 ILCS 5/8-115)
Sec. 8-115.
Securities intermediary and others not
liable to adverse claimant. A securities intermediary that has
transferred a financial asset pursuant to an effective entitlement order, or a
broker or other agent or bailee that has dealt with a financial asset at the
direction of its customer or principal, is not liable to a person having an
adverse claim to the financial asset, unless the securities intermediary, or
broker or other agent or bailee:
(1) took the action after it had been served with an | | injunction, restraining order, or other legal process enjoining it from doing so, issued by a court of competent jurisdiction, and had a reasonable opportunity to act on the injunction, restraining order, or other legal process; or
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(2) acted in collusion with the wrongdoer in
| | violating the rights of the adverse claimant; or
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(3) in the case of a security certificate that has
| | been stolen, acted with notice of the adverse claim.
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(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-116
(810 ILCS 5/8-116)
Sec. 8-116.
Securities intermediary as purchaser
for value. A securities intermediary that receives a financial asset and
establishes a security entitlement to the financial asset in favor of an
entitlement holder is a purchaser for value of the financial asset. A
securities intermediary that acquires a security entitlement to a financial
asset from another securities intermediary acquires the security entitlement
for value if the securities intermediary acquiring the security entitlement
establishes a security entitlement to the financial asset in favor of an
entitlement holder.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/Art. 8 Pt. 2
(810 ILCS 5/Art. 8 Pt. 2 heading)
PART 2.
ISSUE AND ISSUER
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810 ILCS 5/8-201
(810 ILCS 5/8-201) (from Ch. 26, par. 8-201)
Sec. 8-201.
Issuer.
(a) With respect to an obligation on or a defense to a security, an
"issuer" includes a person that:
(1) places or authorizes the placing of its name on a | | security certificate, other than as authenticating trustee, registrar, transfer agent, or the like, to evidence a share, participation, or other interest in its property or in an enterprise, or to evidence its duty to perform an obligation represented by the certificate;
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(2) creates a share, participation, or other interest
| | in its property or in an enterprise, or undertakes an obligation, that is an uncertificated security;
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(3) directly or indirectly creates a fractional
| | interest in its rights or property, if the fractional interest is represented by a security certificate; or
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(4) becomes responsible for, or in place of, another
| | person described as an issuer in this Section.
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(b) With respect to an obligation on or defense to a security, a
guarantor is an issuer to the extent of its guaranty, whether or not its
obligation is noted on a security certificate.
(c) With respect to a registration of a transfer, issuer means a
person on whose behalf transfer books are maintained.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-202
(810 ILCS 5/8-202) (from Ch. 26, par. 8-202)
Sec. 8-202.
Issuer's responsibility and defenses; notice of defect or
defense.
(a) Even against a purchaser for value and without notice, the
terms of a certificated security include terms stated on the certificate and
terms made part of the security by reference on the certificate to another
instrument, indenture, or document or to a constitution, statute, ordinance,
rule, regulation, order, or the like, to the extent the terms referred to do
not conflict with terms stated on the certificate. A reference under this
subsection does not of itself charge a purchaser for value with notice of a
defect going to the validity of the security, even if the certificate expressly
states that a person accepting it admits notice. The terms of an
uncertificated security include those stated in any instrument, indenture, or
document or in a constitution, statute, ordinance, rule, regulation, order, or
the like, pursuant to which the security is issued.
(b) The following rules apply if an issuer asserts that a security is
not valid:
(1) A security other than one issued by a government | | or governmental subdivision, agency, or instrumentality, even though issued with a defect going to its validity, is valid in the hands of a purchaser for value and without notice of the particular defect unless the defect involves a violation of a constitutional provision. In that case, the security is valid in the hands of a purchaser for value and without notice of the defect, other than one who takes by original issue.
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(2) Paragraph (1) applies to an issuer that is a
| | government or governmental subdivision, agency, or instrumentality only if there has been substantial compliance with the legal requirements governing the issue or the issuer has received a substantial consideration for the issue as a whole or for the particular security and a stated purpose of the issue is one for which the issuer has power to borrow money or issue the security.
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(c) Except as otherwise provided in Section 8-205, lack of
genuineness of a certificated security is a complete defense, even against a
purchaser for value and without notice.
(d) All other defenses of the issuer of a security, including
nondelivery and conditional delivery of a certificated security, are
ineffective against a purchaser for value who has taken the certificated
security without notice of the particular defense.
(e) This Section does not affect the right of a party to cancel a
contract for a security "when, as and if issued" or "when distributed" in the
event of a material change in the character of the security that is the subject
of the contract or in the plan or arrangement pursuant to which the security
is to be issued or distributed.
(f) If a security is held by a securities intermediary against whom an
entitlement holder has a security entitlement with respect to the security, the
issuer may not assert any defense that the issuer could not assert if the
entitlement holder held the security directly.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-203
(810 ILCS 5/8-203) (from Ch. 26, par. 8-203)
Sec. 8-203.
Staleness as notice of defect or defense.
After an act or event, other than a call that has been revoked,
creating a right to immediate performance of the principal obligation
represented by a certificated security or setting a date on or after which the
security is to be presented or surrendered for redemption or exchange, a
purchaser is charged with notice of any defect in its issue or defense of the
issuer, if the act or event:
(1) requires the payment of money, the delivery of a | | certificated security, the registration of transfer of an uncertificated security, or any of them on presentation or surrender of the security certificate, the money or security is available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date; or
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(2) is not covered by paragraph (1) and the purchaser
| | takes the security more than 2 years after the date set for surrender or presentation or the date on which performance became due.
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(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-204
(810 ILCS 5/8-204) (from Ch. 26, par. 8-204)
Sec. 8-204.
Effect of issuer's restriction on transfer.
A restriction on transfer of a security imposed by the issuer,
even if otherwise lawful, is ineffective against a person without knowledge of
the restriction unless:
(1) the security is certificated and the restriction | | is noted conspicuously on the security certificate; or
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(2) the security is uncertificated and the registered
| | owner has been notified of the restriction.
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(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-205
(810 ILCS 5/8-205) (from Ch. 26, par. 8-205)
Sec. 8-205.
Effect of unauthorized signature on
security certificate. An unauthorized signature placed on a security
certificate before or in the course of issue is ineffective, but the signature
is effective in favor of a purchaser for value of the certificated security if
the purchaser is without notice of the lack of authority and the signing has
been done by:
(1) an authenticating trustee, registrar, transfer | | agent, or other person entrusted by the issuer with the signing of the security certificate or of similar security certificates, or the immediate preparation for signing of any of them; or
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(2) an employee of the issuer, or of any of the
| | persons listed in paragraph (1), entrusted with responsible handling of the security certificate.
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(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-206
(810 ILCS 5/8-206) (from Ch. 26, par. 8-206)
Sec. 8-206.
Completion or alteration of security
certificate.
(a) If a security certificate contains the signatures necessary to its
issue or transfer but is incomplete in any other respect:
(1) any person may complete it by filling in the | | blanks as authorized; and
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(2) even if the blanks are incorrectly filled in, the
| | security certificate as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness.
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(b) A complete security certificate that has been improperly altered, even
if fraudulently, remains enforceable, but only according to its original
terms.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-207
(810 ILCS 5/8-207) (from Ch. 26, par. 8-207)
Sec. 8-207.
Rights and duties of issuer with respect to registered owners.
(a) Before due presentment for registration of transfer of a
certificated security in registered form or of an instruction requesting
registration of transfer of an uncertificated security, the issuer or indenture
trustee may treat the registered owner as the person exclusively entitled to
vote, receive notifications, and otherwise exercise all the rights and powers
of an owner.
(b) This Article does not affect the liability of the registered owner
of a security for a call, assessment, or the like.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-208
(810 ILCS 5/8-208) (from Ch. 26, par. 8-208)
Sec. 8-208.
Effect of signature of authenticating trustee, registrar,
or transfer agent.
(a) A person signing a security certificate as authenticating trustee,
registrar, transfer agent, or the like, warrants to a purchaser for value of
the certificated security, if the purchaser is without notice of a particular
defect, that:
(1) the certificate is genuine;
(2) the person's own participation in the issue of | | the security is within the person's capacity and within the scope of the authority received by the person from the issuer; and
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(3) the person has reasonable grounds to believe that
| | the certificated security is in the form and within the amount the issuer is authorized to issue.
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(b) Unless otherwise agreed, a person signing under subsection (a) does
not assume responsibility for the validity of the security in other respects.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-209
(810 ILCS 5/8-209)
Sec. 8-209.
Issuer's lien.
A lien in favor of an issuer upon a
certificated security is valid against a purchaser only if the right of the
issuer to the lien is noted conspicuously on the security certificate.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-210
(810 ILCS 5/8-210)
Sec. 8-210.
Overissue.
(a) In this Section, "overissue" means the issue of securities in
excess of the amount the issuer has corporate power to issue, but an
overissue does not occur if appropriate action has cured the overissue.
(b) Except as otherwise provided in subsections (c) and (d), the
provisions of this Article which validate a security or compel its issue or
reissue do not apply to the extent that validation, issue, or reissue would
result in overissue.
(c) If an identical security not constituting an overissue is
reasonably available for purchase, a person entitled to issue or validation
may compel the issuer to purchase the security and deliver it if certificated
or register its transfer if uncertificated, against surrender of any security
certificate the person holds.
(d) If a security is not reasonably available for purchase, a person
entitled to issue or validation may recover from the issuer the price the
person or the last purchaser for value paid for it with interest from the date
of the person's demand.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/Art. 8 Pt. 3
(810 ILCS 5/Art. 8 Pt. 3 heading)
PART 3.
TRANSFER OF CERTIFICATED
AND UNCERTIFICATED SECURITIES
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810 ILCS 5/8-301
(810 ILCS 5/8-301) (from Ch. 26, par. 8-301)
Sec. 8-301.
Delivery.
(a) Delivery of a certificated security to a purchaser occurs when:
(1) the purchaser acquires possession of the security | |
(2) another person, other than a securities
| | intermediary, either acquires possession of the security certificate on behalf of the purchaser or, having previously acquired possession of the certificate, acknowledges that it holds for the purchaser; or
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(3) a securities intermediary acting on behalf of the
| | purchaser acquires possession of the security certificate, only if the certificate is in registered form and is (i) registered in the name of the purchaser, (ii) payable to the order of the purchaser, or (iii) specially indorsed to the purchaser by an effective indorsement and has not been indorsed to the securities intermediary or in blank.
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(b) Delivery of an uncertificated security to a purchaser occurs
when:
(1) the issuer registers the purchaser as the
| | registered owner, upon original issue or registration of transfer; or
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(2) another person, other than a securities
| | intermediary, either becomes the registered owner of the uncertificated security on behalf of the purchaser or, having previously become the registered owner, acknowledges that it holds for the purchaser.
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(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/8-302
(810 ILCS 5/8-302) (from Ch. 26, par. 8-302)
Sec. 8-302.
Rights of purchaser.
(a) Except as otherwise provided in subsections (b) and (c), of a
certificated or uncertificated security acquires all rights in the security
that the transferor had or had
power to transfer.
(b) A purchaser of a limited interest acquires rights only to the
extent of the interest purchased.
(c) A purchaser of a certificated security who as a previous holder
had notice of an adverse claim does not improve its position by taking from
a protected purchaser.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/8-303 (810 ILCS 5/8-303) (from Ch. 26, par. 8-303) (Text of Section before amendment by P.A. 103-1036) Sec. 8-303. Protected purchaser. (a) "Protected purchaser" means a purchaser of a certificated or
uncertificated security, or of an interest therein, who: (1) gives value; (2) does not have notice of any adverse claim to the | | (3) obtains control of the certificated or
| | (b) In addition to acquiring the rights of a purchaser, a protected
purchaser also acquires its interest in the security free of any adverse
claim.
(Source: P.A. 89-364, eff. 1-1-96.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 8-303. Protected purchaser.
(a) "Protected purchaser" means a purchaser of a certificated or uncertificated security, or of an interest therein, who:
(1) gives value;
(2) does not have notice of any adverse claim to the
| | (3) obtains control of the certificated or
| | (b) A protected purchaser also acquires its interest in the security free of any adverse claim.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/8-304
(810 ILCS 5/8-304) (from Ch. 26, par. 8-304)
Sec. 8-304.
Indorsement.
(a) An indorsement may be in blank or special. An indorsement in
blank includes an indorsement to bearer. A special indorsement specifies to
whom a security is to be transferred or who has power to transfer it. A
holder may convert a blank indorsement to a special indorsement.
(b) An indorsement purporting to be only of part of a security
certificate representing units intended by the issuer to be separately
transferable is effective to the extent of the indorsement.
(c) An indorsement, whether special or in blank, does not
constitute a transfer until delivery of the certificate on which it appears or,
if
the indorsement is on a separate document, until delivery of both the
document and the certificate.
(d) If a security certificate in registered form has been delivered to
a purchaser without a necessary indorsement, the purchaser may become a
protected purchaser only when the indorsement is supplied. However,
against a transferor, a transfer is complete upon delivery and the purchaser
has a specifically enforceable right to have any necessary indorsement
supplied.
(e) An indorsement of a security certificate in bearer form may give
notice of an adverse claim to the certificate, but it does not otherwise affect
a right to registration that the holder possesses.
(f) Unless otherwise agreed, a person making an indorsement
assumes only the obligations provided in Section 8-108 and not an obligation
that the security will be honored by the issuer.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-305
(810 ILCS 5/8-305) (from Ch. 26, par. 8-305)
Sec. 8-305.
Instruction.
(a) If an instruction has been originated by an appropriate person
but is incomplete in any other respect, any person may complete it as
authorized and the issuer may rely on it as completed, even though it has
been completed incorrectly.
(b) Unless otherwise agreed, a person initiating an instruction
assumes only the obligations imposed by Section 8-108 and not an obligation
that the security will be honored by the issuer.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-306
(810 ILCS 5/8-306) (from Ch. 26, par. 8-306)
Sec. 8-306.
Effect of guaranteeing signature,
indorsement, or instruction.
(a) A person who guarantees a signature of an indorser of a
security certificate warrants that at the time of signing:
(1) the signature was genuine;
(2) the signer was an appropriate person to indorse, | | or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person; and
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(3) the signer had legal capacity to sign.
(b) A person who guarantees a signature of the originator of an
instruction warrants that at the time of signing:
(1) the signature was genuine;
(2) the signer was an appropriate person to originate
| | the instruction, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person, if the person specified in the instruction as the registered owner was, in fact, the registered owner, as to which fact the signature guarantor does not make a warranty; and
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(3) the signer had legal capacity to sign.
(c) A person who specially guarantees the signature of an originator
of an instruction makes the warranties of a signature guarantor under
subsection (b) and also warrants that at the time the instruction is presented
to the issuer:
(1) the person specified in the instruction as the
| | registered owner of the uncertificated security will be the registered owner; and
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(2) the transfer of the uncertificated security
| | requested in the instruction will be registered by the issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction.
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(d) A guarantor under subsections (a) and (b) or a special
guarantor under subsection (c) does not otherwise warrant the rightfulness
of the transfer.
(e) A person who guarantees an indorsement of a security
certificate makes the warranties of a signature guarantor under subsection
(a) and also warrants the rightfulness of the transfer in all respects.
(f) A person who guarantees an instruction requesting the transfer
of an uncertificated security makes the warranties of a special signature
guarantor under subsection (c) and also warrants the rightfulness of the
transfer in all respects.
(g) An issuer may not require a special guaranty of signature, a
guaranty of indorsement, or a guaranty of instruction as a condition to
registration of transfer.
(h) The warranties under this Section are made to a person taking
or dealing with the security in reliance on the guaranty, and the guarantor is
liable to the person for loss resulting from their breach. An indorser or
originator of an instruction whose signature, indorsement, or instruction has
been guaranteed is liable to a guarantor for any loss suffered by the
guarantor as a result of breach of the warranties of the guarantor.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-307
(810 ILCS 5/8-307) (from Ch. 26, par. 8-307)
Sec. 8-307.
Purchaser's right to requisites for
registration of transfer. Unless otherwise agreed, the transferor
of a security on due demand shall supply the purchaser with proof of
authority to transfer or with any other requisite necessary to obtain
registration of the transfer of the security, but if the transfer is not for
value, a transferor need not comply unless the purchaser pays the necessary
expenses. If the transferor fails within a reasonable time to comply with the
demand, the purchaser may reject or rescind the transfer.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-308
(810 ILCS 5/8-308) (from Ch. 26, par. 8-308)
Sec. 8-308.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-309
(810 ILCS 5/8-309) (from Ch. 26, par. 8-309)
Sec. 8-309.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-310
(810 ILCS 5/8-310) (from Ch. 26, par. 8-310)
Sec. 8-310.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-311
(810 ILCS 5/8-311) (from Ch. 26, par. 8-311)
Sec. 8-311.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-312
(810 ILCS 5/8-312) (from Ch. 26, par. 8-312)
Sec. 8-312.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-313
(810 ILCS 5/8-313) (from Ch. 26, par. 8-313)
Sec. 8-313.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-314
(810 ILCS 5/8-314) (from Ch. 26, par. 8-314)
Sec. 8-314.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-315
(810 ILCS 5/8-315) (from Ch. 26, par. 8-315)
Sec. 8-315.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-316
(810 ILCS 5/8-316) (from Ch. 26, par. 8-316)
Sec. 8-316.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-317
(810 ILCS 5/8-317) (from Ch. 26, par. 8-317)
Sec. 8-317.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-318
(810 ILCS 5/8-318) (from Ch. 26, par. 8-318)
Sec. 8-318.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-319
(810 ILCS 5/8-319) (from Ch. 26, par. 8-319)
Sec. 8-319.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-320
(810 ILCS 5/8-320) (from Ch. 26, par. 8-320)
Sec. 8-320.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-321
(810 ILCS 5/8-321) (from Ch. 26, par. 8-321)
Sec. 8-321.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/Art. 8 Pt. 4
(810 ILCS 5/Art. 8 Pt. 4 heading)
PART 4.
REGISTRATION
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810 ILCS 5/8-401
(810 ILCS 5/8-401) (from Ch. 26, par. 8-401)
Sec. 8-401.
Duty of issuer to register transfer.
(a) If a certificated security in registered form is presented to an
issuer with a request to register transfer or an instruction is presented to an
issuer with a request to register transfer of an uncertificated security, the
issuer shall register the transfer as requested if:
(1) under the terms of the security the person | | seeking registration of transfer is eligible to have the security registered in its name;
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(2) the indorsement or instruction is made by the
| | appropriate person or by an agent who has actual authority to act on behalf of the appropriate person;
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(3) reasonable assurance is given that the
| | indorsement or instruction is genuine and authorized (Section 8-402);
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(4) any applicable law relating to the collection of
| | taxes has been complied with;
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(5) the transfer does not violate any restriction on
| | transfer imposed by the issuer in accordance with Section 8-204;
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(6) a demand that the issuer not register transfer
| | has not become effective under Section 8-403, or the issuer has complied with Section 8-403(b) but no legal process or indemnity bond is obtained as provided in Section 8-403(d); and
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(7) the transfer is in fact rightful or is to a
| |
(b) If an issuer is under a duty to register a transfer of a security,
the issuer is liable to a person presenting a certificated security or an
instruction for registration or to the person's principal for loss resulting
from
unreasonable delay in registration or failure or refusal to register the
transfer.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-402
(810 ILCS 5/8-402) (from Ch. 26, par. 8-402)
Sec. 8-402.
Assurance that indorsement or
instruction is effective.
(a) An issuer may require the following assurance that each
necessary indorsement or each instruction is genuine and authorized:
(1) in all cases, a guaranty of the signature of the | | person making an indorsement or originating an instruction including, in the case of an instruction, reasonable assurance of identity;
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(2) if the indorsement is made or the instruction is
| | originated by an agent, appropriate assurance of actual authority to sign;
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(3) if the indorsement is made or the instruction is
| | originated by a fiduciary pursuant to Section 8-107(a)(4) or (a)(5), appropriate evidence of appointment or incumbency;
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(4) if there is more than one fiduciary, reasonable
| | assurance that all who are required to sign have done so; and
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(5) if the indorsement is made or the instruction is
| | originated by a person not covered by another provision of this subsection, assurance appropriate to the case corresponding as nearly as may be to the provisions of this subsection.
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(b) An issuer may elect to require reasonable assurance beyond
that specified in this Section.
(c) In this Section:
(1) "Guaranty of the signature" means a guaranty
| | signed by or on behalf of a person reasonably believed by the issuer to be responsible. An issuer may adopt standards with respect to responsibility if they are not manifestly unreasonable.
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(2) "Appropriate evidence of appointment or
| |
(i) in the case of a fiduciary appointed or
| | qualified by a court, a certificate issued by or under the direction or supervision of the court or an officer thereof and dated within 60 days before the date of presentation for transfer; or
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(ii) in any other case, a copy of a document
| | showing the appointment or a certificate issued by or on behalf of a person reasonably believed by an issuer to be responsible or, in the absence of that document or certificate, other evidence the issuer reasonably considered appropriate.
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(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-403
(810 ILCS 5/8-403) (from Ch. 26, par. 8-403)
Sec. 8-403.
Demand that issuer not register transfer.
(a) A person who is an appropriate person to make an indorsement
or originate an instruction may demand that the issuer not register transfer
of a security by communicating to the issuer a notification that identifies the
registered owner and the issue of which the security is a part and provides
an address for communications directed to the person making the demand.
The demand is effective only if it is received by the issuer at a time and in a
manner affording the issuer reasonable opportunity to act on it.
(b) If a certificated security in registered form is presented to an
issuer with a request to register transfer or an instruction is presented to an
issuer with a request to register transfer of an uncertificated security after
a demand that the issuer not register transfer has become effective, the issuer
shall promptly communicate to (i) the person who initiated the demand at
the address provided in the demand and (ii) the person who presented the
security for registration of transfer or initiated the instruction requesting
registration of transfer a notification stating that:
(1) the certificated security has been presented for | | registration of transfer or instruction for registration of transfer of uncertificated security has been received;
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(2) a demand that the issuer not register transfer
| | had previously been received; and
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(3) the issuer will withhold registration of transfer
| | for a period of time stated in the notification in order to provide the person who initiated the demand an opportunity to obtain legal process or an indemnity bond.
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(c) The period described in subsection (b)(3) may not exceed 30
days after the date of communication of the notification. A shorter period
may be specified by the issuer if it is not manifestly unreasonable.
(d) An issuer is not liable to a person who initiated a demand that
the issuer not register transfer for any loss the person suffers as a result of
registration of a transfer pursuant to an effective indorsement or instruction
if the person who initiated the demand does not, within the time stated in
the issuer's communication, either:
(1) obtain an appropriate restraining order,
| | injunction, or other process from a court of competent jurisdiction enjoining the issuer from registering the transfer; or
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(2) file with the issuer an indemnity bond,
| | sufficient in the issuer's judgment to protect the issuer and any transfer agent, registrar, or other agent of the issuer involved from any loss it or they may suffer by refusing to register the transfer.
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(e) This Section does not relieve an issuer from liability for
registering transfer pursuant to an indorsement or instruction that was not
effective.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-404
(810 ILCS 5/8-404) (from Ch. 26, par. 8-404)
Sec. 8-404.
Wrongful registration.
(a) Except as otherwise provided in Section 8-406, an issuer is
liable for wrongful registration of transfer if the issuer has registered a
transfer of a security to a person not entitled to it, and the transfer was
registered:
(1) pursuant to an ineffective indorsement or | |
(2) after a demand that the issuer not register
| | transfer became effective under Section 8-403(a) and the issuer did not comply with Section 8-403(b);
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(3) after the issuer had been served with an
| | injunction, restraining order, or other legal process enjoining it from registering the transfer, issued by a court of competent jurisdiction, and the issuer had a reasonable opportunity to act on the injunction, restraining order, or other legal process; or
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(4) by an issuer acting in collusion with the
| |
(b) An issuer that is liable for wrongful registration of transfer
under subsection (a) on demand shall provide the person entitled to the
security with a like certificated or uncertificated security, and any payments
or distributions that the person did not receive as a result of the wrongful
registration. If an overissue would result, the issuer's liability to provide
the person with a like security is governed by Section 8-210.
(c) Except as otherwise provided in subsection (a) or in a law
relating to the collection of taxes, an issuer is not liable to an owner or
other person suffering loss as a result of the registration of a transfer of a
security if registration was made pursuant to an effective indorsement or
instruction.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-405
(810 ILCS 5/8-405) (from Ch. 26, par. 8-405)
Sec. 8-405.
Replacement of lost, destroyed, or
wrongfully taken security certificate.
(a) If an owner of a certificated security, whether in registered or
bearer form, claims that the certificate has been lost, destroyed, or
wrongfully taken, the issuer shall issue a new certificate if the owner:
(1) so requests before the issuer has notice that the | | certificate has been acquired by a protected purchaser;
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(2) files with the issuer a sufficient indemnity
| |
(3) satisfies other reasonable requirements imposed
| |
(b) If, after the issue of a new security certificate, a protected
purchaser of the original certificate presents it for registration of transfer,
the issuer shall register the transfer unless an overissue would result. In
that case, the issuer's liability is governed by Section 8-210. In addition to
any rights on the indemnity bond, an issuer may recover the new certificate
from a person to whom it was issued or any person taking under that person,
except a protected purchaser.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-406
(810 ILCS 5/8-406) (from Ch. 26, par. 8-406)
Sec. 8-406.
Obligation to notify issuer of lost, destroyed, or wrongfully
taken security certificate. If a security certificate has been lost,
apparently destroyed, or wrongfully taken, and the owner fails to notify the
issuer of that fact within a reasonable time after the owner has notice of it
and the issuer registers a transfer of the security before receiving
notification, the owner may not assert against the issuer a claim for
registering the transfer under Section 8-404 or a claim to a new security
certificate under Section 8-405.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-407
(810 ILCS 5/8-407) (from Ch. 26, par. 8-407)
Sec. 8-407.
Authenticating trustee, transfer agent, and registrar.
A
person acting as authenticating trustee, transfer agent, registrar, or other
agent for an issuer in the registration of a
transfer of its securities, in the issue of new security certificates or
uncertificated securities, or in the cancellation of surrendered security
certificates has the same obligation to the holder or owner of a certificated
or uncertificated security with regard to the particular functions performed
as the issuer has in regard to those functions.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-408
(810 ILCS 5/8-408) (from Ch. 26, par. 8-408)
Sec. 8-408.
(Repealed).
(Source: P.A. 85-997. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-409
(810 ILCS 5/8-409) (from Ch. 26, par. 8-409)
Sec. 8-409.
(Repealed).
(Source: P.A. 85-1209. Repealed by P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/Art. 8 Pt. 5
(810 ILCS 5/Art. 8 Pt. 5 heading)
PART 5.
SECURITY ENTITLEMENTS
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810 ILCS 5/8-501
(810 ILCS 5/8-501)
Sec. 8-501.
Securities account; acquisition of
security entitlement from securities intermediary.
(a) "Securities account" means an account to which a financial asset
is or may be credited in accordance with an agreement under which the
person maintaining the account undertakes to treat the person for whom the
account is maintained as entitled to exercise the rights that comprise the
financial asset.
(b) Except as otherwise provided in subsections (d) and (e), a
person acquires a security entitlement if a securities intermediary:
(1) indicates by book entry that a financial asset | | has been credited to the person's securities account;
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(2) receives a financial asset from the person or
| | acquires a financial asset for the person and, in either case, accepts it for credit to the person's securities account; or
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(3) becomes obligated under other law, regulation, or
| | rule to credit a financial asset to the person's securities account.
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(c) If a condition of subsection (b) has been met, a person has a
security entitlement even though the securities intermediary does not itself
hold the financial asset.
(d) If a securities intermediary holds a financial asset for another
person, and the financial asset is registered in the name of, payable to the
order of, or specially indorsed to the other person, and has not been
indorsed to the securities intermediary or in blank, the other person is
treated as holding the financial asset directly rather than as having a
security entitlement with respect to the financial asset.
(e) Issuance of a security is not establishment of a security
entitlement.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-502
(810 ILCS 5/8-502)
Sec. 8-502.
Assertion of adverse claim against
entitlement holder. An action based on an adverse claim to a
financial asset, whether framed in conversion, replevin, constructive trust,
equitable lien, or other theory, may not be asserted against a person who
acquires a security entitlement under Section 8-501 for value and without
notice of the adverse claim.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-503
(810 ILCS 5/8-503)
Sec. 8-503.
Property interest of entitlement
holder in financial asset held by securities
intermediary.
(a) To the extent necessary for a securities intermediary to satisfy
all security entitlements with respect to a particular financial asset, all
interests in that financial asset held by the securities intermediary are held
by the securities intermediary for the entitlement holders, are not property
of the securities intermediary, and are not subject to claims of creditors of
the securities intermediary, except as otherwise provided in Section 8-511.
(b) An entitlement holder's property interest with respect to a
particular financial asset under subsection (a) is a pro rata property interest
in all interests in that financial asset held by the securities intermediary,
without regard to the time the entitlement holder acquired the security
entitlement or the time the securities intermediary acquired the interest in
that financial asset.
(c) An entitlement holder's property interest with respect to a
particular financial asset under subsection (a) may be enforced against the
securities intermediary only by exercise of the entitlement holder's rights
under Sections 8-505 through 8-508.
(d) An entitlement holder's property interest with respect to a
particular financial asset under subsection (a) may be enforced against a
purchaser of the financial asset or interest therein only if:
(1) insolvency proceedings have been initiated by or | | against the securities intermediary;
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(2) the securities intermediary does not have
| | sufficient interests in the financial asset to satisfy the security entitlements of all of its entitlement holders to that financial asset;
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(3) the securities intermediary violated its
| | obligations under Section 8-504 by transferring the financial asset or interest therein to the purchaser; and
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(4) the purchaser is not protected under subsection
| | (e). The trustee or other liquidator, acting on behalf of all entitlement holders having security entitlements with respect to a particular financial asset, may recover the financial asset, or interest therein, from the purchaser. If the trustee or other liquidator elects not to pursue that right, an entitlement holder whose security entitlement remains unsatisfied has the right to recover its interest in the financial asset from the purchaser.
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(e) An action based on the entitlement holder's property interest
with respect to a particular financial asset under subsection (a), whether
framed in conversion, replevin, constructive trust, equitable lien, or other
theory, may not be asserted against any purchaser of a financial asset or
interest therein who gives value, obtains control, and does not act in
collusion with the securities intermediary in violating the securities
intermediary's obligations under Section 8-504.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-504
(810 ILCS 5/8-504)
Sec. 8-504.
Duty of securities intermediary to
maintain financial asset.
(a) A securities intermediary shall promptly obtain and thereafter
maintain a financial asset in a quantity corresponding to the aggregate of all
security entitlements it has established in favor of its entitlement holders
with respect to that financial asset. The securities intermediary may
maintain those financial assets directly or through one or more other
securities intermediaries.
(b) Except to the extent otherwise agreed by its entitlement holder,
a securities intermediary may not grant any security interests in a financial
asset it is obligated to maintain pursuant to subsection (a).
(c) A securities intermediary satisfies the duty in subsection (a) if:
(1) the securities intermediary acts with respect to | | the duty as agreed upon by the entitlement holder and the securities intermediary; or
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(2) in the absence of agreement, the securities
| | intermediary exercises due care in accordance with reasonable commercial standards to obtain and maintain the financial asset.
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(d) This Section does not apply to a clearing corporation that is
itself the obligor of an option or similar obligation to which its entitlement
holders have security entitlements.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-505
(810 ILCS 5/8-505)
Sec. 8-505.
Duty of securities intermediary with
respect to payments and distributions.
(a) A securities intermediary shall take action to obtain a payment
or distribution made by the issuer of a financial asset. A securities
intermediary satisfies the duty if:
(1) the securities intermediary acts with respect to | | the duty as agreed upon by the entitlement holder and the securities intermediary; or
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(2) in the absence of agreement, the securities
| | intermediary exercises due care in accordance with reasonable commercial standards to attempt to obtain the payment or distribution.
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(b) A securities intermediary is obligated to its entitlement holder
for a payment or distribution made by the issuer of a financial asset if the
payment or distribution is received by the securities intermediary.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-506
(810 ILCS 5/8-506)
Sec. 8-506.
Duty of securities intermediary to exercise rights as
directed by entitlement holder. A securities intermediary shall exercise
rights with respect to a financial asset if directed to do so by an entitlement
holder. A securities intermediary satisfies the duty if:
(1) the securities intermediary acts with respect to | | the duty as agreed upon by the entitlement holder and the securities intermediary; or
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(2) in the absence of agreement, the securities
| | intermediary either places the entitlement holder in a position to exercise the rights directly or exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder.
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(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-507
(810 ILCS 5/8-507)
Sec. 8-507.
Duty of securities intermediary to
comply with entitlement order.
(a) A securities intermediary shall comply with an entitlement order
if the entitlement order is originated by the appropriate person, the
securities intermediary has had reasonable opportunity to assure itself that
the entitlement order is genuine and authorized, and the securities
intermediary has had reasonable opportunity to comply with the entitlement
order. A securities intermediary satisfies the duty if:
(1) the securities intermediary acts with respect to | | the duty as agreed upon by the entitlement holder and the securities intermediary; or
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(2) in the absence of agreement, the securities
| | intermediary exercises due care in accordance with reasonable commercial standards to comply with the entitlement order.
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(b) If a securities intermediary transfers a financial asset pursuant
to an ineffective entitlement order, the securities intermediary shall
reestablish a security entitlement in favor of the person entitled to it, and
pay or credit any payments or distributions that the person did not receive
as a result of the wrongful transfer. If the securities intermediary does not
reestablish a security entitlement, the securities intermediary is liable to
the entitlement holder for damages.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-508
(810 ILCS 5/8-508)
Sec. 8-508.
Duty of securities intermediary to
change entitlement holder's position to other form of
security holding. A securities intermediary shall act at the direction
of an entitlement holder to change a security entitlement into another
available form of holding for which the entitlement holder is eligible, or to
cause the financial asset to be transferred to a securities account of the
entitlement holder with another securities intermediary. A securities
intermediary satisfies the duty if:
(1) the securities intermediary acts as agreed upon | | by the entitlement holder and the securities intermediary; or
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(2) in the absence of agreement, the securities
| | intermediary exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder.
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(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-509
(810 ILCS 5/8-509)
Sec. 8-509.
Specification of duties of securities
intermediary by other statute or regulation; manner
of performance of duties of securities intermediary
and exercise of rights of entitlement holder.
(a) If the substance of a duty imposed upon a securities
intermediary by Sections 8-504 through 8-508 is the subject of other statute,
regulation, or rule, compliance with that statute, regulation, or rule
satisfies the duty.
(b) To the extent that specific standards for the performance of the
duties of a securities intermediary or the exercise of the rights of an
entitlement holder are not specified by other statute, regulation, or rule or
by agreement between the securities intermediary and entitlement holder,
the securities intermediary shall perform its duties and the entitlement
holder shall exercise its rights in a commercially reasonable manner.
(c) The obligation of a securities intermediary to perform the duties
imposed by Sections 8-504 through 8-508 is subject to:
(1) rights of the securities intermediary arising out | | of a security interest under a security agreement with the entitlement holder or otherwise; and
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(2) rights of the securities intermediary under other
| | law, regulation, rule, or agreement to withhold performance of its duties as a result of unfulfilled obligations of the entitlement holder to the securities intermediary.
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(d) Sections 8-504 through 8-508 do not require a securities
intermediary to take any action that is prohibited by other statute,
regulation, or rule.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-510
(810 ILCS 5/8-510)
Sec. 8-510.
Rights of purchaser of security
entitlement from entitlement holder.
(a) In a case not covered by the priority rules in Article 9 or the
rules stated in subsection (c), an
action based on an adverse claim to a financial asset or
security entitlement, whether framed in conversion, replevin, constructive
trust, equitable lien, or other theory, may not be asserted against a person
who purchases a security entitlement, or an interest therein, from an
entitlement holder if the purchaser gives value, does not have notice of the
adverse claim, and obtains control.
(b) If an adverse claim could not have been asserted against an
entitlement holder under Section 8-502, the adverse claim cannot be asserted
against a person who purchases a security entitlement, or an interest therein,
from the entitlement holder.
(c) In a case not covered by the priority rules in Article 9, a
purchaser for value of a security entitlement, or an interest therein, who
obtains control has priority over a purchaser of a security entitlement, or an
interest therein, who does not obtain control. Except as otherwise provided
in subsection (d), purchasers who have control rank
according to priority in time of:
(1) the purchaser's becoming the person for whom the | | securities account, in which the security entitlement is carried, is maintained, if the purchaser obtained control under Section 8-106(d)(1);
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(2) the securities intermediary's agreement to comply
| | with the purchaser's entitlement orders with respect to security entitlements carried or to be carried in the securities account in which the security entitlement is carried, if the purchaser obtained control under Section 8-106(d)(2); or
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(3) if the purchaser obtained control through another
| | person under Section 8-106(d)(3), the time on which priority would be based under this subsection if the other person were the secured party.
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(d) A securities intermediary as purchaser
has priority over a conflicting purchaser who has control unless otherwise
agreed by the securities intermediary.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/8-511
(810 ILCS 5/8-511)
Sec. 8-511.
Priority
among security interests and
entitlement holders.
(a) Except as otherwise provided in subsections (b) and (c), if a
securities intermediary does not have sufficient interests in a particular
financial asset to satisfy both its obligations to entitlement holders who have
security entitlements to that financial asset and its obligation to a creditor
of the securities intermediary who has a security interest in that financial
asset, the claims of entitlement holders, other than the creditor, have
priority over the claim of the creditor.
(b) A claim of a creditor of a securities intermediary who has a
security interest in a financial asset held by a securities intermediary has
priority over claims of the securities intermediary's entitlement holders who
have security entitlements with respect to that financial asset if the creditor
has control over the financial asset.
(c) If a clearing corporation does not have sufficient financial assets
to satisfy both its obligations to entitlement holders who have security
entitlements with respect to a financial asset and its obligation to a creditor
of the clearing corporation who has a security interest in that financial
asset, the claim of the creditor has priority over the claims of entitlement
holders.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/Art. 8 Pt. 6
(810 ILCS 5/Art. 8 Pt. 6 heading)
PART 6.
TRANSITION PROVISIONS FOR REVISED ARTICLE 8 AND
CONFORMING AMENDMENTS TO ARTICLES 1, 5, 9, AND 10
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810 ILCS 5/8-601
(810 ILCS 5/8-601)
Sec. 8-601.
Effective date.
(Blank).
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/8-602
(810 ILCS 5/8-602)
Sec. 8-602.
Repeals.
(See Section 60 of Public Act 89-364 for repeal of
certain Sections of Article 8 of the Uniform Commercial Code.)
(Source: P.A. 89-364, eff. 1-1-96; 89-626, eff. 8-9-96.)
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810 ILCS 5/8-603
(810 ILCS 5/8-603)
Sec. 8-603.
Savings clause.
(a) This amendatory Act of 1995 does not affect an action or proceeding
commenced
before this amendatory Act of 1995 takes effect.
(b) If a security interest in a security is perfected at the date this
amendatory Act of 1995 takes effect, and the action by which the security
interest was
perfected would suffice to perfect a security interest under this amendatory
Act of 1995, no
further action is required to continue perfection. If a security interest in a
security is perfected at the date this amendatory Act of 1995 takes effect but
the action by
which the security interest was perfected would not suffice to perfect a
security interest under this amendatory Act of 1995, the security interest
remains perfected
for a period of 4 months after the effective date and continues perfected
thereafter if appropriate action to perfect under this amendatory Act of 1995
is taken within
that period. If
a security interest is perfected at the date this amendatory Act of 1995 takes
effect and the
security interest can be perfected by filing under this amendatory Act of 1995,
a financing
statement signed by the secured party instead of the debtor may be filed
within that period to continue perfection or thereafter to perfect.
(Source: P.A. 89-364, eff. 1-1-96.)
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810 ILCS 5/Art. 9
(810 ILCS 5/Art. 9 heading)
ARTICLE 9
SECURED TRANSACTIONS
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810 ILCS 5/Art. 9 Pt. 1
(810 ILCS 5/Art. 9 Pt. 1 heading)
PART 1.
GENERAL PROVISIONS
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810 ILCS 5/Art. 9 Pt. 1 Sub. 1
(810 ILCS 5/Art. 9 Pt. 1 Sub. 1 heading)
SUBPART 1.
SHORT TITLE, DEFINITIONS, AND GENERAL CONCEPTS
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810 ILCS 5/9-101
(810 ILCS 5/9-101) (from Ch. 26, par. 9-101)
Sec. 9-101.
Short title.
This Article may be cited as Uniform Commercial
Code - Secured Transactions.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-102 (810 ILCS 5/9-102) (from Ch. 26, par. 9-102) (Text of Section before amendment by P.A. 103-1036) Sec. 9-102. Definitions and index of definitions. (a) Article 9 definitions. In this Article: (1) "Accession" means goods that are physically | | united with other goods in such a manner that the identity of the original goods is not lost.
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| (2) "Account", except as used in "account for", means
| | a right to payment of a monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge card or information contained on or for use with the card, or (viii) as winnings in a lottery or other game of chance operated or sponsored by a State, governmental unit of a State, or person licensed or authorized to operate the game by a State or governmental unit of a State. The term includes health-care-insurance receivables. The term does not include (i) rights to payment evidenced by chattel paper or an instrument, (ii) commercial tort claims, (iii) deposit accounts, (iv) investment property, (v) letter-of-credit rights or letters of credit, or (vi) rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card.
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| (3) "Account debtor" means a person obligated on an
| | account, chattel paper, or general intangible. The term does not include persons obligated to pay a negotiable instrument, even if the instrument constitutes part of chattel paper.
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| (4) "Accounting", except as used in "accounting for",
| | (A) authenticated by a secured party;
(B) indicating the aggregate unpaid secured
| | obligations as of a date not more than 35 days earlier or 35 days later than the date of the record; and
|
| (C) identifying the components of the obligations
| | (5) "Agricultural lien" means an interest, other than
| | a security interest, in farm products:
|
| (A) which secures payment or performance of an
| | obligation for goods or services furnished in connection with a debtor's farming operation;
|
| (B) which is created by statute in favor of a
| | person that in the ordinary course of its business furnished goods or services to a debtor in connection with a debtor's farming operation; and
|
| (C) whose effectiveness does not depend on the
| | person's possession of the personal property.
|
| (6) "As-extracted collateral" means:
(A) oil, gas, or other minerals that are subject
| | to a security interest that:
|
| (i) is created by a debtor having an interest
| | in the minerals before extraction; and
|
| (ii) attaches to the minerals as extracted; or
(B) accounts arising out of the sale at the
| | wellhead or minehead of oil, gas, or other minerals in which the debtor had an interest before extraction.
|
| (7) "Authenticate" means:
(A) to sign; or
(B) with present intent to adopt or accept a
| | record, to attach to or logically associate with the record an electronic sound, symbol, or process.
|
| (8) "Bank" means an organization that is engaged in
| | the business of banking. The term includes savings banks, savings and loan associations, credit unions, and trust companies.
|
| (9) "Cash proceeds" means proceeds that are money,
| | checks, deposit accounts, or the like.
|
| (10) "Certificate of title" means a certificate of
| | title with respect to which a statute provides for the security interest in question to be indicated on the certificate as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the collateral. The term includes another record maintained as an alternative to a certificate of title by the governmental unit that issues certificates of title if a statute permits the security interest in question to be indicated on the record as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the collateral.
|
| (11) "Chattel paper" means a record or records that
| | evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods, or a lease of specified goods and a license of software used in the goods. In this paragraph, "monetary obligation" means a monetary obligation secured by the goods or owed under a lease of the goods and includes a monetary obligation with respect to software used in the goods. The term does not include (i) charters or other contracts involving the use or hire of a vessel or (ii) records that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card. If a transaction is evidenced by records that include an instrument or series of instruments, the group of records taken together constitutes chattel paper.
|
| (12) "Collateral" means the property subject to a
| | security interest or agricultural lien. The term includes:
|
| (A) proceeds to which a security interest
| | (B) accounts, chattel paper, payment intangibles,
| | and promissory notes that have been sold; and
|
| (C) goods that are the subject of a consignment.
(13) "Commercial tort claim" means a claim arising in
| | tort with respect to which:
|
| (A) the claimant is an organization; or
(B) the claimant is an individual and the claim:
(i) arose in the course of the claimant's
| | business or profession; and
|
| (ii) does not include damages arising out of
| | personal injury to or the death of an individual.
|
| (14) "Commodity account" means an account maintained
| | by a commodity intermediary in which a commodity contract is carried for a commodity customer.
|
| (15) "Commodity contract" means a commodity futures
| | contract, an option on a commodity futures contract, a commodity option, or another contract if the contract or option is:
|
| (A) traded on or subject to the rules of a board
| | of trade that has been designated as a contract market for such a contract pursuant to federal commodities laws; or
|
| (B) traded on a foreign commodity board of trade,
| | exchange, or market, and is carried on the books of a commodity intermediary for a commodity customer.
|
| (16) "Commodity customer" means a person for which a
| | commodity intermediary carries a commodity contract on its books.
|
| (17) "Commodity intermediary" means a person that:
(A) is registered as a futures commission
| | merchant under federal commodities law; or
|
| (B) in the ordinary course of its business
| | provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to federal commodities law.
|
| (18) "Communicate" means:
(A) to send a written or other tangible record;
(B) to transmit a record by any means agreed upon
| | by the persons sending and receiving the record; or
|
| (C) in the case of transmission of a record to or
| | by a filing office, to transmit a record by any means prescribed by filing-office rule.
|
| (19) "Consignee" means a merchant to which goods are
| | delivered in a consignment.
|
| (20) "Consignment" means a transaction, regardless of
| | its form, in which a person delivers goods to a merchant for the purpose of sale and:
|
| (A) the merchant:
(i) deals in goods of that kind under a name
| | other than the name of the person making delivery;
|
| (ii) is not an auctioneer; and
(iii) is not generally known by its creditors
| | to be substantially engaged in selling the goods of others;
|
| (B) with respect to each delivery, the aggregate
| | value of the goods is $1,000 or more at the time of delivery;
|
| (C) the goods are not consumer goods immediately
| | (D) the transaction does not create a security
| | interest that secures an obligation.
|
| (21) "Consignor" means a person that delivers goods
| | to a consignee in a consignment.
|
| (22) "Consumer debtor" means a debtor in a consumer
| | (23) "Consumer goods" means goods that are used or
| | bought for use primarily for personal, family, or household purposes.
|
| (24) "Consumer-goods transaction" means a consumer
| | (A) an individual incurs an obligation primarily
| | for personal, family, or household purposes; and
|
| (B) a security interest in consumer goods secures
| | (25) "Consumer obligor" means an obligor who is an
| | individual and who incurred the obligation as part of a transaction entered into primarily for personal, family, or household purposes.
|
| (26) "Consumer transaction" means a transaction in
| | which (i) an individual incurs an obligation primarily for personal, family, or household purposes, (ii) a security interest secures the obligation, and (iii) the collateral is held or acquired primarily for personal, family, or household purposes. The term includes consumer-goods transactions.
|
| (27) "Continuation statement" means an amendment of a
| | financing statement which:
|
| (A) identifies, by its file number, the initial
| | financing statement to which it relates; and
|
| (B) indicates that it is a continuation statement
| | for, or that it is filed to continue the effectiveness of, the identified financing statement.
|
| (28) "Debtor" means:
(A) a person having an interest, other than a
| | security interest or other lien, in the collateral, whether or not the person is an obligor;
|
| (B) a seller of accounts, chattel paper, payment
| | intangibles, or promissory notes; or
|
| (C) a consignee.
(29) "Deposit account" means a demand, time, savings,
| | passbook, nonnegotiable certificates of deposit, uncertificated certificates of deposit, nontransferrable certificates of deposit, or similar account maintained with a bank. The term does not include investment property or accounts evidenced by an instrument.
|
| (30) "Document" means a document of title or a
| | receipt of the type described in Section 7-201(b).
|
| (31) "Electronic chattel paper" means chattel paper
| | evidenced by a record or records consisting of information stored in an electronic medium.
|
| (32) "Encumbrance" means a right, other than an
| | ownership interest, in real property. The term includes mortgages and other liens on real property.
|
| (33) "Equipment" means goods other than inventory,
| | farm products, or consumer goods.
|
| (34) "Farm products" means goods, other than standing
| | timber, with respect to which the debtor is engaged in a farming operation and which are:
|
| (A) crops grown, growing, or to be grown,
| | (i) crops produced on trees, vines, and
| | (ii) aquatic goods produced in aquacultural
| | (B) livestock, born or unborn, including aquatic
| | goods produced in aquacultural operations;
|
| (C) supplies used or produced in a farming
| | (D) products of crops or livestock in their
| | (35) "Farming operation" means raising, cultivating,
| | propagating, fattening, grazing, or any other farming, livestock, or aquacultural operation.
|
| (36) "File number" means the number assigned to an
| | initial financing statement pursuant to Section 9-519(a).
|
| (37) "Filing office" means an office designated in
| | Section 9-501 as the place to file a financing statement.
|
| (38) "Filing-office rule" means a rule adopted
| | pursuant to Section 9-526.
|
| (39) "Financing statement" means a record or records
| | composed of an initial financing statement and any filed record relating to the initial financing statement.
|
| (40) "Fixture filing" means the filing of a financing
| | statement covering goods that are or are to become fixtures and satisfying Section 9-502(a) and (b). The term includes the filing of a financing statement covering goods of a transmitting utility which are or are to become fixtures.
|
| (41) "Fixtures" means goods that have become so
| | related to particular real property that an interest in them arises under real property law.
|
| (42) "General intangible" means any personal
| | property, including things in action, other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money, and oil, gas, or other minerals before extraction. The term includes payment intangibles and software.
|
| (43) "Good faith" means honesty in fact and the
| | observance of reasonable commercial standards of fair dealing.
|
| (44) "Goods" means all things that are movable when a
| | security interest attaches. The term includes (i) fixtures, (ii) standing timber that is to be cut and removed under a conveyance or contract for sale, (iii) the unborn young of animals, (iv) crops grown, growing, or to be grown, even if the crops are produced on trees, vines, or bushes, and (v) manufactured homes. The term also includes a computer program embedded in goods and any supporting information provided in connection with a transaction relating to the program if (i) the program is associated with the goods in such a manner that it customarily is considered part of the goods, or (ii) by becoming the owner of the goods, a person acquires a right to use the program in connection with the goods. The term does not include a computer program embedded in goods that consist solely of the medium in which the program is embedded. The term also does not include accounts, chattel paper, commercial tort claims, deposit accounts, documents, general intangibles, instruments, investment property, letter-of-credit rights, letters of credit, money, or oil, gas, or other minerals before extraction.
|
| (45) "Governmental unit" means a subdivision, agency,
| | department, county, parish, municipality, or other unit of the government of the United States, a State, or a foreign country. The term includes an organization having a separate corporate existence if the organization is eligible to issue debt on which interest is exempt from income taxation under the laws of the United States.
|
| (46) "Health-care-insurance receivable" means an
| | interest in or claim under a policy of insurance which is a right to payment of a monetary obligation for health-care goods or services provided.
|
| (47) "Instrument" means a negotiable instrument or
| | any other writing that evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease, and is of a type that in ordinary course of business is transferred by delivery with any necessary indorsement or assignment. The term does not include (i) investment property, (ii) letters of credit, (iii) nonnegotiable certificates of deposit, (iv) uncertificated certificates of deposit, (v) nontransferrable certificates of deposit, or (vi) writings that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card.
|
| (48) "Inventory" means goods, other than farm
| | (A) are leased by a person as lessor;
(B) are held by a person for sale or lease or to
| | be furnished under a contract of service;
|
| (C) are furnished by a person under a contract of
| | (D) consist of raw materials, work in process, or
| | materials used or consumed in a business.
|
| (49) "Investment property" means a security, whether
| | certificated or uncertificated, security entitlement, securities account, commodity contract, or commodity account.
|
| (50) "Jurisdiction of organization", with respect to
| | a registered organization, means the jurisdiction under whose law the organization is formed or organized.
|
| (51) "Letter-of-credit right" means a right to
| | payment or performance under a letter of credit, whether or not the beneficiary has demanded or is at the time entitled to demand payment or performance. The term does not include the right of a beneficiary to demand payment or performance under a letter of credit.
|
| (52) "Lien creditor" means:
(A) a creditor that has acquired a lien on the
| | property involved by attachment, levy, or the like;
|
| (B) an assignee for benefit of creditors from the
| | (C) a trustee in bankruptcy from the date of the
| | filing of the petition; or
|
| (D) a receiver in equity from the time of
| | (53) "Manufactured home" means a structure,
| | transportable in one or more sections, which, in the traveling mode, is eight body feet or more in width or 40 body feet or more in length, or, when erected on site, is 320 or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained therein. The term includes any structure that meets all of the requirements of this paragraph except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the United States Secretary of Housing and Urban Development and complies with the standards established under Title 42 of the United States Code. The term "manufactured home" does not include campers and recreational vehicles.
|
| (54) "Manufactured-home transaction" means a secured
| | (A) that creates a purchase-money security
| | interest in a manufactured home, other than a manufactured home held as inventory; or
|
| (B) in which a manufactured home, other than a
| | manufactured home held as inventory, is the primary collateral.
|
| (55) "Mortgage" means a consensual interest in real
| | property, including fixtures, which secures payment or performance of an obligation.
|
| (56) "New debtor" means a person that becomes bound
| | as debtor under Section 9-203(d) by a security agreement previously entered into by another person.
|
| (57) "New value" means (i) money, (ii) money's worth
| | in property, services, or new credit, or (iii) release by a transferee of an interest in property previously transferred to the transferee. The term does not include an obligation substituted for another obligation.
|
| (58) "Noncash proceeds" means proceeds other than
| | (59) "Obligor" means a person that, with respect to
| | an obligation secured by a security interest in or an agricultural lien on the collateral, (i) owes payment or other performance of the obligation, (ii) has provided property other than the collateral to secure payment or other performance of the obligation, or (iii) is otherwise accountable in whole or in part for payment or other performance of the obligation. The term does not include issuers or nominated persons under a letter of credit.
|
| (60) "Original debtor", except as used in Section
| | 9-310(c), means a person that, as debtor, entered into a security agreement to which a new debtor has become bound under Section 9-203(d).
|
| (61) "Payment intangible" means a general intangible
| | under which the account debtor's principal obligation is a monetary obligation.
|
| (62) "Person related to", with respect to an
| | (A) the spouse of the individual;
(B) a brother, brother-in-law, sister, or
| | sister-in-law of the individual;
|
| (C) an ancestor or lineal descendant of the
| | individual or the individual's spouse; or
|
| (D) any other relative, by blood or marriage, of
| | the individual or the individual's spouse who shares the same home with the individual.
|
| (63) "Person related to", with respect to an
| | (A) a person directly or indirectly controlling,
| | controlled by, or under common control with the organization;
|
| (B) an officer or director of, or a person
| | performing similar functions with respect to, the organization;
|
| (C) an officer or director of, or a person
| | performing similar functions with respect to, a person described in subparagraph (A);
|
| (D) the spouse of an individual described in
| | subparagraph (A), (B), or (C); or
|
| (E) an individual who is related by blood or
| | marriage to an individual described in subparagraph (A), (B), (C), or (D) and shares the same home with the individual.
|
| (64) "Proceeds", except as used in Section 9-609(b),
| | means the following property:
|
| (A) whatever is acquired upon the sale, lease,
| | license, exchange, or other disposition of collateral;
|
| (B) whatever is collected on, or distributed on
| | (C) rights arising out of collateral;
(D) to the extent of the value of collateral,
| | claims arising out of the loss, nonconformity, or interference with the use of, defects or infringement of rights in, or damage to, the collateral; or
|
| (E) to the extent of the value of collateral and
| | to the extent payable to the debtor or the secured party, insurance payable by reason of the loss or nonconformity of, defects or infringement of rights in, or damage to, the collateral.
|
| (65) "Promissory note" means an instrument that
| | evidences a promise to pay a monetary obligation, does not evidence an order to pay, and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds.
|
| (66) "Proposal" means a record authenticated by a
| | secured party which includes the terms on which the secured party is willing to accept collateral in full or partial satisfaction of the obligation it secures pursuant to Sections 9-620, 9-621, and 9-622.
|
| (67) "Public-finance transaction" means a secured
| | transaction in connection with which:
|
| (A) debt securities are issued;
(B) all or a portion of the securities issued
| | have an initial stated maturity of at least 20 years; and
|
| (C) the debtor, obligor, secured party, account
| | debtor or other person obligated on collateral, assignor or assignee of a secured obligation, or assignor or assignee of a security interest is a State or a governmental unit of a State.
|
| (68) "Public organic record" means a record that is
| | available to the public for inspection and is:
|
| (A) a record consisting of the record initially
| | filed with or issued by a State or the United States to form or organize an organization and any record filed with or issued by the State or the United States which amends or restates the initial record;
|
| (B) an organic record of a business trust
| | consisting of the record initially filed with a State and any record filed with the State which amends or restates the initial record, if a statute of the State governing business trusts requires that the record be filed with the State; or
|
| (C) a record consisting of legislation enacted by
| | the legislature of a State or the Congress of the United States which forms or organizes an organization, any record amending the legislation, and any record filed with or issued by the State or the United States which amends or restates the name of the organization.
|
| (69) "Pursuant to commitment", with respect to an
| | advance made or other value given by a secured party, means pursuant to the secured party's obligation, whether or not a subsequent event of default or other event not within the secured party's control has relieved or may relieve the secured party from its obligation.
|
| (70) "Record", except as used in "for record", "of
| | record", "record or legal title", and "record owner", means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.
|
| (71) "Registered organization" means an organization
| | formed or organized solely under the law of a single State or the United States by the filing of a public organic record with, the issuance of a public organic record by, or the enactment of legislation by the State or the United States. The term includes a business trust that is formed or organized under the law of a single State if a statute of the State governing business trusts requires that the business trust's organic record be filed with the State.
|
| (72) "Secondary obligor" means an obligor to the
| | (A) the obligor's obligation is secondary; or
(B) the obligor has a right of recourse with
| | respect to an obligation secured by collateral against the debtor, another obligor, or property of either.
|
| (73) "Secured party" means:
(A) a person in whose favor a security interest
| | is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;
|
| (B) a person that holds an agricultural lien;
(C) a consignor;
(D) a person to which accounts, chattel paper,
| | payment intangibles, or promissory notes have been sold;
|
| (E) a trustee, indenture trustee, agent,
| | collateral agent, or other representative in whose favor a security interest or agricultural lien is created or provided for; or
|
| (F) a person that holds a security interest
| | arising under Section 2-401, 2-505, 2-711(3), 2A-508(5), 4-210, or 5-118.
|
| (74) "Security agreement" means an agreement that
| | creates or provides for a security interest.
|
| (75) "Send", in connection with a record or
| | (A) to deposit in the mail, deliver for
| | transmission, or transmit by any other usual means of communication, with postage or cost of transmission provided for, addressed to any address reasonable under the circumstances; or
|
| (B) to cause the record or notification to be
| | received within the time that it would have been received if properly sent under subparagraph (A).
|
| (76) "Software" means a computer program and any
| | supporting information provided in connection with a transaction relating to the program. The term does not include a computer program that is included in the definition of goods.
|
| (77) "State" means a State of the United States, the
| | District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.
|
| (78) "Supporting obligation" means a letter-of-credit
| | right or secondary obligation that supports the payment or performance of an account, chattel paper, a document, a general intangible, an instrument, or investment property.
|
| (79) "Tangible chattel paper" means chattel paper
| | evidenced by a record or records consisting of information that is inscribed on a tangible medium.
|
| (80) "Termination statement" means an amendment of a
| | financing statement which:
|
| (A) identifies, by its file number, the initial
| | financing statement to which it relates; and
|
| (B) indicates either that it is a termination
| | statement or that the identified financing statement is no longer effective.
|
| (81) "Transmitting utility" means a person primarily
| | engaged in the business of:
|
| (A) operating a railroad, subway, street railway,
| | (B) transmitting communications electrically,
| | electromagnetically, or by light;
|
| (C) transmitting goods by pipeline or sewer; or
(D) transmitting or producing and transmitting
| | electricity, steam, gas, or water.
|
| (b) Definitions in other Articles. "Control" as provided in Section 7-106 and the following definitions in other Articles apply to this Article:
"Applicant". Section 5-102.
"Beneficiary". Section 5-102.
"Broker". Section 8-102.
"Certificated security". Section 8-102.
"Check". Section 3-104.
"Clearing corporation". Section 8-102.
"Contract for sale". Section 2-106.
"Customer". Section 4-104.
"Entitlement holder". Section 8-102.
"Financial asset". Section 8-102.
"Holder in due course". Section 3-302.
"Issuer" (with respect to a letter of credit or letter-of-credit right). Section 5-102.
"Issuer" (with respect to a security). Section 8-201.
"Issuer" (with respect to documents of title). Section 7-102.
"Lease". Section 2A-103.
"Lease agreement". Section 2A-103.
"Lease contract". Section 2A-103.
"Leasehold interest". Section 2A-103.
"Lessee". Section 2A-103.
"Lessee in ordinary course of business". Section 2A-103.
"Lessor". Section 2A-103.
"Lessor's residual interest". Section 2A-103.
"Letter of credit". Section 5-102.
"Merchant". Section 2-104.
"Negotiable instrument". Section 3-104.
"Nominated person". Section 5-102.
"Note". Section 3-104.
"Proceeds of a letter of credit". Section 5-114.
"Prove". Section 3-103.
"Sale". Section 2-106.
"Securities account". Section 8-501.
"Securities intermediary". Section 8-102.
"Security". Section 8-102.
"Security certificate". Section 8-102.
"Security entitlement". Section 8-102.
"Uncertificated security". Section 8-102.
(c) Article 1 definitions and principles. Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.
(Source: P.A. 97-1034, eff. 7-1-13; 98-749, eff. 7-16-14.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-102. Definitions and index of definitions.
(a) Article 9 definitions. In this Article:
(1) "Accession" means goods that are physically
| | united with other goods in such a manner that the identity of the original goods is not lost.
|
| (2) "Account", except as used in "account for",
| | "account statement", "account to", "commodity account" in paragraph (14), "customer's account", "deposit account" in paragraph (29), "on account of", and "statement of account", means a right to payment of a monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge card or information contained on or for use with the card, or (viii) as winnings in a lottery or other game of chance operated or sponsored by a State, governmental unit of a State, or person licensed or authorized to operate the game by a State or governmental unit of a State. The term includes controllable accounts and health-care-insurance receivables. The term does not include (i) chattel paper, (ii) commercial tort claims, (iii) deposit accounts, (iv) investment property, (v) letter-of-credit rights or letters of credit, (vi) rights to payment for money or funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card, or (vii) rights to payment evidenced by an instrument.
|
| (3) "Account debtor" means a person obligated on an
| | account, chattel paper, or general intangible. The term does not include persons obligated to pay a negotiable instrument, even if the negotiable instrument evidences chattel paper.
|
| (4) "Accounting", except as used in "accounting for",
| | (A) signed by a secured party;
(B) indicating the aggregate unpaid secured
| | obligations as of a date not more than 35 days earlier or 35 days later than the date of the record; and
|
| (C) identifying the components of the obligations
| | (5) "Agricultural lien" means an interest, other than
| | a security interest, in farm products:
|
| (A) which secures payment or performance of an
| | obligation for goods or services furnished in connection with a debtor's farming operation;
|
| (B) which is created by statute in favor of a
| | person that in the ordinary course of its business furnished goods or services to a debtor in connection with a debtor's farming operation; and
|
| (C) whose effectiveness does not depend on the
| | person's possession of the personal property.
|
| (6) "As-extracted collateral" means:
(A) oil, gas, or other minerals that are subject
| | to a security interest that:
|
| (i) is created by a debtor having an interest
| | in the minerals before extraction; and
|
| (ii) attaches to the minerals as extracted; or
(B) accounts arising out of the sale at the
| | wellhead or minehead of oil, gas, or other minerals in which the debtor had an interest before extraction.
|
| (7) (Reserved).
(7A) "Assignee", except as used in "assignee for
| | benefit of creditors", means a person (i) in whose favor a security interest that secures an obligation is created or provided for under a security agreement, whether or not the obligation is outstanding or (ii) to which an account, chattel paper, payment intangible, or promissory note has been sold. The term includes a person to which a security interest has been transferred by a secured party.
|
| (7B) "Assignor" means a person that (i) under a
| | security agreement creates or provides for a security interest that secures an obligation or (ii) sells an account, chattel paper, payment intangible, or promissory note. The term includes a secured party that has transferred a security interest to another person.
|
| (8) "Bank" means an organization that is engaged in
| | the business of banking. The term includes savings banks, savings and loan associations, credit unions, and trust companies.
|
| (9) "Cash proceeds" means proceeds that are money,
| | checks, deposit accounts, or the like.
|
| (10) "Certificate of title" means a certificate of
| | title with respect to which a statute provides for the security interest in question to be indicated on the certificate as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the collateral. The term includes another record maintained as an alternative to a certificate of title by the governmental unit that issues certificates of title if a statute permits the security interest in question to be indicated on the record as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the collateral.
|
| (11) "Chattel paper" means:
(A) a right to payment of a monetary obligation
| | secured by specific goods, if the right to payment and security agreement are evidenced by a record; or
|
| (B) a right to payment of a monetary obligation
| | owed by a lessee under a lease agreement with respect to specific goods and a monetary obligation owed by the lessee in connection with the transaction giving rise to the lease, if:
|
| (i) the right to payment and lease agreement
| | are evidenced by a record; and
|
| (ii) the predominant purpose of the
| | transaction giving rise to the lease was to give the lessee the right to possession and use of the goods.
|
| The term does not include a right to payment arising
| | out of a charter or other contract involving the use or hire of a vessel or a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card.
|
| (12) "Collateral" means the property subject to a
| | security interest or agricultural lien. The term includes:
|
| (A) proceeds to which a security interest
| | (B) accounts, chattel paper, payment intangibles,
| | and promissory notes that have been sold; and
|
| (C) goods that are the subject of a consignment.
(13) "Commercial tort claim" means a claim arising in
| | tort with respect to which:
|
| (A) the claimant is an organization; or
(B) the claimant is an individual and the claim:
(i) arose in the course of the claimant's
| | business or profession; and
|
| (ii) does not include damages arising out of
| | personal injury to or the death of an individual.
|
| (14) "Commodity account" means an account maintained
| | by a commodity intermediary in which a commodity contract is carried for a commodity customer.
|
| (15) "Commodity contract" means a commodity futures
| | contract, an option on a commodity futures contract, a commodity option, or another contract if the contract or option is:
|
| (A) traded on or subject to the rules of a board
| | of trade that has been designated as a contract market for such a contract pursuant to federal commodities laws; or
|
| (B) traded on a foreign commodity board of trade,
| | exchange, or market, and is carried on the books of a commodity intermediary for a commodity customer.
|
| (16) "Commodity customer" means a person for which a
| | commodity intermediary carries a commodity contract on its books.
|
| (17) "Commodity intermediary" means a person that:
(A) is registered as a futures commission
| | merchant under federal commodities law; or
|
| (B) in the ordinary course of its business
| | provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to federal commodities law.
|
| (18) "Communicate" means:
(A) to send a written or other tangible record;
(B) to transmit a record by any means agreed upon
| | by the persons sending and receiving the record; or
|
| (C) in the case of transmission of a record to or
| | by a filing office, to transmit a record by any means prescribed by filing-office rule.
|
| (19) "Consignee" means a merchant to which goods are
| | delivered in a consignment.
|
| (20) "Consignment" means a transaction, regardless of
| | its form, in which a person delivers goods to a merchant for the purpose of sale and:
|
| (A) the merchant:
(i) deals in goods of that kind under a name
| | other than the name of the person making delivery;
|
| (ii) is not an auctioneer; and
(iii) is not generally known by its creditors
| | to be substantially engaged in selling the goods of others;
|
| (B) with respect to each delivery, the aggregate
| | value of the goods is $1,000 or more at the time of delivery;
|
| (C) the goods are not consumer goods immediately
| | (D) the transaction does not create a security
| | interest that secures an obligation.
|
| (21) "Consignor" means a person that delivers goods
| | to a consignee in a consignment.
|
| (22) "Consumer debtor" means a debtor in a consumer
| | (23) "Consumer goods" means goods that are used or
| | bought for use primarily for personal, family, or household purposes.
|
| (24) "Consumer-goods transaction" means a consumer
| | (A) an individual incurs an obligation primarily
| | for personal, family, or household purposes; and
|
| (B) a security interest in consumer goods secures
| | (25) "Consumer obligor" means an obligor who is an
| | individual and who incurred the obligation as part of a transaction entered into primarily for personal, family, or household purposes.
|
| (26) "Consumer transaction" means a transaction in
| | which (i) an individual incurs an obligation primarily for personal, family, or household purposes, (ii) a security interest secures the obligation, and (iii) the collateral is held or acquired primarily for personal, family, or household purposes. The term includes consumer-goods transactions.
|
| (27) "Continuation statement" means an amendment of a
| | financing statement which:
|
| (A) identifies, by its file number, the initial
| | financing statement to which it relates; and
|
| (B) indicates that it is a continuation statement
| | for, or that it is filed to continue the effectiveness of, the identified financing statement.
|
| (27A) "Controllable account" means an account
| | evidenced by a controllable electronic record that provides that the account debtor undertakes to pay the person that has control under Section 12-105 of the controllable electronic record.
|
| (27B) "Controllable payment intangible" means a
| | payment intangible evidenced by a controllable electronic record that provides that the account debtor undertakes to pay the person that has control under Section 12-105 of the controllable electronic record.
|
| (28) "Debtor" means:
(A) a person having an interest, other than a
| | security interest or other lien, in the collateral, whether or not the person is an obligor;
|
| (B) a seller of accounts, chattel paper, payment
| | intangibles, or promissory notes; or
|
| (C) a consignee.
(29) "Deposit account" means a demand, time, savings,
| | passbook, nonnegotiable certificates of deposit, uncertificated certificates of deposit, nontransferable certificates of deposit, or similar account maintained with a bank. The term does not include investment property or accounts evidenced by an instrument.
|
| (30) "Document" means a document of title or a
| | receipt of the type described in Section 7-201(b).
|
| (31) (Reserved).
(31A) "Electronic money" means money in an electronic
| | (32) "Encumbrance" means a right, other than an
| | ownership interest, in real property. The term includes mortgages and other liens on real property.
|
| (33) "Equipment" means goods other than inventory,
| | farm products, or consumer goods.
|
| (34) "Farm products" means goods, other than standing
| | timber, with respect to which the debtor is engaged in a farming operation and which are:
|
| (A) crops grown, growing, or to be grown,
| | (i) crops produced on trees, vines, and
| | (ii) aquatic goods produced in aquacultural
| | (B) livestock, born or unborn, including aquatic
| | goods produced in aquacultural operations;
|
| (C) supplies used or produced in a farming
| | (D) products of crops or livestock in their
| | (35) "Farming operation" means raising, cultivating,
| | propagating, fattening, grazing, or any other farming, livestock, or aquacultural operation.
|
| (36) "File number" means the number assigned to an
| | initial financing statement pursuant to Section 9-519(a).
|
| (37) "Filing office" means an office designated in
| | Section 9-501 as the place to file a financing statement.
|
| (38) "Filing-office rule" means a rule adopted
| | pursuant to Section 9-526.
|
| (39) "Financing statement" means a record or records
| | composed of an initial financing statement and any filed record relating to the initial financing statement.
|
| (40) "Fixture filing" means the filing of a financing
| | statement covering goods that are or are to become fixtures and satisfying Section 9-502(a) and (b). The term includes the filing of a financing statement covering goods of a transmitting utility which are or are to become fixtures.
|
| (41) "Fixtures" means goods that have become so
| | related to particular real property that an interest in them arises under real property law.
|
| (42) "General intangible" means any personal
| | property, including things in action, other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money, and oil, gas, or other minerals before extraction. The term includes controllable electronic records, payment intangibles, and software.
|
| (43) "Good faith" means honesty in fact and the
| | observance of reasonable commercial standards of fair dealing.
|
| (44) "Goods" means all things that are movable when a
| | security interest attaches. The term includes (i) fixtures, (ii) standing timber that is to be cut and removed under a conveyance or contract for sale, (iii) the unborn young of animals, (iv) crops grown, growing, or to be grown, even if the crops are produced on trees, vines, or bushes, and (v) manufactured homes. The term also includes a computer program embedded in goods and any supporting information provided in connection with a transaction relating to the program if (i) the program is associated with the goods in such a manner that it customarily is considered part of the goods, or (ii) by becoming the owner of the goods, a person acquires a right to use the program in connection with the goods. The term does not include a computer program embedded in goods that consist solely of the medium in which the program is embedded. The term also does not include accounts, chattel paper, commercial tort claims, deposit accounts, documents, general intangibles, instruments, investment property, letter-of-credit rights, letters of credit, money, or oil, gas, or other minerals before extraction.
|
| (45) "Governmental unit" means a subdivision, agency,
| | department, county, parish, municipality, or other unit of the government of the United States, a State, or a foreign country. The term includes an organization having a separate corporate existence if the organization is eligible to issue debt on which interest is exempt from income taxation under the laws of the United States.
|
| (46) "Health-care-insurance receivable" means an
| | interest in or claim under a policy of insurance which is a right to payment of a monetary obligation for health-care goods or services provided.
|
| (47) "Instrument" means a negotiable instrument or
| | any other writing that evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease, and is of a type that in ordinary course of business is transferred by delivery with any necessary indorsement or assignment. The term does not include (i) investment property, (ii) letters of credit, (iii) nonnegotiable certificates of deposit, (iv) uncertificated certificates of deposit, (v) nontransferable certificates of deposit, (vi) writings that evidence a right to payment arising out of the use of a credit or charge card or information contained on or for use with the card, or (vii) writings that evidence chattel paper.
|
| (48) "Inventory" means goods, other than farm
| | (A) are leased by a person as lessor;
(B) are held by a person for sale or lease or to
| | be furnished under a contract of service;
|
| (C) are furnished by a person under a contract of
| | (D) consist of raw materials, work in process, or
| | materials used or consumed in a business.
|
| (49) "Investment property" means a security, whether
| | certificated or uncertificated, security entitlement, securities account, commodity contract, or commodity account.
|
| (50) "Jurisdiction of organization", with respect to
| | a registered organization, means the jurisdiction under whose law the organization is formed or organized.
|
| (51) "Letter-of-credit right" means a right to
| | payment or performance under a letter of credit, whether or not the beneficiary has demanded or is at the time entitled to demand payment or performance. The term does not include the right of a beneficiary to demand payment or performance under a letter of credit.
|
| (52) "Lien creditor" means:
(A) a creditor that has acquired a lien on the
| | property involved by attachment, levy, or the like;
|
| (B) an assignee for benefit of creditors from the
| | (C) a trustee in bankruptcy from the date of the
| | filing of the petition; or
|
| (D) a receiver in equity from the time of
| | (53) "Manufactured home" means a structure,
| | transportable in one or more sections, which, in the traveling mode, is eight body feet or more in width or 40 body feet or more in length, or, when erected on site, is 320 or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained therein. The term includes any structure that meets all of the requirements of this paragraph except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the United States Secretary of Housing and Urban Development and complies with the standards established under Title 42 of the United States Code. The term "manufactured home" does not include campers and recreational vehicles.
|
| (54) "Manufactured-home transaction" means a secured
| | (A) that creates a purchase-money security
| | interest in a manufactured home, other than a manufactured home held as inventory; or
|
| (B) in which a manufactured home, other than a
| | manufactured home held as inventory, is the primary collateral.
|
| (54A) "Money" has the meaning in Section
| | 1-201(b)(24), but does not include (i) a deposit account or (ii) money in an electronic form that cannot be subjected to control under Section 9-105A.
|
| (55) "Mortgage" means a consensual interest in real
| | property, including fixtures, which secures payment or performance of an obligation.
|
| (56) "New debtor" means a person that becomes bound
| | as debtor under Section 9-203(d) by a security agreement previously entered into by another person.
|
| (57) "New value" means (i) money, (ii) money's worth
| | in property, services, or new credit, or (iii) release by a transferee of an interest in property previously transferred to the transferee. The term does not include an obligation substituted for another obligation.
|
| (58) "Noncash proceeds" means proceeds other than
| | (59) "Obligor" means a person that, with respect to
| | an obligation secured by a security interest in or an agricultural lien on the collateral, (i) owes payment or other performance of the obligation, (ii) has provided property other than the collateral to secure payment or other performance of the obligation, or (iii) is otherwise accountable in whole or in part for payment or other performance of the obligation. The term does not include issuers or nominated persons under a letter of credit.
|
| (60) "Original debtor", except as used in Section
| | 9-310(c), means a person that, as debtor, entered into a security agreement to which a new debtor has become bound under Section 9-203(d).
|
| (61) "Payment intangible" means a general intangible
| | under which the account debtor's principal obligation is a monetary obligation. The term includes a controllable payment intangible.
|
| (62) "Person related to", with respect to an
| | (A) the spouse of the individual;
(B) a brother, brother-in-law, sister, or
| | sister-in-law of the individual;
|
| (C) an ancestor or lineal descendant of the
| | individual or the individual's spouse; or
|
| (D) any other relative, by blood or marriage, of
| | the individual or the individual's spouse who shares the same home with the individual.
|
| (63) "Person related to", with respect to an
| | (A) a person directly or indirectly controlling,
| | controlled by, or under common control with the organization;
|
| (B) an officer or director of, or a person
| | performing similar functions with respect to, the organization;
|
| (C) an officer or director of, or a person
| | performing similar functions with respect to, a person described in subparagraph (A);
|
| (D) the spouse of an individual described in
| | subparagraph (A), (B), or (C); or
|
| (E) an individual who is related by blood or
| | marriage to an individual described in subparagraph (A), (B), (C), or (D) and shares the same home with the individual.
|
| (64) "Proceeds", except as used in Section 9-609(b),
| | means the following property:
|
| (A) whatever is acquired upon the sale, lease,
| | license, exchange, or other disposition of collateral;
|
| (B) whatever is collected on, or distributed on
| | (C) rights arising out of collateral;
(D) to the extent of the value of collateral,
| | claims arising out of the loss, nonconformity, or interference with the use of, defects or infringement of rights in, or damage to, the collateral; or
|
| (E) to the extent of the value of collateral and
| | to the extent payable to the debtor or the secured party, insurance payable by reason of the loss or nonconformity of, defects or infringement of rights in, or damage to, the collateral.
|
| (65) "Promissory note" means an instrument that
| | evidences a promise to pay a monetary obligation, does not evidence an order to pay, and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds.
|
| (66) "Proposal" means a record signed by a secured
| | party which includes the terms on which the secured party is willing to accept collateral in full or partial satisfaction of the obligation it secures pursuant to Sections 9-620, 9-621, and 9-622.
|
| (67) "Public-finance transaction" means a secured
| | transaction in connection with which:
|
| (A) debt securities are issued;
(B) all or a portion of the securities issued
| | have an initial stated maturity of at least 20 years; and
|
| (C) the debtor, obligor, secured party, account
| | debtor or other person obligated on collateral, assignor or assignee of a secured obligation, or assignor or assignee of a security interest is a State or a governmental unit of a State.
|
| (68) "Public organic record" means a record that is
| | available to the public for inspection and is:
|
| (A) a record consisting of the record initially
| | filed with or issued by a State or the United States to form or organize an organization and any record filed with or issued by the State or the United States which amends or restates the initial record;
|
| (B) an organic record of a business trust
| | consisting of the record initially filed with a State and any record filed with the State which amends or restates the initial record, if a statute of the State governing business trusts requires that the record be filed with the State; or
|
| (C) a record consisting of legislation enacted by
| | the legislature of a State or the Congress of the United States which forms or organizes an organization, any record amending the legislation, and any record filed with or issued by the State or the United States which amends or restates the name of the organization.
|
| (69) "Pursuant to commitment", with respect to an
| | advance made or other value given by a secured party, means pursuant to the secured party's obligation, whether or not a subsequent event of default or other event not within the secured party's control has relieved or may relieve the secured party from its obligation.
|
| (70) "Record", except as used in "for record", "of
| | record", "record or legal title", and "record owner", means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.
|
| (71) "Registered organization" means an organization
| | formed or organized solely under the law of a single State or the United States by the filing of a public organic record with, the issuance of a public organic record by, or the enactment of legislation by the State or the United States. The term includes a business trust that is formed or organized under the law of a single State if a statute of the State governing business trusts requires that the business trust's organic record be filed with the State.
|
| (72) "Secondary obligor" means an obligor to the
| | (A) the obligor's obligation is secondary; or
(B) the obligor has a right of recourse with
| | respect to an obligation secured by collateral against the debtor, another obligor, or property of either.
|
| (73) "Secured party" means:
(A) a person in whose favor a security interest
| | is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;
|
| (B) a person that holds an agricultural lien;
(C) a consignor;
(D) a person to which accounts, chattel paper,
| | payment intangibles, or promissory notes have been sold;
|
| (E) a trustee, indenture trustee, agent,
| | collateral agent, or other representative in whose favor a security interest or agricultural lien is created or provided for; or
|
| (F) a person that holds a security interest
| | arising under Section 2-401, 2-505, 2-711(3), 2A-508(5), 4-210, or 5-118.
|
| (74) "Security agreement" means an agreement that
| | creates or provides for a security interest.
|
| (75) (Reserved).
(76) "Software" means a computer program and any
| | supporting information provided in connection with a transaction relating to the program. The term does not include a computer program that is included in the definition of goods.
|
| (77) "State" means a State of the United States, the
| | District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.
|
| (78) "Supporting obligation" means a letter-of-credit
| | right or secondary obligation that supports the payment or performance of an account, chattel paper, a document, a general intangible, an instrument, or investment property.
|
| (79) (Reserved).
(79A) "Tangible money" means money in a tangible
| | (80) "Termination statement" means an amendment of a
| | financing statement which:
|
| (A) identifies, by its file number, the initial
| | financing statement to which it relates; and
|
| (B) indicates either that it is a termination
| | statement or that the identified financing statement is no longer effective.
|
| (81) "Transmitting utility" means a person primarily
| | engaged in the business of:
|
| (A) operating a railroad, subway, street railway,
| | (B) transmitting communications electrically,
| | electromagnetically, or by light;
|
| (C) transmitting goods by pipeline or sewer; or
(D) transmitting or producing and transmitting
| | electricity, steam, gas, or water.
|
| (b) Definitions in other Articles. "Control" as provided in Section 7-106 and the following definitions in other Articles apply to this Article:
"Applicant". Section 5-102.
"Beneficiary". Section 5-102.
"Broker". Section 8-102.
"Certificated security". Section 8-102.
"Check". Section 3-104.
"Clearing corporation". Section 8-102.
"Contract for sale". Section 2-106.
"Controllable electronic record". Section 12-102.
"Customer". Section 4-104.
"Entitlement holder". Section 8-102.
"Financial asset". Section 8-102.
"Holder in due course". Section 3-302.
"Issuer" (with respect to a letter of credit or letter-of-credit right). Section 5-102.
"Issuer" (with respect to a security). Section 8-201.
"Issuer" (with respect to documents of title). Section 7-102.
"Lease". Section 2A-103.
"Lease agreement". Section 2A-103.
"Lease contract". Section 2A-103.
"Leasehold interest". Section 2A-103.
"Lessee". Section 2A-103.
"Lessee in ordinary course of business". Section 2A-103.
"Lessor". Section 2A-103.
"Lessor's residual interest". Section 2A-103.
"Letter of credit". Section 5-102.
"Merchant". Section 2-104.
"Negotiable instrument". Section 3-104.
"Nominated person". Section 5-102.
"Note". Section 3-104.
"Proceeds of a letter of credit". Section 5-114.
"Protected purchaser". Section 8-303.
"Prove". Section 3-103.
"Qualifying purchaser". Section 12-102.
"Sale". Section 2-106.
"Securities account". Section 8-501.
"Securities intermediary". Section 8-102.
"Security". Section 8-102.
"Security certificate". Section 8-102.
"Security entitlement". Section 8-102.
"Uncertificated security". Section 8-102.
(c) Article 1 definitions and principles. Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-103
(810 ILCS 5/9-103) (from Ch. 26, par. 9-103)
Sec. 9-103.
Purchase-money security interest; application of payments;
burden of establishing.
(a) Definitions. In this Section:
(1) "purchase-money collateral" means goods or | | software that secures a purchase-money obligation incurred with respect to that collateral; and
|
|
(2) "purchase-money obligation" means an obligation
| | of an obligor incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used.
|
|
(b) Purchase-money security interest in goods. A security interest in
goods is a purchase-money security interest:
(1) to the extent that the goods are purchase-money
| | collateral with respect to that security interest;
|
|
(2) if the security interest is in inventory that is
| | or was purchase-money collateral, also to the extent that the security interest secures a purchase-money obligation incurred with respect to other inventory in which the secured party holds or held a purchase-money security interest; and
|
|
(3) also to the extent that the security interest
| | secures a purchase-money obligation incurred with respect to software in which the secured party holds or held a purchase-money security interest.
|
|
(c) Purchase-money security interest in software. A security interest in
software is a purchase-money security interest to the extent that the security
interest
also secures a purchase-money obligation incurred with respect to goods in
which
the secured party holds or held a purchase-money security interest if:
(1) the debtor acquired its interest in the software
| | in an integrated transaction in which it acquired an interest in the goods; and
|
|
(2) the debtor acquired its interest in the software
| | for the principal purpose of using the software in the goods.
|
|
(d) Consignor's inventory purchase-money security interest. The
security interest of a consignor in goods that are the subject of a consignment
is a
purchase-money security interest in inventory.
(e) Application of payment in non-consumer-goods transaction. In a
transaction other than a consumer-goods transaction, if the extent to which a
security interest is a purchase-money security interest depends on the
application of
a payment to a particular obligation, the payment must be applied:
(1) in accordance with any reasonable method of
| | application to which the parties agree;
|
|
(2) in the absence of the parties' agreement to a
| | reasonable method, in accordance with any intention of the obligor manifested at or before the time of payment; or
|
|
(3) in the absence of an agreement to a reasonable
| | method and a timely manifestation of the obligor's intention, in the following order:
|
|
(A) to obligations that are not secured; and
(B) if more than one obligation is secured, to
| | obligations secured by purchase-money security interests in the order in which those obligations were incurred.
|
|
(f) No loss of status of purchase-money security interest in
non-consumer-goods transaction. In a transaction other than a consumer-goods
transaction, a purchase-money security interest does not lose its status as
such, even
if:
(1) the purchase-money collateral also secures an
| | obligation that is not a purchase-money obligation;
|
|
(2) collateral that is not purchase-money collateral
| | also secures the purchase-money obligation; or
|
|
(3) the purchase-money obligation has been renewed,
| | refinanced, consolidated, or restructured.
|
|
(g) Burden of proof in non-consumer-goods transaction. In a
transaction other than a consumer-goods transaction, a secured party claiming a
purchase-money security interest has the burden of establishing the extent to
which
the security interest is a purchase-money security interest.
(h) Non-consumer-goods transactions; no inference. The limitation of
the rules in subsections (e), (f), and (g) to transactions other than
consumer-goods
transactions is intended to leave to the court the determination of the proper
rules in
consumer-goods transactions. The court may not infer from that limitation the
nature of the proper rule in consumer-goods transactions and may continue to
apply
established approaches.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-104 (810 ILCS 5/9-104) (from Ch. 26, par. 9-104) (Text of Section before amendment by P.A. 103-1036) Sec. 9-104. Control of deposit account. (a) Requirements for control. A secured party has control of a deposit
account if: (1) the secured party is the bank with which the | | deposit account is maintained;
|
| (2) the debtor, secured party, and bank have agreed
| | in an authenticated record that the bank will comply with instructions originated by the secured party directing disposition of the funds in the deposit account without further consent by the debtor; or
|
| (3) the secured party becomes the bank's customer
| | with respect to the deposit account.
|
| (b) Debtor's right to direct disposition. A secured party that has
satisfied
subsection (a) has control, even if the debtor retains the right to direct the
disposition of funds from the deposit account.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-104. Control of deposit account.
(a) Requirements for control. A secured party has control of a deposit account if:
(1) the secured party is the bank with which the
| | deposit account is maintained;
|
| (2) the debtor, secured party, and bank have agreed
| | in a signed record that the bank will comply with instructions originated by the secured party directing disposition of the funds in the deposit account without further consent by the debtor;
|
| (3) the secured party becomes the bank's customer
| | with respect to the deposit account; or
|
| (4) another person, other than the debtor:
(A) has control of the deposit account and
| | acknowledges that it has control on behalf of the secured party; or
|
| (B) obtains control of the deposit account after
| | having acknowledged that it will obtain control of the deposit account on behalf of the secured party.
|
| (b) Debtor's right to direct disposition. A secured party that has satisfied subsection (a) has control, even if the debtor retains the right to direct the disposition of funds from the deposit account.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-105 (810 ILCS 5/9-105) (from Ch. 26, par. 9-105) (Text of Section before amendment by P.A. 103-1036) Sec. 9-105. Control of electronic chattel paper. (a) General rule: Control of electronic chattel paper. A secured party has
control
of electronic chattel paper if a system employed for evidencing the transfer of interests in the chattel paper reliably establishes the secured party as the person to which the chattel paper was assigned. (b) Specific facts giving control. A system satisfies subsection (a) if the record or records comprising the chattel
paper are
created, stored, and assigned in such a manner that: (1) a single authoritative copy of the record or | | records exists which is unique, identifiable and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable;
|
| (2) the authoritative copy identifies the secured
| | party as the assignee of the record or records;
|
| (3) the authoritative copy is communicated to and
| | maintained by the secured party or its designated custodian;
|
| (4) copies or amendments that add or change an
| | identified assignee of the authoritative copy can be made only with the consent of the secured party;
|
| (5) each copy of the authoritative copy and any copy
| | of a copy is readily identifiable as a copy that is not the authoritative copy; and
|
| (6) any amendment of the authoritative copy is
| | readily identifiable as authorized or unauthorized.
|
| (Source: P.A. 97-1034, eff. 7-1-13.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-105. Control of electronic copy of record evidencing chattel paper.
(a) General rule: control of electronic copy of record evidencing chattel paper. A purchaser has control of an authoritative electronic copy of a record evidencing chattel paper if a system employed for evidencing the assignment of interests in the chattel paper reliably establishes the purchaser as the person to which the authoritative electronic copy was assigned.
(b) Single authoritative copy. A system satisfies subsection (a) if the record or records evidencing the chattel paper are created, stored, and assigned in a manner that:
(1) a single authoritative copy of the record or
| | records exists which is unique, identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable;
|
| (2) the authoritative copy identifies the purchaser
| | as the assignee of the record or records;
|
| (3) the authoritative copy is communicated to and
| | maintained by the purchaser or its designated custodian;
|
| (4) copies or amendments that add or change an
| | identified assignee of the authoritative copy can be made only with the consent of the purchaser;
|
| (5) each copy of the authoritative copy and any copy
| | of a copy is readily identifiable as a copy that is not the authoritative copy; and
|
| (6) any amendment of the authoritative copy is
| | readily identifiable as authorized or unauthorized.
|
| (c) One or more authoritative copies. A system satisfies subsection (a), and a purchaser has control of an authoritative electronic copy of a record evidencing chattel paper, if the electronic copy, a record attached to or logically associated with the electronic copy, or a system in which the electronic copy is recorded:
(1) enables the purchaser readily to identify each
| | electronic copy as either an authoritative copy or a nonauthoritative copy;
|
| (2) enables the purchaser readily to identify itself
| | in any way, including by name, identifying number, cryptographic key, office, or account number, as the assignee of the authoritative electronic copy; and
|
| (3) gives the purchaser exclusive power, subject to
| | (A) prevent others from adding or changing an
| | identified assignee of the authoritative electronic copy; and
|
| (B) transfer control of the authoritative
| | (d) Meaning of exclusive. Subject to subsection (e), a power is exclusive under subsection (c)(3)(A) and (B) even if:
(1) the authoritative electronic copy, a record
| | attached to or logically associated with the authoritative electronic copy, or a system in which the authoritative electronic copy is recorded limits the use of the authoritative electronic copy or has a protocol programmed to cause a change, including a transfer or loss of control; or
|
| (2) the power is shared with another person.
(e) When power not shared with another person. A power of a purchaser is not shared with another person under subsection (d)(2) and the purchaser's power is not exclusive if:
(1) the purchaser can exercise the power only if the
| | power also is exercised by the other person; and
|
| (2) the other person:
(A) can exercise the power without exercise of
| | the power by the purchaser; or
|
| (B) is the transferor to the purchaser of an
| | interest in the chattel paper.
|
| (f) Presumption of exclusivity of certain powers. If a purchaser has the powers specified in subsection (c)(3)(A) and (B), the powers are presumed to be exclusive.
(g) Obtaining control through another person. A purchaser has control of an authoritative electronic copy of a record evidencing chattel paper if another person, other than the transferor to the purchaser of an interest in the chattel paper:
(1) has control of the authoritative electronic copy
| | and acknowledges that it has control on behalf of the purchaser; or
|
| (2) obtains control of the authoritative electronic
| | copy after having acknowledged that it will obtain control of the electronic copy on behalf of the purchaser.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-105A (810 ILCS 5/9-105A) (This Section may contain text from a Public Act with a delayed effective date) Sec. 9-105A. Control of electronic money. (a) General rule: control of electronic money. A person has control of electronic money if: (1) the electronic money, a record attached to or | | logically associated with the electronic money, or a system in which the electronic money is recorded gives the person:
|
| (A) power to avail itself of substantially all
| | the benefit from the electronic money; and
|
| (B) exclusive power, subject to subsection (b),
| | (i) prevent others from availing themselves
| | of substantially all the benefit from the electronic money; and
|
| (ii) transfer control of the electronic money
| | to another person or cause another person to obtain control of other electronic money as a result of the transfer of the electronic money; and
|
| (2) the electronic money, a record attached to or
| | logically associated with the electronic money, or a system in which the electronic money is recorded enables the person readily to identify itself in any way, including by name, identifying number, cryptographic key, office, or account number, as having the powers under paragraph (1).
|
| (b) Meaning of exclusive. Subject to subsection (c), a power is exclusive under subsection (a)(1)(B)(i) and (ii) even if:
(1) the electronic money, a record attached to or
| | logically associated with the electronic money, or a system in which the electronic money is recorded limits the use of the electronic money or has a protocol programmed to cause a change, including a transfer or loss of control; or
|
| (2) the power is shared with another person.
(c) When power not shared with another person. A power of a person is not shared with another person under subsection (b)(2) and the person's power is not exclusive if:
(1) the person can exercise the power only if the
| | power also is exercised by the other person; and
|
| (2) the other person:
(A) can exercise the power without exercise of
| | the power by the person; or
|
| (B) is the transferor to the person of an
| | interest in the electronic money.
|
| (d) Presumption of exclusivity of certain powers. If a person has the powers specified in subsection (a)(1)(B)(i) and (ii), the powers are presumed to be exclusive.
(e) Control through another person. A person has control of electronic money if another person, other than the transferor to the person of an interest in the electronic money:
(1) has control of the electronic money and
| | acknowledges that it has control on behalf of the person; or
|
| (2) obtains control of the electronic money after
| | having acknowledged that it will obtain control of the electronic money on behalf of the person.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-106
(810 ILCS 5/9-106) (from Ch. 26, par. 9-106)
Sec. 9-106.
Control of investment property.
(a) Control under Section 8-106. A person has control of a certificated
security, uncertificated security, or security entitlement as provided in
Section
8-106.
(b) Control of commodity contract. A secured party has control of a
commodity contract if:
(1) the secured party is the commodity intermediary | | with which the commodity contract is carried; or
|
|
(2) the commodity customer, secured party, and
| | commodity intermediary have agreed that the commodity intermediary will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer.
|
|
(c) Effect of control of securities account or commodity account. A
secured party having control of all security entitlements or commodity
contracts
carried in a securities account or commodity account has control over the
securities
account or commodity account.
(Source: P.A. 90-665, eff. 7-30-98; 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-107
(810 ILCS 5/9-107) (from Ch. 26, par. 9-107)
Sec. 9-107.
Control of letter-of-credit right.
A secured party has
control of a
letter-of-credit right to the extent of any right to payment or performance by
the
issuer or any nominated person if the issuer or nominated person has consented
to
an assignment of proceeds of the letter of credit under Section 5-114(c) or
otherwise applicable law or practice.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-107.1
(810 ILCS 5/9-107.1)
Sec. 9-107.1.
Control of Beneficial Interest in Illinois Land Trust.
(a) Requirements for Control. A secured party has control of the beneficial
interest in an Illinois land trust if:
(1) the secured party shall have transmitted to the | | trustee for the trust a record authenticated by the debtor that contains a collateral assignment by the debtor of, or the grant of a security interest in, a beneficial interest in the trust; and
|
|
(2) in an authenticated record, the trustee for the
| | trust has accepted the collateral assignment or security agreement.
|
|
(b) Debtor's right to direct disposition and proceeds. A secured party that
has
satisfied subsection (a) has control, even if the debtor retains, subject to
the terms and conditions of the collateral assignment or security agreement,
the power of direction
of
the trustee and the right to receive the rents, income and profits thereof.
(Source: P.A. 92-234, eff. 1-1-02.)
|
810 ILCS 5/9-107A (810 ILCS 5/9-107A) (This Section may contain text from a Public Act with a delayed effective date) Sec. 9-107A. Control of controllable electronic record, controllable account, or controllable payment intangible. (a) Control under Section 12-105. A secured party has control of a controllable electronic record as provided in Section 12-105. (b) Control of controllable account and controllable payment intangible. A secured party has control of a controllable account or controllable payment intangible if the secured party has control of the controllable electronic record that evidences the controllable account or controllable payment intangible.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/9-107B (810 ILCS 5/9-107B) (This Section may contain text from a Public Act with a delayed effective date) Sec. 9-107B. No requirement to acknowledge or confirm; no duties. (a) No requirement to acknowledge. A person that has control under Section 9-104, 9-105, or 9-105A is not required to acknowledge that it has control on behalf of another person. (b) No duties or confirmation. If a person acknowledges that it has or will obtain control on behalf of another person, unless the person otherwise agrees or law other than this Article otherwise provides, the person does not owe any duty to the other person and is not required to confirm the acknowledgment to any other person.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/9-108
(810 ILCS 5/9-108) (from Ch. 26, par. 9-108)
Sec. 9-108.
Sufficiency of description.
(a) Sufficiency of description. Except as otherwise provided in
subsections (c), (d), and (e), a description of personal or real property is
sufficient,
whether or not it is specific, if it reasonably identifies what is described.
(b) Examples of reasonable identification. Except as otherwise provided
in subsection (d), a description of collateral reasonably identifies the
collateral if it
identifies the collateral by:
(1) specific listing;
(2) category;
(3) except as otherwise provided in subsection (e), a | | type of collateral defined in the Uniform Commercial Code;
|
|
(4) quantity;
(5) computational or allocational formula or
| |
(6) except as otherwise provided in subsection (c),
| | any other method, if the identity of the collateral is objectively determinable.
|
|
(c) Supergeneric description not sufficient. A description of collateral as
"all the debtor's assets" or "all the debtor's personal property" or using words of
similar import does not reasonably identify the collateral.
(d) Investment property. Except as otherwise provided in subsection (e),
a description of a security entitlement, securities account, or commodity account is
sufficient if it describes:
(1) the collateral by those terms or as investment
| |
(2) the underlying financial asset or commodity
| |
(e) When description by type insufficient. A description only by type of
collateral defined in the Uniform Commercial Code is an insufficient
description
of:
(1) a commercial tort claim; or
(2) in a consumer transaction, consumer goods, a
| | security entitlement, a securities account, or a commodity account.
|
|
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/Art. 9 Pt. 1 Sub. 2
(810 ILCS 5/Art. 9 Pt. 1 Sub. 2 heading)
SUBPART 2.
APPLICABILITY OF ARTICLE
|
810 ILCS 5/9-109
(810 ILCS 5/9-109) (from Ch. 26, par. 9-109)
Sec. 9-109.
Scope.
(a) General scope of Article. Except as otherwise provided in subsections
(c) and (d), this Article applies to:
(1) a transaction, regardless of its form, that | | creates a security interest in personal property or fixtures by contract;
|
|
(2) an agricultural lien;
(3) a sale of accounts, chattel paper, payment
| | intangibles, or promissory notes;
|
|
(4) a consignment;
(5) a security interest arising under Section 2-401,
| | 2-505, 2-711(3), or 2A-508(5), as provided in Section 9-110; and
|
|
(6) a security interest arising under Section 4-210
| |
(b) Security interest in secured obligation. The application of this
Article to a security interest in a secured obligation is not affected by the fact that
the obligation is itself secured by a transaction or interest to which this Article does
not apply.
(c) Extent to which Article does not apply. This Article does not apply
to the extent that:
(1) a statute, regulation, or treaty of the United
| | States preempts this Article;
|
|
(2) another statute of this State expressly governs
| | the creation, perfection, priority, or enforcement of a security interest created by this State or a governmental unit of this State;
|
|
(3) a statute of another State, a foreign country, or
| | a governmental unit of another State or a foreign country, other than a statute generally applicable to security interests, expressly governs creation, perfection, priority, or enforcement of a security interest created by the State, country, or governmental unit;
|
|
(4) the rights of a transferee beneficiary or
| | nominated person under a letter of credit are independent and superior under Section 5-114;
|
|
(5) this Article is in conflict with Section 205-410
| | of the Department of Agriculture Law of the Civil Administrative Code of Illinois or the Grain Code; or
|
|
(6) this Article is in conflict with Section 18-107
| | of the Public Utilities Act.
|
|
(d) Inapplicability of Article. This Article does not apply to:
(1) a landlord's lien;
(2) a lien, other than an agricultural lien, given by
| | statute or other rule of law for services or materials, but Section 9-333 applies with respect to priority of the lien;
|
|
(3) an assignment of a claim for wages, salary, or
| | other compensation of an employee;
|
|
(4) a sale of accounts, chattel paper, payment
| | intangibles, or promissory notes as part of a sale of the business out of which they arose;
|
|
(5) an assignment of accounts, chattel paper, payment
| | intangibles, or promissory notes which is for the purpose of collection only;
|
|
(6) an assignment of a right to payment under a
| | contract to an assignee that is also obligated to perform under the contract;
|
|
(7) an assignment of a single account, payment
| | intangible, or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness;
|
|
(8) a transfer of an interest in or an assignment of
| | a claim under a policy of insurance, other than an assignment by or to a health-care provider of a health-care-insurance receivable and any subsequent assignment of the right to payment, but Sections 9-315 and 9-322 apply with respect to proceeds and priorities in proceeds;
|
|
(9) an assignment of a right represented by a
| | judgment, other than a judgment taken on a right to payment that was collateral;
|
|
(10) a right of recoupment or set-off, but:
(A) Section 9-340 applies with respect to the
| | effectiveness of rights of recoupment or set-off against deposit accounts; and
|
|
(B) Section 9-404 applies with respect to
| | defenses or claims of an account debtor;
|
|
(11) the creation or transfer of an interest in or
| | lien on real property, including a lease or rents thereunder, except to the extent that provision is made for:
|
|
(A) liens on real property in Sections 9-203 and
| |
(B) fixtures in Section 9-334;
(C) fixture filings in Sections 9-501, 9-502,
| | 9-512, 9-516, and 9-519; and
|
|
(D) security agreements covering personal and
| | real property in Section 9-604;
|
|
(12) an assignment of a claim arising in tort, other
| | than a commercial tort claim, but Sections 9-315 and 9-322 apply with respect to proceeds and priorities in proceeds;
|
|
(13) a transfer by a government or governmental
| |
(14) a claim or a right to receive compensation for
| | injuries or sickness as described in Section 104(a)(1) or (2) of Title 26 of the United States Code, as amended from time to time; or
|
|
(15) a claim or right to receive benefits under a
| | special needs trust as described in Section 1396p(d)(4) of Title 42 of the United States Code, as amended from time to time.
|
|
(Source: P.A. 91-893, eff. 7-1-01; 92-819, eff. 8-21-02.)
|
810 ILCS 5/9-110
(810 ILCS 5/9-110) (from Ch. 26, par. 9-110)
Sec. 9-110.
Security interests arising under Article 2 or 2A.
A security
interest arising under Section 2-401, 2-505, 2-711(3), or 2A-508(5) is subject
to
this Article. However, until the debtor obtains possession of the goods:
(1) the security interest is enforceable, even if | | Section 9-203(b)(3) has not been satisfied;
|
|
(2) filing is not required to perfect the security
| |
(3) the rights of the secured party after default by
| | the debtor are governed by Article 2 or 2A; and
|
|
(4) the security interest has priority over a
| | conflicting security interest created by the debtor.
|
|
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-112
(810 ILCS 5/9-112) (from Ch. 26, par. 9-112)
Sec. 9-112.
(Blank).
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-113
(810 ILCS 5/9-113) (from Ch. 26, par. 9-113)
Sec. 9-113.
(Blank).
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-114
(810 ILCS 5/9-114) (from Ch. 26, par. 9-114)
Sec. 9-114.
(Blank).
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-115
(810 ILCS 5/9-115) (from Ch. 26, par. 9-115)
Sec. 9-115.
(Blank).
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-116
(810 ILCS 5/9-116)
Sec. 9-116.
(Blank).
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-150
(810 ILCS 5/9-150)
Sec. 9-150.
(Blank).
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/Art. 9 Pt. 2
(810 ILCS 5/Art. 9 Pt. 2 heading)
PART 2.
EFFECTIVENESS OF SECURITY AGREEMENT;
ATTACHMENT OF SECURITY INTEREST;
RIGHTS OF PARTIES TO SECURITY AGREEMENT
|
810 ILCS 5/Art. 9 Pt. 2 Sub. 1
(810 ILCS 5/Art. 9 Pt. 2 Sub. 1 heading)
SUBPART 1.
EFFECTIVENESS AND ATTACHMENT
|
810 ILCS 5/9-201 (810 ILCS 5/9-201) (from Ch. 26, par. 9-201) (Text of Section before amendment by P.A. 103-1036) Sec. 9-201. General effectiveness of security agreement. (a) General effectiveness. Except as otherwise provided in the Uniform Commercial Code, a security agreement is effective according to its terms between the parties, against purchasers of the collateral, and against creditors. (b) Applicable consumer laws and other law. A transaction subject to this Article is subject to any applicable rule of law, statute, or regulation which establishes a different rule for consumers, including: (1) the Retail Installment Sales Act; (2) the Motor Vehicle Retail Installment Sales Act; (3) Article II of Chapter 3 of the Illinois Vehicle | | (4) Article IIIB of the Boat Registration and Safety
| | (5) the Pawnbroker Regulation Act of 2023;
(6) the Motor Vehicle Leasing Act;
(7) the Consumer Installment Loan Act; and
(8) the Consumer Deposit Security Act of 1987.
(c) Other applicable law controls. In case of conflict between this Article and a rule of law, statute, or regulation described in subsection (b), the rule of law, statute, or regulation controls. Failure to comply with a rule of law, statute, or regulation described in subsection (b) has only the effect such rule of law, statute, or regulation specifies.
(d) Further deference to other applicable law. This Article does not:
(1) validate any rate, charge, agreement, or practice
| | that violates a rule of law, statute, or regulation described in subsection (b); or
|
| (2) extend the application of the rule of law,
| | statute, or regulation to a transaction not otherwise subject to it.
|
| (Source: P.A. 103-585, eff. 3-22-24.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-201. General effectiveness of security agreement.
(a) General effectiveness. Except as otherwise provided in the Uniform Commercial Code, a security agreement is effective according to its terms between the parties, against purchasers of the collateral, and against creditors.
(b) Applicable consumer laws and other law. A transaction subject to this Article is subject to any applicable rule of law, statute, or regulation which establishes a different rule for consumers, including, without limitation:
(1) the Retail Installment Sales Act;
(2) the Motor Vehicle Retail Installment Sales Act;
(3) Article II of Chapter 3 of the Illinois Vehicle
| | (4) Article IIIB of the Boat Registration and Safety
| | (5) the Pawnbroker Regulation Act of 2023;
(6) the Motor Vehicle Leasing Act;
(7) the Consumer Installment Loan Act;
(8) the Consumer Deposit Security Act of 1987;
(9) the Predatory Loan Prevention Act;
(10) the Consumer Fraud and Deceptive Business
| | (11) any other statute or regulation that regulates
| | the rates, charges, agreements, and practices for loans, credit sales, or other extensions of credit; and
|
| (12) any consumer protection statute or regulation.
(c) Other applicable law controls. In case of conflict between this Article and a rule of law, statute, or regulation described in subsection (b), the rule of law, statute, or regulation controls. Failure to comply with a rule of law, statute, or regulation described in subsection (b) has only the effect such rule of law, statute, or regulation specifies.
(d) Further deference to other applicable law. This Article does not:
(1) validate any rate, charge, agreement, or practice
| | that violates a rule of law, statute, or regulation described in subsection (b); or
|
| (2) extend the application of the rule of law,
| | statute, or regulation to a transaction not otherwise subject to it.
|
| (Source: P.A. 103-585, eff. 3-22-24; 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-202
(810 ILCS 5/9-202) (from Ch. 26, par. 9-202)
Sec. 9-202.
Title to collateral immaterial.
Except as otherwise provided
with
respect to consignments or sales of accounts, chattel paper, payment
intangibles, or
promissory notes, the provisions of this Article with regard to rights and
obligations
apply whether title to collateral is in the secured party or the debtor.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-203 (810 ILCS 5/9-203) (from Ch. 26, par. 9-203) (Text of Section before amendment by P.A. 103-1036) Sec. 9-203. Attachment and enforceability of security interest; proceeds;
supporting obligations; formal requisites. (a) Attachment. A security interest attaches to collateral when it becomes
enforceable against the debtor with respect to the collateral, unless an
agreement
expressly postpones the time of attachment. (b) Enforceability. Except as otherwise provided in subsections (c)
through (i), a security interest is enforceable against the debtor and third
parties
with respect to the collateral only if: (1) value has been given; (2) the debtor has rights in the collateral or the | | power to transfer rights in the collateral to a secured party; and
|
| (3) one of the following conditions is met:
(A) the debtor has authenticated a security
| | agreement that provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned;
|
| (B) the collateral is not a certificated security
| | and is in the possession of the secured party under Section 9-313 pursuant to the debtor's security agreement;
|
| (C) the collateral is a certificated security in
| | registered form and the security certificate has been delivered to the secured party under Section 8-301 pursuant to the debtor's security agreement; or
|
| (D) the collateral is deposit accounts,
| | electronic chattel paper, investment property, letter-of-credit rights, or electronic documents, and the secured party has control under Section 7-106, 9-104, 9-105, 9-106, or 9-107 pursuant to the debtor's security agreement.
|
| (c) Other UCC provisions. Subsection (b) is subject to Section 4-210 on
the security interest of a collecting bank, Section 5-118 on the security interest of a
letter-of-credit issuer or nominated person, Section 9-110 on a security interest
arising under Article 2 or 2A, and Section 9-206 on security interests in investment
property.
(d) When person becomes bound by another person's security
agreement. A person becomes bound as debtor by a security agreement entered
into by another person if, by operation of law other than this Article or by contract:
(1) the security agreement becomes effective to
| | create a security interest in the person's property; or
|
| (2) the person becomes generally obligated for the
| | obligations of the other person, including the obligation secured under the security agreement, and acquires or succeeds to all or substantially all of the assets of the other person.
|
| (e) Effect of new debtor becoming bound. If a new debtor becomes
bound as debtor by a security agreement entered into by another person:
(1) the agreement satisfies subsection (b)(3) with
| | respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement; and
|
| (2) another agreement is not necessary to make a
| | security interest in the property enforceable.
|
| (f) Proceeds and supporting obligations. The attachment of a security
interest in collateral gives the secured party the rights to proceeds provided
by
Section 9-315 and is also attachment of a security interest in a supporting
obligation for the collateral.
(g) Lien securing right to payment. The attachment of a security interest
in a right to payment or performance secured by a security interest or other
lien on
personal or real property is also attachment of a security interest in the
security
interest, mortgage, or other lien.
(h) Security entitlement carried in securities account. The attachment
of a security interest in a securities account is also attachment of a security
interest
in the security entitlements carried in the securities account.
(i) Commodity contracts carried in commodity account. The
attachment of a security interest in a commodity account is also attachment of
a
security interest in the commodity contracts carried in the commodity
account.
(Source: P.A. 95-895, eff. 1-1-09.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-203. Attachment and enforceability of security interest; proceeds; supporting obligations; formal requisites.
(a) Attachment. A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment.
(b) Enforceability. Except as otherwise provided in subsections (c) through (i), a security interest is enforceable against the debtor and third parties with respect to the collateral only if:
(1) value has been given;
(2) the debtor has rights in the collateral or the
| | power to transfer rights in the collateral to a secured party; and
|
| (3) one of the following conditions is met:
(A) the debtor has signed a security agreement
| | that provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned;
|
| (B) the collateral is not a certificated security
| | and is in the possession of the secured party under Section 9-313 pursuant to the debtor's security agreement;
|
| (C) the collateral is a certificated security in
| | registered form and the security certificate has been delivered to the secured party under Section 8-301 pursuant to the debtor's security agreement;
|
| (D) the collateral is controllable accounts,
| | controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, investment property, or letter-of-credit rights, and the secured party has control under Section 7-106, 9-104, 9-105A, 9-106, 9-107, or 9-107A pursuant to the debtor's security agreement; or
|
| (E) the collateral is chattel paper and the
| | secured party has possession and control under Section 9-314A pursuant to the debtor's security agreement.
|
| (c) Other UCC provisions. Subsection (b) is subject to Section 4-210 on the security interest of a collecting bank, Section 5-118 on the security interest of a letter-of-credit issuer or nominated person, Section 9-110 on a security interest arising under Article 2 or 2A, and Section 9-206 on security interests in investment property.
(d) When person becomes bound by another person's security agreement. A person becomes bound as debtor by a security agreement entered into by another person if, by operation of law other than this Article or by contract:
(1) the security agreement becomes effective to
| | create a security interest in the person's property; or
|
| (2) the person becomes generally obligated for the
| | obligations of the other person, including the obligation secured under the security agreement, and acquires or succeeds to all or substantially all of the assets of the other person.
|
| (e) Effect of new debtor becoming bound. If a new debtor becomes bound as debtor by a security agreement entered into by another person:
(1) the agreement satisfies subsection (b)(3) with
| | respect to existing or after-acquired property of the new debtor to the extent the property is described in the agreement; and
|
| (2) another agreement is not necessary to make a
| | security interest in the property enforceable.
|
| (f) Proceeds and supporting obligations. The attachment of a security interest in collateral gives the secured party the rights to proceeds provided by Section 9-315 and is also attachment of a security interest in a supporting obligation for the collateral.
(g) Lien securing right to payment. The attachment of a security interest in a right to payment or performance secured by a security interest or other lien on personal or real property is also attachment of a security interest in the security interest, mortgage, or other lien.
(h) Security entitlement carried in securities account. The attachment of a security interest in a securities account is also attachment of a security interest in the security entitlements carried in the securities account.
(i) Commodity contracts carried in commodity account. The attachment of a security interest in a commodity account is also attachment of a security interest in the commodity contracts carried in the commodity account.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-204 (810 ILCS 5/9-204) (from Ch. 26, par. 9-204) (Text of Section before amendment by P.A. 103-1036) Sec. 9-204. After-acquired property; future advances. (a) After-acquired collateral. Except as otherwise provided in subsection
(b), a security agreement may create or provide for a security interest in
after-acquired collateral. (b) When after-acquired property clause not effective. A security
interest does not attach under a term constituting an after-acquired property
clause
to: (1) consumer goods, other than an accession when | | given as additional security, unless the debtor acquires rights in them within 10 days after the secured party gives value; or
|
| (2) a commercial tort claim.
(c) Future advances and other value. A security agreement may provide
that collateral secures, or that accounts, chattel paper, payment intangibles,
or
promissory notes are sold in connection with, future advances or other value,
whether or not the advances or value are given pursuant to commitment.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-204. After-acquired property; future advances.
(a) After-acquired collateral. Except as otherwise provided in subsection (b), a security agreement may create or provide for a security interest in after-acquired collateral.
(b) When after-acquired property clause not effective. Subject to subsection (b.1), a security interest does not attach under a term constituting an after-acquired property clause to:
(1) consumer goods, other than an accession when
| | given as additional security, unless the debtor acquires rights in them within 10 days after the secured party gives value; or
|
| (2) a commercial tort claim.
(b.1) Limitation on subsection (b). Subsection (b) does not prevent a security interest from attaching:
(1) to consumer goods as proceeds under Section
| | 9-315(a) or commingled goods under Section 9-336(c);
|
| (2) to a commercial tort claim as proceeds under
| | (3) under an after-acquired property clause to
| | property that is proceeds of consumer goods or a commercial tort claim.
|
| (c) Future advances and other value. A security agreement may provide that collateral secures, or that accounts, chattel paper, payment intangibles, or promissory notes are sold in connection with, future advances or other value, whether or not the advances or value are given pursuant to commitment.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-205
(810 ILCS 5/9-205) (from Ch. 26, par. 9-205)
Sec. 9-205.
Use or disposition of collateral permissible.
(a) When security interest not invalid or fraudulent. A security interest
is not invalid or fraudulent against creditors solely because:
(1) the debtor has the right or ability to:
(A) use, commingle, or dispose of all or part of | | the collateral, including returned or repossessed goods;
|
|
(B) collect, compromise, enforce, or otherwise
| |
(C) accept the return of collateral or make
| |
(D) use, commingle, or dispose of proceeds; or
(2) the secured party fails to require the debtor to
| | account for proceeds or replace collateral.
|
|
(b) Requirements of possession not relaxed. This Section does not relax
the requirements of possession if attachment, perfection, or enforcement of a
security interest depends upon possession of the collateral by the secured
party.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-205.1
(810 ILCS 5/9-205.1) (from Ch. 26, par. 9-205.1)
Sec. 9-205.1.
Listing by debtor of purchasers or receivers of
collateral. A secured party may require that the debtor include as
part of the security agreement a list of persons to whom the debtor desires
to sell or otherwise dispose of the collateral.
The debtor shall not sell or otherwise dispose of the collateral to a person
not included in that list unless the debtor has notified the secured party
of his desire to sell or otherwise dispose of the collateral to such person
at least 7 days prior to the sale or other disposition.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-206
(810 ILCS 5/9-206) (from Ch. 26, par. 9-206)
Sec. 9-206.
Security interest arising in purchase or delivery of financial
asset.
(a) Security interest when person buys through securities
intermediary. A security interest in favor of a securities intermediary
attaches to a
person's security entitlement if:
(1) the person buys a financial asset through the | | securities intermediary in a transaction in which the person is obligated to pay the purchase price to the securities intermediary at the time of the purchase; and
|
|
(2) the securities intermediary credits the financial
| | asset to the buyer's securities account before the buyer pays the securities intermediary.
|
|
(b) Security interest secures obligation to pay for financial asset. The
security interest described in subsection (a) secures the person's obligation
to pay
for the financial asset.
(c) Security interest in payment against delivery transaction. A
security interest in favor of a person that delivers a certificated security or other
financial asset represented by a writing attaches to the security or other financial
asset if:
(1) the security or other financial asset:
(A) in the ordinary course of business is
| | transferred by delivery with any necessary indorsement or assignment; and
|
|
(B) is delivered under an agreement between
| | persons in the business of dealing with such securities or financial assets; and
|
|
(2) the agreement calls for delivery against payment.
(d) Security interest secures obligation to pay for delivery. The security
interest described in subsection (c) secures the obligation to make payment for
the
delivery.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/Art. 9 Pt. 2 Sub. 2
(810 ILCS 5/Art. 9 Pt. 2 Sub. 2 heading)
SUBPART 2.
RIGHTS AND DUTIES
|
810 ILCS 5/9-207 (810 ILCS 5/9-207) (from Ch. 26, par. 9-207) (Text of Section before amendment by P.A. 103-1036) Sec. 9-207. Rights and duties of secured party having possession or
control
of collateral. (a) Duty of care when secured party in possession. Except as otherwise
provided in subsection (d), a secured party shall use reasonable care in the
custody
and preservation of collateral in the secured party's possession. In the case
of
chattel paper or an instrument, reasonable care includes taking necessary steps
to
preserve rights against prior parties unless otherwise agreed. (b) Expenses, risks, duties, and rights when secured party in
possession. Except as otherwise provided in subsection (d), if a secured party
has
possession of collateral: (1) reasonable expenses, including the cost of | | insurance and payment of taxes or other charges, incurred in the custody, preservation, use, or operation of the collateral are chargeable to the debtor and are secured by the collateral;
|
| (2) the risk of accidental loss or damage is on the
| | debtor to the extent of a deficiency in any effective insurance coverage;
|
| (3) the secured party shall keep the collateral
| | identifiable, but fungible collateral may be commingled; and
|
| (4) the secured party may use or operate the
| | (A) for the purpose of preserving the collateral
| | (B) as permitted by an order of a court having
| | competent jurisdiction; or
|
| (C) except in the case of consumer goods, in the
| | manner and to the extent agreed by the debtor.
|
| (c) Duties and rights when secured party in possession or control.
Except as otherwise provided in subsection (d), a secured party having possession
of collateral or control of collateral under Section 7-106, 9-104, 9-105, 9-106, or 9-107:
(1) may hold as additional security any proceeds,
| | except money or funds, received from the collateral;
|
| (2) shall apply money or funds received from the
| | collateral to reduce the secured obligation, unless remitted to the debtor; and
|
| (3) may create a security interest in the collateral.
(d) Buyer of certain rights to payment. If the secured party is a buyer of
accounts, chattel paper, payment intangibles, or promissory notes or a
consignor:
(1) subsection (a) does not apply unless the secured
| | party is entitled under an agreement:
|
| (A) to charge back uncollected collateral; or
(B) otherwise to full or limited recourse against
| | the debtor or a secondary obligor based on the nonpayment or other default of an account debtor or other obligor on the collateral; and
|
| (2) subsections (b) and (c) do not apply.
(Source: P.A. 95-895, eff. 1-1-09.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-207. Rights and duties of secured party having possession or control of collateral.
(a) Duty of care when secured party in possession. Except as otherwise provided in subsection (d), a secured party shall use reasonable care in the custody and preservation of collateral in the secured party's possession. In the case of chattel paper or an instrument, reasonable care includes taking necessary steps to preserve rights against prior parties unless otherwise agreed.
(b) Expenses, risks, duties, and rights when secured party in possession. Except as otherwise provided in subsection (d), if a secured party has possession of collateral:
(1) reasonable expenses, including the cost of
| | insurance and payment of taxes or other charges, incurred in the custody, preservation, use, or operation of the collateral are chargeable to the debtor and are secured by the collateral;
|
| (2) the risk of accidental loss or damage is on the
| | debtor to the extent of a deficiency in any effective insurance coverage;
|
| (3) the secured party shall keep the collateral
| | identifiable, but fungible collateral may be commingled; and
|
| (4) the secured party may use or operate the
| | (A) for the purpose of preserving the collateral
| | (B) as permitted by an order of a court having
| | competent jurisdiction; or
|
| (C) except in the case of consumer goods, in the
| | manner and to the extent agreed by the debtor.
|
| (c) Duties and rights when secured party in possession or control. Except as otherwise provided in subsection (d), a secured party having possession of collateral or control of collateral under Section 7-106, 9-104, 9-105, 9-105A, 9-106, 9-107, or 9-107A:
(1) may hold as additional security any proceeds,
| | except money or funds, received from the collateral;
|
| (2) shall apply money or funds received from the
| | collateral to reduce the secured obligation, unless remitted to the debtor; and
|
| (3) may create a security interest in the collateral.
(d) Buyer of certain rights to payment. If the secured party is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor:
(1) subsection (a) does not apply unless the secured
| | party is entitled under an agreement:
|
| (A) to charge back uncollected collateral; or
(B) otherwise to full or limited recourse against
| | the debtor or a secondary obligor based on the nonpayment or other default of an account debtor or other obligor on the collateral; and
|
| (2) subsections (b) and (c) do not apply.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-208 (810 ILCS 5/9-208) (from Ch. 26, par. 9-208) (Text of Section before amendment by P.A. 103-1036) Sec. 9-208. Additional duties of secured party having control of
collateral. (a) Applicability of Section. This Section applies to cases in which there
is no outstanding secured obligation and the secured party is not committed to
make advances, incur obligations, or otherwise give value. (b) Duties of secured party after receiving demand from debtor.
Within 10 days after receiving an authenticated demand by the debtor: (1) a secured party having control of a deposit | | account under Section 9-104(a)(2) shall send to the bank with which the deposit account is maintained an authenticated statement that releases the bank from any further obligation to comply with instructions originated by the secured party;
|
| (2) a secured party having control of a deposit
| | account under Section 9-104(a)(3) shall:
|
| (A) pay the debtor the balance on deposit in the
| | (B) transfer the balance on deposit into a
| | deposit account in the debtor's name;
|
| (3) a secured party, other than a buyer, having
| | control of electronic chattel paper under Section 9-105 shall:
|
| (A) communicate the authoritative copy of the
| | electronic chattel paper to the debtor or its designated custodian;
|
| (B) if the debtor designates a custodian that is
| | the designated custodian with which the authoritative copy of the electronic chattel paper is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and
|
| (C) take appropriate action to enable the debtor
| | or its designated custodian to make copies of or revisions to the authoritative copy which add or change an identified assignee of the authoritative copy without the consent of the secured party;
|
| (4) a secured party having control of investment
| | property under Section 8-106(d)(2) or 9-106(b) shall send to the securities intermediary or commodity intermediary with which the security entitlement or commodity contract is maintained an authenticated record that releases the securities intermediary or commodity intermediary from any further obligation to comply with entitlement orders or directions originated by the secured party;
|
| (5) a secured party having control of a
| | letter-of-credit right under Section 9-107 shall send to each person having an unfulfilled obligation to pay or deliver proceeds of the letter of credit to the secured party an authenticated release from any further obligation to pay or deliver proceeds of the letter of credit to the secured party; and
|
| (6) a secured party having control of an electronic
| | (A) give control of the electronic document to
| | the debtor or its designated custodian;
|
| (B) if the debtor designates a custodian that is
| | the designated custodian with which the authoritative copy of the electronic document is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and
|
| (C) take appropriate action to enable the debtor
| | or its designated custodian to make copies of or revisions to the authoritative copy which add or change an identified assignee of the authoritative copy without the consent of the secured party.
|
| (Source: P.A. 95-895, eff. 1-1-09.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-208. Additional duties of secured party having control of collateral.
(a) Applicability of Section. This Section applies to cases in which there is no outstanding secured obligation and the secured party is not committed to make advances, incur obligations, or otherwise give value.
(b) Duties of secured party after receiving demand from debtor. Within 10 days after receiving a signed demand by the debtor:
(1) a secured party having control of a deposit
| | account under Section 9-104(a)(2) shall send to the bank with which the deposit account is maintained a signed record that releases the bank from any further obligation to comply with instructions originated by the secured party;
|
| (2) a secured party having control of a deposit
| | account under Section 9-104(a)(3) shall:
|
| (A) pay the debtor the balance on deposit in the
| | (B) transfer the balance on deposit into a
| | deposit account in the debtor's name;
|
| (3) a secured party, other than a buyer, having
| | control under Section 9-105 of an authoritative electronic copy of a record evidencing chattel paper shall transfer control of the electronic copy to the debtor or a person designated by the debtor;
|
| (4) a secured party having control of investment
| | property under Section 8-106(d)(2) or 9-106(b) shall send to the securities intermediary or commodity intermediary with which the security entitlement or commodity contract is maintained a signed record that releases the securities intermediary or commodity intermediary from any further obligation to comply with entitlement orders or directions originated by the secured party;
|
| (5) a secured party having control of a
| | letter-of-credit right under Section 9-107 shall send to each person having an unfulfilled obligation to pay or deliver proceeds of the letter of credit to the secured party a signed release from any further obligation to pay or deliver proceeds of the letter of credit to the secured party;
|
| (6) a secured party having control under Section
| | 7-106 of an authoritative electronic copy of an electronic document shall transfer control of the electronic copy to the debtor or a person designated by the debtor;
|
| (7) a secured party having control under Section
| | 9-105A of electronic money shall transfer control of the electronic money to the debtor or a person designated by the debtor; and
|
| (8) a secured party having control under Section
| | 12-105 of a controllable electronic record, other than a buyer of a controllable account or controllable payment intangible evidenced by the controllable electronic record, shall transfer control of the controllable electronic record to the debtor or a person designated by the debtor.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-209 (810 ILCS 5/9-209) (Text of Section before amendment by P.A. 103-1036) Sec. 9-209. Duties of secured party if account debtor has been notified of
assignment. (a) Applicability of Section. Except as otherwise provided in subsection
(c), this Section applies if: (1) there is no outstanding secured obligation; and (2) the secured party is not committed to make | | advances, incur obligations, or otherwise give value.
|
| (b) Duties of secured party after receiving demand from debtor.
Within 10 days after receiving an authenticated demand by the debtor, a secured
party shall send to an account debtor that has received notification of an
assignment
to the secured party as assignee under Section 9-406(a) an authenticated record
that
releases the account debtor from any further obligation to the secured party.
(c) Inapplicability to sales. This Section does not apply to an assignment
constituting the sale of an account, chattel paper, or payment intangible.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-209. Duties of secured party if account debtor has been notified of assignment.
(a) Applicability of Section. Except as otherwise provided in subsection (c), this Section applies if:
(1) there is no outstanding secured obligation; and
(2) the secured party is not committed to make
| | advances, incur obligations, or otherwise give value.
|
| (b) Duties of secured party after receiving demand from debtor. Within 10 days after receiving a signed demand by the debtor, a secured party shall send to an account debtor that has received notification under Section 9-406(a) or 12-106(b) of an assignment to the secured party as assignee a signed record that releases the account debtor from any further obligation to the secured party.
(c) Inapplicability to sales. This Section does not apply to an assignment constituting the sale of an account, chattel paper, or payment intangible.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-210 (810 ILCS 5/9-210) (Text of Section before amendment by P.A. 103-1036) Sec. 9-210. Request for accounting; request regarding list of collateral
or
statement of account. (a) Definitions. In this Section: (1) "Request" means a record of a type described in | | paragraph (2), (3), or (4).
|
| (2) "Request for an accounting" means a record
| | authenticated by a debtor requesting that the recipient provide an accounting of the unpaid obligations secured by collateral and reasonably identifying the transaction or relationship that is the subject of the request.
|
| (3) "Request regarding a list of collateral" means a
| | record authenticated by a debtor requesting that the recipient approve or correct a list of what the debtor believes to be the collateral securing an obligation and reasonably identifying the transaction or relationship that is the subject of the request.
|
| (4) "Request regarding a statement of account" means
| | a record authenticated by a debtor requesting that the recipient approve or correct a statement indicating what the debtor believes to be the aggregate amount of unpaid obligations secured by collateral as of a specified date and reasonably identifying the transaction or relationship that is the subject of the request.
|
| (b) Duty to respond to requests. Subject to subsections (c), (d), (e), and
(f), a secured party, other than a buyer of accounts, chattel paper, payment
intangibles, or promissory notes or a consignor, shall comply with a request within
14 days after receipt:
(1) in the case of a request for an accounting, by
| | authenticating and sending to the debtor an accounting; and
|
| (2) in the case of a request regarding a list of
| | collateral or a request regarding a statement of account, by authenticating and sending to the debtor an approval or correction.
|
| (c) Request regarding list of collateral; statement concerning type of
collateral. A secured party that claims a security interest in all of a particular type
of collateral owned by the debtor may comply with a request regarding a list of
collateral by sending to the debtor an authenticated record including a statement to
that effect within 14 days after receipt.
(d) Request regarding list of collateral; no interest claimed. A person
that receives a request regarding a list of collateral, claims no interest in the
collateral when it receives the request, and claimed an interest in the collateral at an
earlier time shall comply with the request within 14 days after receipt by sending to
the debtor an authenticated record:
(1) disclaiming any interest in the collateral; and
(2) if known to the recipient, providing the name and
| | mailing address of any assignee of or successor to the recipient's interest in the collateral.
|
| (e) Request for accounting or regarding statement of account; no
interest in obligation claimed. A person that receives a request for an
accounting
or a request regarding a statement of account, claims no interest in the
obligations
when it receives the request, and claimed an interest in the obligations at an
earlier
time shall comply with the request within 14 days after receipt by sending to
the
debtor an authenticated record:
(1) disclaiming any interest in the obligations; and
(2) if known to the recipient, providing the name and
| | mailing address of any assignee of or successor to the recipient's interest in the obligations.
|
| (f) Charges for responses. A debtor is entitled without charge to one
response to a request under this Section during any six-month period. The
secured
party may require payment of a charge not exceeding $25 for each additional
response.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-210. Request for accounting; request regarding list of collateral or statement of account.
(a) Definitions. In this Section:
(1) "Request" means a record of a type described in
| | paragraph (2), (3), or (4).
|
| (2) "Request for an accounting" means a record signed
| | by a debtor requesting that the recipient provide an accounting of the unpaid obligations secured by collateral and reasonably identifying the transaction or relationship that is the subject of the request.
|
| (3) "Request regarding a list of collateral" means a
| | record signed by a debtor requesting that the recipient approve or correct a list of what the debtor believes to be the collateral securing an obligation and reasonably identifying the transaction or relationship that is the subject of the request.
|
| (4) "Request regarding a statement of account" means
| | a record signed by a debtor requesting that the recipient approve or correct a statement indicating what the debtor believes to be the aggregate amount of unpaid obligations secured by collateral as of a specified date and reasonably identifying the transaction or relationship that is the subject of the request.
|
| (b) Duty to respond to requests. Subject to subsections (c), (d), (e), and (f), a secured party, other than a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor, shall comply with a request within 14 days after receipt:
(1) in the case of a request for an accounting, by
| | signing and sending to the debtor an accounting; and
|
| (2) in the case of a request regarding a list of
| | collateral or a request regarding a statement of account, by signing and sending to the debtor an approval or correction.
|
| (c) Request regarding list of collateral; statement concerning type of collateral. A secured party that claims a security interest in all of a particular type of collateral owned by the debtor may comply with a request regarding a list of collateral by sending to the debtor a signed record including a statement to that effect within 14 days after receipt.
(d) Request regarding list of collateral; no interest claimed. A person that receives a request regarding a list of collateral, claims no interest in the collateral when it receives the request, and claimed an interest in the collateral at an earlier time shall comply with the request within 14 days after receipt by sending to the debtor a signed record:
(1) disclaiming any interest in the collateral; and
(2) if known to the recipient, providing the name and
| | mailing address of any assignee of or successor to the recipient's interest in the collateral.
|
| (e) Request for accounting or regarding statement of account; no interest in obligation claimed. A person that receives a request for an accounting or a request regarding a statement of account, claims no interest in the obligations when it receives the request, and claimed an interest in the obligations at an earlier time shall comply with the request within 14 days after receipt by sending to the debtor a signed record:
(1) disclaiming any interest in the obligations; and
(2) if known to the recipient, providing the name and
| | mailing address of any assignee of or successor to the recipient's interest in the obligations.
|
| (f) Charges for responses. A debtor is entitled without charge to one response to a request under this Section during any six-month period. The secured party may require payment of a charge not exceeding $25 for each additional response.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/Art. 9 Pt. 3
(810 ILCS 5/Art. 9 Pt. 3 heading)
PART 3.
PERFECTION AND PRIORITY
|
810 ILCS 5/Art. 9 Pt. 3 Sub. 1
(810 ILCS 5/Art. 9 Pt. 3 Sub. 1 heading)
SUBPART 1.
LAW GOVERNING PERFECTION AND PRIORITY
|
810 ILCS 5/9-301 (810 ILCS 5/9-301) (from Ch. 26, par. 9-301) (Text of Section before amendment by P.A. 103-1036) Sec. 9-301. Law governing perfection and priority of security interests. Except as otherwise provided in Sections 9-303 through 9-306.1,
the following
rules
determine the law governing perfection, the effect of perfection or
nonperfection,
and the priority of a security interest in collateral: (1) Except as otherwise provided in this Section, | | while a debtor is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral.
|
| (2) While collateral is located in a jurisdiction,
| | the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a possessory security interest in that collateral.
|
| (3) Except as otherwise provided in paragraph (4),
| | while tangible negotiable documents, goods, instruments, money, or tangible chattel paper is located in a jurisdiction, the local law of that jurisdiction governs:
|
| (A) perfection of a security interest in the
| | goods by filing a fixture filing;
|
| (B) perfection of a security interest in timber
| | (C) the effect of perfection or nonperfection and
| | the priority of a nonpossessory security interest in the collateral.
|
| (4) The local law of the jurisdiction in which the
| | wellhead or minehead is located governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in as-extracted collateral.
|
| (Source: P.A. 95-895, eff. 1-1-09.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-301. Law governing perfection and priority of security interests. Except as otherwise provided in Sections 9-303 through 9-306B, the following rules determine the law governing perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral:
(1) Except as otherwise provided in this Section,
| | while a debtor is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral.
|
| (2) While collateral is located in a jurisdiction,
| | the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a possessory security interest in that collateral.
|
| (3) Except as otherwise provided in paragraph (4),
| | while tangible negotiable documents, goods, instruments, or tangible money is located in a jurisdiction, the local law of that jurisdiction governs:
|
| (A) perfection of a security interest in the
| | goods by filing a fixture filing;
|
| (B) perfection of a security interest in timber
| | (C) the effect of perfection or nonperfection and
| | the priority of a nonpossessory security interest in the collateral.
|
| (4) The local law of the jurisdiction in which the
| | wellhead or minehead is located governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in as-extracted collateral.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-302
(810 ILCS 5/9-302) (from Ch. 26, par. 9-302)
Sec. 9-302.
Law governing perfection and priority of agricultural liens.
While farm products are located in a jurisdiction, the local law of that
jurisdiction
governs perfection, the effect of perfection or nonperfection, and the priority
of an
agricultural lien on the farm products.
(Source: P.A. 90-665, eff. 7-30-98; 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-303
(810 ILCS 5/9-303) (from Ch. 26, par. 9-303)
Sec. 9-303.
Law governing perfection and priority of security interests in
goods covered by a certificate of title.
(a) Applicability of Section. This Section applies to goods covered by a
certificate of title, even if there is no other relationship between the
jurisdiction
under whose certificate of title the goods are covered and the goods or the
debtor.
(b) When goods covered by certificate of title. Goods become covered by
a certificate of title when a valid application for the certificate of title
and the
applicable fee are delivered to the appropriate authority. Goods cease to be
covered
by a certificate of title at the earlier of the time the certificate of title
ceases to be
effective under the law of the issuing jurisdiction or the time the goods
become
covered subsequently by a certificate of title issued by another jurisdiction.
(c) Applicable law. The local law of the jurisdiction under whose
certificate of title the goods are covered governs perfection, the effect of
perfection
or nonperfection, and the priority of a security interest in goods covered by a
certificate of title from the time the goods become covered by the certificate
of title
until the goods cease to be covered by the certificate of title.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-304 (810 ILCS 5/9-304) (from Ch. 26, par. 9-304) (Text of Section before amendment by P.A. 103-1036) Sec. 9-304. Law governing perfection and priority of security interests
in deposit accounts. (a) Law of bank's jurisdiction governs. The local law of a bank's
jurisdiction governs perfection, the effect of perfection or nonperfection, and
the
priority of a security interest in a deposit account maintained with that bank. (b) Bank's jurisdiction. The following rules determine a bank's
jurisdiction for purposes of this Part: (1) If an agreement between the bank and the debtor | | governing the deposit account expressly provides that a particular jurisdiction is the bank's jurisdiction for purposes of this Part, this Article, or the Uniform Commercial Code, that jurisdiction is the bank's jurisdiction.
|
| (2) If paragraph (1) does not apply and an agreement
| | between the bank and its customer governing the deposit account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the bank's jurisdiction.
|
| (3) If neither paragraph (1) nor paragraph (2)
| | applies and an agreement between the bank and its customer governing the deposit account expressly provides that the deposit account is maintained at an office in a particular jurisdiction, that jurisdiction is the bank's jurisdiction.
|
| (4) If none of the preceding paragraphs applies, the
| | bank's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the customer's account is located.
|
| (5) If none of the preceding paragraphs applies, the
| | bank's jurisdiction is the jurisdiction in which the chief executive office of the bank is located.
|
| (Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-304. Law governing perfection and priority of security interests in deposit accounts.
(a) Law of bank's jurisdiction governs. The local law of a bank's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a deposit account maintained with that bank even if the transaction does not bear any relation to the bank's jurisdiction.
(b) Bank's jurisdiction. The following rules determine a bank's jurisdiction for purposes of this Part:
(1) If an agreement between the bank and the debtor
| | governing the deposit account expressly provides that a particular jurisdiction is the bank's jurisdiction for purposes of this Part, this Article, or the Uniform Commercial Code, that jurisdiction is the bank's jurisdiction.
|
| (2) If paragraph (1) does not apply and an agreement
| | between the bank and its customer governing the deposit account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the bank's jurisdiction.
|
| (3) If neither paragraph (1) nor paragraph (2)
| | applies and an agreement between the bank and its customer governing the deposit account expressly provides that the deposit account is maintained at an office in a particular jurisdiction, that jurisdiction is the bank's jurisdiction.
|
| (4) If none of the preceding paragraphs applies, the
| | bank's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the customer's account is located.
|
| (5) If none of the preceding paragraphs applies, the
| | bank's jurisdiction is the jurisdiction in which the chief executive office of the bank is located.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-305 (810 ILCS 5/9-305) (from Ch. 26, par. 9-305) (Text of Section before amendment by P.A. 103-1036) Sec. 9-305. Law governing perfection and priority of security interests
in investment property. (a) Governing law: general rules. Except as otherwise provided
in subsection (c), the following rules apply: (1) While a security certificate is located in a | | jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in the certificated security represented thereby.
|
| (2) The local law of the issuer's jurisdiction as
| | specified in Section 8-110(d) governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in an uncertificated security.
|
| (3) The local law of the securities intermediary's
| | jurisdiction as specified in Section 8-110(e) governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a security entitlement or securities account.
|
| (4) The local law of the commodity intermediary's
| | jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a commodity contract or commodity account.
|
| (b) Commodity intermediary's jurisdiction. The following rules
determine a commodity intermediary's jurisdiction for purposes of this Part:
(1) If an agreement between the commodity
| | intermediary and commodity customer governing the commodity account expressly provides that a particular jurisdiction is the commodity intermediary's jurisdiction for purposes of this Part, this Article, or the Uniform Commercial Code, that jurisdiction is the commodity intermediary's jurisdiction.
|
| (2) If paragraph (1) does not apply and an agreement
| | between the commodity intermediary and commodity customer governing the commodity account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.
|
| (3) If neither paragraph (1) nor paragraph (2)
| | applies and an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that the commodity account is maintained at an office in a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.
|
| (4) If none of the preceding paragraphs applies, the
| | commodity intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the commodity customer's account is located.
|
| (5) If none of the preceding paragraphs applies, the
| | commodity intermediary's jurisdiction is the jurisdiction in which the chief executive office of the commodity intermediary is located.
|
| (c) When perfection governed by law of jurisdiction where
debtor located. The local law of the jurisdiction in which the debtor is located
governs:
(1) perfection of a security interest in investment
| | (2) automatic perfection of a security interest in
| | investment property created by a broker or securities intermediary; and
|
| (3) automatic perfection of a security interest in a
| | commodity contract or commodity account created by a commodity intermediary.
|
| (Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-305. Law governing perfection and priority of security interests in investment property.
(a) Governing law: general rules. Except as otherwise provided in subsection (c), the following rules apply:
(1) While a security certificate is located in a
| | jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in the certificated security represented thereby.
|
| (2) The local law of the issuer's jurisdiction as
| | specified in Section 8-110(d) governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in an uncertificated security.
|
| (3) The local law of the securities intermediary's
| | jurisdiction as specified in Section 8-110(e) governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a security entitlement or securities account.
|
| (4) The local law of the commodity intermediary's
| | jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a commodity contract or commodity account.
|
| (5) Paragraphs (2), (3), and (4) apply even if the
| | transaction does not bear any relation to the jurisdiction.
|
| (b) Commodity intermediary's jurisdiction. The following rules determine a commodity intermediary's jurisdiction for purposes of this Part:
(1) If an agreement between the commodity
| | intermediary and commodity customer governing the commodity account expressly provides that a particular jurisdiction is the commodity intermediary's jurisdiction for purposes of this Part, this Article, or the Uniform Commercial Code, that jurisdiction is the commodity intermediary's jurisdiction.
|
| (2) If paragraph (1) does not apply and an agreement
| | between the commodity intermediary and commodity customer governing the commodity account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.
|
| (3) If neither paragraph (1) nor paragraph (2)
| | applies and an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that the commodity account is maintained at an office in a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.
|
| (4) If none of the preceding paragraphs applies, the
| | commodity intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the commodity customer's account is located.
|
| (5) If none of the preceding paragraphs applies, the
| | commodity intermediary's jurisdiction is the jurisdiction in which the chief executive office of the commodity intermediary is located.
|
| (c) When perfection governed by law of jurisdiction where debtor located. The local law of the jurisdiction in which the debtor is located governs:
(1) perfection of a security interest in investment
| | (2) automatic perfection of a security interest in
| | investment property created by a broker or securities intermediary; and
|
| (3) automatic perfection of a security interest in a
| | commodity contract or commodity account created by a commodity intermediary.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-306
(810 ILCS 5/9-306) (from Ch. 26, par. 9-306)
Sec. 9-306.
Law governing perfection and priority of security interests
in letter-of-credit rights.
(a) Governing law: issuer's or nominated person's jurisdiction.
Subject to subsection (c), the local law of the issuer's jurisdiction or a
nominated
person's jurisdiction governs perfection, the effect of perfection or
nonperfection,
and the priority of a security interest in a letter-of-credit right if the
issuer's
jurisdiction or nominated person's jurisdiction is a State.
(b) Issuer's or nominated person's jurisdiction. For purposes of
this Part, an issuer's jurisdiction or nominated person's jurisdiction is the
jurisdiction whose law governs the liability of the issuer or nominated person
with
respect to the letter-of-credit right as provided in Section 5-116.
(c) When Section not applicable. This Section does not apply to a
security interest that is perfected only under Section 9-308(d).
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-306.01
(810 ILCS 5/9-306.01) (from Ch. 26, par. 9-306.01)
Sec. 9-306.01.
(Blank).
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-306.02
(810 ILCS 5/9-306.02) (from Ch. 26, par. 9-306.02)
Sec. 9-306.02.
(Blank).
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-306.1
(810 ILCS 5/9-306.1)
Sec. 9-306.1.
Law Governing Perfection and Priority of Collateral
Assignments
of
Beneficial Interests in Illinois Land Trusts. The local law of the State of
Illinois governs perfection, the effect of perfection or nonperfection, and the
priority of a collateral assignment of, or other security interest in, a
beneficial interest in an Illinois
land
trust. This Section implements the important interest of this State in matters
associated with the administration of Illinois land trusts created for the
principal purpose of owning an interest in Illinois land and the regulation of
restrictions on the transfer of beneficial interests in, and of the power of
appointments under, such trusts.
(Source: P.A. 92-234, eff. 1-1-02.)
|
810 ILCS 5/9-306A (810 ILCS 5/9-306A) (This Section may contain text from a Public Act with a delayed effective date) Sec. 9-306A. Law governing perfection and priority of security interests in chattel paper. (a) Chattel paper evidenced by authoritative electronic copy. Except as provided in subsection (d), if chattel paper is evidenced only by an authoritative electronic copy of the chattel paper or is evidenced by an authoritative electronic copy and an authoritative tangible copy, the local law of the chattel paper's jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in the chattel paper, even if the transaction does not bear any relation to the chattel paper's jurisdiction. (b) Chattel paper's jurisdiction. The following rules determine the chattel paper's jurisdiction under this Section: (1) If the authoritative electronic copy of the | | record evidencing chattel paper, or a record attached to or logically associated with the electronic copy and readily available for review, expressly provides that a particular jurisdiction is the chattel paper's jurisdiction for purposes of this part, this Article, or the Uniform Commercial Code, that jurisdiction is the chattel paper's jurisdiction.
|
| (2) If paragraph (1) does not apply and the rules of
| | the system in which the authoritative electronic copy is recorded are readily available for review and expressly provide that a particular jurisdiction is the chattel paper's jurisdiction for purposes of this part, this Article, or the Uniform Commercial Code, that jurisdiction is the chattel paper's jurisdiction.
|
| (3) If paragraphs (1) and (2) do not apply and the
| | authoritative electronic copy, or a record attached to or logically associated with the electronic copy and readily available for review, expressly provides that the chattel paper is governed by the law of a particular jurisdiction, that jurisdiction is the chattel paper's jurisdiction.
|
| (4) If paragraphs (1), (2), and (3) do not apply and
| | the rules of the system in which the authoritative electronic copy is recorded are readily available for review and expressly provide that the chattel paper or the system is governed by the law of a particular jurisdiction, that jurisdiction is the chattel paper's jurisdiction.
|
| (5) If paragraphs (1) through (4) do not apply, the
| | chattel paper's jurisdiction is the jurisdiction in which the debtor is located.
|
| (c) Chattel paper evidenced by authoritative tangible copy. If an authoritative tangible copy of a record evidences chattel paper and the chattel paper is not evidenced by an authoritative electronic copy, while the authoritative tangible copy of the record evidencing chattel paper is located in a jurisdiction, the local law of that jurisdiction governs:
(1) perfection of a security interest in the chattel
| | paper by possession under Section 9-314A; and
|
| (2) the effect of perfection or nonperfection and the
| | priority of a security interest in the chattel paper.
|
| (d) When perfection governed by law of jurisdiction where debtor located. The local law of the jurisdiction in which the debtor is located governs perfection of a security interest in chattel paper by filing.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-306B (810 ILCS 5/9-306B) (This Section may contain text from a Public Act with a delayed effective date) Sec. 9-306B. Law governing perfection and priority of security interests in controllable accounts, controllable electronic records, and controllable payment intangibles. (a) Governing law: general rules. Except as provided in subsection (b), the local law of the controllable electronic record's jurisdiction specified in Section 12-107(c) and (d) governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in a controllable electronic record and a security interest in a controllable account or controllable payment intangible evidenced by the controllable electronic record. (b) When perfection governed by law of jurisdiction where debtor located. The local law of the jurisdiction in which the debtor is located governs: (1) perfection of a security interest in a | | controllable account, controllable electronic record, or controllable payment intangible by filing; and
|
| (2) automatic perfection of a security interest in a
| | controllable payment intangible created by a sale of the controllable payment intangible.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-307
(810 ILCS 5/9-307) (from Ch. 26, par. 9-307)
Sec. 9-307. Location of debtor.
(a) "Place of business." In this Section, "place of business" means
a place where a debtor conducts its affairs.
(b) Debtor's location: general rules. Except as otherwise
provided in this Section, the following rules determine a debtor's location:
(1) A debtor who is an individual is located at the | | individual's principal residence.
|
|
(2) A debtor that is an organization and has only one
| | place of business is located at its place of business.
|
|
(3) A debtor that is an organization and has more
| | than one place of business is located at its chief executive office.
|
|
(c) Limitation of applicability of subsection (b). Subsection (b)
applies only if a debtor's residence, place of business, or chief executive
office, as applicable, is located in a jurisdiction whose law generally
requires information concerning the existence of a nonpossessory security
interest to be made generally available in a filing, recording, or registration
system as a condition or result of the security interest's obtaining priority
over the rights of a lien creditor with respect to the collateral. If
subsection (b) does not apply, the debtor is located in the District of
Columbia.
(d) Continuation of location: cessation of existence, etc. A person that
ceases to exist, have a residence, or have a place of business continues
to be located in the jurisdiction specified by subsections (b) and (c).
(e) Location of registered organization organized under State
law. A registered organization that is organized under the law of a State is
located in that State.
(f) Location of registered organization organized under federal law; bank
branches and agencies. Except as otherwise provided in subsection (i), a
registered organization that is organized under the law of the United States
and a branch or agency of a bank that is not organized under the law of the
United States or a State are located:
(1) in the State that the law of the United States
| | designates, if the law designates a State of location;
|
|
(2) in the State that the registered organization,
| | branch, or agency designates, if the law of the United States authorizes the registered organization, branch, or agency to designate its State of location, including by designating its main office, home office, or other comparable office; or
|
|
(3) in the District of Columbia, if neither paragraph
| | (1) nor paragraph (2) applies.
|
|
(g) Continuation of location: change in status of registered organization.
A registered organization continues to be located in the jurisdiction specified
by subsection (e) or (f) notwithstanding:
(1) the suspension, revocation, forfeiture, or lapse
| | of the registered organization's status as such in its jurisdiction of organization; or
|
|
(2) the dissolution, winding up, or cancellation of
| | the existence of the registered organization.
|
|
(h) Location of United States. The United States is located in the
District of Columbia.
(i) Location of foreign bank branch or agency if licensed in only one
State. A branch or agency of a bank that is not organized under the law
of the United States or a State is located in the State in which the branch
or agency is licensed, if all branches and agencies of the bank are licensed
in only one State.
(j) Location of foreign air carrier. A foreign air carrier under the
Federal Aviation Act of 1958, as amended, is located at the designated office
of the agent upon which service of process may be made on behalf of the
carrier.
(k) Section applies only to this Part. This Section applies only for
purposes of this Part.
(Source: P.A. 97-1034, eff. 7-1-13.)
|
810 ILCS 5/9-307.1
(810 ILCS 5/9-307.1) (from Ch. 26, par. 9-307.1)
Sec. 9-307.1.
(Blank).
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-307.2
(810 ILCS 5/9-307.2) (from Ch. 26, par. 9-307.2)
Sec. 9-307.2.
(Blank).
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/Art. 9 Pt. 3 Sub. 2
(810 ILCS 5/Art. 9 Pt. 3 Sub. 2 heading)
SUBPART 2.
PERFECTION
|
810 ILCS 5/9-308
(810 ILCS 5/9-308) (from Ch. 26, par. 9-308)
Sec. 9-308.
When security interest or agricultural lien is perfected;
continuity of perfection.
(a) Perfection of security interest. Except as otherwise provided
in this Section and Section 9-309, a security interest is perfected if it has
attached
and all of the applicable requirements for perfection in Sections 9-310 through
9-316 have been satisfied. A security interest is perfected when it attaches
if the
applicable requirements are satisfied before the security interest attaches.
(b) Perfection of agricultural lien. An agricultural lien is
perfected if it has become effective and all of the applicable requirements for
perfection in Section 9-310 have been satisfied. An agricultural lien is
perfected
when it becomes effective if the applicable requirements are satisfied before
the
agricultural lien becomes effective.
(c) Continuous perfection; perfection by different methods. A
security interest or agricultural lien is perfected continuously if it is originally
perfected by one method under this Article and is later perfected by another method
under this Article, without an intermediate period when it was unperfected.
(d) Supporting obligation. Perfection of a security interest in
collateral also perfects a security interest in a supporting obligation for the
collateral.
(e) Lien securing right to payment. Perfection of a security
interest in a right to payment or performance also perfects a security interest in a
security interest, mortgage, or other lien on personal or real property securing the
right.
(f) Security entitlement carried in securities account. Perfection
of a security interest in a securities account also perfects a security
interest in the
security entitlements carried in the securities account.
(g) Commodity contract carried in commodity account.
Perfection of a security interest in a commodity account also perfects a
security
interest in the commodity contracts carried in the commodity account.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-309
(810 ILCS 5/9-309) (from Ch. 26, par. 9-309)
Sec. 9-309.
Security interest perfected upon attachment.
The following
security interests are perfected when they attach:
(1) a purchase-money security interest in consumer | | goods, except as otherwise provided in Section 9-311(b) with respect to consumer goods that are subject to a statute or treaty described in Section 9-311(a);
|
|
(2) an assignment of accounts or payment intangibles
| | which does not by itself or in conjunction with other assignments to the same assignee transfer a significant part of the assignor's outstanding accounts or payment intangibles;
|
|
(3) a sale of a payment intangible;
(4) a sale of a promissory note;
(5) a security interest created by the assignment of
| | a health-care-insurance receivable to the provider of the health-care goods or services;
|
|
(6) a security interest arising under Section 2-401,
| | 2-505, 2-711(3), or 2A-508(5), until the debtor obtains possession of the collateral;
|
|
(7) a security interest of a collecting bank arising
| |
(8) a security interest of an issuer or nominated
| | person arising under Section 5-118;
|
|
(9) a security interest arising in the delivery of a
| | financial asset under Section 9-206(c);
|
|
(10) a security interest in investment property
| | created by a broker or securities intermediary;
|
|
(11) a security interest in a commodity contract or a
| | commodity account created by a commodity intermediary;
|
|
(12) an assignment for the benefit of all creditors
| | of the transferor and subsequent transfers by the assignee thereunder; and
|
|
(13) a security interest created by an assignment of
| | a beneficial interest in a decedent's estate.
|
|
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-310 (810 ILCS 5/9-310) (from Ch. 26, par. 9-310) (Text of Section before amendment by P.A. 103-1036) Sec. 9-310. When filing required to perfect security interest or
agricultural lien; security interests and agricultural liens to which filing
provisions do not apply. (a) General rule: perfection by filing. Except as otherwise
provided in subsection (b) and Section 9-312(b), a financing statement must be
filed to perfect all security interests and agricultural liens. (b) Exceptions: filing not necessary. The filing of a financing
statement is not necessary to perfect a security interest: (1) that is perfected under Section 9-308(d), (e), | | (2) that is perfected under Section 9-309 when it
| | (3) in property subject to a statute, regulation, or
| | treaty described in Section 9-311(a);
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| (4) in goods in possession of a bailee which is
| | perfected under Section 9-312(d)(1) or (2);
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| (5) in certificated securities, documents, goods, or
| | instruments which is perfected without filing, control, or possession under Section 9-312(e), (f), or (g);
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| (6) in collateral in the secured party's possession
| | (7) in a certificated security which is perfected by
| | delivery of the security certificate to the secured party under Section 9-313;
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| (8) in deposit accounts, electronic chattel paper,
| | electronic documents, investment property, letter-of-credit rights, or beneficial interests in Illinois land trusts which is perfected by control under Section 9-314;
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| (9) in proceeds which is perfected under Section
| | (10) that is perfected under Section 9-316.
(c) Assignment of perfected security interest. If a secured party
assigns a perfected security interest or agricultural lien, a filing under this
Article is
not required to continue the perfected status of the security interest against
creditors
of and transferees from the original debtor.
(Source: P.A. 95-895, eff. 1-1-09.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-310. When filing required to perfect security interest or agricultural lien; security interests and agricultural liens to which filing provisions do not apply.
(a) General rule: perfection by filing. Except as otherwise provided in subsection (b) and Section 9-312(b), a financing statement must be filed to perfect all security interests and agricultural liens.
(b) Exceptions: filing not necessary. The filing of a financing statement is not necessary to perfect a security interest:
(1) that is perfected under Section 9-308(d), (e),
| | (2) that is perfected under Section 9-309 when it
| | (3) in property subject to a statute, regulation, or
| | treaty described in Section 9-311(a);
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| (4) in goods in possession of a bailee which is
| | perfected under Section 9-312(d)(1) or (2);
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| (5) in certificated securities, documents, goods, or
| | instruments which is perfected without filing, control, or possession under Section 9-312(e), (f), or (g);
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| (6) in collateral in the secured party's possession
| | (7) in a certificated security which is perfected by
| | delivery of the security certificate to the secured party under Section 9-313;
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| (8) in controllable accounts, controllable electronic
| | records, controllable payment intangibles, deposit accounts, electronic documents, investment property, letter-of-credit rights, or beneficial interests in Illinois land trusts which is perfected by control under Section 9-314;
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| (8.1) in chattel paper which is perfected by
| | possession and control under Section 9-314A;
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| (9) in proceeds which is perfected under Section
| | (10) that is perfected under Section 9-316.
(c) Assignment of perfected security interest. If a secured party assigns a perfected security interest or agricultural lien, a filing under this Article is not required to continue the perfected status of the security interest against creditors of and transferees from the original debtor.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/9-311
(810 ILCS 5/9-311) (from Ch. 26, par. 9-311)
Sec. 9-311. Perfection of security interests in property subject to
certain
statutes, regulations, and treaties.
(a) Security interest subject to other law. Except as otherwise
provided in subsection (d), the filing of a financing statement is not
necessary or
effective to perfect a security interest in property subject to:
(1) a statute, regulation, or treaty of the United | | States whose requirements for a security interest's obtaining priority over the rights of a lien creditor with respect to the property preempt Section 9-310(a);
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(2) the Illinois Vehicle Code or the Boat
| | Registration and Safety Act; or
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(3) a statute of another jurisdiction which provides
| | for a security interest to be indicated on a certificate of title as a condition or result of the security interest's obtaining priority over the rights of a lien creditor with respect to the property.
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(b) Compliance with other law. Compliance with the
requirements of a statute, regulation, or treaty described in subsection (a)
for
obtaining priority over the rights of a lien creditor is equivalent to the
filing of a
financing statement under this Article. Except as otherwise provided in subsection
(d) and Sections 9-313 and 9-316(d) and (e) for goods covered by a certificate of
title, a security interest in property subject to a statute, regulation, or treaty
described in subsection (a) may be perfected only by compliance with those
requirements, and a security interest so perfected remains perfected
notwithstanding a change in the use or transfer of possession of the collateral.
(c) Duration and renewal of perfection. Except as otherwise
provided in subsection (d) and Section 9-316(d) and (e), duration and renewal
of
perfection of a security interest perfected by compliance with the requirements
prescribed by a statute, regulation, or treaty described in subsection (a) are
governed by the statute, regulation, or treaty. In other respects, the
security interest
is subject to this Article.
(d) Inapplicability to certain inventory. During any period in
which
collateral subject to a
statute specified in subsection (a)(2)
is inventory held for sale or lease by a person or leased by
that
person as lessor and that person is in the business of selling or leasing goods
of that
kind, this Section does not apply to a security interest in that collateral
created by
that person as debtor.
(Source: P.A. 97-1034, eff. 7-1-13.)
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810 ILCS 5/9-312 (810 ILCS 5/9-312) (from Ch. 26, par. 9-312) (Text of Section before amendment by P.A. 103-1036) Sec. 9-312. Perfection of security interests in chattel paper, deposit
accounts, documents, goods covered by documents, instruments, investment
property, letter-of-credit rights, and money; perfection by permissive filing;
temporary perfection without filing or transfer of possession. (a) Perfection by filing permitted. A security interest in chattel
paper, negotiable documents, instruments,
beneficial interests in Illinois land trusts,
or investment property may be
perfected
by filing. (b) Control or possession of certain collateral. Except as
otherwise provided in Section 9-315(c) and (d) for proceeds: (1) a security interest in a deposit account may be | | perfected only by control under Section 9-314;
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| (2) and except as otherwise provided in Section
| | 9-308(d), a security interest in a letter-of-credit right may be perfected only by control under Section 9-314; and
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| (3) a security interest in money may be perfected
| | only by the secured party's taking possession under Section 9-313.
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| (c) Goods covered by negotiable document. While goods are in
the possession of a bailee that has issued a negotiable document covering the
goods:
(1) a security interest in the goods may be perfected
| | by perfecting a security interest in the document; and
|
| (2) a security interest perfected in the document has
| | priority over any security interest that becomes perfected in the goods by another method during that time.
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| (d) Goods covered by nonnegotiable document. While goods are
in the possession of a bailee that has issued a nonnegotiable document covering the
goods, a security interest in the goods may be perfected by:
(1) issuance of a document in the name of the secured
| | (2) the bailee's receipt of notification of the
| | secured party's interest; or
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| (3) filing as to the goods.
(e) Temporary perfection: new value. A security interest in
certificated securities, negotiable documents, or instruments is perfected without
filing or the taking of possession or control for a period of 20 days from the time it attaches to
the extent that it arises for new value given under an authenticated security
agreement.
(f) Temporary perfection: goods or documents made available
to debtor. A perfected security interest in a negotiable document or goods in
possession of a bailee, other than one that has issued a negotiable document for the
goods, remains perfected for 20 days without filing if the secured party makes
available to the debtor the goods or documents representing the goods for the
purpose of:
(1) ultimate sale or exchange; or
(2) loading, unloading, storing, shipping,
| | transshipping, manufacturing, processing, or otherwise dealing with them in a manner preliminary to their sale or exchange.
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| (g) Temporary perfection: delivery of security certificate or
instrument to debtor. A perfected security interest in a certificated security
or
instrument remains perfected for 20 days without filing if the secured party
delivers
the security certificate or instrument to the debtor for the purpose of:
(1) ultimate sale or exchange; or
(2) presentation, collection, enforcement, renewal,
| | or registration of transfer.
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| (h) Expiration of temporary perfection. After the 20-day period
specified in subsection (e), (f), or (g) expires, perfection depends upon
compliance
with this Article.
(Source: P.A. 95-895, eff. 1-1-09.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-312. Perfection of security interests in chattel paper, controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, negotiable documents, goods covered by documents, instruments, investment property, letter-of-credit rights, and money; perfection by permissive filing; temporary perfection without filing or transfer of possession.
(a) Perfection by filing permitted. A security interest in chattel paper, controllable accounts, controllable electronic records, controllable payment intangibles, instruments, beneficial interests in Illinois land trusts, investment property, or negotiable documents may be perfected by filing.
(b) Control or possession of certain collateral. Except as otherwise provided in Section 9-315(c) and (d) for proceeds:
(1) a security interest in a deposit account may be
| | perfected only by control under Section 9-314;
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| (2) and except as otherwise provided in Section
| | 9-308(d), a security interest in a letter-of-credit right may be perfected only by control under Section 9-314;
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| (3) a security interest in tangible money may be
| | perfected only by the secured party's taking possession under Section 9-313; and
|
| (4) a security interest in electronic money may be
| | perfected only by control under Section 9-314.
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| (c) Goods covered by negotiable document. While goods are in the possession of a bailee that has issued a negotiable document covering the goods:
(1) a security interest in the goods may be perfected
| | by perfecting a security interest in the document; and
|
| (2) a security interest perfected in the document has
| | priority over any security interest that becomes perfected in the goods by another method during that time.
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| (d) Goods covered by nonnegotiable document. While goods are in the possession of a bailee that has issued a nonnegotiable document covering the goods, a security interest in the goods may be perfected by:
(1) issuance of a document in the name of the secured
| | (2) the bailee's receipt of notification of the
| | secured party's interest; or
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| (3) filing as to the goods.
(e) Temporary perfection: new value. A security interest in certificated securities, negotiable documents, or instruments is perfected without filing or the taking of possession or control for a period of 20 days from the time it attaches to the extent that it arises for new value given under a signed security agreement.
(f) Temporary perfection: goods or documents made available to debtor. A perfected security interest in a negotiable document or goods in possession of a bailee, other than one that has issued a negotiable document for the goods, remains perfected for 20 days without filing if the secured party makes available to the debtor the goods or documents representing the goods for the purpose of:
(1) ultimate sale or exchange; or
(2) loading, unloading, storing, shipping,
| | transshipping, manufacturing, processing, or otherwise dealing with them in a manner preliminary to their sale or exchange.
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| (g) Temporary perfection: delivery of security certificate or instrument to debtor. A perfected security interest in a certificated security or instrument remains perfected for 20 days without filing if the secured party delivers the security certificate or instrument to the debtor for the purpose of:
(1) ultimate sale or exchange; or
(2) presentation, collection, enforcement, renewal,
| | or registration of transfer.
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| (h) Expiration of temporary perfection. After the 20-day period specified in subsection (e), (f), or (g) expires, perfection depends upon compliance with this Article.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/9-313 (810 ILCS 5/9-313) (from Ch. 26, par. 9-313) (Text of Section before amendment by P.A. 103-1036) Sec. 9-313. When possession by or delivery to secured party perfects
security interest without filing. (a) Perfection by possession or delivery. Except as otherwise provided
in subsection (b), a secured party may perfect a security interest in
tangible negotiable documents, goods, instruments, money, or tangible chattel paper by
taking possession of the collateral. A secured party may perfect a security
interest in certificated securities by taking delivery of the certificated
securities under Section 8-301. (b) Goods covered by certificate of title. With respect to goods covered
by a certificate of title issued by this State, a secured party may perfect a
security interest in the goods by taking possession of the goods only in the
circumstances described in Section 9-316(d). (c) Collateral in possession of person other than debtor. With respect to
collateral other than certificated securities and goods covered by a document,
a secured party takes possession of collateral in the possession of a person
other than the debtor, the secured party, or a lessee of the collateral from
the debtor in the ordinary course of the debtor's business, when: (1) the person in possession authenticates a record | | acknowledging that it holds possession of the collateral for the secured party's benefit; or
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| (2) the person takes possession of the collateral
| | after having authenticated a record acknowledging that it will hold possession of collateral for the secured party's benefit.
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| (d) Time of perfection by possession; continuation of perfection. If
perfection of a security interest depends upon possession of the collateral by
a secured party, perfection occurs no earlier than the time the secured party
takes possession and continues only while the secured party retains possession.
(e) Time of perfection by delivery; continuation of perfection. A security
interest in a certificated security in registered form is perfected by
delivery when delivery of the certificated security occurs under Section 8-301
and remains perfected by delivery until the debtor obtains possession of the
security certificate.
(f) Acknowledgment not required. A person in possession of
collateral is not required to acknowledge that it holds possession for a
secured party's benefit.
(g) Effectiveness of acknowledgment; no duties or confirmation.
If a person acknowledges that it holds possession for the secured party's
benefit:
(1) the acknowledgment is effective under subsection
| | (c) or Section 8-301(a), even if the acknowledgment violates the rights of a debtor; and
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| (2) unless the person otherwise agrees or law other
| | than this Article otherwise provides, the person does not owe any duty to the secured party and is not required to confirm the acknowledgment to another person.
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| (h) Secured party's delivery to person other than debtor. A secured
party having possession of collateral does not relinquish possession by
delivering the collateral to a person other than the debtor or a lessee
of the collateral from the debtor in the ordinary course of the debtor's
business if the person was instructed before the delivery or is instructed
contemporaneously with the delivery:
(1) to hold possession of the collateral for the
| | secured party's benefit; or
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| (2) to redeliver the collateral to the secured party.
(i) Effect of delivery under subsection (h); no duties or confirmation.
A secured party does not relinquish possession, even if a delivery under
subsection (h) violates the rights of a debtor. A person to which collateral
is delivered under subsection (h) does not owe any duty to the secured party
and is not required to confirm the delivery to another person unless the
person otherwise agrees or law other than this Article otherwise provides.
(Source: P.A. 95-895, eff. 1-1-09.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-313. When possession by or delivery to secured party perfects security interest without filing.
(a) Perfection by possession or delivery. Except as otherwise provided in subsection (b), a secured party may perfect a security interest in goods, instruments, negotiable tangible documents, or tangible money by taking possession of the collateral. A secured party may perfect a security interest in certificated securities by taking delivery of the certificated securities under Section 8-301.
(b) Goods covered by certificate of title. With respect to goods covered by a certificate of title issued by this State, a secured party may perfect a security interest in the goods by taking possession of the goods only in the circumstances described in Section 9-316(d).
(c) Collateral in possession of person other than debtor. With respect to collateral other than certificated securities and goods covered by a document, a secured party takes possession of collateral in the possession of a person other than the debtor, the secured party, or a lessee of the collateral from the debtor in the ordinary course of the debtor's business, when:
(1) the person in possession signs a record
| | acknowledging that it holds possession of the collateral for the secured party's benefit; or
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| (2) the person takes possession of the collateral
| | after having signed a record acknowledging that it will hold possession of the collateral for the secured party's benefit.
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| (d) Time of perfection by possession; continuation of perfection. If perfection of a security interest depends upon possession of the collateral by a secured party, perfection occurs not earlier than the time the secured party takes possession and continues only while the secured party retains possession.
(e) Time of perfection by delivery; continuation of perfection. A security interest in a certificated security in registered form is perfected by delivery when delivery of the certificated security occurs under Section 8-301 and remains perfected by delivery until the debtor obtains possession of the security certificate.
(f) Acknowledgment not required. A person in possession of collateral is not required to acknowledge that it holds possession for a secured party's benefit.
(g) Effectiveness of acknowledgment; no duties or confirmation. If a person acknowledges that it holds possession for the secured party's benefit:
(1) the acknowledgment is effective under subsection
| | (c) or Section 8-301(a), even if the acknowledgment violates the rights of a debtor; and
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| (2) unless the person otherwise agrees or law other
| | than this Article otherwise provides, the person does not owe any duty to the secured party and is not required to confirm the acknowledgment to another person.
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| (h) Secured party's delivery to person other than debtor. A secured party having possession of collateral does not relinquish possession by delivering the collateral to a person other than the debtor or a lessee of the collateral from the debtor in the ordinary course of the debtor's business if the person was instructed before the delivery or is instructed contemporaneously with the delivery:
(1) to hold possession of the collateral for the
| | secured party's benefit; or
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| (2) to redeliver the collateral to the secured party.
(i) Effect of delivery under subsection (h); no duties or confirmation. A secured party does not relinquish possession, even if a delivery under subsection (h) violates the rights of a debtor. A person to which collateral is delivered under subsection (h) does not owe any duty to the secured party and is not required to confirm the delivery to another person unless the person otherwise agrees or law other than this Article otherwise provides.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/9-314 (810 ILCS 5/9-314) (from Ch. 26, par. 9-314) (Text of Section before amendment by P.A. 103-1036) Sec. 9-314. Perfection by control. (a) Perfection by control. A security interest in investment
property, deposit accounts,
electronic chattel paper, letter-of-credit rights,
electronic documents, or beneficial interests in Illinois land trusts may be
perfected by control of the collateral under Section 7-106, 9-104, 9-105, 9-106,
9-107, or 9-107.1. (b) Specified collateral: time of perfection by control;
continuation of perfection. A security interest in deposit accounts,
electronic
chattel paper, letter-of-credit rights,
electronic documents, or beneficial interests in Illinois land trusts
is perfected by control under Section
7-106, 9-104,
9-105, 9-107, or 9-107.1 when the secured party obtains control and
remains perfected by
control only while the secured party retains control. (c) Investment property: time of perfection by control;
continuation of perfection. A security interest in investment property is
perfected
by control under Section 9-106 from the time the secured party obtains control
and
remains perfected by control until: (1) the secured party does not have control; and (2) one of the following occurs: (A) if the collateral is a certificated security, | | the debtor has or acquires possession of the security certificate;
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| (B) if the collateral is an uncertificated
| | security, the issuer has registered or registers the debtor as the registered owner; or
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| (C) if the collateral is a security entitlement,
| | the debtor is or becomes the entitlement holder.
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| (Source: P.A. 95-895, eff. 1-1-09.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-314. Perfection by control.
(a) Perfection by control. A security interest in controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, investment property, or letter-of-credit rights or beneficial interests in Illinois land trusts may be perfected by control of the collateral under Section 7-106, 9-104, 9-105A, 9-106, 9-107, 9-107.1, or 9-107A.
(b) Specified collateral: time of perfection by control; continuation of perfection. A security interest in controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, electronic documents, electronic money, or letter-of-credit rights or beneficial interests in Illinois land trusts is perfected by control under Section 7-106, 9-104, 9-105A, 9-107, 9-107.1, or 9-107A not earlier than the time the secured party obtains control and remains perfected by control only while the secured party retains control.
(c) Investment property: time of perfection by control; continuation of perfection. A security interest in investment property is perfected by control under Section 9-106 not earlier than the time the secured party obtains control and remains perfected by control until:
(1) the secured party does not have control; and
(2) one of the following occurs:
(A) if the collateral is a certificated security,
| | the debtor has or acquires possession of the security certificate;
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| (B) if the collateral is an uncertificated
| | security, the issuer has registered or registers the debtor as the registered owner; or
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| (C) if the collateral is a security entitlement,
| | the debtor is or becomes the entitlement holder.
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| (Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/9-314A (810 ILCS 5/9-314A) (This Section may contain text from a Public Act with a delayed effective date) Sec. 9-314A. Perfection by possession and control of chattel paper. (a) Perfection by possession and control. A secured party may perfect a security interest in chattel paper by taking possession of each authoritative tangible copy of the record evidencing the chattel paper and obtaining control of each authoritative electronic copy of the electronic record evidencing the chattel paper. (b) Time of perfection; continuation of perfection. A security interest is perfected under subsection (a) not earlier than the time the secured party takes possession and obtains control and remains perfected under subsection (a) only while the secured party retains possession and control. (c) Application of Section 9-313 to perfection by possession of chattel paper. Section 9-313(c) and (f) through (i) applies to perfection by possession of an authoritative tangible copy of a record evidencing chattel paper.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/9-315
(810 ILCS 5/9-315) (from Ch. 26, par. 9-315)
Sec. 9-315.
Secured party's rights on disposition of collateral and in
proceeds.
(a) Disposition of collateral: continuation of security interest or
agricultural lien; proceeds. Except as otherwise provided in this Article and
in
Section 2-403(2):
(1) a security interest or agricultural lien | | continues in collateral notwithstanding sale, lease, license, exchange, or other disposition thereof unless the secured party authorized the disposition free of the security interest or agricultural lien; and
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(2) a security interest attaches to any identifiable
| |
(b) When commingled proceeds identifiable. Proceeds that are
commingled with other property are identifiable proceeds:
(1) if the proceeds are goods, to the extent provided
| |
(2) if the proceeds are not goods, to the extent that
| | the secured party identifies the proceeds by a method of tracing, including application of equitable principles, that is permitted under law other than this Article with respect to commingled property of the type involved.
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(c) Perfection of security interest in proceeds. A security interest
in proceeds is a perfected security interest if the security interest in the original
collateral was perfected.
(d) Continuation of perfection. A perfected security interest in
proceeds becomes unperfected on the 21st day after the security interest attaches to
the proceeds unless:
(1) the following conditions are satisfied:
(A) a filed financing statement covers the
| |
(B) the proceeds are collateral in which a
| | security interest may be perfected by filing in the office in which the financing statement has been filed; and
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(C) the proceeds are not acquired with cash
| |
(2) the proceeds are identifiable cash proceeds; or
(3) the security interest in the proceeds is
| | perfected other than under subsection (c) when the security interest attaches to the proceeds or within 20 days thereafter.
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(e) When perfected security interest in proceeds becomes
unperfected. If a filed financing statement covers the original collateral, a
security
interest in proceeds which remains perfected under subsection (d)(1) becomes
unperfected at the later of:
(1) when the effectiveness of the filed financing
| | statement lapses under Section 9-515 or is terminated under Section 9-513; or
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(2) the 21st day after the security interest attaches
| |
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-315.01
(810 ILCS 5/9-315.01)
Sec. 9-315.01.
Debtor disposing of collateral and failing to pay secured
party
amount due under security agreement; penalties for violation.
(1) It is unlawful for a debtor under the terms of a security agreement
(a)
who has
no right of sale or other disposition of the collateral or (b) who has a right
of sale or other
disposition of the collateral and is to account to the secured party for the
proceeds of any
sale or other disposition of the collateral, to sell or otherwise dispose of
the collateral and
willfully and wrongfully to fail to pay the secured party the amount of said
proceeds due
under the security agreement. Failure to pay such proceeds to the secured
party within 10
days after the sale or other disposition of the collateral is prima facie
evidence of a willful
and wanton failure to pay.
(2) An individual convicted of a violation of this Section shall be guilty
of
a Class
3 felony.
(3) A corporation convicted of a violation of this Section shall be guilty
of
a
business offense and shall be fined not less than $2,000 nor more than $10,000.
(4) In the event the debtor under the terms of a security agreement is a
corporation
or a partnership, any officer, director, manager, or managerial agent of the
debtor who
violates this Section or causes the debtor to violate this Section shall be
guilty of a Class
3 felony.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-315.02
(810 ILCS 5/9-315.02)
Sec. 9-315.02.
Disposal of collateral by debtor to persons
other than those previously disclosed to secured party - penalties for
violation - defense.
(1) Where, pursuant to Section 9-205.1, a secured party has required that
before the debtor sells or otherwise disposes of collateral in the debtor's
possession he disclose to the secured party the persons to whom he desires to
sell or otherwise dispose of such collateral, it is unlawful for the debtor to
sell or otherwise dispose of the collateral to a person other than a person so
disclosed to the secured party.
(2) An individual convicted of a violation of this Section shall be guilty
of a Class A misdemeanor.
(3) A corporation convicted of a violation of this Section shall be guilty
of a business offense and shall be fined not less than $2,000 nor more than
$10,000.
(4) In the event the debtor under the terms of a security agreement is a
corporation or a partnership, any officer, director, manager, or managerial
agent of the debtor who violates this Section or causes the debtor to violate
this Section shall be guilty of a Class A misdemeanor.
(5) It is an affirmative defense to a prosecution for the violation of this
Section that the debtor has paid to the secured party the proceeds from the
sale or other disposition of the collateral within 10 days after such sale or
disposition.
(Source: P.A. 91-893, eff. 7-1-01; 92-16, eff. 6-28-01.)
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810 ILCS 5/9-316 (810 ILCS 5/9-316) (from Ch. 26, par. 9-316) (Text of Section before amendment by P.A. 103-1036) Sec. 9-316. Effect of change
in governing law. (a) General rule: effect on perfection of change in governing
law. A security interest perfected pursuant to the law of the jurisdiction
designated
in Section 9-301(1) or 9-305(c) remains perfected until the earliest of: (1) the time perfection would have ceased under the | | law of that jurisdiction;
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| (2) the expiration of four months after a change of
| | the debtor's location to another jurisdiction; or
|
| (3) the expiration of one year after a transfer of
| | collateral to a person that thereby becomes a debtor and is located in another jurisdiction.
|
| (b) Security interest perfected or unperfected under law of new
jurisdiction. If a security interest described in subsection (a) becomes perfected
under the law of the other jurisdiction before the earliest time or event described in
that subsection, it remains perfected thereafter. If the security interest does not
become perfected under the law of the other jurisdiction before the earliest time or
event, it becomes unperfected and is deemed never to have been perfected as
against a purchaser of the collateral for value.
(c) Possessory security interest in collateral moved to new
jurisdiction. A possessory security interest in collateral, other than goods covered
by a certificate of title and as-extracted collateral consisting of goods, remains
continuously perfected if:
(1) the collateral is located in one jurisdiction and
| | subject to a security interest perfected under the law of that jurisdiction;
|
| (2) thereafter the collateral is brought into another
| | (3) upon entry into the other jurisdiction, the
| | security interest is perfected under the law of the other jurisdiction.
|
| (d) Goods covered by certificate of title from this State. Except
as otherwise provided in subsection (e), a security interest in goods covered by a
certificate of title which is perfected by any method under the law of another
jurisdiction when the goods become covered by a certificate of title from this State
remains perfected until the security interest would have become unperfected
under
the law of the other jurisdiction had the goods not become so covered.
(e) When subsection (d) security interest becomes unperfected
against purchasers. A security interest described in subsection (d) becomes
unperfected as against a purchaser of the goods for value and is deemed never
to
have been perfected as against a purchaser of the goods for value if the
applicable
requirements for perfection under Section 9-311(b) or 9-313 are not satisfied
before
the earlier of:
(1) the time the security interest would have become
| | unperfected under the law of the other jurisdiction had the goods not become covered by a certificate of title from this State; or
|
| (2) the expiration of four months after the goods had
| | (f) Change in jurisdiction of bank, issuer, nominated person,
securities intermediary, or commodity intermediary. A security interest in
deposit accounts, letter-of-credit rights, or investment property which is perfected
under the law of the bank's jurisdiction, the issuer's jurisdiction, a nominated
person's jurisdiction, the securities intermediary's jurisdiction, or the commodity
intermediary's jurisdiction, as applicable, remains perfected until the earlier of:
(1) the time the security interest would have become
| | unperfected under the law of that jurisdiction; or
|
| (2) the expiration of four months after a change of
| | the applicable jurisdiction to another jurisdiction.
|
| (g) Subsection (f) security interest perfected or unperfected
under law of new jurisdiction. If a security interest described in subsection
(f)
becomes perfected under the law of the other jurisdiction before the earlier of
the
time or the end of the period described in that subsection, it remains
perfected
thereafter. If the security interest does not become perfected under the law
of the
other jurisdiction before the earlier of that time or the end of that period,
it becomes
unperfected and is deemed never to have been perfected as against a purchaser
of
the collateral for value.
(h) Effect on filed financing statement of change in governing law. The following rules apply to collateral to which a security interest attaches within four months after the debtor changes its location to another jurisdiction:
(1) A financing statement filed before the change
| | pursuant to the law of the jurisdiction designated in Section 9-301(1) or 9-305(c) is effective to perfect a security interest in the collateral if the financing statement would have been effective to perfect a security interest in the collateral had the debtor not changed its location.
|
| (2) If a security interest perfected by a financing
| | statement that is effective under paragraph (1) becomes perfected under the law of the other jurisdiction before the earlier of the time the financing statement would have become ineffective under the law of the jurisdiction designated in Section 9-301(1) or 9-305(c) or the expiration of the four-month period, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier time or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.
|
| (i) Effect of change in governing law on financing statement filed against original debtor. If a financing statement naming an original debtor is filed pursuant to the law of the jurisdiction designated in Section 9-301(1) or 9-305(c) and the new debtor is located in another jurisdiction, the following rules apply:
(1) The financing statement is effective to perfect
| | a security interest in collateral acquired by the new debtor before, and within four months after, the new debtor becomes bound under Section 9-203(d), if the financing statement would have been effective to perfect a security interest in the collateral had the collateral been acquired by the original debtor.
|
| (2) A security interest perfected by the financing
| | statement and which becomes perfected under the law of the other jurisdiction before the earlier of the time the financing statement would have become ineffective under the law of the jurisdiction designated in Section 9-301(1) or 9-305(c) or the expiration of the four-month period remains perfected thereafter. A security interest that is perfected by the financing statement but which does not become perfected under the law of the other jurisdiction before the earlier time or event becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.
|
| (Source: P.A. 97-1034, eff. 7-1-13.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-316. Effect of change in governing law.
(a) General rule: effect on perfection of change in governing law. A security interest perfected pursuant to the law of the jurisdiction designated in Section 9-301(1), 9-305(c), 9-306A(d), or 9-306B(b) remains perfected until the earliest of:
(1) the time perfection would have ceased under the
| | law of that jurisdiction;
|
| (2) the expiration of four months after a change of
| | the debtor's location to another jurisdiction; or
|
| (3) the expiration of one year after a transfer of
| | collateral to a person that thereby becomes a debtor and is located in another jurisdiction.
|
| (b) Security interest perfected or unperfected under law of new jurisdiction. If a security interest described in subsection (a) becomes perfected under the law of the other jurisdiction before the earliest time or event described in that subsection, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earliest time or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.
(c) Possessory security interest in collateral moved to new jurisdiction. A possessory security interest in collateral, other than goods covered by a certificate of title and as-extracted collateral consisting of goods, remains continuously perfected if:
(1) the collateral is located in one jurisdiction and
| | subject to a security interest perfected under the law of that jurisdiction;
|
| (2) thereafter the collateral is brought into another
| | (3) upon entry into the other jurisdiction, the
| | security interest is perfected under the law of the other jurisdiction.
|
| (d) Goods covered by certificate of title from this State. Except as otherwise provided in subsection (e), a security interest in goods covered by a certificate of title which is perfected by any method under the law of another jurisdiction when the goods become covered by a certificate of title from this State remains perfected until the security interest would have become unperfected under the law of the other jurisdiction had the goods not become so covered.
(e) When subsection (d) security interest becomes unperfected against purchasers. A security interest described in subsection (d) becomes unperfected as against a purchaser of the goods for value and is deemed never to have been perfected as against a purchaser of the goods for value if the applicable requirements for perfection under Section 9-311(b) or 9-313 are not satisfied before the earlier of:
(1) the time the security interest would have become
| | unperfected under the law of the other jurisdiction had the goods not become covered by a certificate of title from this State; or
|
| (2) the expiration of four months after the goods had
| | (f) Change in jurisdiction of chattel paper, controllable electronic record, bank, issuer, nominated person, securities intermediary, or commodity intermediary. A security interest in chattel paper, controllable accounts, controllable electronic records, controllable payment intangibles, deposit accounts, letter-of-credit rights, or investment property which is perfected under the law of the chattel paper's jurisdiction, the controllable electronic record's jurisdiction, the bank's jurisdiction, the issuer's jurisdiction, a nominated person's jurisdiction, the securities intermediary's jurisdiction, or the commodity intermediary's jurisdiction, as applicable, remains perfected until the earlier of:
(1) the time the security interest would have become
| | unperfected under the law of that jurisdiction; or
|
| (2) the expiration of four months after a change of
| | the applicable jurisdiction to another jurisdiction.
|
| (g) Subsection (f) security interest perfected or unperfected under law of new jurisdiction. If a security interest described in subsection (f) becomes perfected under the law of the other jurisdiction before the earlier of the time or the end of the period described in that subsection, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier of that time or the end of that period, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.
(h) Effect on filed financing statement of change in governing law. The following rules apply to collateral to which a security interest attaches within four months after the debtor changes its location to another jurisdiction:
(1) A financing statement filed before the change
| | pursuant to the law of the jurisdiction designated in Section 9-301(1) or 9-305(c) is effective to perfect a security interest in the collateral if the financing statement would have been effective to perfect a security interest in the collateral had the debtor not changed its location.
|
| (2) If a security interest perfected by a financing
| | statement that is effective under paragraph (1) becomes perfected under the law of the other jurisdiction before the earlier of the time the financing statement would have become ineffective under the law of the jurisdiction designated in Section 9-301(1) or 9-305(c) or the expiration of the four-month period, it remains perfected thereafter. If the security interest does not become perfected under the law of the other jurisdiction before the earlier time or event, it becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.
|
| (i) Effect of change in governing law on financing statement filed against original debtor. If a financing statement naming an original debtor is filed pursuant to the law of the jurisdiction designated in Section 9-301(1) or 9-305(c) and the new debtor is located in another jurisdiction, the following rules apply:
(1) The financing statement is effective to perfect a
| | security interest in collateral acquired by the new debtor before, and within four months after, the new debtor becomes bound under Section 9-203(d), if the financing statement would have been effective to perfect a security interest in the collateral had the collateral been acquired by the original debtor.
|
| (2) A security interest perfected by the financing
| | statement and which becomes perfected under the law of the other jurisdiction before the earlier of the time the financing statement would have become ineffective under the law of the jurisdiction designated in Section 9-301(1) or 9-305(c) or the expiration of the four-month period remains perfected thereafter. A security interest that is perfected by the financing statement but which does not become perfected under the law of the other jurisdiction before the earlier time or event becomes unperfected and is deemed never to have been perfected as against a purchaser of the collateral for value.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/Art. 9 Pt. 3 Sub. 3
(810 ILCS 5/Art. 9 Pt. 3 Sub. 3 heading)
SUBPART 3.
PRIORITY
|
810 ILCS 5/9-317 (810 ILCS 5/9-317) (from Ch. 26, par. 9-317) (Text of Section before amendment by P.A. 103-1036) Sec. 9-317. Interests that take priority over or take free of
security interest or agricultural lien. (a) Conflicting security interests and rights of lien creditors. A
security interest or agricultural lien is subordinate to the rights
of: (1) a person entitled to priority under Section | | (2) except as otherwise provided in subsection (e) or
| | (f), a person that becomes a lien creditor before the earlier of the time:
|
| (A) the security interest or agricultural lien is
| | (B) one of the conditions specified in Section
| | 9-203(b)(3) is met and a financing statement covering the collateral is filed.
|
| (b) Buyers that receive delivery. Except as otherwise provided in
subsection (e), a buyer, other than a secured party, of tangible chattel paper,
tangible documents, goods, instruments, or a certificated security takes free of a
security
interest or agricultural lien if the buyer gives value and receives delivery of
the
collateral without knowledge of the security interest or agricultural lien and
before
it is perfected.
(c) Lessees that receive delivery. Except as otherwise provided in
subsection (e), a lessee of goods takes free of a security interest or agricultural lien
if the lessee gives value and receives delivery of the collateral without knowledge
of the security interest or agricultural lien and before it is perfected.
(d) Licensees and buyers of certain collateral. A licensee of a
general intangible or a buyer, other than a secured party, of collateral other than tangible chattel paper, tangible documents, goods, instruments, or a certificated
security takes free of a security interest if the licensee or buyer gives value
without
knowledge of the security interest and before it is perfected.
(e) Purchase-money security interest. Except as otherwise
provided in Sections 9-320 and 9-321, if a person files a financing statement
with
respect to a purchase-money security interest before or within 20 days after
the
debtor receives delivery of the collateral, the security interest takes
priority over the
rights of a buyer, lessee, or lien creditor which arise between the time the
security
interest
attaches and the time of filing.
(f) Public deposits. An unperfected security interest shall take priority
over the rights of
a lien creditor if (i) the lien creditor is a trustee or receiver of a bank
or acting in furtherance of its
supervisory authority over such bank and (ii) a security interest is granted by
the bank to secure a deposit of
public funds with the bank or a repurchase agreement
with the bank pursuant to the Government Securities
Act of 1986, as amended.
(Source: P.A. 97-1034, eff. 7-1-13.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-317. Interests that take priority over or take free of security interest or agricultural lien.
(a) Conflicting security interests and rights of lien creditors. A security interest or agricultural lien is subordinate to the rights of:
(1) a person entitled to priority under Section
| | (2) except as otherwise provided in subsection (e) or
| | (f), a person that becomes a lien creditor before the earlier of the time:
|
| (A) the security interest or agricultural lien is
| | (B) one of the conditions specified in Section
| | 9-203(b)(3) is met and a financing statement covering the collateral is filed.
|
| (b) Buyers that receive delivery. Except as otherwise provided in subsection (e), a buyer, other than a secured party, of goods, instruments, tangible documents, or a certificated security takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.
(c) Lessees that receive delivery. Except as otherwise provided in subsection (e), a lessee of goods takes free of a security interest or agricultural lien if the lessee gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.
(d) Licensees and buyers of certain collateral. Subject to subsections (g) through (j), a licensee of a general intangible or a buyer, other than a secured party, of collateral other than electronic money, goods, instruments, tangible documents, or a certificated security takes free of a security interest if the licensee or buyer gives value without knowledge of the security interest and before it is perfected.
(e) Purchase-money security interest. Except as otherwise provided in Sections 9-320 and 9-321, if a person files a financing statement with respect to a purchase-money security interest before or within 20 days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee, or lien creditor which arise between the time the security interest attaches and the time of filing.
(f) Public deposits. An unperfected security interest shall take priority over the rights of a lien creditor if (i) the lien creditor is a trustee or receiver of a bank or acting in furtherance of its supervisory authority over such bank and (ii) a security interest is granted by the bank to secure a deposit of public funds with the bank or a repurchase agreement with the bank pursuant to the Government Securities Act of 1986, as amended.
(g) Buyers of chattel paper. A buyer, other than a secured party, of chattel paper takes free of a security interest if, without knowledge of the security interest and before it is perfected, the buyer gives value and:
(1) receives delivery of each authoritative tangible
| | copy of the record evidencing the chattel paper; and
|
| (2) if each authoritative electronic copy of the
| | record evidencing the chattel paper can be subjected to control under Section 9-105, obtains control of each authoritative electronic copy.
|
| (h) Buyers of electronic documents. A buyer of an electronic document takes free of a security interest if, without knowledge of the security interest and before it is perfected, the buyer gives value and, if each authoritative electronic copy of the document can be subjected to control under Section 7-106, obtains control of each authoritative electronic copy.
(i) Buyers of controllable electronic records. A buyer of a controllable electronic record takes free of a security interest if, without knowledge of the security interest and before it is perfected, the buyer gives value and obtains control of the controllable electronic record.
(j) Buyers of controllable accounts and controllable payment intangibles. A buyer, other than a secured party, of a controllable account or a controllable payment intangible takes free of a security interest if, without knowledge of the security interest and before it is perfected, the buyer gives value and obtains control of the controllable account or controllable payment intangible.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-318
(810 ILCS 5/9-318) (from Ch. 26, par. 9-318)
Sec. 9-318.
No interest retained in right to payment that is sold; rights
and title of seller of account or chattel paper with respect to creditors and
purchasers.
(a) Seller retains no interest. A debtor that has sold an account,
chattel paper, payment intangible, or promissory note does not retain a legal
or
equitable interest in the collateral sold.
(b) Deemed rights of debtor if buyer's security interest
unperfected. For purposes of determining the rights of creditors of, and
purchasers for value of an account or chattel paper from, a debtor that has
sold an
account or chattel paper, while the buyer's security interest is unperfected,
the
debtor is deemed to have rights and title to the account or chattel paper
identical to
those the debtor sold.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-319
(810 ILCS 5/9-319)
Sec. 9-319.
Rights and title of consignee with respect to creditors and
purchasers.
(a) Consignee has consignor's rights. Except as otherwise
provided in subsection (b), for purposes of determining the rights of creditors
of,
and purchasers for value of goods from, a consignee, while the goods are in the
possession of the consignee, the consignee is deemed to have rights and title
to the
goods identical to those the consignor had or had power to transfer.
(b) Applicability of other law. For purposes of determining the
rights of a creditor of a consignee, law other than this Article determines the
rights
and title of a consignee while goods are in the consignee's possession if,
under this
Part, a perfected security interest held by the consignor would have priority
over
the rights of the creditor.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-320
(810 ILCS 5/9-320)
Sec. 9-320.
Buyer of goods and farm products.
(a) Buyer in ordinary course of business. Except as otherwise
provided in subsections (e) and (f), a buyer in the ordinary course of business
takes free of a
security interest created by the buyer's seller, even if the security
interest
is perfected and the buyer knows of its existence.
(b) Buyer of consumer goods. Except as otherwise provided in
subsection (e), a buyer of goods from a person who used or bought the goods for
use primarily for personal, family, or household purposes takes free of a
security
interest, even if perfected, if the buyer buys:
(1) without knowledge of the security interest;
(2) for value;
(3) primarily for the buyer's personal, family, or | |
(4) before the filing of a financing statement
| |
(c) Effectiveness of filing for subsection (b). To the extent that it
affects the priority of a security interest over a buyer of goods under subsection (b),
the period of effectiveness of a filing made in the jurisdiction in which the
seller is
located is governed by Section 9-316(a) and (b).
(d) Buyer in ordinary course of business at wellhead or
minehead. A buyer in ordinary course of business buying oil, gas, or other
minerals at the wellhead or minehead or after extraction takes free of an
interest
arising out of an encumbrance.
(e) Possessory security interest not affected. Subsections (a) and
(b) do not affect a security interest in goods in the possession of the secured
party
under Section 9-313.
(f) Buyer of farm products.
(1) A buyer of farm products takes subject to a
| | security interest created by the seller if:
|
|
(A) within one year before the sale of the farm
| | products, the buyer has received from the secured party or the seller written notice of the security interest organized according to farm products that:
|
|
(i) is an original or reproduced copy thereof;
(ii) contains: (a) the name and address of
| | the secured party; (b) the name and address of the person indebted to the secured party; (c) the social security number of the debtor or, in the case of a debtor doing business other than as an individual, the Internal Revenue Service taxpayer identification number of such debtor; (d) a description of the farm products subject to the security interest created by the debtor, including the amount of such products where applicable, crop year, county, and a reasonable description of the property;
|
|
(iii) must be amended in writing, within 3
| | months, similarly signed and transmitted, to reflect material changes;
|
|
(iv) will lapse on either the expiration
| | period of the statement or the transmission of a notice signed by the secured party that the statement has lapsed, whichever occurs first; and
|
|
(v) sets forth any payment obligations
| | imposed on the buyer by the secured party as conditions for waiver or release of the security interest; and
|
|
(B) the buyer has failed to perform the payment
| |
(2) For the purposes of this subsection (f), a buyer
| | of farm products has received notice from the secured party or seller when written notice of the security interest is sent to the buyer by registered or certified mail.
|
|
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-320.1
(810 ILCS 5/9-320.1)
Sec. 9-320.1.
Liability of commission merchant or selling agent engaged in
sale of livestock or other farm products to holder of security interest.
(a) A commission merchant or selling agent
who sells a farm product for others shall be subject to a security interest
created by the seller in
such farm product if:
(1) within one year before the sale of the farm | | products, the buyer has received from the secured party or the seller written notice of the security interest organized according to farm products that:
|
|
(A) is an original or reproduced copy thereof;
(B) contains: (i) the name and address of the
| | secured party; (ii) the name and address of the person indebted to the secured party; (iii) the social security number of the debtor or, in case of a debtor doing business other than as an individual, the Internal Revenue Service taxpayer identification number of such debtor; (iv) a description of the farm products subject to the security interest created by the debtor, including the amount of such products where applicable, crop year, county, and a reasonable description of the property;
|
|
(C) must be amended in writing, within 3 months,
| | similarly signed and transmitted, to reflect material changes;
|
|
(D) will lapse on either the expiration period of
| | the statement or the transmission of a notice signed by the secured party that the statement has lapsed, whichever occurs first; and
|
|
(E) sets forth any payment obligations imposed on
| | the buyer by the secured party as conditions for waiver or release of the security interest; and
|
|
(2) the commission merchant or selling agent has
| | failed to perform the payment obligations.
|
|
(b) For the purposes of this Section, a commission merchant or selling
agent has received notice from the secured party or seller when written
notice of the security
interest is sent to the commission merchant or selling agent by registered or
certified mail.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-320.2
(810 ILCS 5/9-320.2)
Sec. 9-320.2.
Notice to seller of farm products.
A commission merchant or selling agent who sells farm products for others,
and
any person
buying farm products in the ordinary course of business from a person engaged
in farming
operations, shall post at each licensed location where the merchant, agent, or
person buying farm
products in the ordinary course of business does business a notice that shall
read as follows:
"NOTICE TO SELLERS OF FARM PRODUCTS
It is a criminal offense to sell farm products subject to a security interest
without
making payment to the secured party. You should notify the purchaser if there
is a
security interest in the farm products you are selling.".
The notice shall be posted in a conspicuous manner and shall be in
contrasting type, large enough
to be read from a distance of 10 feet.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-321
(810 ILCS 5/9-321)
Sec. 9-321.
Licensee of general intangible and lessee of goods in ordinary
course of business.
(a) "Licensee in ordinary course of business." In this Section,
"licensee in ordinary course of business" means a person that becomes a
licensee of
a general intangible in good faith, without knowledge that the license violates
the
rights of another person in the general intangible, and in the ordinary course
from a
person in the business of licensing general intangibles of that kind. A person
becomes a licensee in the ordinary course if the license to the person comports with
the usual or customary practices in the kind of business in which the licensor is
engaged or with the licensor's own usual or customary practices.
(b) Rights of licensee in ordinary course of business. A licensee
in ordinary course of business takes its rights under a nonexclusive license free of a
security interest in the general intangible created by the licensor, even if
the
security interest is perfected and the licensee knows of its existence.
(c) Rights of lessee in ordinary course of business. A lessee in
ordinary course of business takes its leasehold interest free of a security
interest in
the goods created by the lessor, even if the security interest is perfected and
the
lessee knows of its existence.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-322
(810 ILCS 5/9-322)
Sec. 9-322.
Priorities among conflicting security interests in and
agricultural liens on same collateral.
(a) General priority rules. Except as otherwise provided in this
Section, priority among conflicting security interests and agricultural liens
in the
same collateral is determined according to the following rules:
(1) Conflicting perfected security interests and | | agricultural liens rank according to priority in time of filing or perfection. Priority dates from the earlier of the time a filing covering the collateral is first made or the security interest or agricultural lien is first perfected, if there is no period thereafter when there is neither filing nor perfection.
|
|
(2) A perfected security interest or agricultural
| | lien has priority over a conflicting unperfected security interest or agricultural lien.
|
|
(3) The first security interest or agricultural lien
| | to attach or become effective has priority if conflicting security interests and agricultural liens are unperfected.
|
|
(b) Time of perfection: proceeds and supporting obligations.
For the purposes of subsection (a)(1):
(1) the time of filing or perfection as to a security
| | interest in collateral is also the time of filing or perfection as to a security interest in proceeds; and
|
|
(2) the time of filing or perfection as to a security
| | interest in collateral supported by a supporting obligation is also the time of filing or perfection as to a security interest in the supporting obligation.
|
|
(c) Special priority rules: proceeds and supporting obligations.
Except as otherwise provided in subsection (f), a security interest in
collateral
which qualifies for priority over a conflicting security interest under Section
9-327,
9-328, 9-329, 9-329.1, 9-330, or 9-331 also has priority over a conflicting
security interest
in:
(1) any supporting obligation for the collateral; and
(2) proceeds of the collateral if:
(A) the security interest in proceeds is
| |
(B) the proceeds are cash proceeds or of the same
| | type as the collateral; and
|
|
(C) in the case of proceeds that are proceeds of
| | proceeds, all intervening proceeds are cash proceeds, proceeds of the same type as the collateral, or an account relating to the collateral.
|
|
(d) First-to-file priority rule for certain collateral. Subject to
subsection (e) and except as otherwise provided in subsection (f), if a
security
interest in chattel paper, deposit accounts, negotiable documents, instruments,
investment property, letter-of-credit rights,
or beneficial interests in Illinois land trusts
is perfected by a method other than
filing, conflicting perfected security interests in proceeds of the collateral
rank
according to priority in time of filing.
(e) Applicability of subsection (d). Subsection (d) applies only if
the proceeds of the collateral are not cash proceeds, chattel paper, negotiable
documents, instruments, investment property,
beneficial interests in Illinois land trusts,
or letter-of-credit rights.
(f) Limitations on subsections (a) through (e). Subsections (a)
through (e) are subject to:
(1) subsection (g) and the other provisions of this
| |
(2) Section 4-210 with respect to a security interest
| |
(3) Section 5-118 with respect to a security interest
| | of an issuer or nominated person; and
|
|
(4) Section 9-110 with respect to a security interest
| | arising under Article 2 or 2A.
|
|
(g) Priority under agricultural lien statute. A perfected
agricultural lien on collateral has priority over a conflicting security
interest in or
agricultural lien on the same collateral if the statute creating the
agricultural lien so
provides.
(Source: P.A. 91-893, eff. 7-1-01; 92-234, eff. 1-1-02.)
|
810 ILCS 5/9-323 (810 ILCS 5/9-323) (Text of Section before amendment by P.A. 103-1036) Sec. 9-323. Future advances. (a) When priority based on time of advance. Except as otherwise
provided in subsection (c), for purposes of determining the priority of a
perfected
security interest under Section 9-322(a)(1), perfection of the security interest dates
from the time an advance is made to the extent that the security interest secures an
advance that: (1) is made while the security interest is perfected | | (A) under Section 9-309 when it attaches; or
(B) temporarily under Section 9-312(e), (f), or
| | (2) is not made pursuant to a commitment entered into
| | before or while the security interest is perfected by a method other than under Section 9-309 or 9-312(e), (f), or (g).
|
| (b) Lien creditor. Except as otherwise provided in subsection (c),
a security interest is subordinate to the
rights of a person that becomes a lien creditor to the extent that the
security interest secures an advance made more than 45 days after the
person
becomes a lien creditor unless
the advance is made:
(1) without knowledge of the lien; or
(2) pursuant to a commitment entered into without
| | (c) Buyer of receivables. Subsections (a) and (b) do not apply to a
security interest held by a secured party that is a buyer of accounts, chattel paper,
payment intangibles, or promissory notes or a consignor.
(d) Buyer of goods. Except as otherwise provided in subsection
(e), a buyer of goods other than a buyer in ordinary course of business takes free of
a security interest to the extent that it secures advances made after the earlier of:
(1) the time the secured party acquires knowledge of
| | (2) 45 days after the purchase.
(e) Advances made pursuant to commitment: priority of buyer
of goods. Subsection (d) does not apply if the advance is made pursuant to a
commitment entered into without knowledge of the buyer's purchase and before the
expiration of the 45-day period.
(f) Lessee of goods. Except as otherwise provided in subsection
(g), a lessee of goods, other than a lessee in ordinary course of business,
takes the
leasehold interest free of a security interest to the extent that it secures
advances
made after the earlier of:
(1) the time the secured party acquires knowledge of
| | (2) 45 days after the lease contract becomes
| | (g) Advances made pursuant to commitment: priority of lessee
of goods. Subsection (f) does not apply if the advance is made pursuant to a
commitment entered into without knowledge of the lease and before the
expiration
of the 45-day period.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-323. Future advances.
(a) When priority based on time of advance. Except as otherwise provided in subsection (c), for purposes of determining the priority of a perfected security interest under Section 9-322(a)(1), perfection of the security interest dates from the time an advance is made to the extent that the security interest secures an advance that:
(1) is made while the security interest is perfected
| | (A) under Section 9-309 when it attaches; or
(B) temporarily under Section 9-312(e), (f), or
| | (2) is not made pursuant to a commitment entered into
| | before or while the security interest is perfected by a method other than under Section 9-309 or 9-312(e), (f), or (g).
|
| (b) Lien creditor. Except as otherwise provided in subsection (c), a security interest is subordinate to the rights of a person that becomes a lien creditor to the extent that the security interest secures an advance made more than 45 days after the person becomes a lien creditor unless the advance is made:
(1) without knowledge of the lien; or
(2) pursuant to a commitment entered into without
| | (c) Buyer of receivables. Subsections (a) and (b) do not apply to a security interest held by a secured party that is a buyer of accounts, chattel paper, payment intangibles, or promissory notes or a consignor.
(d) Buyer of goods. Except as otherwise provided in subsection (e), a buyer of goods takes free of a security interest to the extent that it secures advances made after the earlier of:
(1) the time the secured party acquires knowledge of
| | (2) 45 days after the purchase.
(e) Advances made pursuant to commitment: priority of buyer of goods. Subsection (d) does not apply if the advance is made pursuant to a commitment entered into without knowledge of the buyer's purchase and before the expiration of the 45-day period.
(f) Lessee of goods. Except as otherwise provided in subsection (g), a lessee of goods takes the leasehold interest free of a security interest to the extent that it secures advances made after the earlier of:
(1) the time the secured party acquires knowledge of
| | (2) 45 days after the lease contract becomes
| | (g) Advances made pursuant to commitment: priority of lessee of goods. Subsection (f) does not apply if the advance is made pursuant to a commitment entered into without knowledge of the lease and before the expiration of the 45-day period.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-324 (810 ILCS 5/9-324) (Text of Section before amendment by P.A. 103-1036) Sec. 9-324. Priority of purchase-money security interests. (a) General rule: purchase-money priority. Except as otherwise
provided in subsection (g), a perfected purchase-money security interest in
goods
other than inventory or livestock has priority over a conflicting security
interest in
the same goods, and, except as otherwise provided in Section 9-327, a perfected
security interest in its identifiable proceeds also has priority, if the
purchase-money
security interest is perfected when the debtor receives possession of the
collateral or
within 20 days thereafter. (b) Inventory purchase-money priority. Subject to subsection (c)
and except as otherwise provided in subsection (g), a perfected purchase-money
security interest in inventory has priority over a conflicting security
interest in the
same inventory, has priority over a conflicting security interest in chattel paper or
an instrument constituting proceeds of the inventory and in proceeds of the chattel
paper, if so provided in Section 9-330, and, except as otherwise provided in Section
9-327, also has priority in identifiable cash proceeds of the inventory to the extent
the identifiable cash proceeds are received on or before the delivery of the
inventory to a buyer, if: (1) the purchase-money security interest is perfected | | when the debtor receives possession of the inventory;
|
| (2) the purchase-money secured party sends an
| | authenticated notification to the holder of the conflicting security interest;
|
| (3) the holder of the conflicting security interest
| | receives the notification within five years before the debtor receives possession of the inventory; and
|
| (4) the notification states that the person sending
| | the notification has or expects to acquire a purchase-money security interest in inventory of the debtor and describes the inventory.
|
| (c) Holders of conflicting inventory security interests to be
notified. Subsections (b)(2) through (4) apply only if the holder of the conflicting
security interest had filed a financing statement covering the same types of
inventory:
(1) if the purchase-money security interest is
| | perfected by filing, before the date of the filing; or
|
| (2) if the purchase-money security interest is
| | temporarily perfected without filing or possession under Section 9-312(f), before the beginning of the 20-day period thereunder.
|
| (d) Livestock purchase-money priority. Subject to subsection (e)
and except as otherwise provided in subsection (g), a perfected purchase-money
security interest in livestock that are farm products has priority over a conflicting
security interest in the same livestock, and, except as otherwise provided in Section
9-327, a perfected security interest in their identifiable proceeds and identifiable
products in their unmanufactured states also has priority, if:
(1) the purchase-money security interest is perfected
| | when the debtor receives possession of the livestock;
|
| (2) the purchase-money secured party sends an
| | authenticated notification to the holder of the conflicting security interest;
|
| (3) the holder of the conflicting security interest
| | receives the notification within six months before the debtor receives possession of the livestock; and
|
| (4) the notification states that the person sending
| | the notification has or expects to acquire a purchase-money security interest in livestock of the debtor and describes the livestock.
|
| (e) Holders of conflicting livestock security interests to be
notified. Subsections (d)(2) through (4) apply only if the holder of the conflicting
security interest had filed a financing statement covering the same types of
livestock:
(1) if the purchase-money security interest is
| | perfected by filing, before the date of the filing; or
|
| (2) if the purchase-money security interest is
| | temporarily perfected without filing or possession under Section 9-312(f), before the beginning of the 20-day period thereunder.
|
| (f) Software purchase-money priority. Except as otherwise
provided in subsection (g), a perfected purchase-money security interest in software
has priority over a conflicting security interest in the same collateral, and, except as
otherwise provided in Section 9-327, a perfected security interest in its identifiable
proceeds also has priority, to the extent that the purchase-money security interest in
the goods in which the software was acquired for use has priority in the goods and
proceeds of the goods under this Section.
(g) Conflicting purchase-money security interests. If more than
one security interest qualifies for priority in the same collateral under
subsection
(a), (b), (d), or (f):
(1) a security interest securing an obligation
| | incurred as all or part of the price of the collateral has priority over a security interest securing an obligation incurred for value given to enable the debtor to acquire rights in or the use of collateral; and
|
| (2) in all other cases, Section 9-322(a) applies to
| | the qualifying security interests.
|
| (Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-324. Priority of purchase-money security interests.
(a) General rule: purchase-money priority. Except as otherwise provided in subsection (g), a perfected purchase-money security interest in goods other than inventory or livestock has priority over a conflicting security interest in the same goods, and, except as otherwise provided in Section 9-327, a perfected security interest in its identifiable proceeds also has priority, if the purchase-money security interest is perfected when the debtor receives possession of the collateral or within 20 days thereafter.
(b) Inventory purchase-money priority. Subject to subsection (c) and except as otherwise provided in subsection (g), a perfected purchase-money security interest in inventory has priority over a conflicting security interest in the same inventory, has priority over a conflicting security interest in chattel paper or an instrument constituting proceeds of the inventory and in proceeds of the chattel paper, if so provided in Section 9-330, and, except as otherwise provided in Section 9-327, also has priority in identifiable cash proceeds of the inventory to the extent the identifiable cash proceeds are received on or before the delivery of the inventory to a buyer, if:
(1) the purchase-money security interest is perfected
| | when the debtor receives possession of the inventory;
|
| (2) the purchase-money secured party sends a signed
| | notification to the holder of the conflicting security interest;
|
| (3) the holder of the conflicting security interest
| | receives the notification within five years before the debtor receives possession of the inventory; and
|
| (4) the notification states that the person sending
| | the notification has or expects to acquire a purchase-money security interest in inventory of the debtor and describes the inventory.
|
| (c) Holders of conflicting inventory security interests to be notified. Subsections (b)(2) through (4) apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of inventory:
(1) if the purchase-money security interest is
| | perfected by filing, before the date of the filing; or
|
| (2) if the purchase-money security interest is
| | temporarily perfected without filing or possession under Section 9-312(f), before the beginning of the 20-day period thereunder.
|
| (d) Livestock purchase-money priority. Subject to subsection (e) and except as otherwise provided in subsection (g), a perfected purchase-money security interest in livestock that are farm products has priority over a conflicting security interest in the same livestock, and, except as otherwise provided in Section 9-327, a perfected security interest in their identifiable proceeds and identifiable products in their unmanufactured states also has priority, if:
(1) the purchase-money security interest is perfected
| | when the debtor receives possession of the livestock;
|
| (2) the purchase-money secured party sends a signed
| | notification to the holder of the conflicting security interest;
|
| (3) the holder of the conflicting security interest
| | receives the notification within six months before the debtor receives possession of the livestock; and
|
| (4) the notification states that the person sending
| | the notification has or expects to acquire a purchase-money security interest in livestock of the debtor and describes the livestock.
|
| (e) Holders of conflicting livestock security interests to be notified. Subsections (d)(2) through (4) apply only if the holder of the conflicting security interest had filed a financing statement covering the same types of livestock:
(1) if the purchase-money security interest is
| | perfected by filing, before the date of the filing; or
|
| (2) if the purchase-money security interest is
| | temporarily perfected without filing or possession under Section 9-312(f), before the beginning of the 20-day period thereunder.
|
| (f) Software purchase-money priority. Except as otherwise provided in subsection (g), a perfected purchase-money security interest in software has priority over a conflicting security interest in the same collateral, and, except as otherwise provided in Section 9-327, a perfected security interest in its identifiable proceeds also has priority, to the extent that the purchase-money security interest in the goods in which the software was acquired for use has priority in the goods and proceeds of the goods under this Section.
(g) Conflicting purchase-money security interests. If more than one security interest qualifies for priority in the same collateral under subsection (a), (b), (d), or (f):
(1) a security interest securing an obligation
| | incurred as all or part of the price of the collateral has priority over a security interest securing an obligation incurred for value given to enable the debtor to acquire rights in or the use of collateral; and
|
| (2) in all other cases, Section 9-322(a) applies to
| | the qualifying security interests.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-325
(810 ILCS 5/9-325)
Sec. 9-325.
Priority of security interests in transferred collateral.
(a) Subordination of security interest in transferred collateral.
Except as otherwise provided in subsection (b), a security interest created by
a
debtor is subordinate to a security interest in the same collateral created by
another
person if:
(1) the debtor acquired the collateral subject to the | | security interest created by the other person;
|
|
(2) the security interest created by the other person
| | was perfected when the debtor acquired the collateral; and
|
|
(3) there is no period thereafter when the security
| |
(b) Limitation of subsection (a) subordination. Subsection (a)
subordinates a security interest only if the security interest:
(1) otherwise would have priority solely under
| | Section 9-322(a) or 9-324; or
|
|
(2) arose solely under Section 2-711(3) or 2A-508(5).
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-326
(810 ILCS 5/9-326)
Sec. 9-326. Priority of security interests created by new debtor.
(a) Subordination of security interest created by new debtor.
Subject to subsection (b), a security interest that is created by a new debtor in collateral in which the new debtor has or acquires rights and is
perfected solely by a filed financing statement that would be ineffective to perfect the security interest but for the application of Section 9-316(i)(1) or 9-508 is subordinate to a
security interest in the same collateral which is perfected other than by such a
filed
financing statement.
(b) Priority under other provisions; multiple original debtors.
The other provisions of this Part determine the priority among conflicting
security
interests in the same collateral perfected by filed financing statements described in subsection (a). However, if the security agreements to
which
a new debtor became bound as debtor were not entered into by the same original
debtor, the conflicting security interests rank according to priority in time
of the
new debtor's having become bound.
(Source: P.A. 97-1034, eff. 7-1-13.)
|
810 ILCS 5/9-326A (810 ILCS 5/9-326A) (This Section may contain text from a Public Act with a delayed effective date) Sec. 9-326A. Priority of security interest in controllable account, controllable electronic record, and controllable payment intangible. A security interest in a controllable account, controllable electronic record, or controllable payment intangible held by a secured party having control of the account, electronic record, or payment intangible has priority over a conflicting security interest held by a secured party that does not have control.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/9-327
(810 ILCS 5/9-327)
Sec. 9-327.
Priority of security interests in deposit account.
The
following rules govern priority among conflicting security interests in the
same
deposit account:
(1) A security interest held by a secured party having control of the
deposit account under Section 9-104 has priority over a conflicting security
interest
held by a secured party that does not have control.
(2) Except as otherwise provided in paragraphs (3) and (4), security
interests perfected by control under Section 9-314 rank according to priority
in time
of obtaining control.
(3) Except as otherwise provided in paragraph (4), a security
interest held by the bank with which the deposit account is maintained has
priority
over a conflicting security interest held by another secured party.
(4) A security interest perfected by control under Section
9-104(a)(3) has priority over a security interest held by the bank with which
the
deposit account is maintained.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-328
(810 ILCS 5/9-328)
Sec. 9-328.
Priority of security interests in investment property.
The
following rules govern priority among conflicting security interests in the
same
investment property:
(1) A security interest held by a secured party having control of
investment property under Section 9-106 has priority over a security interest
held
by a secured party that does not have control of the investment property.
(2) Except as otherwise provided in paragraphs (3) and (4),
conflicting security interests held by secured parties each of which has
control
under Section 9-106 rank according to priority in time of:
(A) if the collateral is a security, obtaining | |
(B) if the collateral is a security entitlement
| | carried in a securities account and:
|
|
(i) if the secured party obtained control under
| | Section 8-106(d)(1), the secured party's becoming the person for which the securities account is maintained;
|
|
(ii) if the secured party obtained control under
| | Section 8-106(d)(2), the securities intermediary's agreement to comply with the secured party's entitlement orders with respect to security entitlements carried or to be carried in the securities account; or
|
|
(iii) if the secured party obtained control
| | through another person under Section 8-106(d)(3), the time on which priority would be based under this paragraph if the other person were the secured party; or
|
|
(C) if the collateral is a commodity contract carried
| | with a commodity intermediary, the satisfaction of the requirement for control specified in Section 9-106(b)(2) with respect to commodity contracts carried or to be carried with the commodity intermediary.
|
|
(3) A security interest held by a securities intermediary in a security
entitlement or a securities account maintained with the securities intermediary
has
priority over a conflicting security interest held by another secured party.
(4) A security interest held by a commodity intermediary in a
commodity contract or a commodity account maintained with the commodity
intermediary has priority over a conflicting security interest held by another
secured party.
(5) A security interest in a certificated security in registered form
which is perfected by taking delivery under Section 9-313(a) and not by control
under Section 9-314 has priority over a conflicting security interest perfected
by a
method other than control.
(6) Conflicting security interests created by a broker, securities
intermediary, or commodity intermediary which are perfected without control
under Section 9-106 rank equally.
(7) In all other cases, priority among conflicting security interests in
investment property is governed by Sections 9-322 and 9-323.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-329
(810 ILCS 5/9-329)
Sec. 9-329.
Priority of security interests in letter-of-credit right.
The
following rules govern priority among conflicting security interests in the
same
letter-of-credit right:
(1) A security interest held by a secured party | | having control of the letter-of-credit right under Section 9-107 has priority to the extent of its control over a conflicting security interest held by a secured party that does not have control.
|
|
(2) Security interests perfected by control under
| | Section 9-314 rank according to priority in time of obtaining control.
|
|
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-329.1
(810 ILCS 5/9-329.1)
Sec. 9-329.1.
Priority of Security Interests in
Beneficial Interest in an Illinois Land Trust. The following rules govern
priority among conflicting security interests
in the same beneficial interest in an Illinois land trust:
(1) A security interest held by a secured party | | having control of the beneficial interest under Section 9-107.1 has priority to the extent of its control over a conflicting security interest held by a secured party that does not have control.
|
|
(2) Security interests perfected by control under
| | Section 9-314 rank according to priority in time of obtaining control.
|
|
(Source: P.A. 92-234, eff. 1-1-02.)
|
810 ILCS 5/9-330 (810 ILCS 5/9-330) (Text of Section before amendment by P.A. 103-1036) Sec. 9-330. Priority of purchaser of chattel paper or instrument. (a) Purchaser's priority: security interest claimed merely as
proceeds. A purchaser of chattel paper has priority over a security interest
in the
chattel paper which is claimed merely as proceeds of inventory subject to a
security
interest if: (1) in good faith and in the ordinary course of the | | purchaser's business, the purchaser gives new value and takes possession of the chattel paper or obtains control of the chattel paper under Section 9-105; and
|
| (2) the chattel paper does not indicate that it has
| | been assigned to an identified assignee other than the purchaser.
|
| (b) Purchaser's priority: other security interests. A purchaser
of chattel paper has priority over a security interest in the chattel paper which is
claimed other than merely as proceeds of inventory subject to a security interest if
the purchaser gives new value and takes possession of the chattel paper or obtains
control of the chattel paper under Section 9-105 in good faith, in the ordinary
course of the purchaser's business, and without knowledge that the purchase
violates the rights of the secured party.
(c) Chattel paper purchaser's priority in proceeds. Except as
otherwise provided in Section 9-327, a purchaser having priority in chattel paper
under subsection (a) or (b) also has priority in proceeds of the chattel paper to the
extent that:
(1) Section 9-322 provides for priority in the
| | (2) the proceeds consist of the specific goods
| | covered by the chattel paper or cash proceeds of the specific goods, even if the purchaser's security interest in the proceeds is unperfected.
|
| (d) Instrument purchaser's priority. Except as otherwise
provided in Section 9-331(a), a purchaser of an instrument has priority over a
security interest in the instrument perfected by a method other than possession if
the purchaser gives value and takes possession of the instrument in good faith and
without knowledge that the purchase violates the rights of the secured party.
(e) Holder of purchase-money security interest gives new value.
For purposes of subsections (a) and (b), the holder of a purchase-money
security
interest in inventory gives new value for chattel paper constituting proceeds
of the
inventory.
(f) Indication of assignment gives knowledge. For purposes of
subsections (b) and (d), if chattel paper or an instrument indicates that it
has been
assigned to an identified secured party other than the purchaser, a purchaser
of the
chattel paper or instrument has knowledge that the purchase violates the rights
of
the secured party.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-330. Priority of purchaser of chattel paper or instrument.
(a) Purchaser's priority: security interest claimed merely as proceeds. A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed merely as proceeds of inventory subject to a security interest if:
(1) in good faith and in the ordinary course of the
| | purchaser's business, the purchaser gives new value, takes possession of each authoritative tangible copy of the record evidencing the chattel paper, and obtains control under Section 9-105 of each authoritative electronic copy of the record evidencing the chattel paper; and
|
| (2) the authoritative copies of the record evidencing
| | the chattel paper do not indicate that the chattel paper has been assigned to an identified assignee other than the purchaser.
|
| (b) Purchaser's priority: other security interests. A purchaser of chattel paper has priority over a security interest in the chattel paper which is claimed other than merely as proceeds of inventory subject to a security interest if the purchaser gives new value, takes possession of each authoritative tangible copy of the record evidencing the chattel paper, and obtains control under Section 9-105 of each authoritative electronic copy of the record evidencing the chattel paper in good faith, in the ordinary course of the purchaser's business, and without knowledge that the purchase violates the rights of the secured party.
(c) Chattel paper purchaser's priority in proceeds. Except as otherwise provided in Section 9-327, a purchaser having priority in chattel paper under subsection (a) or (b) also has priority in proceeds of the chattel paper to the extent that:
(1) Section 9-322 provides for priority in the
| | (2) the proceeds consist of the specific goods
| | covered by the chattel paper or cash proceeds of the specific goods, even if the purchaser's security interest in the proceeds is unperfected.
|
| (d) Instrument purchaser's priority. Except as otherwise provided in Section 9-331(a), a purchaser of an instrument has priority over a security interest in the instrument perfected by a method other than possession if the purchaser gives value and takes possession of the instrument in good faith and without knowledge that the purchase violates the rights of the secured party.
(e) Holder of purchase-money security interest gives new value. For purposes of subsections (a) and (b), the holder of a purchase-money security interest in inventory gives new value for chattel paper constituting proceeds of the inventory.
(f) Indication of assignment gives knowledge. For purposes of subsections (b) and (d), if the authoritative copies of the record evidencing chattel paper or an instrument indicate that the chattel paper or instrument has been assigned to an identified secured party other than the purchaser, a purchaser of the chattel paper or instrument has knowledge that the purchase violates the rights of the secured party.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-331 (810 ILCS 5/9-331) (Text of Section before amendment by P.A. 103-1036) Sec. 9-331. Priority of rights of purchasers of instruments, documents,
and securities under other Articles; priority of interests in financial assets
and
security entitlements under Article 8. (a) Rights under Articles 3, 7, and 8 not limited. This Article
does not limit the rights of a holder in due course of a negotiable instrument,
a
holder to which a negotiable document of title has been duly negotiated, or a
protected purchaser of a security. These holders or purchasers take priority
over an
earlier security interest, even if perfected, to the extent provided in
Articles 3, 7,
and 8. (b) Protection under Article 8. This Article does not limit the
rights of or impose liability on a person to the extent that the person is
protected
against the assertion of a claim under Article 8. (c) Filing not notice. Filing under this Article does not constitute
notice of a claim or defense to the holders, or purchasers, or persons
described in
subsections (a) and (b).(Source: P.A. 91-893, eff. 7-1-01.) (Text of Section after amendment by P.A. 103-1036) Sec. 9-331. Priority of rights of purchasers of controllable accounts, controllable electronic records, controllable payment intangibles, documents, instruments, and securities under other Articles; priority of interests in financial assets and security entitlements and protection against assertion of claim under Articles 8 and 12. (a) Rights under Articles 3, 7, 8, and 12 not limited. This Article does not limit the rights of a holder in due course of a negotiable instrument, a holder to which a negotiable document of title has been duly negotiated, a protected purchaser of a security, or a qualifying purchaser of a controllable account, controllable electronic record, or controllable payment intangible. These holders or purchasers take priority over an earlier security interest, even if perfected, to the extent provided in Articles 3, 7, 8, and 12. (b) Protection under Articles 8 and 12. This Article does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under Article 8 or 12. (c) Filing not notice. Filing under this Article does not constitute notice of a claim or defense to the holders, or purchasers, or persons described in subsections (a) and (b).(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/9-332 (810 ILCS 5/9-332) (Text of Section before amendment by P.A. 103-1036) Sec. 9-332. Transfer of money; transfer of funds from deposit account. (a) Transferee of money. A transferee of money takes the money
free of a security interest unless the transferee acts in collusion with the
debtor in
violating the rights of the secured party. (b) Transferee of funds from deposit account. A transferee of
funds from a deposit account takes the funds free of a security interest in the
deposit account unless the transferee acts in collusion with the debtor in
violating
the rights of the secured party.(Source: P.A. 91-893, eff. 7-1-01.) (Text of Section after amendment by P.A. 103-1036) Sec. 9-332. Transfer of money; transfer of funds from deposit account. (a) Transferee of tangible money. A transferee of tangible money takes the money free of a security interest if the transferee receives possession of the money without acting in collusion with the debtor in violating the rights of the secured party. (b) Transferee of funds from deposit account. A transferee of funds from a deposit account takes the funds free of a security interest in the deposit account if the transferee receives the funds without acting in collusion with the debtor in violating the rights of the secured party. (c) Transferee of electronic money. A transferee of electronic money takes the money free of a security interest if the transferee obtains control of the money without acting in collusion with the debtor in violating the rights of the secured party. (Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/9-333
(810 ILCS 5/9-333)
Sec. 9-333.
Priority of certain liens arising by operation of law.
(a) "Possessory lien." In this Section, "possessory lien" means an
interest, other than a security interest or an agricultural lien:
(1) which secures payment or performance of an | | obligation for services or materials furnished with respect to goods by a person in the ordinary course of the person's business;
|
|
(2) which is created by statute or rule of law in
| |
(3) whose effectiveness depends on the person's
| |
(b) Priority of possessory lien. A possessory lien on goods has
priority over a security interest in the goods unless the lien is created by a
statute
that expressly provides otherwise.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-334 (810 ILCS 5/9-334) (Text of Section before amendment by P.A. 103-1036) Sec. 9-334. Priority of security interests in fixtures and crops. (a) Security interest in fixtures under this Article. A security
interest under this Article may be created in goods that are fixtures or may
continue
in goods that become fixtures. A security interest does not exist under this
Article
in ordinary building materials incorporated into an improvement on land. (b) Security interest in fixtures under real-property law. This
Article does not prevent creation of an encumbrance upon fixtures under real
property law. (c) General rule: subordination of security interest in fixtures.
In cases not governed by subsections (d) through (h), a security interest in
fixtures
is subordinate to a conflicting interest of an encumbrancer or owner of the
related
real property other than the debtor. (d) Fixtures purchase-money priority. Except as otherwise
provided in subsection (h), a perfected security interest in fixtures has
priority over
a conflicting interest of an encumbrancer or owner of the real property if the
debtor
has an interest of record in or is in possession of the real property and: (1) the security interest is a purchase-money | | (2) the interest of the encumbrancer or owner arises
| | before the goods become fixtures; and
|
| (3) the security interest is perfected by a fixture
| | filing before the goods become fixtures or within 20 days thereafter.
|
| (e) Priority of security interest in fixtures over interests in real
property. A perfected security interest in fixtures has priority over a conflicting
interest of an encumbrancer or owner of the real property if:
(1) the debtor has an interest of record in the real
| | property or is in possession of the real property and the security interest:
|
| (A) is perfected by a fixture filing before the
| | interest of the encumbrancer or owner is of record; and
|
| (B) has priority over any conflicting interest of
| | a predecessor in title of the encumbrancer or owner;
|
| (2) before the goods become fixtures, the security
| | interest is perfected by any method permitted by this Article and the fixtures are readily removable:
|
| (A) factory or office machines;
(B) equipment that is not primarily used or
| | leased for use in the operation of the real property; or
|
| (C) replacements of domestic appliances that are
| | (3) the conflicting interest is a lien on the real
| | property obtained by legal or equitable proceedings after the security interest was perfected by any method permitted by this Article; or
|
| (4) the security interest is:
(A) created in a manufactured home in a
| | manufactured-home transaction; and
|
| (B) perfected pursuant to a statute described in
| | (f) Priority based on consent, disclaimer, or right to remove. A
security interest in fixtures, whether or not perfected, has priority over a
conflicting
interest of an encumbrancer or owner of the real property if:
(1) the encumbrancer or owner has, in an
| | authenticated record, consented to the security interest or disclaimed an interest in the goods as fixtures; or
|
| (2) the debtor has a right to remove the goods as
| | against the encumbrancer or owner.
|
| (g) Continuation of subsection (f)(2) priority. The priority of the
security interest under subsection (f)(2) continues for a reasonable time if
the debtor's
right to remove the goods as against the encumbrancer or owner terminates.
(h) Priority of construction mortgage. A mortgage is a
construction mortgage to the extent that it secures an obligation incurred for the
construction of an improvement on land, including the acquisition cost of the land,
if a recorded record of the mortgage so indicates. Except as otherwise
provided in
subsections (e) and (f), a security interest in fixtures is subordinate to a
construction
mortgage if a record of the mortgage is recorded before the goods become
fixtures
and the goods become fixtures before the completion of the construction. A
mortgage has this priority to the same extent as a construction mortgage to the
extent that it is given to refinance a construction mortgage.
(i) Priority of security interest in crops.
(1) Subject to Section 9-322(g), a perfected security
| | interest in crops growing on real property has priority over:
|
| (A) a conflicting interest of an encumbrancer or
| | owner of the real property; and
|
| (B) the rights of a holder of an obligation
| | secured by a collateral assignment of beneficial interest in a land trust, including rights by virtue of an equitable lien.
|
| (2) For purposes of this subsection:
(A) "Collateral assignment of beneficial
| | interest" means any pledge or assignment of the beneficial interest in a land trust to a person to secure a debt to other obligation.
|
| (B) "Land trust" means any trust arrangement
| | under which the legal and equitable title to real estate is held by a trustee, the interest of the beneficiary of the trust is personal property, and the beneficiary or any person designated in writing by the beneficiary has (i) the exclusive power to direct or control the trustee in dealing with the title to the trust property, (ii) the exclusive control of the management, operation, renting, and selling of the trust property, and (iii) the exclusive right to the earnings, avails, and proceeds of trust property.
|
| (Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-334. Priority of security interests in fixtures and crops.
(a) Security interest in fixtures under this Article. A security interest under this Article may be created in goods that are fixtures or may continue in goods that become fixtures. A security interest does not exist under this Article in ordinary building materials incorporated into an improvement on land.
(b) Security interest in fixtures under real-property law. This Article does not prevent creation of an encumbrance upon fixtures under real property law.
(c) General rule: subordination of security interest in fixtures. In cases not governed by subsections (d) through (h), a security interest in fixtures is subordinate to a conflicting interest of an encumbrancer or owner of the related real property other than the debtor.
(d) Fixtures purchase-money priority. Except as otherwise provided in subsection (h), a perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if the debtor has an interest of record in or is in possession of the real property and:
(1) the security interest is a purchase-money
| | (2) the interest of the encumbrancer or owner arises
| | before the goods become fixtures; and
|
| (3) the security interest is perfected by a fixture
| | filing before the goods become fixtures or within 20 days thereafter.
|
| (e) Priority of security interest in fixtures over interests in real property. A perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if:
(1) the debtor has an interest of record in the real
| | property or is in possession of the real property and the security interest:
|
| (A) is perfected by a fixture filing before the
| | interest of the encumbrancer or owner is of record; and
|
| (B) has priority over any conflicting interest of
| | a predecessor in title of the encumbrancer or owner;
|
| (2) before the goods become fixtures, the security
| | interest is perfected by any method permitted by this Article and the fixtures are readily removable:
|
| (A) factory or office machines;
(B) equipment that is not primarily used or
| | leased for use in the operation of the real property; or
|
| (C) replacements of domestic appliances that are
| | (3) the conflicting interest is a lien on the real
| | property obtained by legal or equitable proceedings after the security interest was perfected by any method permitted by this Article; or
|
| (4) the security interest is:
(A) created in a manufactured home in a
| | manufactured-home transaction; and
|
| (B) perfected pursuant to a statute described in
| | (f) Priority based on consent, disclaimer, or right to remove. A security interest in fixtures, whether or not perfected, has priority over a conflicting interest of an encumbrancer or owner of the real property if:
(1) the encumbrancer or owner has, in a signed
| | record, consented to the security interest or disclaimed an interest in the goods as fixtures; or
|
| (2) the debtor has a right to remove the goods as
| | against the encumbrancer or owner.
|
| (g) Continuation of subsection (f)(2) priority. The priority of the security interest under subsection (f)(2) continues for a reasonable time if the debtor's right to remove the goods as against the encumbrancer or owner terminates.
(h) Priority of construction mortgage. A mortgage is a construction mortgage to the extent that it secures an obligation incurred for the construction of an improvement on land, including the acquisition cost of the land, if a recorded record of the mortgage so indicates. Except as otherwise provided in subsections (e) and (f), a security interest in fixtures is subordinate to a construction mortgage if a record of the mortgage is recorded before the goods become fixtures and the goods become fixtures before the completion of the construction. A mortgage has this priority to the same extent as a construction mortgage to the extent that it is given to refinance a construction mortgage.
(i) Priority of security interest in crops.
(1) Subject to Section 9-322(g), a perfected security
| | interest in crops growing on real property has priority over:
|
| (A) a conflicting interest of an encumbrancer or
| | owner of the real property; and
|
| (B) the rights of a holder of an obligation
| | secured by a collateral assignment of beneficial interest in a land trust, including rights by virtue of an equitable lien.
|
| (2) For purposes of this subsection:
(A) "Collateral assignment of beneficial
| | interest" means any pledge or assignment of the beneficial interest in a land trust to a person to secure a debt to other obligation.
|
| (B) "Land trust" means any trust arrangement
| | under which the legal and equitable title to real estate is held by a trustee, the interest of the beneficiary of the trust is personal property, and the beneficiary or any person designated in writing by the beneficiary has (i) the exclusive power to direct or control the trustee in dealing with the title to the trust property, (ii) the exclusive control of the management, operation, renting, and selling of the trust property, and (iii) the exclusive right to the earnings, avails, and proceeds of trust property.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-335
(810 ILCS 5/9-335)
Sec. 9-335.
Accessions.
(a) Creation of security interest in accession. A security interest
may be created in an accession and continues in collateral that becomes an
accession.
(b) Perfection of security interest. If a security interest is
perfected when the collateral becomes an accession, the security interest
remains
perfected in the collateral.
(c) Priority of security interest. Except as otherwise provided in
subsection (d), the other provisions of this Part determine the priority of a
security
interest in an accession.
(d) Compliance with certificate-of-title statute. A security
interest in an accession is subordinate to a security interest in the whole which is
perfected by compliance with the requirements of a certificate-of-title statute under
Section 9-311(b).
(e) Removal of accession after default. After default, subject to
Part 6, a secured party may remove an accession from other goods if the
security
interest in the accession has priority over the claims of every person having
an
interest in the whole.
(f) Reimbursement following removal. A secured party that
removes an accession from other goods under subsection (e) shall promptly
reimburse any holder of a security interest or other lien on, or owner of, the
whole
or of the other goods, other than the debtor, for the cost of repair of any
physical
injury to the whole or the other goods. The secured party need not reimburse
the
holder or owner for any diminution in value of the whole or the other goods
caused
by the absence of the accession removed or by any necessity for replacing it.
A
person entitled to reimbursement may refuse permission to remove until the
secured party gives adequate assurance for the performance of the obligation to
reimburse.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-336
(810 ILCS 5/9-336)
Sec. 9-336.
Commingled goods.
(a) "Commingled goods." In this Section, "commingled goods"
means goods that are physically united with other goods in such a manner that
their
identity is lost in a product or mass.
(b) No security interest in commingled goods as such. A security
interest does not exist in commingled goods as such. However, a security
interest
may attach to a product or mass that results when goods become commingled
goods.
(c) Attachment of security interest to product or mass. If
collateral becomes commingled goods, a security interest attaches to the product or
mass.
(d) Perfection of security interest. If a security interest in
collateral is perfected before the collateral becomes commingled goods, the
security interest that attaches to the product or mass under subsection (c) is
perfected.
(e) Priority of security interest. Except as otherwise provided in
subsection (f), the other provisions of this Part determine the priority of a security
interest that attaches to the product or mass under subsection (c).
(f) Conflicting security interests in product or mass If more than
one security interest attaches to the product or mass under subsection (c), the
following rules determine priority:
(1) A security interest that is perfected under | | subsection (d) has priority over a security interest that is unperfected at the time the collateral becomes commingled goods.
|
|
(2) If more than one security interest is perfected
| | under subsection (d), the security interests rank equally in proportion to the value of the collateral at the time it became commingled goods.
|
|
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-337
(810 ILCS 5/9-337)
Sec. 9-337.
Priority of security interests in goods covered by certificate
of title. If, while a security interest in goods is perfected by any method
under the
law of another jurisdiction, this State issues a certificate of title that does
not show
that the goods are subject to the security interest or contain a statement that
they
may be subject to security interests not shown on the certificate:
(1) a buyer of the goods, other than a person in the | | business of selling goods of that kind, takes free of the security interest if the buyer gives value and receives delivery of the goods after issuance of the certificate and without knowledge of the security interest; and
|
|
(2) the security interest is subordinate to a
| | conflicting security interest in the goods that attaches, and is perfected under Section 9-311(b), after issuance of the certificate and without the conflicting secured party's knowledge of the security interest.
|
|
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-338
(810 ILCS 5/9-338)
Sec. 9-338. Priority of security interest or agricultural lien perfected
by
filed financing statement providing certain incorrect information. If a
security
interest or agricultural lien is perfected by a filed financing statement
providing
information described in Section 9-516(b)(5) which is incorrect at the time the
financing statement is filed:
(1) the security interest or agricultural lien is | | subordinate to a conflicting perfected security interest in the collateral to the extent that the holder of the conflicting security interest gives value in reasonable reliance upon the incorrect information; and
|
|
(2) a purchaser, other than a secured party, of the
| | collateral takes free of the security interest or agricultural lien to the extent that, in reasonable reliance upon the incorrect information, the purchaser gives value and, in the case of tangible chattel paper, tangible documents, goods, instruments, or a security certificate, receives delivery of the collateral.
|
|
(Source: P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/9-339
(810 ILCS 5/9-339)
Sec. 9-339.
Priority subject to subordination.
This Article does not
preclude subordination by agreement by a person entitled to priority.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/Art. 9 Pt. 3 Sub. 4
(810 ILCS 5/Art. 9 Pt. 3 Sub. 4 heading)
SUBPART 4.
RIGHTS OF BANK
|
810 ILCS 5/9-340
(810 ILCS 5/9-340)
Sec. 9-340.
Effectiveness of right of recoupment or set-off against
deposit account.
(a) Exercise of recoupment or set-off. Except as otherwise
provided in subsection (c), a bank with which a deposit account is maintained
may
exercise any right of recoupment or set-off against a secured party that holds
a
security interest in the deposit account.
(b) Recoupment or set-off not affected by security interest.
Except as otherwise provided in subsection (c), the application of this Article
to a
security interest in a deposit account does not affect a right of recoupment or
set-off
of the secured party as to a deposit account maintained with the secured party.
(c) When set-off ineffective. The exercise by a bank of a set-off
against a deposit account is ineffective against a secured party that holds a
security
interest in the deposit account which is perfected by control under Section
9-104(a)(3), if the set-off is based on a claim against the debtor.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-341 (810 ILCS 5/9-341) (Text of Section before amendment by P.A. 103-1036) Sec. 9-341. Bank's rights and duties with respect to deposit account. Except as otherwise provided in Section 9-340(c), and unless the bank otherwise
agrees in an authenticated record, a bank's rights and duties with respect to a
deposit account maintained with the bank are not terminated, suspended, or
modified by: (1) the creation, attachment, or perfection of a | | security interest in the deposit account;
|
| (2) the bank's knowledge of the security interest; or
(3) the bank's receipt of instructions from the
| | (Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-341. Bank's rights and duties with respect to deposit account. Except as otherwise provided in Section 9-340(c), and unless the bank otherwise agrees in a signed record, a bank's rights and duties with respect to a deposit account maintained with the bank are not terminated, suspended, or modified by:
(1) the creation, attachment, or perfection of a
| | security interest in the deposit account;
|
| (2) the bank's knowledge of the security interest; or
(3) the bank's receipt of instructions from the
| | (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-342
(810 ILCS 5/9-342)
Sec. 9-342.
Bank's right to refuse to enter into or disclose existence of
control agreement. This Article does not require a bank to enter into an
agreement of the kind described in Section 9-104(a)(2), even if its customer so
requests or directs. A bank that has entered into such an agreement is not
required
to confirm the existence of the agreement to another person unless requested to
do
so by its customer.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/Art. 9 Pt. 4
(810 ILCS 5/Art. 9 Pt. 4 heading)
PART 4.
RIGHTS OF THIRD PARTIES
|
810 ILCS 5/9-401
(810 ILCS 5/9-401) (from Ch. 26, par. 9-401)
Sec. 9-401.
Alienability of debtor's rights.
(a) Other law governs alienability; exceptions. Except as
otherwise provided in subsection (b) and Sections 9-406, 9-407, 9-408, and
9-409,
whether a debtor's rights in collateral may be voluntarily or involuntarily
transferred is governed by law other than this Article.
(b) Agreement does not prevent transfer. An agreement between
the debtor and secured party which prohibits a transfer of the debtor's rights
in
collateral or makes the transfer a default does not prevent the transfer from
taking
effect.
(Source: P.A. 90-300, eff. 1-1-98; 91-893, eff. 7-1-01.)
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810 ILCS 5/9-401A
(810 ILCS 5/9-401A)
Sec. 9-401A.
(Blank).
(Source: P.A. 90-300, eff. 1-1-98; 91-893, eff. 7-1-01.)
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810 ILCS 5/9-402
(810 ILCS 5/9-402) (from Ch. 26, par. 9-402)
Sec. 9-402.
Secured party not obligated on contract of debtor or in tort.
The existence of a security interest, agricultural lien, or authority given to
a debtor
to dispose of or use collateral, without more, does not subject a secured party
to
liability in contract or tort for the debtor's acts or omissions.
(Source: P.A. 91-357, eff. 7-29-99; 91-893, eff. 7-1-01.)
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810 ILCS 5/9-403
(810 ILCS 5/9-403) (from Ch. 26, par. 9-403)
Sec. 9-403.
Agreement not to assert defenses against assignee.
(a) "Value." In this Section, "value" has the meaning provided in
Section 3-303(a).
(b) Agreement not to assert claim or defense. Except as
otherwise provided in this Section, an agreement between an account debtor and
an
assignor not to assert against an assignee any claim or defense that the
account
debtor may have against the assignor is enforceable by an assignee that takes
an
assignment:
(1) for value;
(2) in good faith;
(3) without notice of a claim of a property or | | possessory right to the property assigned; and
|
|
(4) without notice of a defense or claim in
| | recoupment of the type that may be asserted against a person entitled to enforce a negotiable instrument under Section 3-305(a).
|
|
(c) When subsection (b) not applicable. Subsection (b) does not
apply to defenses of a type that may be asserted against a holder in due course of a
negotiable instrument under Section 3-305(b).
(d) Omission of required statement in consumer transaction. In
a consumer transaction, if a record evidences the account debtor's obligation, law
other than this Article requires that the record include a statement to the effect that
the rights of an assignee are subject to claims or defenses that the account debtor
could assert against the original obligee, and the record does not include such a
statement:
(1) the record has the same effect as if the record
| | included such a statement; and
|
|
(2) the account debtor may assert against an assignee
| | those claims and defenses that would have been available if the record included such a statement.
|
|
(e) Rule for individual under other law. This Section is subject
to law other than this Article which establishes a different rule for an account
debtor who is an individual and who incurred the obligation primarily for personal,
family, or household purposes.
(f) Other law not displaced. Except as otherwise provided in
subsection (d), this Section does not displace law other than this Article which
gives effect to an agreement by an account debtor not to assert a claim or
defense
against an assignee.
(Source: P.A. 90-300, eff. 1-1-98; 91-357, eff. 7-29-99; 91-893, eff.
7-1-01.)
|
810 ILCS 5/9-404 (810 ILCS 5/9-404) (from Ch. 26, par. 9-404) (Text of Section before amendment by P.A. 103-1036) Sec. 9-404. Rights acquired by assignee; claims and defenses against
assignee. (a) Assignee's rights subject to terms, claims, and defenses;
exceptions. Unless an account debtor has made an enforceable agreement not to
assert defenses or claims, and subject to subsections (b) through (e), the
rights of an
assignee are subject to: (1) all terms of the agreement between the account | | debtor and assignor and any defense or claim in recoupment arising from the transaction that gave rise to the contract; and
|
| (2) any other defense or claim of the account debtor
| | against the assignor which accrues before the account debtor receives a notification of the assignment authenticated by the assignor or the assignee.
|
| (b) Account debtor's claim reduces amount owed to assignee.
Subject to subsection (c) and except as otherwise provided in subsection (d), the
claim of an account debtor against an assignor may be asserted against an assignee
under subsection (a) only to reduce the amount the account debtor owes.
(c) Rule for individual under other law. This Section is subject
to law other than this Article which establishes a different rule for an account
debtor who is an individual and who incurred the obligation primarily for personal,
family, or household purposes.
(d) Omission of required statement in consumer transaction. In
a consumer transaction, if a record evidences the account debtor's obligation,
law
other than this Article requires that the record include a statement to the
effect that
the account debtor's recovery against an assignee with respect to claims and
defenses against the assignor may not exceed amounts paid by the account debtor
under the record, and the record does not include such a statement, the extent
to
which a claim of an account debtor against the assignor may be asserted against
an
assignee is determined as if the record included such a statement.
(e) Inapplicability to health-care-insurance receivable. This
Section does not apply to an assignment of a health-care-insurance
receivable.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-404. Rights acquired by assignee; claims and defenses against assignee.
(a) Assignee's rights subject to terms, claims, and defenses; exceptions. Unless an account debtor has made an enforceable agreement not to assert defenses or claims, and subject to subsections (b) through (e), the rights of an assignee are subject to:
(1) all terms of the agreement between the account
| | debtor and assignor and any defense or claim in recoupment arising from the transaction that gave rise to the contract; and
|
| (2) any other defense or claim of the account debtor
| | against the assignor which accrues before the account debtor receives a notification of the assignment signed by the assignor or the assignee.
|
| (b) Account debtor's claim reduces amount owed to assignee. Subject to subsection (c) and except as otherwise provided in subsection (d), the claim of an account debtor against an assignor may be asserted against an assignee under subsection (a) only to reduce the amount the account debtor owes.
(c) Rule for individual under other law. This Section is subject to law other than this Article which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes.
(d) Omission of required statement in consumer transaction. In a consumer transaction, if a record evidences the account debtor's obligation, law other than this Article requires that the record include a statement to the effect that the account debtor's recovery against an assignee with respect to claims and defenses against the assignor may not exceed amounts paid by the account debtor under the record, and the record does not include such a statement, the extent to which a claim of an account debtor against the assignor may be asserted against an assignee is determined as if the record included such a statement.
(e) Inapplicability to health-care-insurance receivable. This Section does not apply to an assignment of a health-care-insurance receivable.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/9-404.5
(810 ILCS 5/9-404.5)
Sec. 9-404.5.
Termination statement; duties of filing officer.
(1) If a financing statement covering consumer goods is filed on or
after July 1, 1973, then within one
month or within 10 days following written demand by the debtor after there
is no outstanding secured obligation and no commitment to make advances,
incur obligations or otherwise give value, the secured party must file with
each filing officer with whom the financing statement was filed, a
termination statement to the effect that he no longer claims a security
interest under the financing statement, which shall be identified by file
number. In other cases whenever there is no outstanding secured obligation
and no commitment to make advances, incur obligations or otherwise give
value, the secured party must on written demand by the debtor send the
debtor, for each filing officer with whom the financing statement was
filed, a termination statement to the effect that he no longer claims a
security interest under the financing statement, which shall be identified
by file number. A termination statement signed by a person other than the
secured party of record must be accompanied by a separate written statement
of assignment signed by the secured party of record. If
the affected secured party fails to file such a termination statement as
required by this subsection, or to send such a termination statement within
10 days after proper demand therefor, he shall be liable to the debtor for
$100 and in addition for any loss caused to the debtor by such failure.
(2) On presentation to the filing officer of such a termination
statement he must note it in the index. If he has received the termination
statement in duplicate, he shall return one copy of the termination
statement to the secured party stamped to show the time of receipt thereof.
If the filing officer has a microfilm or other photographic record of the
financing statement, and of any related continuation statement, statement
of assignment and statement of release, he may remove the originals from
the files at any time after receipt of the termination statement, or if he
has no such record, he may remove them from the files at any time after one
year after receipt of the termination statement.
(3) If the termination statement is in the standard form prescribed by the
Secretary
of State, the uniform fee for filing and indexing the termination statement in
the office of
a county recorder shall be $5 and otherwise shall be $10, plus in each case an
additional
fee of $5 for each name more than one at each address listed against which the
termination statement is required to be indexed.
(Source: P.A. 91-893, eff. 7-6-00.)
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810 ILCS 5/9-405
(810 ILCS 5/9-405) (from Ch. 26, par. 9-405)
Sec. 9-405.
Modification of assigned contract.
(a) Effect of modification on assignee. A modification of or
substitution for an assigned contract is effective against an assignee if made
in good
faith. The assignee acquires corresponding rights under the modified or
substituted
contract. The assignment may provide that the modification or substitution is
a
breach of contract by the assignor. This subsection is subject to subsections
(b)
through (d).
(b) Applicability of subsection (a). Subsection (a) applies to the
extent that:
(1) the right to payment or a part thereof under an | | assigned contract has not been fully earned by performance; or
|
|
(2) the right to payment or a part thereof has been
| | fully earned by performance and the account debtor has not received notification of the assignment under Section 9-406(a).
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(c) Rule for individual under other law. This Section is subject
to law other than this Article which establishes a different rule for an
account
debtor who is an individual and who incurred the obligation primarily for
personal,
family, or household purposes.
(d) Inapplicability to health-care-insurance receivable. This
Section does not apply to an assignment of a health-care-insurance
receivable.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-406 (810 ILCS 5/9-406) (from Ch. 26, par. 9-406) (Text of Section before amendment by P.A. 103-1036) Sec. 9-406. Discharge of account debtor; notification of assignment;
identification and proof of assignment; restrictions on assignment of accounts,
chattel paper, payment intangibles, and promissory notes ineffective. (a) Discharge of account debtor; effect of notification. Subject to
subsections (b) through (i), an account debtor on an account, chattel paper, or
a
payment intangible may discharge its obligation by paying the assignor until,
but
not after, the account debtor receives a notification, authenticated by the
assignor or
the assignee, that the amount due or to become due has been assigned and that
payment is to be made to the assignee. After receipt of the notification, the
account
debtor may discharge its obligation by paying the assignee and may not
discharge
the obligation by paying the assignor. (b) When notification ineffective. Subject to subsection (h),
notification is ineffective under subsection (a): (1) if it does not reasonably identify the rights | | (2) to the extent that an agreement between an
| | account debtor and a seller of a payment intangible limits the account debtor's duty to pay a person other than the seller and the limitation is effective under law other than this Article; or
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| (3) at the option of an account debtor, if the
| | notification notifies the account debtor to make less than the full amount of any installment or other periodic payment to the assignee, even if:
|
| (A) only a portion of the account, chattel paper,
| | or payment intangible has been assigned to that assignee;
|
| (B) a portion has been assigned to another
| | (C) the account debtor knows that the assignment
| | to that assignee is limited.
|
| (c) Proof of assignment. Subject to subsection (h), if requested by
the account debtor, an assignee shall seasonably furnish reasonable proof that
the
assignment has been made. Unless the assignee complies, the account debtor may
discharge its obligation by paying the assignor, even if the account debtor has
received a notification under subsection (a).
(d) Term restricting assignment generally ineffective. Except as
otherwise provided in subsection (e) and Sections 2A-303 and 9-407, and subject
to
subsection (h), a term in an agreement between an account debtor and an
assignor
or in a promissory note is ineffective to the extent that it:
(1) prohibits, restricts, or requires the consent of
| | the account debtor or person obligated on the promissory note to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, the account, chattel paper, payment intangible, or promissory note; or
|
| (2) provides that the assignment or transfer or the
| | creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the account, chattel paper, payment intangible, or promissory note.
|
| (e) Inapplicability of subsection (d) to certain sales. Subsection
(d) does not apply to the sale of a payment intangible or promissory note, other than a sale pursuant to a disposition under Section 9-610 or an acceptance of collateral under Section 9-620.
(f) Legal restrictions on assignment generally ineffective.
Except as otherwise provided in Sections 2A-303 and 9-407 and subject to
subsections (h) and (i), a rule of law, statute, or regulation that prohibits, restricts,
or requires the consent of a government, governmental body or official, or account
debtor to the assignment or transfer of, or creation of a security interest in, an
account or chattel paper is ineffective to the extent that the rule of law, statute, or
regulation:
(1) prohibits, restricts, or requires the consent of
| | the government, governmental body or official, or account debtor to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in the account or chattel paper; or
|
| (2) provides that the assignment or transfer or the
| | creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the account or chattel paper.
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| (g) Subsection (b)(3) not waivable. Subject to subsection (h), an
account debtor may not waive or vary its option under subsection (b)(3).
(h) Rule for individual under other law. This Section is subject
to law other than this Article which establishes a different rule for an
account
debtor who is an individual and who incurred the obligation primarily for
personal,
family, or household purposes.
(i) Inapplicability to health-care-insurance receivable. This
Section does not apply to an assignment of a health-care-insurance
receivable.
(Source: P.A. 97-1034, eff. 7-1-13.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-406. Discharge of account debtor; notification of assignment; identification and proof of assignment; restrictions on assignment of accounts, chattel paper, payment intangibles, and promissory notes ineffective.
(a) Discharge of account debtor; effect of notification. Subject to subsections (b) through (i) and (l), an account debtor on an account, chattel paper, or a payment intangible may discharge its obligation by paying the assignor until, but not after, the account debtor receives a notification, signed by the assignor or the assignee, that the amount due or to become due has been assigned and that payment is to be made to the assignee. After receipt of the notification, the account debtor may discharge its obligation by paying the assignee and may not discharge the obligation by paying the assignor.
(b) When notification ineffective. Subject to subsections (h) and (l), notification is ineffective under subsection (a):
(1) if it does not reasonably identify the rights
| | (2) to the extent that an agreement between an
| | account debtor and a seller of a payment intangible limits the account debtor's duty to pay a person other than the seller and the limitation is effective under law other than this Article; or
|
| (3) at the option of an account debtor, if the
| | notification notifies the account debtor to make less than the full amount of any installment or other periodic payment to the assignee, even if:
|
| (A) only a portion of the account, chattel paper,
| | or payment intangible has been assigned to that assignee;
|
| (B) a portion has been assigned to another
| | (C) the account debtor knows that the assignment
| | to that assignee is limited.
|
| (c) Proof of assignment. Subject to subsections (h) and (l), if requested by the account debtor, an assignee shall seasonably furnish reasonable proof that the assignment has been made. Unless the assignee complies, the account debtor may discharge its obligation by paying the assignor, even if the account debtor has received a notification under subsection (a).
(d) Term restricting assignment generally ineffective. In this subsection, "promissory note" includes a negotiable instrument that evidences chattel paper. Except as otherwise provided in subsection (e) and Sections 2A-303 and 9-407, and subject to subsection (h), a term in an agreement between an account debtor and an assignor or in a promissory note is ineffective to the extent that it:
(1) prohibits, restricts, or requires the consent of
| | the account debtor or person obligated on the promissory note to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, the account, chattel paper, payment intangible, or promissory note; or
|
| (2) provides that the assignment or transfer or the
| | creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the account, chattel paper, payment intangible, or promissory note.
|
| (e) Inapplicability of subsection (d) to certain sales. Subsection (d) does not apply to the sale of a payment intangible or promissory note, other than a sale pursuant to a disposition under Section 9-610 or an acceptance of collateral under Section 9-620.
(f) Legal restrictions on assignment generally ineffective. Except as otherwise provided in Sections 2A-303 and 9-407 and subject to subsections (h) and (i), a rule of law, statute, or regulation that prohibits, restricts, or requires the consent of a government, governmental body or official, or account debtor to the assignment or transfer of, or creation of a security interest in, an account or chattel paper is ineffective to the extent that the rule of law, statute, or regulation:
(1) prohibits, restricts, or requires the consent of
| | the government, governmental body or official, or account debtor to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in the account or chattel paper; or
|
| (2) provides that the assignment or transfer or the
| | creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the account or chattel paper.
|
| (g) Subsection (b)(3) not waivable. Subject to subsections (h) and (l), an account debtor may not waive or vary its option under subsection (b)(3).
(h) Rule for individual under other law. This Section is subject to law other than this Article which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes.
(i) Inapplicability to health-care-insurance receivable. This Section does not apply to an assignment of a health-care-insurance receivable.
(j) (Reserved).
(k) (Reserved).
(l) Inapplicability of certain subsections. Subsections (a), (b), (c), and (g) do not apply to a controllable account or controllable payment intangible.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/9-407
(810 ILCS 5/9-407) (from Ch. 26, par. 9-407)
Sec. 9-407.
Restrictions on creation or enforcement of security interest
in leasehold interest or in lessor's residual interest.
(a) Term restricting assignment generally ineffective. Except as
otherwise provided in subsection (b), a term in a lease agreement is
ineffective to
the extent that it:
(1) prohibits, restricts, or requires the consent of | | a party to the lease to the assignment or transfer or the creation, attachment, perfection, or enforcement of a security interest in an interest of a party under the lease contract or in the lessor's residual interest in the goods; or
|
|
(2) provides that the assignment or transfer or the
| | creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the lease.
|
|
(b) Effectiveness of certain terms. Except as otherwise provided
in Section 2A-303(7), a term described in subsection (a)(2) is effective to the
extent
that there is:
(1) a transfer by the lessee of the lessee's right of
| | possession or use of the goods in violation of the term; or
|
|
(2) a delegation of a material performance of either
| | party to the lease contract in violation of the term.
|
|
(c) Security interest not material impairment. The creation,
attachment, perfection, or enforcement of a security interest in the lessor's
interest
under the lease contract or the lessor's residual interest in the goods is not
a transfer
that materially impairs the lessee's prospect of obtaining return performance
or
materially changes the duty of or materially increases the burden or risk
imposed
on the lessee within the purview of Section 2A-303(4) unless, and then only to
the
extent that, enforcement actually results in a delegation of material
performance of
the lessor.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-408 (810 ILCS 5/9-408) (from Ch. 26, par. 9-408) (Text of Section before amendment by P.A. 103-1036) Sec. 9-408. Restrictions on assignment of promissory notes,
health-care-insurance receivables, and certain general intangibles ineffective. (a) Term restricting assignment generally ineffective. Except as
otherwise provided in subsection (b), a term in a promissory note or in
an agreement between an account debtor and a debtor which relates to a
health-care-insurance receivable or a general intangible, including a
contract, permit, license, or franchise, and which term prohibits, restricts,
or requires the consent of the person obligated on the promissory note or the
account debtor to, the assignment or transfer of, or creation, attachment, or
perfection of a security interest in, the promissory note,
health-care-insurance receivable, or general intangible, is ineffective to the
extent that the term: (1) would impair the creation, attachment, or | | perfection of a security interest; or
|
| (2) provides that the assignment or transfer or the
| | creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.
|
| (b) Applicability of subsection (a) to sales of certain rights to payment.
Subsection (a) applies to a security interest in a payment intangible or
promissory note only if the security interest arises out of a sale of the
payment intangible or promissory note, other than a sale pursuant to a disposition under Section 9-610 or an acceptance of collateral under Section 9-620.
(c) Legal restrictions on assignment generally ineffective. A rule of law,
statute, or regulation that prohibits, restricts, or requires the consent of
a government, governmental body or official, person obligated on a promissory
note, or account debtor to the assignment or transfer of, or creation of a
security interest in, a promissory note, health-care-insurance receivable, or
general intangible, including a contract, permit, license, or franchise between
an account debtor and a debtor, is ineffective to the extent that the rule of
law, statute, or regulation:
(1) would impair the creation, attachment, or
| | perfection of a security interest; or
|
| (2) provides that the assignment or transfer or the
| | creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.
|
| (d) Limitation on ineffectiveness under subsections (a) and (c).
To the extent that a term in a promissory note or in an agreement between an
account debtor and a debtor which relates to a health-care-insurance receivable
or general intangible or a rule of law, statute, or regulation described in
subsection (c) would be effective under law other than this Article but is
ineffective under subsection (a) or (c), the creation, attachment, or
perfection of a security interest in the promissory note, health-care-insurance
receivable, or general intangible:
(1) is not enforceable against the person obligated
| | on the promissory note or the account debtor;
|
| (2) does not impose a duty or obligation on the
| | person obligated on the promissory note or the account debtor;
|
| (3) does not require the person obligated on the
| | promissory note or the account debtor to recognize the security interest, pay or render performance to the secured party, or accept payment or performance from the secured party;
|
| (4) does not entitle the secured party to use or
| | assign the debtor's rights under the promissory note, health-care-insurance receivable, or general intangible, including any related information or materials furnished to the debtor in the transaction giving rise to the promissory note, health-care-insurance receivable, or general intangible;
|
| (5) does not entitle the secured party to use,
| | assign, possess, or have access to any trade secrets or confidential information of the person obligated on the promissory note or the account debtor; and
|
| (6) does not entitle the secured party to enforce the
| | security interest in the promissory note, health-care-insurance receivable, or general intangible.
|
| (Source: P.A. 97-1034, eff. 7-1-13.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-408. Restrictions on assignment of promissory notes, health-care-insurance receivables, and certain general intangibles ineffective.
(a) Term restricting assignment generally ineffective. Except as otherwise provided in subsection (b), a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or a general intangible, including a contract, permit, license, or franchise, and which term prohibits, restricts, or requires the consent of the person obligated on the promissory note or the account debtor to, the assignment or transfer of, or creation, attachment, or perfection of a security interest in, the promissory note, health-care-insurance receivable, or general intangible, is ineffective to the extent that the term:
(1) would impair the creation, attachment, or
| | perfection of a security interest; or
|
| (2) provides that the assignment or transfer or the
| | creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.
|
| (b) Applicability of subsection (a) to sales of certain rights to payment. Subsection (a) applies to a security interest in a payment intangible or promissory note only if the security interest arises out of a sale of the payment intangible or promissory note, other than a sale pursuant to a disposition under Section 9-610 or an acceptance of collateral under Section 9-620.
(c) Legal restrictions on assignment generally ineffective. A rule of law, statute, or regulation that prohibits, restricts, or requires the consent of a government, governmental body or official, person obligated on a promissory note, or account debtor to the assignment or transfer of, or creation of a security interest in, a promissory note, health-care-insurance receivable, or general intangible, including a contract, permit, license, or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law, statute, or regulation:
(1) would impair the creation, attachment, or
| | perfection of a security interest; or
|
| (2) provides that the assignment or transfer or the
| | creation, attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the promissory note, health-care-insurance receivable, or general intangible.
|
| (d) Limitation on ineffectiveness under subsections (a) and (c). To the extent that a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or general intangible or a rule of law, statute, or regulation described in subsection (c) would be effective under law other than this Article but is ineffective under subsection (a) or (c), the creation, attachment, or perfection of a security interest in the promissory note, health-care-insurance receivable, or general intangible:
(1) is not enforceable against the person obligated
| | on the promissory note or the account debtor;
|
| (2) does not impose a duty or obligation on the
| | person obligated on the promissory note or the account debtor;
|
| (3) does not require the person obligated on the
| | promissory note or the account debtor to recognize the security interest, pay or render performance to the secured party, or accept payment or performance from the secured party;
|
| (4) does not entitle the secured party to use or
| | assign the debtor's rights under the promissory note, health-care-insurance receivable, or general intangible, including any related information or materials furnished to the debtor in the transaction giving rise to the promissory note, health-care-insurance receivable, or general intangible;
|
| (5) does not entitle the secured party to use,
| | assign, possess, or have access to any trade secrets or confidential information of the person obligated on the promissory note or the account debtor; and
|
| (6) does not entitle the secured party to enforce the
| | security interest in the promissory note, health-care-insurance receivable, or general intangible.
|
| (e) "Promissory note". In this Section, "promissory note" includes a negotiable instrument that evidences chattel paper.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/9-409
(810 ILCS 5/9-409)
Sec. 9-409.
Restrictions on assignment of letter-of-credit rights
ineffective.
(a) Term or law restricting assignment generally ineffective. A
term in a letter of credit or a rule of law, statute, regulation, custom, or
practice
applicable to the letter of credit which prohibits, restricts, or requires the
consent of
an applicant, issuer, or nominated person to a beneficiary's assignment of or
creation of a security interest in a letter-of-credit right is ineffective to
the extent
that the term or rule of law, statute, regulation, custom, or practice:
(1) would impair the creation, attachment, or | | perfection of a security interest in the letter-of-credit right; or
|
|
(2) provides that the assignment or the creation,
| | attachment, or perfection of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the letter-of-credit right.
|
|
(b) Limitation on ineffectiveness under subsection (a). To the
extent that a term in a letter of credit is ineffective under subsection (a) but would
be effective under law other than this Article or a custom or practice applicable to
the letter of credit, to the transfer of a right to draw or otherwise demand
performance under the letter of credit, or to the assignment of a right to proceeds of
the letter of credit, the creation, attachment, or perfection of a security interest in
the letter-of-credit right:
(1) is not enforceable against the applicant, issuer,
| | nominated person, or transferee beneficiary;
|
|
(2) imposes no duties or obligations on the
| | applicant, issuer, nominated person, or transferee beneficiary; and
|
|
(3) does not require the applicant, issuer, nominated
| | person, or transferee beneficiary to recognize the security interest, pay or render performance to the secured party, or accept payment or other performance from the secured party.
|
|
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-410
(810 ILCS 5/9-410)
Sec. 9-410.
(Blank).
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/Art. 9 Pt. 5
(810 ILCS 5/Art. 9 Pt. 5 heading)
PART 5.
FILING
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810 ILCS 5/Art. 9 Pt. 5 Sub. 1
(810 ILCS 5/Art. 9 Pt. 5 Sub. 1 heading)
SUBPART 1.
FILING OFFICE; CONTENTS AND
EFFECTIVENESS OF FINANCING STATEMENT
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810 ILCS 5/9-501
(810 ILCS 5/9-501) (from Ch. 26, par. 9-501)
Sec. 9-501.
Filing office.
(a) Filing offices. Except as otherwise provided in subsection (b),
if the local law of this State governs perfection of a security interest or
agricultural
lien, the office in which to file a financing statement to perfect the security
interest
or agricultural lien is:
(1) the office designated for the filing or recording | | of a record of a mortgage on the related real property, if:
|
|
(A) the collateral is as-extracted collateral or
| |
(B) the financing statement is filed as a fixture
| | filing and the collateral is goods that are or are to become fixtures; or
|
|
(2) the office of the Secretary of State in all other
| | cases, including a case in which the collateral is goods that are or are to become fixtures and the financing statement is not filed as a fixture filing.
|
|
(b) Filing office for transmitting utilities. The office in which to
file a financing statement to perfect a security interest in collateral,
including
fixtures, of a transmitting utility is the office of the Secretary of State.
The
financing statement also
constitutes a fixture filing as to the collateral indicated in the financing
statement
which is or is to become fixtures.
(Source: P.A. 91-357, eff. 7-29-99; 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-501.1 (810 ILCS 5/9-501.1) Sec. 9-501.1. Fraudulent records. (a) No person shall cause to be communicated to the filing office for filing a false record the person knows or reasonably should know: (1) is not authorized or permitted under Section | | 9-509, 9-708, or 9-808 of this Article;
|
| (2) is not related to a valid existing or potential
| | commercial or financial transaction, an existing agricultural or other lien, or a judgment of a court of competent jurisdiction; and
|
| (3) is filed with the intent to harass or defraud the
| | person identified as debtor in the record or any other person.
|
| (b) A person who violates subsection (a) is guilty of a Class A misdemeanor for a first offense and a Class 4 felony for a second or subsequent offense.
(c) A person who violates subsection (a) shall be liable in a civil action to each injured person for:
(1) the greater of the actual damages caused by the
| | violation or up to $10,000 in lieu of actual damages;
|
| (2) reasonable attorney's fees;
(3) court costs and other related expenses of
| | bringing an action, including reasonable investigative expenses; and
|
| (4) in the discretion of the court, exemplary damages
| | in an amount determined by the court or jury.
|
| (d) A person identified as debtor in a filed record the person believes was caused to be communicated to the filing office in violation of subsection (a) may, under penalty of perjury, file with the Secretary of State an affidavit to that effect. The Secretary of State shall adopt and make available a form affidavit for use under this Section.
(e) Upon receipt of an affidavit filed under this Section, or upon administrative action by the Secretary of State, the Secretary of State shall communicate to the secured party of record on the record to which the affidavit or administrative action relates and to the person that communicated the record to the filing office, if different and known to the office, a request for additional documentation supporting the effectiveness of the record. The Department of Business Services of the Office of the Secretary of State and the Office of the General Counsel shall review all such documentation received within 30 days after the first request for additional documentation is sent. The Secretary of State may terminate the record effective 30 days after the first request for additional documentation is sent if it has a reasonable basis for concluding that the record was communicated to the filing office in violation of subsection (a).
The Secretary of State may initiate an administrative action under the first paragraph of this subsection (e) with regard to a filed record if it has reason to believe, from information contained in the record or obtained from the person that communicated the record to the filing office, that the record was communicated to the filing office in violation of subsection (a). The Secretary of State may give heightened scrutiny to a record that indicates that the debtor is a transmitting utility or that indicates that the transaction to which the record relates is a manufactured-home transaction or a public-finance transaction.
(f) The Secretary of State shall not charge a fee to file an affidavit under this Section and shall not return any fee paid for filing a record terminated under this Section.
(g) The Secretary of State shall promptly communicate to the secured party of record a notice of the termination of a record under subsection (e). A secured party of record that believes in good faith that the record was not communicated to the filing office in violation of subsection (a) may file an action to require that the record be reinstated by the filing office. A person that communicated a record to the filing office that the filing office rejected in reliance on Section 9-516(b)(3.5), who believes in good faith that the record was not communicated to the filing office in violation of Section 9-516(b)(3.5), may file an action to require that the record be accepted by the filing office.
(h) If a court or tribunal in an action under this Section determines that a record terminated under this Section or rejected in reliance on Section 9-516(b)(3.5) should be reinstated or accepted, the court or tribunal shall provide a copy of its order to that effect to the Secretary of State. On receipt of an order reinstating a terminated record, the Secretary of State shall refile the record along with a notice indicating that the record was refiled pursuant to this Section and its initial filing date. On receipt of an order requiring that a rejected record be accepted, the Secretary of State shall promptly file the record along with a notice indicating that the record was filed pursuant to this Section and the date on which it was communicated for filing. A rejected record that is filed pursuant to an order of a court or tribunal shall have the effect described in Section 9-516(d) for a record the filing office refuses to accept for a reason other than one set forth in Section 9-516(b).
(i) A terminated record that is refiled under subsection (h) is effective as a filed record from the initial filing date. If the period of effectiveness of a refiled record would have lapsed during the period of termination, the secured party may file a continuation statement within 30 days after the record is refiled and the continuation statement shall have the same effect as if it had been filed during the 6-month period described in Section 9-515(d). A refiled record shall be considered never to have been ineffective against all persons and for all purposes except that it shall not be effective as against a purchaser of the collateral that gave value in reasonable reliance on the absence of the record from the files.
(j) Neither the filing office nor any of its employees shall incur liability for the termination or failure to terminate a record under this Section or for the refusal to accept a record for filing in the lawful performance of the duties of the office or employee.
(k) This Section does not apply to a record communicated to the filing office by a regulated financial institution or by a representative of a regulated financial institution except that the Secretary of State may request from the secured party of record on the record or from the person that communicated the record to the filing office, if different and known to the office, additional documentation supporting that the record was communicated to the filing office by a regulated financial institution or by a representative of a regulated financial institution. The term "regulated financial institution" means a financial institution subject to regulatory oversight or examination by a State or federal agency and includes banks, savings banks, savings associations, building and loan associations, credit unions, consumer finance companies, industrial banks, industrial loan companies, insurance companies, investment companies, investment funds, installment sellers, mortgage servicers, sales finance companies, and leasing companies.
(l) If a record was communicated to the filing office for filing before the effective date of this Section and its communication would have constituted a violation of subsection (a) if it had occurred on or after the effective date of the Section: (i) subsections (b) and (c) are not applicable; and (ii) the other subsections of this Section are applicable.
(Source: P.A. 97-836, eff. 7-20-12.)
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810 ILCS 5/9-502
(810 ILCS 5/9-502) (from Ch. 26, par. 9-502)
Sec. 9-502. Contents of financing statement; record of mortgage as
financing statement; time of filing financing statement.
(a) Sufficiency of financing statement. Subject to subsection (b),
a financing statement is sufficient only if it:
(1) provides the name of the debtor;
(2) provides the name of the secured party or a | | representative of the secured party; and
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(3) indicates the collateral covered by the financing
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(b) Real-property-related financing statements. Except as
otherwise provided in Section 9-501(b), to be sufficient, a financing statement
that
covers as-extracted collateral or timber to be cut, or which is filed as a
fixture filing
and covers goods that are or are to become fixtures, must satisfy subsection (a) and
also:
(1) indicate that it covers this type of collateral;
(2) indicate that it is to be filed in the real
| |
(3) provide a description of the real property to
| | which the collateral is related sufficient to give constructive notice of a mortgage under the law of this State if the description were contained in a record of the mortgage of the real property; and
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(4) if the debtor does not have an interest of record
| | in the real property, provide the name of a record owner.
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(c) Record of mortgage as financing statement. A record of a
mortgage is effective, from the date of recording, as a financing statement
filed as a
fixture filing or as a financing statement covering as-extracted collateral or
timber
to be cut only if:
(1) the record indicates the goods or accounts that
| |
(2) the goods are or are to become fixtures related
| | to the real property described in the record or the collateral is related to the real property described in the record and is as-extracted collateral or timber to be cut;
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(3) the record satisfies the requirements for a
| | financing statement in this Section, but:
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| (A) the record need not indicate that it is to be
| | filed in the real property records; and
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(B) the record sufficiently provides the name of
| | a debtor who is an individual if it provides the individual name of the debtor or the surname and first personal name of the debtor, even if the debtor is an individual to whom Section 9-503(a)(4) applies; and
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(4) the record is recorded.
(d) Filing before security agreement or attachment. A financing
statement may be filed before a security agreement is made or a security
interest
otherwise attaches.
(Source: P.A. 97-1034, eff. 7-1-13.)
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810 ILCS 5/9-503
(810 ILCS 5/9-503) (from Ch. 26, par. 9-503)
Sec. 9-503. Name of debtor and secured party.
(a) Sufficiency of debtor's name. A financing statement
sufficiently provides the name of the debtor:
(1) except as otherwise provided in paragraph (3), if | | the debtor is a registered organization or the collateral is held in a trust that is a registered organization, only if the financing statement provides the name that is stated to be the registered organization's name on the public organic record most recently filed with or issued or enacted by the registered organization's jurisdiction of organization which purports to state, amend, or restate the registered organization's name;
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(2) subject to subsection (f), if the collateral is
| | being administered by the personal representative of a decedent, only if the financing statement provides, as the name of the debtor, the name of the decedent and, in a separate part of the financing statement, indicates that the collateral is being administered by a personal representative;
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(3) if the collateral is held in a trust that is not
| | a registered organization, only if the financing statement:
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(A) provides, as the name of the debtor:
(i) if the organic record of the trust
| | specifies a name for the trust, the name specified; or
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| (ii) if the organic record of the trust does
| | not specify a name for the trust, the name of the settlor or testator; and
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(B) in a separate part of the financing
| | (i) if the name is provided in accordance
| | with subparagraph (A)(i), indicates that the collateral is held in a trust; or
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| (ii) if the name is provided in accordance
| | with subparagraph (A)(ii), provides additional information sufficient to distinguish the trust from other trusts having one or more of the same settlors or the same testator and indicates that the collateral is held in a trust, unless the additional information so indicates;
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| (4) subject to subsection (g), if the debtor is an
| | individual to whom this State has issued a driver's license that has not expired, only if the financing statement provides the name of the individual which is indicated on the driver's license;
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| (5) if the debtor is an individual to whom paragraph
| | (4) does not apply, only if the financing statement provides the individual name of the debtor or the surname and first personal name of the debtor; and
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(6) in other cases:
(A) if the debtor has a name, only if the
| | financing statement provides the organizational name of the debtor; and
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(B) if the debtor does not have a name, only if
| | it provides the names of the partners, members, associates, or other persons comprising the debtor, in a manner that each name provided would be sufficient if the person named were the debtor.
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(b) Additional debtor-related information. A financing statement
that provides the name of the debtor in accordance with subsection (a) is not
rendered ineffective by the absence of:
(1) a trade name or other name of the debtor; or
(2) unless required under subsection (a)(6)(B), names
| | of partners, members, associates, or other persons comprising the debtor.
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(c) Debtor's trade name insufficient. A financing statement that
provides only the debtor's trade name does not sufficiently provide the name of the
debtor.
(d) Representative capacity. Failure to indicate the representative
capacity of a secured party or representative of a secured party does not affect the
sufficiency of a financing statement.
(e) Multiple debtors and secured parties. A financing statement
may provide the name of more than one debtor and the name of more than one
secured party.
(f) Name of decedent. The name of the decedent indicated on the order appointing the personal representative of the decedent issued by the court having jurisdiction over the collateral is sufficient as the "name of the decedent" under subsection (a)(2).
(g) Multiple driver's licenses. If this State has issued to an individual more than one driver's license of a kind described in subsection (a)(4), the one that was issued most recently is the one to which subsection (a)(4) refers.
(h) Definition. In this Section, the "name of the settlor or testator" means:
(1) if the settlor is a registered organization, the
| | name that is stated to be the settlor's name on the public organic record most recently filed with or issued or enacted by the settlor's jurisdiction of organization which purports to state, amend, or restate the settlor's name; or
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| (2) in other cases, the name of the settlor or
| | testator indicated in the trust's organic record.
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| (Source: P.A. 97-1034, eff. 7-1-13.)
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810 ILCS 5/9-504
(810 ILCS 5/9-504) (from Ch. 26, par. 9-504)
Sec. 9-504.
Indication of collateral.
A financing statement sufficiently
indicates the collateral that it covers if the financing statement
provides:
(1) a description of the collateral pursuant to | |
(2) an indication that the financing statement covers
| | all assets or all personal property.
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(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-505
(810 ILCS 5/9-505) (from Ch. 26, par. 9-505)
Sec. 9-505.
Filing and compliance with other statutes and treaties for
consignments, leases, other bailments, and other transactions.
(a) Use of terms other than "debtor" and "secured party." A
consignor, lessor, or other bailor of goods, a licensor, or a buyer of a
payment
intangible or promissory note may file a financing statement, or may comply
with a
statute or treaty described in Section 9-311(a), using the terms "consignor",
"consignee", "lessor", "lessee", "bailor", "bailee", "licensor", "licensee",
"owner",
"registered owner", "buyer", "seller", or words of similar import, instead of
the
terms "secured party" and "debtor".
(b) Effect of financing statement under subsection (a). This part
applies to the filing of a financing statement under subsection (a) and, as
appropriate, to compliance that is equivalent to filing a financing statement
under
Section 9-311(b), but the filing or compliance is not of itself a factor in
determining
whether the collateral secures an obligation. If it is determined for another
reason
that the collateral secures an obligation, a security interest held by the
consignor,
lessor, bailor, licensor, owner, or buyer which attaches to the collateral is
perfected
by the filing or compliance.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-506
(810 ILCS 5/9-506) (from Ch. 26, par. 9-506)
Sec. 9-506.
Effect of errors or omissions.
(a) Minor errors and omissions. A financing statement
substantially satisfying the requirements of this Part is effective, even if it
has
minor errors or omissions, unless the errors or omissions make the financing
statement seriously misleading.
(b) Financing statement seriously misleading. Except as
otherwise provided in subsection (c), a financing statement that fails
sufficiently to
provide the name of the debtor in accordance with Section 9-503(a) is seriously
misleading.
(c) Financing statement not seriously misleading. If a search of
the records of the filing office under the debtor's correct name, using the
filing
office's standard search logic, if any, would disclose a financing statement
that fails
sufficiently to provide the name of the debtor in accordance with Section
9-503(a),
the name provided does not make the financing statement seriously misleading.
(d) "Debtor's correct name." For purposes of Section 9-508(b),
the "debtor's correct name" in subsection (c) means the correct name of the new
debtor.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-507
(810 ILCS 5/9-507) (from Ch. 26, par. 9-507)
Sec. 9-507. Effect of certain events on effectiveness of financing
statement.
(a) Disposition. A filed financing statement remains effective with
respect to collateral that is sold, exchanged, leased, licensed, or otherwise
disposed
of and in which a security interest or agricultural lien continues, even if the
secured
party knows of or consents to the disposition.
(b) Information becoming seriously misleading. Except as
otherwise provided in subsection (c) and Section 9-508, a financing statement
is not
rendered ineffective if, after the financing statement is filed, the
information
provided in the financing statement becomes seriously misleading under Section
9-506.
(c) Change in debtor's name. If the name that
a filed financing statement provides for a debtor becomes insufficient as the name of the debtor under Section 9-503(a) so that the financing statement becomes seriously misleading under Section 9-506:
(1) the financing statement is effective to perfect a | | security interest in collateral acquired by the debtor before, or within four months after, the filed financing statement becomes seriously misleading; and
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(2) the financing statement is not effective to
| | perfect a security interest in collateral acquired by the debtor more than four months after the filed financing statement becomes seriously misleading, unless an amendment to the financing statement which renders the financing statement not seriously misleading is filed within four months after the filed financing statement becomes seriously misleading.
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(Source: P.A. 97-1034, eff. 7-1-13.)
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810 ILCS 5/9-508
(810 ILCS 5/9-508)
Sec. 9-508.
Effectiveness of financing statement if new debtor becomes
bound by security agreement.
(a) Financing statement naming original debtor. Except as
otherwise provided in this Section, a filed financing statement naming an
original
debtor is effective to perfect a security interest in collateral in which a new
debtor
has or acquires rights to the extent that the financing statement would have
been
effective had the original debtor acquired rights in the collateral.
(b) Financing statement becoming seriously misleading. If the
difference between the name of the original debtor and that of the new debtor
causes a filed financing statement that is effective under subsection (a) to be
seriously misleading under Section 9-506:
(1) the financing statement is effective to perfect a | | security interest in collateral acquired by the new debtor before, and within four months after, the new debtor becomes bound under Section 9-203(d); and
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(2) the financing statement is not effective to
| | perfect a security interest in collateral acquired by the new debtor more than four months after the new debtor becomes bound under Section 9-203(d) unless an initial financing statement providing the name of the new debtor is filed before the expiration of that time.
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(c) When Section not applicable. This Section does not apply to
collateral as to which a filed financing statement remains effective against
the new
debtor under Section 9-507(a).
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-509 (810 ILCS 5/9-509) (Text of Section before amendment by P.A. 103-1036) Sec. 9-509. Persons entitled to file a record. (a) Person entitled to file record. A person may file an initial
financing statement, amendment that adds collateral covered by a financing
statement, or amendment that adds a debtor to a financing statement only if: (1) the debtor authorizes the filing in an | | authenticated record or pursuant to subsection (b) or (c); or
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| (2) the person holds an agricultural lien that has
| | become effective at the time of filing and the financing statement covers only collateral in which the person holds an agricultural lien.
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| (b) Security agreement as authorization. By authenticating or
becoming bound as debtor by a security agreement, a debtor or new debtor
authorizes the filing of an initial financing statement, and an amendment,
covering:
(1) the collateral described in the security
| | (2) property that becomes collateral under Section
| | 9-315(a)(2), whether or not the security agreement expressly covers proceeds.
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| (c) Acquisition of collateral as authorization. By acquiring
collateral in which a security interest or agricultural lien continues under Section
9-315(a)(1), a debtor authorizes the filing of an initial financing statement, and an
amendment, covering the collateral and property that becomes collateral under
Section 9-315(a)(2).
(d) Person entitled to file certain amendments. A person may
file an amendment other than an amendment that adds collateral covered by a
financing statement or an amendment that adds a debtor to a financing statement
only if:
(1) the secured party of record authorizes the
| | (2) the amendment is a termination statement for a
| | financing statement as to which the secured party of record has failed to file or send a termination statement as required by Section 9-513(a) or (c), the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed.
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| (e) Multiple secured parties of record. If there is more than one
secured party of record for a financing statement, each secured party of record
may
authorize the filing of an amendment under subsection (d).
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-509. Persons entitled to file a record.
(a) Person entitled to file record. A person may file an initial financing statement, amendment that adds collateral covered by a financing statement, or amendment that adds a debtor to a financing statement only if:
(1) the debtor authorizes the filing in a signed
| | record or pursuant to subsection (b) or (c); or
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| (2) the person holds an agricultural lien that has
| | become effective at the time of filing and the financing statement covers only collateral in which the person holds an agricultural lien.
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| (b) Security agreement as authorization. By signing or becoming bound as debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing statement, and an amendment, covering:
(1) the collateral described in the security
| | (2) property that becomes collateral under Section
| | 9-315(a)(2), whether or not the security agreement expressly covers proceeds.
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| (c) Acquisition of collateral as authorization. By acquiring collateral in which a security interest or agricultural lien continues under Section 9-315(a)(1), a debtor authorizes the filing of an initial financing statement, and an amendment, covering the collateral and property that becomes collateral under Section 9-315(a)(2).
(d) Person entitled to file certain amendments. A person may file an amendment other than an amendment that adds collateral covered by a financing statement or an amendment that adds a debtor to a financing statement only if:
(1) the secured party of record authorizes the
| | (2) the amendment is a termination statement for a
| | financing statement as to which the secured party of record has failed to file or send a termination statement as required by Section 9-513(a) or (c), the debtor authorizes the filing, and the termination statement indicates that the debtor authorized it to be filed.
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| (e) Multiple secured parties of record. If there is more than one secured party of record for a financing statement, each secured party of record may authorize the filing of an amendment under subsection (d).
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/9-510
(810 ILCS 5/9-510)
Sec. 9-510. Effectiveness of filed record.
(a) Filed record effective if authorized. A filed record is effective
only to the extent that it was filed by a person that may file it under Section
9-509.
(b) Authorization by one secured party of record. A record
authorized by one secured party of record does not affect the financing
statement
with respect to another secured party of record.
(c) Continuation statement not timely filed. A continuation
statement that is not filed within the six-month period prescribed by Section
9-515(d) is ineffective.
(d) A filed record ceases to be effective if the filing office terminates the record pursuant to Section 9-501.1. (Source: P.A. 97-836, eff. 7-20-12.)
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810 ILCS 5/9-511
(810 ILCS 5/9-511)
Sec. 9-511.
Secured party of record.
(a) Secured party of record. A secured party of record with
respect to a financing statement is a person whose name is provided as the name
of
the secured party or a representative of the secured party in an initial
financing
statement that has been filed. If an initial financing statement is filed
under Section
9-514(a), the assignee named in the initial financing statement is the secured
party
of record with respect to the financing statement.
(b) Amendment naming secured party of record. If an
amendment of a financing statement which provides the name of a person as a
secured party or a representative of a secured party is filed, the person named
in the
amendment is a secured party of record. If an amendment is filed under Section
9-514(b), the assignee named in the amendment is a secured party of record.
(c) Amendment deleting secured party of record. A person
remains a secured party of record until the filing of an amendment of the
financing
statement which deletes the person.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-512
(810 ILCS 5/9-512)
Sec. 9-512.
Amendment of financing statement.
(a) Amendment of information in financing statement. Subject
to Section 9-509, a person may add or delete collateral covered by, continue or
terminate the effectiveness of, or, subject to subsection (e), otherwise amend
the
information provided in, a financing statement by filing an amendment that:
(1) identifies, by its file number, the initial | | financing statement to which the amendment relates; and
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(2) if the amendment relates to an initial financing
| | statement filed or recorded in a filing office described in Section 9-501(a)(1), provides the date and time that the initial financing statement was filed and the information specified in Section 9-502(b).
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(b) Period of effectiveness not affected. Except as otherwise
provided in Section 9-515, the filing of an amendment does not extend the
period
of effectiveness of the financing statement.
(c) Effectiveness of amendment adding collateral. A financing
statement that is amended by an amendment that adds collateral is effective as
to
the added collateral only from the date of the filing of the amendment.
(d) Effectiveness of amendment adding debtor. A financing
statement that is amended by an amendment that adds a debtor is effective as to
the
added debtor only from the date of the filing of the amendment.
(e) Certain amendments ineffective. An amendment is ineffective
to the extent it:
(1) purports to delete all debtors and fails to
| | provide the name of a debtor to be covered by the financing statement; or
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(2) purports to delete all secured parties of record
| | and fails to provide the name of a new secured party of record.
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(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-513 (810 ILCS 5/9-513) (Text of Section before amendment by P.A. 103-1036) Sec. 9-513. Termination statement. (a) Consumer goods. A secured party shall cause the secured party
of record for a financing statement to file a termination statement for the
financing
statement if the financing statement covers consumer goods and: (1) there is no obligation secured by the collateral | | covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value; or
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| (2) the debtor did not authorize the filing of the
| | initial financing statement.
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| (b) Time for compliance with subsection (a). To comply with
subsection (a), a secured party shall cause the secured party of record to file the
termination statement:
(1) within one month after there is no obligation
| | secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value; or
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| (2) if earlier, within 20 days after the secured
| | party receives an authenticated demand from a debtor.
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| (c) Other collateral. In cases not governed by subsection (a),
within 20 days after a secured party receives an authenticated demand from a
debtor, the secured party shall cause the secured party of record for a financing
statement to send to the debtor a termination statement for the financing statement
or file the termination statement in the filing office if:
(1) except in the case of a financing statement
| | covering accounts or chattel paper that has been sold or goods that are the subject of a consignment, there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value;
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| (2) the financing statement covers accounts or
| | chattel paper that has been sold but as to which the account debtor or other person obligated has discharged its obligation;
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| (3) the financing statement covers goods that were
| | the subject of a consignment to the debtor but are not in the debtor's possession; or
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| (4) the debtor did not authorize the filing of the
| | initial financing statement.
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| (d) Effect of filing termination statement. Except as otherwise
provided in Section 9-510, upon the filing of a termination statement with the
filing
office, the financing statement to which the termination statement relates
ceases to
be
effective. Except
as otherwise provided in Section 9-510, for purposes of Sections 9-519(g),
9-522(a), and 9-523(c) the filing with the filing office of a termination
statement relating to a financing statement that indicates that the debtor is a
transmitting utility also causes the effectiveness of the financing statement
to lapse.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-513. Termination statement.
(a) Consumer goods. A secured party shall cause the secured party of record for a financing statement to file a termination statement for the financing statement if the financing statement covers consumer goods and:
(1) there is no obligation secured by the collateral
| | covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value; or
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| (2) the debtor did not authorize the filing of the
| | initial financing statement.
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| (b) Time for compliance with subsection (a). To comply with subsection (a), a secured party shall cause the secured party of record to file the termination statement:
(1) within one month after there is no obligation
| | secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value; or
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| (2) if earlier, within 20 days after the secured
| | party receives a signed demand from a debtor.
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| (c) Other collateral. In cases not governed by subsection (a), within 20 days after a secured party receives a signed demand from a debtor, the secured party shall cause the secured party of record for a financing statement to send to the debtor a termination statement for the financing statement or file the termination statement in the filing office if:
(1) except in the case of a financing statement
| | covering accounts or chattel paper that has been sold or goods that are the subject of a consignment, there is no obligation secured by the collateral covered by the financing statement and no commitment to make an advance, incur an obligation, or otherwise give value;
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| (2) the financing statement covers accounts or
| | chattel paper that has been sold but as to which the account debtor or other person obligated has discharged its obligation;
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| (3) the financing statement covers goods that were
| | the subject of a consignment to the debtor but are not in the debtor's possession; or
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| (4) the debtor did not authorize the filing of the
| | initial financing statement.
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| (d) Effect of filing termination statement. Except as otherwise provided in Section 9-510, upon the filing of a termination statement with the filing office, the financing statement to which the termination statement relates ceases to be effective. Except as otherwise provided in Section 9-510, for purposes of Sections 9-519(g), 9-522(a), and 9-523(c) the filing with the filing office of a termination statement relating to a financing statement that indicates that the debtor is a transmitting utility also causes the effectiveness of the financing statement to lapse.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/9-514
(810 ILCS 5/9-514)
Sec. 9-514.
Assignment of powers of secured party of record.
(a) Assignment reflected on initial financing statement. Except
as otherwise provided in subsection (c), an initial financing statement may
reflect
an assignment of all of the secured party's power to authorize an amendment to
the
financing statement by providing the name and mailing address of the assignee
as
the name and address of the secured party.
(b) Assignment of filed financing statement. Except as otherwise
provided in subsection (c), a secured party of record may assign of record all or part
of its power to authorize an amendment to a financing statement by filing in the
filing office an amendment of the financing statement which:
(1) identifies, by its file number, the initial | | financing statement to which it relates;
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(2) provides the name of the assignor; and
(3) provides the name and mailing address of the
| |
(c) Assignment of record of mortgage. An assignment of record
of a security interest in a fixture covered by a record of a mortgage which is
effective as a financing statement filed as a fixture filing under Section
9-502(c)
may be made only by an assignment of record of the mortgage in the manner
provided by law of this State other than the Uniform Commercial Code.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-515
(810 ILCS 5/9-515)
Sec. 9-515. Duration and effectiveness of financing statement; effect of
lapsed financing statement.
(a) Five-year effectiveness. Except as otherwise provided in
subsections (b), (e), (f), and (g), a filed financing statement is effective
for a period
of five years after the date of filing.
(b) Public-finance or manufactured-home transaction. Except
as otherwise provided in subsections (e), (f), and (g), an initial financing
statement
filed in connection with a public-finance transaction or manufactured-home
transaction is effective for a period of 30 years after the date of filing if it indicates
that it is filed in connection with a public-finance transaction or
manufactured-home transaction.
(c) Lapse and continuation of financing statement. The
effectiveness of a filed financing statement lapses on the expiration of the period of
its effectiveness unless before the lapse a continuation statement is filed pursuant to
subsection (d). Upon lapse, a financing statement ceases to be effective and any
security interest or agricultural lien that was perfected by the financing statement
becomes unperfected, unless the security interest is perfected otherwise. If the
security interest or agricultural lien becomes unperfected upon lapse, it is deemed
never to have been perfected as against a purchaser of the collateral for value.
(d) When continuation statement may be filed. A continuation
statement may be filed only within six months before the expiration of the five-year
period specified in subsection (a) or the 30-year period specified in subsection (b),
whichever is applicable.
(e) Effect of filing continuation statement. Except as otherwise
provided in Section 9-510, upon timely filing of a continuation statement, the
effectiveness of the initial financing statement continues for a period of five years
commencing on the day on which the financing statement would have become
ineffective in the absence of the filing. Upon the expiration of the five-year period,
the financing statement lapses in the same manner as provided in subsection (c),
unless, before the lapse, another continuation statement is filed pursuant to
subsection (d). Succeeding continuation statements may be filed in the same
manner to continue the effectiveness of the initial financing statement.
(f) Transmitting utility financing statement. If a debtor is a
transmitting utility and a filed initial financing statement so indicates, the financing
statement is effective until a termination statement is filed.
(g) Record of mortgage as financing statement. A record of a
mortgage that is effective as a financing statement filed as a fixture filing under
Section 9-502(c) remains effective as a financing statement filed as a fixture
filing
until the mortgage is released or satisfied of record or its effectiveness
otherwise
terminates as to the real property.
(Source: P.A. 97-1034, eff. 7-1-13.)
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810 ILCS 5/9-516
(810 ILCS 5/9-516)
Sec. 9-516. What constitutes filing; effectiveness of filing.
(a) What constitutes filing. Except as otherwise provided in
subsection (b), communication of a record to a filing office and tender of the
filing
fee or acceptance of the record by the filing office constitutes filing.
(b) Refusal to accept record; filing does not occur. Filing does
not occur with respect to a record that a filing office refuses to accept
because:
(1) the record is not communicated by a method or | | medium of communication authorized by the filing office;
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|
(2) an amount equal to or greater than the applicable
| | filing fee is not tendered;
|
|
(3) the filing office is unable to index the record
| |
(A) in the case of an initial financing
| | statement, the record does not provide a name for the debtor;
|
|
(B) in the case of an amendment or information
| |
(i) does not identify the initial financing
| | statement as required by Section 9-512 or 9-518, as applicable;
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(ii) identifies an initial financing
| | statement whose effectiveness has lapsed under Section 9-515; or
|
|
(iii) identifies an initial financing
| | statement which was terminated pursuant to Section 9-501.1;
|
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(C) in the case of an initial financing statement
| | that provides the name of a debtor identified as an individual or an amendment that provides a name of a debtor identified as an individual which was not previously provided in the financing statement to which the record relates, the record does not identify the debtor's surname;
|
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(D) in the case of a record filed or recorded in
| | the filing office described in Section 9-501(a)(1), the record does not provide a sufficient description of the real property to which it relates; or
|
|
(E) in the case of a record submitted to the
| | filing office described in Section 9-501(a)(1), the filing office has reason to believe, from information contained in the record or from the person that communicated the record to the office, that: (i) if the record indicates that the debtor is a transmitting utility, the debtor does not meet the definition of a transmitting utility as described in Section 9-102(a)(81); (ii) if the record indicates that the transaction relating to the record is a manufactured-home transaction, the transaction does not meet the definition of a manufactured-home transaction as described in Section 9-102(a)(54); or (iii) if the record indicates that the transaction relating to the record is a public-finance transaction, the transaction does not meet the definition of a public-finance transaction as described in Section 9-102(a)(67);
|
| (3.5) in the case of an initial financing statement
| | or an amendment, if the filing office believes in good faith that the record was communicated to the filing office in violation of Section 9-501.1(a);
|
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(4) in the case of an initial financing statement or
| | an amendment that adds a secured party of record, the record does not provide a name and mailing address for the secured party of record;
|
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(5) in the case of an initial financing statement or
| | an amendment that provides a name of a debtor which was not previously provided in the financing statement to which the amendment relates, the record does not:
|
|
(A) provide a mailing address for the debtor; or
(B) indicate whether the name provided as the
| | name of the debtor is the name of an individual or an organization;
|
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(6) in the case of an assignment reflected in an
| | initial financing statement under Section 9-514(a) or an amendment filed under Section 9-514(b), the record does not provide a name and mailing address for the assignee; or
|
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(7) in the case of a continuation statement, the
| | record is not filed within the six-month period prescribed by Section 9-515(d).
|
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(c) Rules applicable to subsection (b). For purposes of subsection
(b):
(1) a record does not provide information if the
| | filing office is unable to read or decipher the information; and
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(2) a record that does not indicate that it is an
| | amendment or identify an initial financing statement to which it relates, as required by Section 9-512, 9-514, or 9-518, is an initial financing statement.
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(d) Refusal to accept record; record effective as filed record. A
record that is communicated to the filing office with tender of the filing fee,
but
which the filing office refuses to accept for a reason other than one set forth
in
subsection (b), is effective as a filed record except as against a purchaser of
the
collateral which gives value in reasonable reliance upon the absence of the
record
from the files.
(e) The Secretary of State may refuse to accept a record for filing under subdivision (b)(3)(E) or (b)(3.5) only if the refusal is approved by the Department of Business Services of the Secretary of State and the General Counsel to the Secretary of State.
(Source: P.A. 97-836, eff. 7-20-12; 97-1034, eff. 7-1-13; 98-463, eff. 8-16-13.)
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810 ILCS 5/9-517
(810 ILCS 5/9-517)
Sec. 9-517.
Effect of indexing errors.
The failure of the filing office
to index a record correctly does not affect the effectiveness of the filed
record.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-518
(810 ILCS 5/9-518)
Sec. 9-518. Claim concerning inaccurate or wrongfully filed record.
(a) Statement with respect to record indexed under a person's name. A person may file in the filing office an information statement with respect to a record indexed there under the person's
name
if the person believes that the record is inaccurate or was wrongfully filed.
(b) Contents of statement under subsection (a). An information statement under subsection (a)
must:
(1) identify the record to which it relates by the | | file number assigned to the initial financing statement to which the record relates;
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|
(2) indicate that it is an information statement; and
(3) provide the basis for the person's belief that
| | the record is inaccurate and indicate the manner in which the person believes the record should be amended to cure any inaccuracy or provide the basis for the person's belief that the record was wrongfully filed.
|
|
(c) Statement by secured party of record. A person may file in the filing office an information statement with respect to a record filed there if the person is a secured party of record with respect to the financing statement to which the record relates and believes that the person that filed the record was not entitled to do so under Section 9-509(d).
(d) Contents of statement under subsection (c). An information statement under subsection (c) must:
(1) identify the record to which it relates by the
| | file number assigned to the initial financing statement to which the record relates;
|
| (2) indicate that it is an information statement; and
(3) provide the basis for the person's belief that
| | the person that filed the record was not entitled to do so under Section 9-509(d).
|
| (e) Record not affected by information statement. The filing of an information statement does not affect the effectiveness of an initial financing
statement or other filed record.
(Source: P.A. 97-1034, eff. 7-1-13.)
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810 ILCS 5/Art. 9 Pt. 5 Sub. 2
(810 ILCS 5/Art. 9 Pt. 5 Sub. 2 heading)
SUBPART 2.
DUTIES AND OPERATION OF FILING OFFICE
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810 ILCS 5/9-519
(810 ILCS 5/9-519)
Sec. 9-519.
Numbering, maintaining, and indexing records;
communicating information provided in records.
(a) Filing office duties. For each record filed in a filing office, the
filing office shall:
(1) assign a unique number to the filed record;
(2) create a record, which may be electronic, | | microfilm, or otherwise, that bears the number assigned to the filed record and the date and time of filing;
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(3) maintain the filed record for public inspection;
| |
(4) index the filed record in accordance with
| | subsections (c), (d), and (e).
|
|
(b) File number. A file number assigned after January 1, 2002,
must include a digit that:
(1) is mathematically derived from or related to the
| | other digits of the file number; and
|
|
(2) aids the filing office in determining whether a
| | number communicated as the file number includes a single-digit or transpositional error.
|
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(c) Indexing: general. Except as otherwise provided in
subsections (d) and (e), the filing office shall:
(1) index an initial financing statement according to
| | the name of the debtor and index all filed records relating to the initial financing statement in a manner that associates with one another an initial financing statement and all filed records relating to the initial financing statement; and
|
|
(2) index a record that provides a name of a debtor
| | which was not previously provided in the financing statement to which the record relates also according to the name that was not previously provided.
|
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(d) Indexing: real-property-related financing statement. If a
financing statement is filed as a fixture filing or covers as-extracted
collateral or
timber to be cut, it must be filed for record and the filing office shall index
it:
(1) under the names of the debtor and of each owner
| | of record shown on the financing statement as if they were the mortgagors under a mortgage of the real property described; and
|
|
(2) to the extent that the law of this State provides
| | for indexing of records of mortgages under the name of the mortgagee, under the name of the secured party as if the secured party were the mortgagee thereunder, or, if indexing is by description, as if the financing statement were a record of a mortgage of the real property described.
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|
(e) Indexing: real-property-related assignment. If a financing
statement is filed as a fixture filing or covers as-extracted collateral or timber to be
cut, the filing office shall index an assignment filed under Section 9-514(a) or an
amendment filed under Section 9-514(b):
(1) under the name of the assignor as grantor; and
(2) to the extent that the law of this State provides
| | for indexing a record of the assignment of a mortgage under the name of the assignee, under the name of the assignee.
|
|
(f) Retrieval and association capability. The filing office shall
maintain a capability:
(1) to retrieve a record by the name of the debtor
| | and by the file number assigned to the initial financing statement to which the record relates; and
|
|
(2) to associate and retrieve with one another an
| | initial financing statement and each filed record relating to the initial financing statement.
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|
(g) Removal of debtor's name. The filing office may not remove
a debtor's name from the index until one year after the effectiveness of a
financing
statement naming the debtor lapses under Section 9-515 with respect to all
secured
parties of record.
(h) Timeliness of filing office performance. The filing office shall
perform the acts required by subsections (a) through (e) at the time and in the
manner prescribed by filing-office rule, but not later than two business days
after
the filing office receives the record in question.
(i) Inapplicability to real-property-related filing office. Subsections
(b) and (h) do not apply to a filing office described in Section
9-501(a)(1).
(j) Unless a statute on disposition of public records provides otherwise,
if the filing officer has an electronic, microfilm, or other image record to be
maintained of the financing statement, continuation statement, statement of
assignment, statement of release, termination statement, or any other related
document, he or she may remove and destroy the original paper submission.
(Source: P.A. 91-893, eff. 7-1-01; 92-33, eff. 7-1-01.)
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810 ILCS 5/9-520
(810 ILCS 5/9-520)
Sec. 9-520.
Acceptance and refusal to accept record.
(a) Mandatory refusal to accept record. A filing office shall
refuse to accept a record for filing for a reason set forth in Section 9-516(b)
and
may refuse to accept a record for filing only for a reason set forth in Section
9-516(b).
(b) Communication concerning refusal. If a filing office refuses
to accept a record for filing, it shall communicate to the person that
presented the
record the fact of and reason for the refusal and the date and time the record
would
have been filed had the filing office accepted it. The communication must be
made
at the time and in the manner prescribed by filing-office rule,
but in the case of a filing
office described in Section 9-501(a)(2),
in no event more than two
business
days after the filing office receives the record.
(c) When filed financing statement effective. A filed financing
statement satisfying Section 9-502(a) and (b) is effective, even if the filing
office is
required to refuse to accept it for filing under subsection (a). However,
Section
9-338 applies to a filed financing statement providing information described in
Section 9-516(b)(5) which is incorrect at the time the financing statement is
filed.
(d) Separate application to multiple debtors. If a record
communicated to a filing office provides information that relates to more than
one
debtor, this Part applies as to each debtor separately.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-521
(810 ILCS 5/9-521)
Sec. 9-521. Uniform form of written financing statement and
amendment.
(a) Initial financing statement form. A filing office that accepts
written records may not refuse to accept a
written initial financing statement
in the
form and format
set forth in the official text of the 2010 amendments to Article 9 of the
Uniform Commercial Code
promulgated by the American Law Institute and the National Conference of
Commissioners on Uniform State Laws,
except for a reason set forth in Section
9-516(b).
(b) Amendment form. A filing office that accepts written records may not
refuse
to accept a written record in
the form and format
set forth as Form UCC3 and Form UCC3Ad in the final official text of the 2010 amendments to Article 9 of the
Uniform Commercial Code
promulgated by the American Law Institute and the National Conference of
Commissioners on Uniform State Laws, except for a
reason
set
forth in Section 9-516(b).
(Source: P.A. 97-1034, eff. 7-1-13.)
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810 ILCS 5/9-522
(810 ILCS 5/9-522)
Sec. 9-522.
Maintenance and destruction of records.
(a) Post-lapse maintenance and retrieval of information. The
filing office shall maintain a record of the information provided in a filed
financing
statement for at least one year after the effectiveness of the financing
statement has
lapsed under Section 9-515 with respect to all secured parties of record. The
record
must be retrievable by using the name of
the debtor and:
(1) if the record was filed in the filing office | | described in Section 9-501(a)(1), by using the file number assigned to the initial financing statement to which the record relates and the date and time that the record was filed or recorded; or
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(2) if the record was filed in the filing office
| | described in Section 9-501(a)(2), by using the file number assigned to the initial financing statement to which the record relates.
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(b) Destruction of written records. Except to the extent that a
statute governing disposition of public records provides otherwise, the filing
office
immediately may destroy any written record evidencing a financing statement.
However, if the filing office destroys a written record, it shall maintain
another
record of the financing statement which complies with subsection (a).
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-523
(810 ILCS 5/9-523)
Sec. 9-523.
Information from filing office; sale or license of records.
(a) Acknowledgment of filing written record. If a person that
files a written record requests an acknowledgment of the filing, the filing
office
shall send to the person an image of the record showing the number assigned to
the
record pursuant to Section 9-519(a)(1) and the date and time of the filing of
the
record. However, if the person furnishes a copy of the record to the filing
office,
the filing office may instead:
(1) note upon the copy the number assigned to the | | record pursuant to Section 9-519(a)(1) and the date and time of the filing of the record; and
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(2) send the copy to the person.
(b) Acknowledgment of filing other record. If a person files a
record other than a written record, the filing office shall communicate to the person
an acknowledgment that provides:
(1) the information in the record;
(2) the number assigned to the record pursuant to
| |
(3) the date and time of the filing of the record.
(c) Communication of requested information. The filing office
shall communicate or otherwise make available in a record the following
information to any person that requests it:
(1) whether there is on file on a date and time
| | specified by the filing office, but not a date earlier than three business days before the filing office receives the request, any financing statement that:
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(A) designates a particular debtor or, if the
| | request so states, designates a particular debtor at the address specified in the request;
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(B) has not lapsed under Section 9-515 with
| | respect to all secured parties of record; and
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|
(C) if the request so states, has lapsed under
| | Section 9-515 and a record of which is maintained by the filing office under Section 9-522(a);
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(2) the date and time of filing of each financing
| |
(3) the information provided in each financing
| |
(d) Medium for communicating information. In complying with
its duty under subsection (c), the filing office may communicate information in
any
medium. However, if requested, the filing office shall communicate information
by
issuing a record that can be admitted into evidence in the courts of this
State without extrinsic evidence of its authenticity.
(e) Timeliness of filing office performance. The filing office shall
perform the acts required by subsections (a) through (d) at the time and in the
manner prescribed by filing-office rule,
but in the case of a filing
office described in Section 9-501(a)(2),
not later than two business days
after
the filing office receives the request.
(f) Public availability of records. At least weekly, the Secretary
of State shall offer to sell
or
license to the public on a nonexclusive basis, in bulk, copies of all records
filed in it
under this Part, in every medium from time to time available to the filing
office.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-524
(810 ILCS 5/9-524)
Sec. 9-524.
Delay by filing office.
Delay by the filing office beyond a
time
limit prescribed by this Part is excused if:
(1) the delay is caused by interruption of | | communication or computer facilities, war, emergency conditions, failure of equipment, or other circumstances beyond control of the filing office; and
|
|
(2) the filing office exercises reasonable diligence
| |
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-525
(810 ILCS 5/9-525)
Sec. 9-525. Fees.
(a) Initial financing
statement or
other record: general rule.
Except as otherwise
provided in subsection (e), the fee for filing and indexing a record under this
Part,
other than an initial financing statement of the kind described in subsection
(b),
is:
(1) $20 if the record is communicated in writing and | | consists of one or two pages;
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|
(2) $20 if the record is communicated in writing and
| | consists of more than two pages; and
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|
(3) $20 if the record is communicated by another
| | medium authorized by filing-office rule.
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|
(b) Initial financing statement:
public-finance
and
manufactured-housing transactions. Except as
otherwise provided in subsection (e), the fee for filing and indexing an
initial
financing statement of the following kind is:
(1) $20 if the financing statement indicates that it
| | is filed in connection with a public-finance transaction;
|
|
(2) $20 if the financing statement indicates that it
| | is filed in connection with a manufactured-home transaction.
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|
(c) Number of names. The number of names required to be
indexed does not affect the amount of the fee in subsections (a) and (b).
(d) Response to information request. The fee for responding to a
request for information from the filing office, including for issuing a
certificate
showing communicating whether there is on file any financing
statement naming
a particular debtor, is:
(1) $10 if the request is communicated in writing; and
(2) $10 if the request is communicated by another
| | medium authorized by filing-office rule.
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|
(e) Record of mortgage. This Section does not require a fee with
respect to a record of a mortgage which is effective as a financing statement
filed as
a fixture filing or as a financing statement covering as-extracted collateral
or timber
to be cut under Section 9-502(c). However, the recording and satisfaction fees
that
otherwise would be applicable to the record of the mortgage apply.
(f) Of the total money collected for each filing with the Secretary of State of an original financing statement, amended statement, continuation, or assignment, or for a release of collateral, $12 of the filing fee shall be paid into the Secretary of State Special Services Fund. The remaining $8 shall be deposited into the General Revenue Fund in the State treasury.
(Source: P.A. 93-990, eff. 8-23-04.)
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810 ILCS 5/9-526
(810 ILCS 5/9-526)
Sec. 9-526.
Filing-office rules.
(a) Adoption of filing-office rules. The Secretary of State
shall adopt and publish rules to implement
this
Article. The filing-office rules must be:
(1) consistent with this Article; and
(2) adopted and published in accordance with the | | Illinois Administrative Procedure Act.
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|
(b) Harmonization of rules. To keep the filing-office rules and
practices of the filing office in harmony with the rules and practices of
filing offices
in other jurisdictions that enact substantially this Part, and to keep the
technology
used by the filing office compatible with the technology used by filing offices
in
other jurisdictions that enact substantially this Part, the Secretary of State,
so far as is consistent with the purposes,
policies,
and provisions of this Article, in adopting, amending, and repealing
filing-office
rules, shall:
(1) consult with filing offices in other
| | jurisdictions that enact substantially this Part; and
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|
(2) consult the most recent version of the Model
| | Rules promulgated by the International Association of Corporate Administrators or any successor organization; and
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|
(3) take into consideration the rules and practices
| | of, and the technology used by, filing offices in other jurisdictions that enact substantially this Part.
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|
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-527
(810 ILCS 5/9-527)
Sec. 9-527.
Duty to report.
The Secretary of State
shall report annually to the
Governor and
Legislature on the operation of the filing office. The report must contain a
statement of the extent to which:
(1) the filing-office rules are not in harmony with | | the rules of filing offices in other jurisdictions that enact substantially this Part and the reasons for these variations; and
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(2) the filing-office rules are not in harmony with
| | the most recent version of the Model Rules promulgated by the International Association of Corporate Administrators, or any successor organization, and the reasons for these variations.
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|
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-528
(810 ILCS 5/9-528)
Sec. 9-528.
Liability of filing officer.
Neither the filing officer nor
any of the filing officer's employees or agents shall be subject to personal
liability by reason of any error or omission in the performance of any duty
under this Article except in the case of willful and wanton conduct.
(Source: P.A. 92-33, eff. 7-1-01.)
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810 ILCS 5/Art. 9 Pt. 6
(810 ILCS 5/Art. 9 Pt. 6 heading)
PART 6.
DEFAULT
|
810 ILCS 5/Art. 9 Pt. 6 Sub. 1
(810 ILCS 5/Art. 9 Pt. 6 Sub. 1 heading)
SUBPART 1.
DEFAULT AND ENFORCEMENT
OF SECURITY INTEREST
|
810 ILCS 5/9-601 (810 ILCS 5/9-601) (Text of Section before amendment by P.A. 103-1036) Sec. 9-601. Rights after default; judicial enforcement; consignor or
buyer of accounts, chattel paper, payment intangibles, or promissory notes. (a) Rights of secured party after default. After default, a secured
party has the rights provided in this Part and, except as otherwise provided in
Section 9-602, those provided by agreement of the parties. A secured party: (1) may reduce a claim to judgment, foreclose, or | | otherwise enforce the claim, security interest, or agricultural lien by any available judicial procedure; and
|
| (2) if the collateral is documents, may proceed
| | either as to the documents or as to the goods they cover.
|
| (b) Rights and duties of secured party in possession or control.
A secured party in possession of collateral or control of collateral under Section
7-106, 9-104, 9-105, 9-106, or 9-107 has the rights and duties provided in Section 9-207.
(c) Rights cumulative; simultaneous exercise. The rights under
subsections (a) and (b) are cumulative and may be exercised simultaneously.
(d) Rights of debtor and obligor. Except as otherwise provided in
subsection (g) and Section 9-605, after default, a debtor and an obligor have
the
rights provided in this Part and by agreement of the parties.
(e) Lien of levy after judgment. If a secured party has reduced its
claim to judgment, the lien of any levy that may be made upon the collateral by
virtue of a judgment relates back to the earliest of:
(1) the date of perfection of the security interest
| | or agricultural lien in the collateral;
|
| (2) the date of filing a financing statement covering
| | (3) any date specified in a statute under which the
| | agricultural lien was created.
|
| (f) Execution sale. A sale pursuant to a judgment is a foreclosure
of the security interest or agricultural lien by judicial procedure within the
meaning
of this Section. A secured party may purchase at the sale and thereafter hold
the
collateral free of any other requirements of this Article.
(g) Consignor or buyer of certain rights to payment. Except as
otherwise provided in Section 9-607(c), this Part imposes no duties upon a
secured
party that is a consignor or is a buyer of accounts, chattel paper, payment
intangibles, or promissory notes.
(Source: P.A. 95-895, eff. 1-1-09.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-601. Rights after default; judicial enforcement; consignor or buyer of accounts, chattel paper, payment intangibles, or promissory notes.
(a) Rights of secured party after default. After default, a secured party has the rights provided in this Part and, except as otherwise provided in Section 9-602, those provided by agreement of the parties. A secured party:
(1) may reduce a claim to judgment, foreclose, or
| | otherwise enforce the claim, security interest, or agricultural lien by any available judicial procedure; and
|
| (2) if the collateral is documents, may proceed
| | either as to the documents or as to the goods they cover.
|
| (b) Rights and duties of secured party in possession or control. A secured party in possession of collateral or control of collateral under Section 7-106, 9-104, 9-105, 9-105A, 9-106, 9-107, or 9-107A has the rights and duties provided in Section 9-207.
(c) Rights cumulative; simultaneous exercise. The rights under subsections (a) and (b) are cumulative and may be exercised simultaneously.
(d) Rights of debtor and obligor. Except as otherwise provided in subsection (g) and Section 9-605, after default, a debtor and an obligor have the rights provided in this Part and by agreement of the parties.
(e) Lien of levy after judgment. If a secured party has reduced its claim to judgment, the lien of any levy that may be made upon the collateral by virtue of a judgment relates back to the earliest of:
(1) the date of perfection of the security interest
| | or agricultural lien in the collateral;
|
| (2) the date of filing a financing statement covering
| | (3) any date specified in a statute under which the
| | agricultural lien was created.
|
| (f) Execution sale. A sale pursuant to a judgment is a foreclosure of the security interest or agricultural lien by judicial procedure within the meaning of this Section. A secured party may purchase at the sale and thereafter hold the collateral free of any other requirements of this Article.
(g) Consignor or buyer of certain rights to payment. Except as otherwise provided in Section 9-607(c), this Part imposes no duties upon a secured party that is a consignor or is a buyer of accounts, chattel paper, payment intangibles, or promissory notes.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-602
(810 ILCS 5/9-602)
Sec. 9-602.
Waiver and variance of rights and duties.
Except as
otherwise provided in Section 9-624, to the extent that they give rights to a
debtor
or obligor and impose duties on a secured party, the debtor or obligor may not
waive or vary the rules stated in the following listed Sections:
(1) Section 9-207(b)(4)(C), which deals with use and | | operation of the collateral by the secured party;
|
|
(2) Section 9-210, which deals with requests for an
| | accounting and requests concerning a list of collateral and statement of account;
|
|
(3) Section 9-607(c), which deals with collection and
| | enforcement of collateral;
|
|
(4) Sections 9-608(a) and 9-615(c) to the extent that
| | they deal with application or payment of noncash proceeds of collection, enforcement, or disposition;
|
|
(5) Sections 9-608(a) and 9-615(d) to the extent that
| | they require accounting for or payment of surplus proceeds of collateral;
|
|
(6) Section 9-609 to the extent that it imposes upon
| | a secured party that takes possession of collateral without judicial process the duty to do so without breach of the peace;
|
|
(7) Sections 9-610(b), 9-611, 9-613, and 9-614, which
| | deal with disposition of collateral;
|
|
(8) Section 9-615(f), which deals with calculation of
| | a deficiency or surplus when a disposition is made to the secured party, a person related to the secured party, or a secondary obligor;
|
|
(9) Section 9-616, which deals with explanation of
| | the calculation of a surplus or deficiency;
|
|
(10) Sections 9-620, 9-621, and 9-622, which deal
| | with acceptance of collateral in satisfaction of obligation;
|
|
(11) Section 9-623, which deals with redemption of
| |
(12) Section 9-624, which deals with permissible
| |
(13) Sections 9-625 and 9-626, which deal with the
| | secured party's liability for failure to comply with this Article.
|
|
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-603
(810 ILCS 5/9-603)
Sec. 9-603.
Agreement on standards concerning rights and duties.
(a) Agreed standards. The parties may determine by agreement
the standards measuring the fulfillment of the rights of a debtor or obligor
and the
duties of a secured party under a rule stated in Section 9-602 if the standards
are
not manifestly unreasonable.
(b) Agreed standards inapplicable to breach of peace.
Subsection (a) does not apply to the duty under Section 9-609 to refrain from
breaching the peace.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-604
(810 ILCS 5/9-604)
Sec. 9-604.
Procedure if security agreement covers real property or
fixtures.
(a) Enforcement: personal and real property. If a security
agreement covers both personal and real property, a secured party may proceed:
(1) under this Part as to the personal property | | without prejudicing any rights with respect to the real property; or
|
|
(2) as to both the personal property and the real
| | property in accordance with the rights with respect to the real property, in which case the other provisions of this Part do not apply.
|
|
(b) Enforcement: fixtures. Subject to subsection (c), if a security
agreement covers goods that are or become fixtures, a secured party may
proceed:
(1) under this Part; or
(2) in accordance with the rights with respect to
| | real property, in which case the other provisions of this Part do not apply.
|
|
(c) Removal of fixtures. Subject to the other provisions of this
Part, if a secured party holding a security interest in fixtures has priority over all
owners and encumbrancers of the real property, the secured party, after default,
may remove the collateral from the real property.
(d) Injury caused by removal. A secured party that removes
collateral shall promptly reimburse any encumbrancer or owner of the real
property, other than the debtor, for the cost of repair of any physical injury caused
by the removal. The secured party need not reimburse the encumbrancer or owner
for any diminution in value of the real property caused by the absence of the
goods
removed or by any necessity of replacing them. A person entitled to
reimbursement may refuse permission to remove until the secured party gives
adequate assurance for the performance of the obligation to reimburse.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-605 (810 ILCS 5/9-605) (Text of Section before amendment by P.A. 103-1036) Sec. 9-605. Unknown debtor or secondary obligor. A secured party does
not owe a duty based on its status as secured party: (1) to a person that is a debtor or obligor, unless | | (A) that the person is a debtor or obligor;
(B) the identity of the person; and
(C) how to communicate with the person; or
(2) to a secured party or lienholder that has filed a
| | financing statement against a person, unless the secured party knows:
|
| (A) that the person is a debtor; and
(B) the identity of the person.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-605. Unknown debtor or secondary obligor.
(a) In general: No duty owed by secured party. Except as provided in subsection (b), a secured party does not owe a duty based on its status as secured party:
(1) to a person that is a debtor or obligor, unless
| | (A) that the person is a debtor or obligor;
(B) the identity of the person; and
(C) how to communicate with the person; or
(2) to a secured party or lienholder that has filed a
| | financing statement against a person, unless the secured party knows:
|
| (A) that the person is a debtor; and
(B) the identity of the person.
(b) Exception: Secured party owes duty to debtor or obligor. A secured party owes a duty based on its status as a secured party to a person if, at the time the secured party obtains control of collateral that is a controllable account, controllable electronic record, or controllable payment intangible or at the time the security interest attaches to the collateral, whichever is later:
(1) the person is a debtor or obligor; and
(2) the secured party knows that the information in
| | subsection (a)(1)(A), (B), or (C) relating to the person is not provided by the collateral, a record attached to or logically associated with the collateral, or the system in which the collateral is recorded.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-606
(810 ILCS 5/9-606)
Sec. 9-606.
Time of default for agricultural lien.
For purposes of this
Part, a default occurs in connection with an agricultural lien at the time the
secured party becomes entitled to enforce the lien in accordance with the
statute under which it was created.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-607
(810 ILCS 5/9-607)
Sec. 9-607. Collection and enforcement by secured party.
(a) Collection and enforcement generally. If so agreed, and in
any event after default, a secured party:
(1) may notify an account debtor or other person | | obligated on collateral to make payment or otherwise render performance to or for the benefit of the secured party;
|
|
(2) may take any proceeds to which the secured party
| | is entitled under Section 9-315;
|
|
(3) may enforce the obligations of an account debtor
| | or other person obligated on collateral and exercise the rights of the debtor with respect to the obligation of the account debtor or other person obligated on collateral to make payment or otherwise render performance to the debtor, and with respect to any property that secures the obligations of the account debtor or other person obligated on the collateral;
|
|
(4) if it holds a security interest in a deposit
| | account perfected by control under Section 9-104(a)(1), may apply the balance of the deposit account to the obligation secured by the deposit account; and
|
|
(5) if it holds a security interest in a deposit
| | account perfected by control under Section 9-104(a)(2) or (3), may instruct the bank to pay the balance of the deposit account to or for the benefit of the secured party.
|
|
(b) Nonjudicial enforcement of mortgage. If necessary to enable
a secured party to exercise under subsection (a)(3) the right of a debtor to enforce a
mortgage nonjudicially, the secured party may record in the office in which a
record of the mortgage is recorded:
(1) a copy of the security agreement that creates or
| | provides for a security interest in the obligation secured by the mortgage; and
|
|
(2) the secured party's sworn affidavit in recordable
| |
(A) a default has occurred with respect to the
| | obligation secured by the mortgage; and
|
|
(B) the secured party is entitled to enforce the
| |
(c) Commercially reasonable collection and enforcement. A
secured party shall proceed in a commercially reasonable manner if the secured
party:
(1) undertakes to collect from or enforce an
| | obligation of an account debtor or other person obligated on collateral; and
|
|
(2) is entitled to charge back uncollected collateral
| | or otherwise to full or limited recourse against the debtor or a secondary obligor.
|
|
(d) Expenses of collection and enforcement. A secured party may
deduct from the collections made pursuant to subsection (c) reasonable expenses of
collection and enforcement, including reasonable attorney's fees and legal
expenses
incurred by the secured party.
(e) Duties to secured party not affected. This Section does not
determine whether an account debtor, bank, or other person obligated on
collateral
owes a duty to a secured party.
(Source: P.A. 97-1034, eff. 7-1-13.)
|
810 ILCS 5/9-608 (810 ILCS 5/9-608) (Text of Section before amendment by P.A. 103-1036) Sec. 9-608. Application of proceeds of collection or enforcement;
liability for deficiency and right to surplus. (a) Application of proceeds, surplus, and deficiency if obligation
secured. If a security interest or agricultural lien secures payment or
performance
of an obligation, the following rules apply: (1) A secured party shall apply or pay over for | | application the cash proceeds of collection or enforcement under Section 9-607 in the following order to:
|
| (A) the reasonable expenses of collection and
| | enforcement and, to the extent provided for by agreement and not prohibited by law, reasonable attorney's fees and legal expenses incurred by the secured party;
|
| (B) the satisfaction of obligations secured by
| | the security interest or agricultural lien under which the collection or enforcement is made; and
|
| (C) the satisfaction of obligations secured by
| | any subordinate security interest in or other lien on the collateral subject to the security interest or agricultural lien under which the collection or enforcement is made if the secured party receives an authenticated demand for proceeds before distribution of the proceeds is completed.
|
| (2) If requested by a secured party, a holder of a
| | subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder complies, the secured party need not comply with the holder's demand under paragraph (1)(C).
|
| (3) A secured party need not apply or pay over for
| | application noncash proceeds of collection and enforcement under Section 9-607 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.
|
| (4) A secured party shall account to and pay a debtor
| | for any surplus, and the obligor is liable for any deficiency.
|
| (b) No surplus or deficiency in sales of certain rights to
payment. If the underlying transaction is a sale of accounts, chattel paper,
payment intangibles, or promissory notes, the debtor is not entitled to any
surplus,
and the obligor is not liable for any deficiency.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-608. Application of proceeds of collection or enforcement; liability for deficiency and right to surplus.
(a) Application of proceeds, surplus, and deficiency if obligation secured. If a security interest or agricultural lien secures payment or performance of an obligation, the following rules apply:
(1) A secured party shall apply or pay over for
| | application the cash proceeds of collection or enforcement under Section 9-607 in the following order to:
|
| (A) the reasonable expenses of collection and
| | enforcement and, to the extent provided for by agreement and not prohibited by law, reasonable attorney's fees and legal expenses incurred by the secured party;
|
| (B) the satisfaction of obligations secured by
| | the security interest or agricultural lien under which the collection or enforcement is made; and
|
| (C) the satisfaction of obligations secured by
| | any subordinate security interest in or other lien on the collateral subject to the security interest or agricultural lien under which the collection or enforcement is made if the secured party receives a signed demand for proceeds before distribution of the proceeds is completed.
|
| (2) If requested by a secured party, a holder of a
| | subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder complies, the secured party need not comply with the holder's demand under paragraph (1)(C).
|
| (3) A secured party need not apply or pay over for
| | application noncash proceeds of collection and enforcement under Section 9-607 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.
|
| (4) A secured party shall account to and pay a debtor
| | for any surplus, and the obligor is liable for any deficiency.
|
| (b) No surplus or deficiency in sales of certain rights to payment. If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes, the debtor is not entitled to any surplus, and the obligor is not liable for any deficiency.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-609
(810 ILCS 5/9-609)
Sec. 9-609.
Secured party's right to take possession after default.
(a) Possession; rendering equipment unusable; disposition on
debtor's premises. After default, a secured party:
(1) may take possession of the collateral; and
(2) without removal, may render equipment unusable | | and dispose of collateral on a debtor's premises under Section 9-610.
|
|
(b) Judicial and nonjudicial process. A secured party may
proceed under subsection (a):
(1) pursuant to judicial process; or
(2) without judicial process, if it proceeds without
| |
(c) Assembly of collateral. If so agreed, and in any event after
default, a secured party may require the debtor to assemble the collateral and make
it available to the secured party at a place to be designated by the secured party
which is reasonably convenient to both parties.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-610
(810 ILCS 5/9-610)
Sec. 9-610. Disposition of collateral after default.
(a) Disposition after default. After default, a secured party may
sell, lease, license, or otherwise dispose of any or all of the collateral in
its present
condition or following any commercially reasonable preparation or processing.
(b) Commercially reasonable disposition. Every aspect of a
disposition of collateral, including the method, manner, time, place, and other
terms, must be commercially reasonable. If commercially reasonable, a secured
party may dispose of collateral by public or private proceedings, by one or
more
contracts, as a unit or in parcels, and at any time and place and on any terms.
(c) Purchase by secured party. A secured party may purchase
collateral:
(1) at a public disposition; or
(2) at a private disposition only if the collateral | | is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations.
|
|
(d) Warranties on disposition. A contract for sale, lease, license,
or other disposition includes the warranties relating to title, possession, quiet
enjoyment, and the like which by operation of law accompany a voluntary
disposition of property of the kind subject to the contract.
(e) Disclaimer of warranties. A secured party may disclaim or
modify warranties under subsection (d):
(1) in a manner that would be effective to disclaim
| | or modify the warranties in a voluntary disposition of property of the kind subject to the contract of disposition; or
|
|
(2) by communicating to the purchaser a record
| | evidencing the contract for disposition and including an express disclaimer or modification of the warranties.
|
|
(f) Record sufficient to disclaim warranties. A record is
sufficient to disclaim warranties under subsection (e) if it indicates "There
is no
warranty relating to title, possession, quiet enjoyment, or the like in this
disposition" or uses words of similar import.
(g) The provisions of this Section are subject to Section 26.5 of the Retail Installment Sales Act.
(Source: P.A. 97-913, eff. 1-1-13.)
|
810 ILCS 5/9-611 (810 ILCS 5/9-611) (Text of Section before amendment by P.A. 103-1036) Sec. 9-611. Notification before disposition of collateral. (a) "Notification date." In this Section, "notification date" means
the earlier of the date on which: (1) a secured party sends to the debtor and any | | secondary obligor an authenticated notification of disposition; or
|
| (2) the debtor and any secondary obligor waive the
| | (b) Notification of disposition required. Except as otherwise
provided in subsection (d), a secured party that disposes of collateral under
Section
9-610 shall send to the persons specified in subsection (c) a reasonable
authenticated notification of disposition.
(c) Persons to be notified. To comply with subsection (b), the
secured party shall send an authenticated notification of disposition to:
(1) the debtor;
(2) any secondary obligor; and
(3) if the collateral is other than consumer goods:
(A) any other person from which the secured party
| | has received, before the notification date, an authenticated notification of a claim of an interest in the collateral;
|
| (B) any other secured party or lienholder that,
| | 10 days before the notification date, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that:
|
| (i) identified the collateral;
(ii) was indexed under the debtor's name as
| | (iii) was filed in the office in which to
| | file a financing statement against the debtor covering the collateral as of that date; and
|
| (C) any other secured party that, 10 days before
| | the notification date, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in Section 9-311(a).
|
| (d) Subsection (b) inapplicable: perishable collateral;
recognized market. Subsection (b) does not apply if the collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market.
(e) Compliance with subsection (c)(3)(B). A secured party
complies with the requirement for notification prescribed by subsection (c)(3)(B)
if:
(1) not later than 20 days or earlier than 30 days
| | before the notification date, the secured party requests, in a commercially reasonable manner, information concerning financing statements indexed under the debtor's name in the office indicated in subsection (c)(3)(B); and
|
| (2) before the notification date, the secured party:
(A) did not receive a response to the request for
| | (B) received a response to the request for
| | information and sent an authenticated notification of disposition to each secured party or other lienholder named in that response whose financing statement covered the collateral.
|
| (Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-611. Notification before disposition of collateral.
(a) "Notification date." In this Section, "notification date" means the earlier of the date on which:
(1) a secured party sends to the debtor and any
| | secondary obligor a signed notification of disposition; or
|
| (2) the debtor and any secondary obligor waive the
| | (b) Notification of disposition required. Except as otherwise provided in subsection (d), a secured party that disposes of collateral under Section 9-610 shall send to the persons specified in subsection (c) a reasonable signed notification of disposition.
(c) Persons to be notified. To comply with subsection (b), the secured party shall send a signed notification of disposition to:
(1) the debtor;
(2) any secondary obligor; and
(3) if the collateral is other than consumer goods:
(A) any other person from which the secured party
| | has received, before the notification date, a signed notification of a claim of an interest in the collateral;
|
| (B) any other secured party or lienholder that,
| | 10 days before the notification date, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that:
|
| (i) identified the collateral;
(ii) was indexed under the debtor's name as
| | (iii) was filed in the office in which to
| | file a financing statement against the debtor covering the collateral as of that date; and
|
| (C) any other secured party that, 10 days before
| | the notification date, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in Section 9-311(a).
|
| (d) Subsection (b) inapplicable: perishable collateral; recognized market. Subsection (b) does not apply if the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market.
(e) Compliance with subsection (c)(3)(B). A secured party complies with the requirement for notification prescribed by subsection (c)(3)(B) if:
(1) not later than 20 days or earlier than 30 days
| | before the notification date, the secured party requests, in a commercially reasonable manner, information concerning financing statements indexed under the debtor's name in the office indicated in subsection (c)(3)(B); and
|
| (2) before the notification date, the secured party:
(A) did not receive a response to the request for
| | (B) received a response to the request for
| | information and sent a signed notification of disposition to each secured party or other lienholder named in that response whose financing statement covered the collateral.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-612
(810 ILCS 5/9-612)
Sec. 9-612.
Timeliness of notification before disposition of collateral.
(a) Reasonable time is question of fact. Except as otherwise
provided in subsection (b), whether a notification is sent within a reasonable
time is
a question of
fact. The limitation of the
rule in subsection (b) to transactions other than consumer-goods transactions
is intended to leave to the court the determination of the proper rules in
consumer-goods transactions. The court may not infer from that limitation the
nature of the proper rule in consumer-goods transactions and may continue to
apply established approaches.
(b) 10-day period sufficient in non-consumer transaction. In a
transaction other than a consumer transaction, a notification of disposition
sent
after default and 10 days or more before the earliest time of disposition set
forth in
the notification is sent within a reasonable time before the disposition.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-613 (810 ILCS 5/9-613) (Text of Section before amendment by P.A. 103-1036) Sec. 9-613. Contents and form of notification before disposition of collateral: general. Except in a consumer-goods transaction, the following rules apply: (1) The contents of a notification of disposition are | | sufficient if the notification:
|
| (A) describes the debtor and the secured party;
(B) describes the collateral that is the subject
| | of the intended disposition;
|
| (C) states the method of intended disposition;
(D) states that the debtor is entitled to an
| | accounting of the unpaid indebtedness and states the charge, if any, for an accounting; and
|
| (E) states the time and place of a public
| | disposition or the time after which any other disposition is to be made.
|
| (2) Whether the contents of a notification that lacks
| | any of the information specified in paragraph (1) are nevertheless sufficient is a question of fact.
|
| (3) The contents of a notification providing
| | substantially the information specified in paragraph (1) are sufficient, even if the notification is accompanied by or combined other notification or includes:
|
| (A) information not specified by that paragraph;
| | (B) minor errors that are not seriously
| | (4) A particular phrasing of the notification is not
| | (5) The following form of notification and the form
| | appearing in Section 9-614(4), when completed, each provides sufficient information:
|
| NOTIFICATION OF DISPOSITION OF COLLATERAL To: ..................................... (Name of | | debtor, obligor, or other person to which the notification is sent)
|
| From: ................................... (Name,
| | address, and telephone number of secured party)
|
| Name of Debtor(s): ..................... (Include
| | only if debtor(s) are not an addressee)
|
|
For a public disposition:
We will sell or lease or license, as applicable, the
| | ............................ (describe collateral) to the highest qualified bidder in public as follows:
|
| Day and Date: ...................................
Time: ...........................................
Place: ..........................................
For a private disposition:
We will sell (or lease or license, as applicable) the
| | ........................... (describe collateral) privately sometime after ................ (day and date).
|
| You are entitled to an accounting of the unpaid
| | indebtedness secured by the property that we intend to sell or lease or license, as applicable for a charge of $................. You may request an accounting by calling us at .................. (telephone number).
|
| (Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-613. Contents and form of notification before disposition of collateral: general.
(a) Contents and form of notification. Except in a consumer-goods transaction, the following rules apply:
(1) The contents of a notification of disposition are
| | sufficient if the notification:
|
| (A) describes the debtor and the secured party;
(B) describes the collateral that is the subject
| | of the intended disposition;
|
| (C) states the method of intended disposition;
(D) states that the debtor is entitled to an
| | accounting of the unpaid indebtedness and states the charge, if any, for an accounting; and
|
| (E) states the time and place of a public
| | disposition or the time after which any other disposition is to be made.
|
| (2) Whether the contents of a notification that lacks
| | any of the information specified in paragraph (1) are nevertheless sufficient is a question of fact.
|
| (3) The contents of a notification providing
| | substantially the information specified in paragraph (1) are sufficient, even if the notification is accompanied by or combined other notification or includes:
|
| (A) information not specified by that paragraph;
| | (B) minor errors that are not seriously
| | (4) A particular phrasing of the notification is not
| | (5) The following form of notification and the form
| | appearing in Section 9-614(a)(4), when completed in accordance with the instructions in subsection (b) and Section 9-614(b), each provides sufficient information:
|
| NOTIFICATION OF DISPOSITION OF COLLATERAL To: (Name of debtor, obligor, or other person to which the notification is sent)
From: (Name, address, and telephone number of secured party)
{1} Name of any debtor that is not an addressee: (Name of each debtor)
{2} We will sell (describe collateral) (to the highest qualified bidder) at public sale. A sale could include a lease or license. The sale will be held as follows:
(Date)
(Time)
(Place)
{3} We will sell (describe collateral) at private sale sometime after (date). A sale could include a lease or license.
{4} You are entitled to an accounting of the unpaid indebtedness secured by the property that we intend to sell or, as applicable, lease or license.
{5} If you request an accounting you must pay a charge of $ (amount).
{6} You may request an accounting by calling us at (telephone number).[End of Form] (b) Instructions for form of notification. The following instructions apply to the form of notification in subsection (a)(5):
(1) The instructions in this subsection refer to the | | numbers in braces before items in the form of notification in subsection (a)(5). Do not include the numbers or braces in the notification. The numbers and braces are used only for the purpose of these instructions.
|
| (2) Include and complete item {1} only if there is a
| | debtor that is not an addressee of the notification and list the name or names.
|
| (3) Include and complete either item {2}, if the
| | notification relates to a public disposition of the collateral, or item {3}, if the notification relates to a private disposition of the collateral. If item {2} is included, include the words "to the highest qualified bidder" only if applicable.
|
| (4) Include and complete items {4} and {6}.
(5) Include and complete item {5} only if the sender
| | will charge the recipient for an accounting.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-614 (810 ILCS 5/9-614) (Text of Section before amendment by P.A. 103-1036) Sec. 9-614. Contents and form of notification before disposition of collateral: consumer-goods transaction. In a consumer-goods transaction, the following rules apply: (1) A notification of disposition must provide the | | (A) the information specified in Section 9-613(1);
(B) a description of any liability for a
| | deficiency of the person to which the notification is sent;
|
| (C) a telephone number from which the amount that
| | must be paid to the secured party to redeem the collateral under Section 9-623 is available; and
|
| (D) a telephone number or mailing address from
| | which additional information concerning the disposition and the obligation secured is available.
|
| (2) A particular phrasing of the notification is not
| | (3) The contents of a notification providing
| | substantially the information specified in paragraph (1) are sufficient, even if the notification:
|
| (A) is accompanied by or combined with other
| | (B) includes information not specified by that
| | (C) includes minor errors that are not seriously
| | (4) The following form of notification, when
| | completed, provides sufficient information:
|
| ............. (Name and address of secured party)
............. (Date)
NOTICE OF OUR PLAN TO SELL PROPERTY ......................................................
(Name and address of any obligor who is also a debtor)
Subject: ..................................
(Identification of Transaction)
We have your ..................... (describe | | collateral), because you broke promises in our agreement.
|
|
For a public disposition:
We will sell ....................... (describe
| | collateral) at public sale. A sale could include a lease or license. The sale will be held as follows:
|
| Date: ................................
Time: ................................
Place: ................................
You may attend the sale and bring bidders if you want.
For a private disposition:
We will sell ........................... (describe
| | collateral) at private sale sometime after .................... (date). A sale could include a lease or license.
|
| The money that we get from the sale (after paying our
| | costs) will reduce the amount you owe. If we get less money than you owe, you ............ (will or will not, as applicable) still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else.
|
| You can get the property back at any time before we
| | sell it by paying us the full amount you owe (not just the past due payments), including our expenses. To learn the exact amount you must pay, call us at ................ (telephone number).
|
| If you want us to explain to you in writing how we
| | have figured the amount that you owe us, you may call us at .................. (telephone number) or write us at .................................... (secured party's address) and request a written explanation. We will charge you $ ........... for the explanation if we sent you another written explanation of the amount you owe us within the last six months.
|
| If you need more information about the sale call us
| | at .................. (telephone number) or write us at ......................... (secured party's address).
|
| We are sending this notice to the following other
| | people who have an interest ...................... (describe collateral) or who owe money under your agreement:
|
| .................................................
(Names of all other debtors and obligors, if any)
(5) A notification in the form of paragraph (4) is
| | sufficient, even if it includes errors in information not required by paragraph (1).
|
| (6) If a notification under this Section is not in
| | the form of paragraph (4), law other than this Article determines the effect of including information not required by paragraph (1).
|
| (Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-614. Contents and form of notification before disposition of collateral: consumer-goods transaction.
(a) Contents and form of notification. In a consumer-goods transaction, the following rules apply:
(1) A notification of disposition must provide the
| | (A) the information specified in Section
| | (B) a description of any liability for a
| | deficiency of the person to which the notification is sent;
|
| (C) a telephone number from which the amount that
| | must be paid to the secured party to redeem the collateral under Section 9-623 is available; and
|
| (D) a telephone number or mailing address from
| | which additional information concerning the disposition and the obligation secured is available.
|
| (2) A particular phrasing of the notification is not
| | (3) The contents of a notification providing
| | substantially the information specified in paragraph (1) are sufficient, even if the notification:
|
| (A) is accompanied by or combined with other
| | (B) includes information not specified by that
| | (C) includes minor errors that are not seriously
| | (4) The following form of notification, when
| | completed in accordance with the instructions in subsection (b), provides sufficient information:
|
| (Name and address of secured party)
(Date)
NOTICE OF OUR PLAN TO SELL PROPERTY (Name and address of any obligor who is also a debtor)
Subject: (Identify transaction)
We have your (describe collateral), because you broke promises in our agreement.
{1} We will sell (describe collateral) at public sale. A sale could include a lease or license. The sale will be held as follows:
(Date)
(Time)
(Place)
You may attend the sale and bring bidders if you want.
{2} We will sell (describe collateral) at private sale sometime after (date). A sale could include a lease or license.
{3} The money that we get from the sale, after paying our costs, will reduce the amount you owe. If we get less money than you owe, you (will or will not, as applicable) still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else.
{4} You can get the property back at any time before we sell it by paying us the full amount you owe, not just the past due payments, including our expenses. To learn the exact amount you must pay, call us at (telephone number).
{5} If you want us to explain to you in (writing) (writing or in (description of electronic record)) (description of electronic record) how we have figured the amount that you owe us, {6} call us at (telephone number) (or) (write us at (secured party's address)) (or contact us by (description of electronic communication method)) {7} and request (a written explanation) (a written explanation or an explanation in (description of electronic record)) (an explanation in (description of electronic record)).
{8} We will charge you $ (amount) for the explanation if we sent you another written explanation of the amount you owe us within the last six months.
{9} If you need more information about the sale (call us at (telephone number)) (or) (write us at (secured party's address)) (or contact us by (description of electronic communication method)).
{10} We are sending this notice to the following other people who have an interest in (describe collateral) or who owe money under your agreement:
(Names of all other debtors and obligors, if any)[End of Form] (b) Instructions for form of notification. The following instructions apply to the form of notification in subsection (a)(4):
(1) The instructions in this subsection refer to the | | numbers in braces before items in the form of notification in subsection (a)(4). Do not include the numbers or braces in the notification. The numbers and braces are used only for the purpose of these instructions.
|
| (2) Include and complete either item {1}, if the
| | notification relates to a public disposition of the collateral, or item {2}, if the notification relates to a private disposition of the collateral.
|
| (3) Include and complete items {3}, {4}, {5}, {6},
| | (4) In item {5}, include and complete any one of the
| | three alternative methods for the explanation-writing, writing or electronic record, or electronic record.
|
| (5) In item {6}, include the telephone number. In
| | addition, the sender may include and complete either or both of the two additional alternative methods of communication-writing or electronic communication-for the recipient of the notification to communicate with the sender. Neither of the two additional methods of communication is required to be included.
|
| (6) In item {7}, include and complete the method or
| | methods for the explanation-writing, writing or electronic record, or electronic record-included in item {5}.
|
| (7) Include and complete item {8} only if a written
| | explanation is included in item {5} as a method for communicating the explanation and the sender will charge the recipient for another written explanation.
|
| (8) In item {9}, include either the telephone number
| | or the address or both the telephone number and the address. In addition, the sender may include and complete the additional method of communication-electronic communication-for the recipient of the notification to communicate with the sender. The additional method of electronic communication is not required to be included.
|
| (9) If item {10} does not apply, insert "None" after
| | (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-615 (810 ILCS 5/9-615) (Text of Section before amendment by P.A. 103-1036) Sec. 9-615. Application of proceeds of disposition; liability for
deficiency and right to surplus. (a) Application of proceeds. A secured party shall apply or pay
over for application the cash proceeds of disposition in the following order
to: (1) the reasonable expenses of retaking, holding, | | preparing for disposition, processing, and disposing, and, to the extent provided for by agreement and not prohibited by law, reasonable attorney's fees and legal expenses incurred by the secured party;
|
| (2) the satisfaction of obligations secured by the
| | security interest or agricultural lien under which the disposition is made;
|
| (3) the satisfaction of obligations secured by any
| | subordinate security interest in or other subordinate lien on the collateral if:
|
| (A) the secured party receives from the holder of
| | the subordinate security interest or other lien an authenticated demand for proceeds before distribution of the proceeds is completed; and
|
| (B) in a case in which a consignor has an
| | interest in the collateral, the subordinate security interest or other lien is senior to the interest of the consignor; and
|
| (4) a secured party that is a consignor of the
| | collateral if the secured party receives from the consignor an authenticated demand for proceeds before distribution of the proceeds is completed.
|
| (b) Proof of subordinate interest. If requested by a secured party,
a holder of a subordinate security interest or other lien shall furnish reasonable
proof of the interest or lien within a reasonable time. Unless the holder does so, the
secured party need not comply with the holder's demand under subsection (a)(3).
(c) Application of noncash proceeds. A secured party need not
apply or pay over for application noncash proceeds of disposition under this
Section unless the failure to do so would be commercially unreasonable. A secured
party that applies or pays over for application noncash proceeds shall do so in a
commercially reasonable manner.
(d) Surplus or deficiency if obligation secured. If the security
interest under which a disposition is made secures payment or performance of an
obligation, after making the payments and applications required by subsection (a)
and permitted by subsection (c):
(1) unless subsection (a)(4) requires the secured
| | party to apply or pay over cash proceeds to a consignor, the secured party shall account to and pay a debtor for any surplus; and
|
| (2) the obligor is liable for any deficiency.
(e) No surplus or deficiency in sales of certain rights to
payment. If the underlying transaction is a sale of accounts, chattel paper,
payment intangibles, or promissory notes:
(1) the debtor is not entitled to any surplus; and
(2) the obligor is not liable for any deficiency.
(f) Calculation of surplus or deficiency in disposition to person
related to secured party. The surplus or deficiency following a disposition is
calculated based on the amount of proceeds that would have been realized in a
disposition complying with this Part
and described in subsection
(f)(2) of this Section to
a transferee other than the secured party, a
person related to the secured party, or a secondary obligor if:
(1) the transferee in the disposition is the secured
| | party, a person related to the secured party, or a secondary obligor; and
|
| (2) the amount of proceeds of the disposition is
| | significantly below the range of proceeds that would have been received from a complying disposition by a forced sale without reserve to a willing buyer other than the secured party, a person related to the secured party, or a secondary obligor.
|
| (g) Cash proceeds received by junior secured party. A secured
party that receives cash proceeds of a disposition in good faith and without
knowledge that the receipt violates the rights of the holder of a security
interest or
other lien that is not subordinate to the security interest or agricultural
lien under
which the disposition is made:
(1) takes the cash proceeds free of the security
| | (2) is not obligated to apply the proceeds of the
| | disposition to the satisfaction of obligations secured by the security interest or other lien; and
|
| (3) is not obligated to account to or pay the holder
| | of the security interest or other lien for any surplus.
|
| (Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-615. Application of proceeds of disposition; liability for deficiency and right to surplus.
(a) Application of proceeds. A secured party shall apply or pay over for application the cash proceeds of disposition in the following order to:
(1) the reasonable expenses of retaking, holding,
| | preparing for disposition, processing, and disposing, and, to the extent provided for by agreement and not prohibited by law, reasonable attorney's fees and legal expenses incurred by the secured party;
|
| (2) the satisfaction of obligations secured by the
| | security interest or agricultural lien under which the disposition is made;
|
| (3) the satisfaction of obligations secured by any
| | subordinate security interest in or other subordinate lien on the collateral if:
|
| (A) the secured party receives from the holder of
| | the subordinate security interest or other lien a signed demand for proceeds before distribution of the proceeds is completed; and
|
| (B) in a case in which a consignor has an
| | interest in the collateral, the subordinate security interest or other lien is senior to the interest of the consignor; and
|
| (4) a secured party that is a consignor of the
| | collateral if the secured party receives from the consignor a signed demand for proceeds before distribution of the proceeds is completed.
|
| (b) Proof of subordinate interest. If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder does so, the secured party need not comply with the holder's demand under subsection (a)(3).
(c) Application of noncash proceeds. A secured party need not apply or pay over for application noncash proceeds of disposition under this Section unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.
(d) Surplus or deficiency if obligation secured. If the security interest under which a disposition is made secures payment or performance of an obligation, after making the payments and applications required by subsection (a) and permitted by subsection (c):
(1) unless subsection (a)(4) requires the secured
| | party to apply or pay over cash proceeds to a consignor, the secured party shall account to and pay a debtor for any surplus; and
|
| (2) the obligor is liable for any deficiency.
(e) No surplus or deficiency in sales of certain rights to payment. If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes:
(1) the debtor is not entitled to any surplus; and
(2) the obligor is not liable for any deficiency.
(f) Calculation of surplus or deficiency in disposition to person related to secured party. The surplus or deficiency following a disposition is calculated based on the amount of proceeds that would have been realized in a disposition complying with this Part and described in subsection (f)(2) of this Section to a transferee other than the secured party, a person related to the secured party, or a secondary obligor if:
(1) the transferee in the disposition is the secured
| | party, a person related to the secured party, or a secondary obligor; and
|
| (2) the amount of proceeds of the disposition is
| | significantly below the range of proceeds that would have been received from a complying disposition by a forced sale without reserve to a willing buyer other than the secured party, a person related to the secured party, or a secondary obligor.
|
| (g) Cash proceeds received by junior secured party. A secured party that receives cash proceeds of a disposition in good faith and without knowledge that the receipt violates the rights of the holder of a security interest or other lien that is not subordinate to the security interest or agricultural lien under which the disposition is made:
(1) takes the cash proceeds free of the security
| | (2) is not obligated to apply the proceeds of the
| | disposition to the satisfaction of obligations secured by the security interest or other lien; and
|
| (3) is not obligated to account to or pay the holder
| | of the security interest or other lien for any surplus.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-616 (810 ILCS 5/9-616) (Text of Section before amendment by P.A. 103-1036) Sec. 9-616. Explanation of calculation of surplus or deficiency. (a) Definitions. In this Section: (1) "Explanation" means a writing that: (A) states whether a surplus or deficiency is | | owed and the amount of the surplus, if applicable;
|
| (B) states, if applicable, that future debits,
| | credits, charges, including additional credit service charges or interest, rebates, and expenses may affect the amount of the surplus or deficiency;
|
| (C) provides a telephone number or mailing
| | address from which the debtor or consumer obligor may obtain additional information concerning the transaction and from which such person may request the amount of the deficiency and further information regarding how the secured party calculated the surplus or deficiency; and
|
| (D) at the sender's option, the information set
| | (2) "Request" means a record:
(A) authenticated by a debtor or consumer obligor;
(B) requesting that the recipient provide
| | information of how it calculated the surplus or deficiency; and
|
| (C) sent after disposition of the collateral
| | (b) Explanation of calculation. In a consumer-goods transaction
in which the debtor is entitled to a surplus or a consumer obligor is liable
for a
deficiency under Section 9-615, the secured party shall:
(1) send an explanation to the debtor or consumer
| | obligor, as applicable, after the disposition and:
|
| (A) before or when the secured party accounts to
| | the debtor and pays any surplus or first makes written demand on the consumer obligor after the disposition for payment of the deficiency, other than in instances in which such demand is made by a third-party debt collector covered by the Fair Debt Collection Practices Act; and
|
| (B) within 14 days after receipt of a request
| | made by the debtor or consumer obligor within one year after the secured party has given an explanation under this Section or notice to such debtor or consumer obligor under Section 9-614 of this Article; or
|
| (2) in the case of a consumer obligor who is liable
| | for a deficiency, within 14 days after receipt of a request, send to the consumer obligor a record waiving the secured party's right to a deficiency.
|
| (c) Required information for response to request. To comply with a
request, the secured party must provide a response in writing which includes
the following information:
(1) the aggregate amount of obligations secured by
| | the security interest under which the disposition was made, and, if the amount reflects a rebate of unearned interest or credit service charge, an indication of that fact, calculated as of a specified date:
|
| (A) if the secured party takes or receives
| | possession of the collateral after default, not more than 35 days before the secured party takes or receives possession; or
|
| (B) if the secured party takes or receives
| | possession of the collateral before default or does not take possession of the collateral, not more than 35 days before the disposition;
|
| (2) the amount of proceeds of the disposition;
(3) the aggregate amount of the obligations after
| | deducting the amount of proceeds;
|
| (4) the amount, in the aggregate or by type, and
| | types of expenses, including expenses of retaking, holding, preparing for disposition, processing, and disposing of the collateral, and attorney's fees secured by the collateral which are known to the secured party and relate to the current disposition;
|
| (5) the amount, in the aggregate or by type, and
| | types of credits, including rebates of interest or credit service charges, to which the obligor is known to be entitled and which are not reflected in the amount in paragraph (1); and
|
| (6) the amount of the surplus or deficiency.
(d) Substantial compliance. A particular phrasing of
the explanation or response to a request is not required. An explanation or
a response to a request complying substantially with the requirements of this
Section is sufficient even if it is:
(1) accompanied by or combined with other
| | (2) includes information not specified by this
| | (3) includes minor errors that are not seriously
| | (4) includes errors in information not required by
| | (e) Charges for responses. A debtor or consumer obligor is
entitled without charge to one response to a request under this Section during
any
six-month period in which the secured party did not send to the debtor or
consumer
obligor an explanation pursuant to subsection (b)(1). The secured party may
require payment of a charge not exceeding $25 for each additional response.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-616. Explanation of calculation of surplus or deficiency.
(a) Definitions. In this Section:
(1) "Explanation" means a record that:
(A) states whether a surplus or deficiency is
| | owed and the amount of the surplus, if applicable;
|
| (B) states, if applicable, that future debits,
| | credits, charges, including additional credit service charges or interest, rebates, and expenses may affect the amount of the surplus or deficiency;
|
| (C) provides a telephone number or mailing
| | address from which the debtor or consumer obligor may obtain additional information concerning the transaction and from which such person may request the amount of the deficiency and further information regarding how the secured party calculated the surplus or deficiency; and
|
| (D) at the sender's option, the information set
| | (2) "Request" means a record:
(A) signed by a debtor or consumer obligor;
(B) requesting that the recipient provide
| | information of how it calculated the surplus or deficiency; and
|
| (C) sent after disposition of the collateral
| | (b) Explanation of calculation. In a consumer-goods transaction in which the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under Section 9-615, the secured party shall:
(1) send an explanation to the debtor or consumer
| | obligor, as applicable, after the disposition and:
|
| (A) before or when the secured party accounts to
| | the debtor and pays any surplus or first makes demand in a record on the consumer obligor after the disposition for payment of the deficiency, other than in instances in which such demand is made by a third-party debt collector covered by the Fair Debt Collection Practices Act; and
|
| (B) within 14 days after receipt of a request
| | made by the debtor or consumer obligor within one year after the secured party has given an explanation under this Section or notice to such debtor or consumer obligor under Section 9-614 of this Article; or
|
| (2) in the case of a consumer obligor who is liable
| | for a deficiency, within 14 days after receipt of a request, send to the consumer obligor a record waiving the secured party's right to a deficiency.
|
| (c) Required information. To comply with subsection (a)(1)(B), an explanation must provide the following information in the following order:
(1) the aggregate amount of obligations secured by
| | the security interest under which the disposition was made, and, if the amount reflects a rebate of unearned interest or credit service charge, an indication of that fact, calculated as of a specified date:
|
| (A) if the secured party takes or receives
| | possession of the collateral after default, not more than 35 days before the secured party takes or receives possession; or
|
| (B) if the secured party takes or receives
| | possession of the collateral before default or does not take possession of the collateral, not more than 35 days before the disposition;
|
| (2) the amount of proceeds of the disposition;
(3) the aggregate amount of the obligations after
| | deducting the amount of proceeds;
|
| (4) the amount, in the aggregate or by type, and
| | types of expenses, including expenses of retaking, holding, preparing for disposition, processing, and disposing of the collateral, and attorney's fees secured by the collateral which are known to the secured party and relate to the current disposition;
|
| (5) the amount, in the aggregate or by type, and
| | types of credits, including rebates of interest or credit service charges, to which the obligor is known to be entitled and which are not reflected in the amount in paragraph (1); and
|
| (6) the amount of the surplus or deficiency.
(d) Substantial compliance. A particular phrasing of the explanation or response to a request is not required. An explanation or a response to a request complying substantially with the requirements of this Section is sufficient even if it is:
(1) accompanied by or combined with other
| | (2) includes information not specified by this
| | (3) includes minor errors that are not seriously
| | (4) includes errors in information not required by
| | (e) Charges for responses. A debtor or consumer obligor is entitled without charge to one response to a request under this Section during any six-month period in which the secured party did not send to the debtor or consumer obligor an explanation pursuant to subsection (b)(1). The secured party may require payment of a charge not exceeding $25 for each additional response.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-617
(810 ILCS 5/9-617)
Sec. 9-617.
Rights of transferee of collateral.
(a) Effects of disposition. A secured party's disposition of
collateral after default:
(1) transfers to a transferee for value all of the | | debtor's rights in the collateral;
|
|
(2) discharges the security interest under which the
| |
(3) discharges any subordinate security interest or
| |
(b) Rights of good-faith transferee. A transferee that acts in good
faith takes free of the rights and interests described in subsection (a), even
if the
secured party fails to comply with this Article or the requirements of any
judicial
proceeding.
(c) Rights of other transferee. If a transferee does not take free of
the rights and interests described in subsection (a), the transferee takes the
collateral subject to:
(1) the debtor's rights in the collateral;
(2) the security interest or agricultural lien under
| | which the disposition is made; and
|
|
(3) any other security interest or other lien.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-618
(810 ILCS 5/9-618)
Sec. 9-618.
Rights and duties of certain secondary obligors.
(a) Rights and duties of secondary obligor. A secondary obligor
acquires the rights and becomes obligated to perform the duties of the secured
party
after the secondary obligor:
(1) receives an assignment of a secured obligation | |
(2) receives a transfer of collateral from the
| | secured party and agrees to accept the rights and assume the duties of the secured party; or
|
|
(3) is subrogated to the rights of a secured party
| | with respect to collateral.
|
|
(b) Effect of assignment, transfer, or subrogation. An
assignment, transfer, or subrogation described in subsection (a):
(1) is not a disposition of collateral under Section
| |
(2) relieves the secured party of further duties
| |
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-619 (810 ILCS 5/9-619) (Text of Section before amendment by P.A. 103-1036) Sec. 9-619. Transfer of record or legal title. (a) "Transfer statement." In this Section, "transfer statement"
means a record authenticated by a secured party stating: (1) that the debtor has defaulted in connection with | | an obligation secured by specified collateral;
|
| (2) that the secured party has exercised its
| | post-default remedies with respect to the collateral;
|
| (3) that, by reason of the exercise, a transferee has
| | acquired the rights of the debtor in the collateral; and
|
| (4) the name and mailing address of the secured
| | party, debtor, and transferee.
|
| (b) Effect of transfer statement. A transfer statement entitles the
transferee to the transfer of record of all rights of the debtor in the collateral
specified in the statement in any official filing, recording, registration, or
certificate-of-title system covering the collateral. If a transfer statement is
presented with the applicable fee and request form to the official or office
responsible for maintaining the system, the official or office shall:
(1) accept the transfer statement;
(2) promptly amend its records to reflect the
| | (3) if applicable, issue a new appropriate
| | certificate of title in the name of the transferee.
|
| (c) Transfer not a disposition; no relief of secured party's
duties. A transfer of the record or legal title to collateral to a secured
party under
subsection (b) or otherwise is not of itself a disposition of collateral under
this
Article and does not of itself relieve the secured party of its duties under
this
Article.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-619. Transfer of record or legal title.
(a) "Transfer statement." In this Section, "transfer statement" means a record signed by a secured party stating:
(1) that the debtor has defaulted in connection with
| | an obligation secured by specified collateral;
|
| (2) that the secured party has exercised its
| | post-default remedies with respect to the collateral;
|
| (3) that, by reason of the exercise, a transferee has
| | acquired the rights of the debtor in the collateral; and
|
| (4) the name and mailing address of the secured
| | party, debtor, and transferee.
|
| (b) Effect of transfer statement. A transfer statement entitles the transferee to the transfer of record of all rights of the debtor in the collateral specified in the statement in any official filing, recording, registration, or certificate-of-title system covering the collateral. If a transfer statement is presented with the applicable fee and request form to the official or office responsible for maintaining the system, the official or office shall:
(1) accept the transfer statement;
(2) promptly amend its records to reflect the
| | (3) if applicable, issue a new appropriate
| | certificate of title in the name of the transferee.
|
| (c) Transfer not a disposition; no relief of secured party's duties. A transfer of the record or legal title to collateral to a secured party under subsection (b) or otherwise is not of itself a disposition of collateral under this Article and does not of itself relieve the secured party of its duties under this Article.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-620 (810 ILCS 5/9-620) (Text of Section before amendment by P.A. 103-1036) Sec. 9-620. Acceptance of collateral in full or partial satisfaction of
obligation; compulsory disposition of collateral. (a) Conditions to acceptance in satisfaction. Except as otherwise
provided in subsection (g), a secured party may accept collateral in full or
partial
satisfaction of the obligation it secures only if: (1) the debtor consents to the acceptance under | | (2) the secured party does not receive, within the
| | time set forth in subsection (d), a notification of objection to the proposal authenticated by:
|
| (A) a person to which the secured party was
| | required to send a proposal under Section 9-621; or
|
| (B) any other person, other than the debtor,
| | holding an interest in the collateral subordinate to the security interest that is the subject of the proposal;
|
| (3) if the collateral is consumer goods, the
| | collateral is not in the possession of the debtor when the debtor consents to the acceptance; and
|
| (4) subsection (e) does not require the secured party
| | to dispose of the collateral or the debtor waives the requirement pursuant to Section 9-624.
|
| (b) Purported acceptance ineffective. A purported or apparent
acceptance of collateral under this Section is ineffective unless:
(1) the secured party consents to the acceptance in
| | an authenticated record or sends a proposal to the debtor; and
|
| (2) the conditions of subsection (a) are met.
(c) Debtor's consent. For purposes of this Section:
(1) a debtor consents to an acceptance of collateral
| | in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default; and
|
| (2) a debtor consents to an acceptance of collateral
| | in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default or the secured party:
|
| (A) sends to the debtor after default a proposal
| | that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained;
|
| (B) in the proposal, proposes to accept
| | collateral in full satisfaction of the obligation it secures; and
|
| (C) does not receive a notification of objection
| | authenticated by the debtor within 20 days after the proposal is sent.
|
| (d) Effectiveness of notification. To be effective under subsection
(a)(2), a notification of objection must be received by the secured party:
(1) in the case of a person to which the proposal was
| | sent pursuant to Section 9-621, within 20 days after notification was sent to that person; and
|
| (2) in other cases:
(A) within 20 days after the last notification
| | was sent pursuant to Section 9-621; or
|
| (B) if a notification was not sent, before the
| | debtor consents to the acceptance under subsection (c).
|
| (e) Mandatory disposition of consumer goods. A secured party
that has taken possession of collateral shall dispose of the collateral pursuant to
Section 9-610 within the time specified in subsection (f) if:
(1) 60 percent of the cash price has been paid in the
| | case of a purchase-money security interest in consumer goods; or
|
| (2) 60 percent of the principal amount of the
| | obligation secured has been paid in the case of a non-purchase-money security interest in consumer goods.
|
| (f) Compliance with mandatory disposition requirement. To
comply with subsection (e), the secured party shall dispose of the collateral:
(1) within 90 days after taking possession; or
(2) within any longer period to which the debtor and
| | all secondary obligors have agreed in an agreement to that effect entered into and authenticated after default.
|
| (g) No partial satisfaction in consumer transaction. In a
consumer transaction, a secured party may not accept collateral in partial
satisfaction of the obligation it secures.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-620. Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral.
(a) Conditions to acceptance in satisfaction. Except as otherwise provided in subsection (g), a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:
(1) the debtor consents to the acceptance under
| | (2) the secured party does not receive, within the
| | time set forth in subsection (d), a notification of objection to the proposal signed by:
|
| (A) a person to which the secured party was
| | required to send a proposal under Section 9-621; or
|
| (B) any other person, other than the debtor,
| | holding an interest in the collateral subordinate to the security interest that is the subject of the proposal;
|
| (3) if the collateral is consumer goods, the
| | collateral is not in the possession of the debtor when the debtor consents to the acceptance; and
|
| (4) subsection (e) does not require the secured party
| | to dispose of the collateral or the debtor waives the requirement pursuant to Section 9-624.
|
| (b) Purported acceptance ineffective. A purported or apparent acceptance of collateral under this Section is ineffective unless:
(1) the secured party consents to the acceptance in a
| | signed record or sends a proposal to the debtor; and
|
| (2) the conditions of subsection (a) are met.
(c) Debtor's consent. For purposes of this Section:
(1) a debtor consents to an acceptance of collateral
| | in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record signed after default; and
|
| (2) a debtor consents to an acceptance of collateral
| | in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record signed after default or the secured party:
|
| (A) sends to the debtor after default a proposal
| | that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained;
|
| (B) in the proposal, proposes to accept
| | collateral in full satisfaction of the obligation it secures; and
|
| (C) does not receive a notification of objection
| | signed by the debtor within 20 days after the proposal is sent.
|
| (d) Effectiveness of notification. To be effective under subsection (a)(2), a notification of objection must be received by the secured party:
(1) in the case of a person to which the proposal was
| | sent pursuant to Section 9-621, within 20 days after notification was sent to that person; and
|
| (2) in other cases:
(A) within 20 days after the last notification
| | was sent pursuant to Section 9-621; or
|
| (B) if a notification was not sent, before the
| | debtor consents to the acceptance under subsection (c).
|
| (e) Mandatory disposition of consumer goods. A secured party that has taken possession of collateral shall dispose of the collateral pursuant to Section 9-610 within the time specified in subsection (f) if:
(1) 60 percent of the cash price has been paid in the
| | case of a purchase-money security interest in consumer goods; or
|
| (2) 60 percent of the principal amount of the
| | obligation secured has been paid in the case of a non-purchase-money security interest in consumer goods.
|
| (f) Compliance with mandatory disposition requirement. To comply with subsection (e), the secured party shall dispose of the collateral:
(1) within 90 days after taking possession; or
(2) within any longer period to which the debtor and
| | all secondary obligors have agreed in an agreement to that effect entered into and signed after default.
|
| (g) No partial satisfaction in consumer transaction. In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-621 (810 ILCS 5/9-621) (Text of Section before amendment by P.A. 103-1036) Sec. 9-621. Notification of proposal to accept collateral. (a) Persons to which proposal to be sent. A secured party that
desires to accept collateral in full or partial satisfaction of the obligation
it secures
shall send its proposal to: (1) any person from which the secured party has | | received, before the debtor consented to the acceptance, an authenticated notification of a claim of an interest in the collateral;
|
| (2) any other secured party or lienholder that, 10
| | days before the debtor consented to the acceptance, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that:
|
| (A) identified the collateral;
(B) was indexed under the debtor's name as of
| | (C) was filed in the office or offices in which
| | to file a financing statement against the debtor covering the collateral as of that date; and
|
| (3) any other secured party that, 10 days before the
| | debtor consented to the acceptance, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in Section 9-311(a).
|
| (b) Proposal to be sent to secondary obligor in partial
satisfaction. A secured party that desires to accept collateral in partial
satisfaction
of the obligation it secures shall send its proposal to any secondary obligor
in
addition to the persons described in subsection (a).
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-621. Notification of proposal to accept collateral.
(a) Persons to which proposal to be sent. A secured party that desires to accept collateral in full or partial satisfaction of the obligation it secures shall send its proposal to:
(1) any person from which the secured party has
| | received, before the debtor consented to the acceptance, a signed notification of a claim of an interest in the collateral;
|
| (2) any other secured party or lienholder that, 10
| | days before the debtor consented to the acceptance, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that:
|
| (A) identified the collateral;
(B) was indexed under the debtor's name as of
| | (C) was filed in the office or offices in which
| | to file a financing statement against the debtor covering the collateral as of that date; and
|
| (3) any other secured party that, 10 days before the
| | debtor consented to the acceptance, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in Section 9-311(a).
|
| (b) Proposal to be sent to secondary obligor in partial satisfaction. A secured party that desires to accept collateral in partial satisfaction of the obligation it secures shall send its proposal to any secondary obligor in addition to the persons described in subsection (a).
(Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/9-622
(810 ILCS 5/9-622)
Sec. 9-622.
Effect of acceptance of collateral.
(a) Effect of acceptance. A secured party's acceptance of
collateral in full or partial satisfaction of the obligation it secures:
(1) discharges the obligation to the extent consented | |
(2) transfers to the secured party all of a debtor's
| | rights in the collateral;
|
|
(3) discharges the security interest or agricultural
| | lien that is the subject of the debtor's consent and any subordinate security interest or other subordinate lien; and
|
|
(4) terminates any other subordinate interest.
(b) Discharge of subordinate interest notwithstanding
noncompliance. A subordinate interest is discharged or terminated under
subsection (a), even if the secured party fails to comply with this Article.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-623
(810 ILCS 5/9-623)
Sec. 9-623.
Right to redeem collateral.
(a) Persons that may redeem. A debtor, any secondary obligor, or
any other secured party or lienholder may redeem collateral.
(b) Requirements for redemption. To redeem collateral, a person
shall tender:
(1) fulfillment of all obligations secured by the | |
(2) the reasonable expenses and attorney's fees
| | described in Section 9-615(a)(1).
|
|
(c) When redemption may occur. A redemption may occur at any
time before a secured party:
(1) has collected collateral under Section 9-607;
(2) has disposed of collateral or entered into a
| | contract for its disposition under Section 9-610; or
|
|
(3) has accepted collateral in full or partial
| | satisfaction of the obligation it secures under Section 9-622.
|
|
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-624 (810 ILCS 5/9-624) (Text of Section before amendment by P.A. 103-1036) Sec. 9-624. Waiver. (a) Waiver of disposition notification. A debtor or secondary
obligor may waive the right to notification of disposition of collateral under
Section
9-611 only by an agreement to that effect entered into and authenticated after
default. (b) Waiver of mandatory disposition. A debtor may waive the
right to require disposition of collateral under Section 9-620(e) only by an
agreement to that effect entered into and authenticated after default. (c) Waiver of redemption right.
A debtor or secondary obligor may waive the right to redeem
collateral
under Section 9-623 only by an agreement to that effect entered into and
authenticated after default.(Source: P.A. 91-893, eff. 7-1-01.) (Text of Section after amendment by P.A. 103-1036) Sec. 9-624. Waiver. (a) Waiver of disposition notification. A debtor or secondary obligor may waive the right to notification of disposition of collateral under Section 9-611 only by an agreement to that effect entered into and signed after default. (b) Waiver of mandatory disposition. A debtor may waive the right to require disposition of collateral under Section 9-620(e) only by an agreement to that effect entered into and signed after default. (c) Waiver of redemption right. A debtor or secondary obligor may waive the right to redeem collateral under Section 9-623 only by an agreement to that effect entered into and signed after default.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/Art 9, P6, Sub 2
(810 ILCS 5/Art 9, P6, Sub 2 heading)
SUBPART 2.
NONCOMPLIANCE WITH ARTICLE
|
810 ILCS 5/9-625
(810 ILCS 5/9-625)
Sec. 9-625. Remedies for secured party's failure to comply with Article.
(a) Judicial orders concerning noncompliance. If it is established
that a secured party is not proceeding in accordance with this Article, a court
may
order or restrain collection, enforcement, or disposition of collateral on
appropriate
terms and conditions.
(b) Damages for noncompliance. Subject to subsections (c), (d),
and (f), a person is liable for damages in the amount of any loss caused by a
failure
to comply with this Article. Loss caused by a failure to comply with a request
under Section 9-210 may include loss resulting from the debtor's inability to
obtain, or increased costs of, alternative financing.
(c) Persons entitled to recover damages; statutory damages if collateral is consumer goods. Except as otherwise provided in Section 9-628:
(1) a person that, at the time of the failure, was a | | debtor, was an obligor, or held a security interest in or other lien on the collateral may recover in an individual action damages under subsection (b) for its loss; and
|
|
(2) if the collateral is consumer goods, a person
| | that was a debtor or a secondary obligor at the time a secured party failed to comply with this Part may recover in an individual action for that failure in any event an amount not less than the credit service charge plus 10 percent of the principal amount of the obligation or the time-price differential plus 10 percent of the cash price.
|
|
(d) Recovery when deficiency eliminated or reduced. A debtor
whose deficiency is eliminated under Section 9-626 may recover damages for the
loss of any surplus. However, a debtor or secondary obligor whose deficiency
is
eliminated or reduced under Section 9-626 may not otherwise recover under
subsection (b) for noncompliance with the provisions of this Part relating to
collection, enforcement, disposition, or acceptance.
(e) Statutory damages: noncompliance with specified
provisions. In addition to any damages recoverable under subsection (b), the
debtor, consumer obligor, or person named as a debtor in a filed record, as
applicable, may recover in an individual action $500 for each instance that a
person:
(1) fails to comply with Section 9-208;
(2) fails to comply with Section 9-209;
(3) files a record that the person is not entitled to
| | file under Section 9-509(a); or
|
|
(4) fails to cause the secured party of record to
| | file or send a termination statement as required by Section 9-513(a) or (c).
|
|
(f) Statutory damages: noncompliance with Section 9-210. A
debtor or consumer obligor may recover damages under subsection (b) and, in
addition, may in an individual action recover $500 in each case from a person
that, without reasonable cause, fails
to
comply with a request under Section 9-210. A recipient of a request under
Section
9-210 which never claimed an interest in the collateral or obligations that are
the
subject of a request under that Section has a reasonable excuse for failure to
comply
with the request within the meaning of this subsection.
(g) Limitation of security interest: noncompliance with Section
9-210. If a secured party fails to comply with a request regarding a list of
collateral
or a statement of account under Section 9-210, the secured party may claim a
security interest only as shown in the statement included in the request as
against a
person that is reasonably misled by the failure.
(Source: P.A. 97-1034, eff. 7-1-13.)
|
810 ILCS 5/9-626
(810 ILCS 5/9-626)
Sec. 9-626.
Action in which deficiency or surplus is in
issue; applicable rules if amount of deficiency or surplus is in issue. In
an action in which the amount of a deficiency
or surplus is in issue, the following rules apply:
(1) A secured party need not prove compliance with | | the provisions of this Part relating to collection, enforcement, disposition, or acceptance unless the debtor or a secondary obligor places the secured party's compliance in issue.
|
|
(2) If the secured party's compliance is placed in
| | issue, the secured party has the burden of establishing that the collection, enforcement, disposition, or acceptance was conducted in accordance with this Part.
|
|
(3) Except as otherwise provided in Section 9-628, if
| | a secured party fails to prove that the collection, enforcement, disposition, or acceptance was conducted in accordance with the provisions of this Part relating to collection, enforcement, disposition, or acceptance, the liability of a debtor or a secondary obligor for a deficiency is limited to an amount by which the sum of the secured obligation, expenses, and attorney's fees exceeds the greater of:
|
|
(A) the proceeds of the collection, enforcement,
| | disposition, or acceptance; or
|
|
(B) the amount of proceeds that would have been
| | realized had the noncomplying secured party proceeded in accordance with the provisions of this Part relating to collection, enforcement, disposition, or acceptance.
|
|
(4) For purposes of paragraph (3)(B), the amount of
| | proceeds that would have been realized is equal to the sum of the secured obligation, expenses, and attorney's fees unless the secured party proves that the amount is less than that sum.
|
|
(5) If a deficiency or surplus is calculated under
| | Section 9-615(f), the debtor or obligor has the burden of establishing that the amount of proceeds of the disposition is significantly below the range of prices that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.
|
|
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-627
(810 ILCS 5/9-627)
Sec. 9-627.
Determination of whether conduct was commercially
reasonable.
(a) Greater amount obtainable under other circumstances; no
preclusion of commercial reasonableness. The fact that a greater amount could
have been obtained by a collection, enforcement, disposition, or acceptance at
a
different time or in a different method from that selected by the secured party
is not
of itself sufficient to preclude the secured party from establishing that the
collection, enforcement, disposition, or acceptance was made in a commercially
reasonable manner.
(b) Dispositions that are commercially reasonable. A disposition
of collateral is made in a commercially reasonable manner if the disposition is
made:
(1) in the usual manner on any recognized market;
(2) at the price current in any recognized market at | | the time of the disposition; or
|
|
(3) otherwise in conformity with reasonable
| | commercial practices among dealers in the type of property that was the subject of the disposition.
|
|
(c) Approval by court or on behalf of creditors. A collection,
enforcement, disposition, or acceptance is commercially reasonable if it has been
approved:
(1) in a judicial proceeding;
(2) by a bona fide creditors' committee;
(3) by a representative of creditors; or
(4) by an assignee for the benefit of creditors.
(d) Approval under subsection (c) not necessary; absence of
approval has no effect. Approval under subsection (c) need not be obtained,
and
lack of approval does not mean that the collection, enforcement, disposition,
or
acceptance is not commercially reasonable.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-628 (810 ILCS 5/9-628) (Text of Section before amendment by P.A. 103-1036) Sec. 9-628. Nonliability and limitation on liability of secured party;
liability of secondary obligor. (a) Limitation of liability to debtor or obligor. Unless a secured
party knows that a person is a debtor or obligor, knows the identity of the
person,
and knows how to communicate with the person: (1) the secured party is not liable to the person, or | | to a secured party or lienholder that has filed a financing statement against the person, for failure to comply with this Article; and
|
| (2) the secured party's failure to comply with this
| | Article does not affect the liability of the person for a deficiency.
|
| (b) Limitation of liability to debtor, obligor, another secured
party, or lienholder. A secured party is not liable because of its status as secured
party:
(1) to a person that is a debtor or obligor, unless
| | (A) that the person is a debtor or obligor;
(B) the identity of the person; and
(C) how to communicate with the person; or
(2) to a secured party or lienholder that has filed a
| | financing statement against a person, unless the secured party knows:
|
| (A) that the person is a debtor; and
(B) the identity of the person.
(c) Limitation of liability if reasonable belief that transaction
not a consumer-goods transaction or consumer transaction. A secured party is
not liable to any person, and a person's liability for a deficiency is not
affected,
because of any act or omission arising out of the secured party's reasonable
belief
that a transaction is not a consumer-goods transaction or a consumer
transaction or
that goods are not consumer goods, if the secured party's belief is based on
its
reasonable reliance on:
(1) a debtor's representation concerning the purpose
| | for which collateral was to be used, acquired, or held; or
|
| (2) an obligor's representation concerning the
| | purpose for which a secured obligation was incurred.
|
| (d) Limitation of liability for statutory damages. A secured party
is not liable to any person under Section 9-625(c)(2) for its failure to comply
with
Section 9-616.
(e) Limitation of multiple liability for statutory damages. A
secured party is not liable under Section 9-625(c)(2) more than once with
respect to
any one secured obligation.
(Source: P.A. 91-893, eff. 7-1-01.)
(Text of Section after amendment by P.A. 103-1036)
Sec. 9-628. Nonliability and limitation on liability of secured party; liability of secondary obligor.
(a) Limitation of liability to debtor or obligor. Subject to subsection (f), unless a secured party knows that a person is a debtor or obligor, knows the identity of the person, and knows how to communicate with the person:
(1) the secured party is not liable to the person, or
| | to a secured party or lienholder that has filed a financing statement against the person, for failure to comply with this Article; and
|
| (2) the secured party's failure to comply with this
| | Article does not affect the liability of the person for a deficiency.
|
| (b) Limitation of liability to debtor, obligor, another secured party, or lienholder. Subject to subsection (f), a secured party is not liable because of its status as secured party:
(1) to a person that is a debtor or obligor, unless
| | (A) that the person is a debtor or obligor;
(B) the identity of the person; and
(C) how to communicate with the person; or
(2) to a secured party or lienholder that has filed a
| | financing statement against a person, unless the secured party knows:
|
| (A) that the person is a debtor; and
(B) the identity of the person.
(c) Limitation of liability if reasonable belief that transaction not a consumer-goods transaction or consumer transaction. A secured party is not liable to any person, and a person's liability for a deficiency is not affected, because of any act or omission arising out of the secured party's reasonable belief that a transaction is not a consumer-goods transaction or a consumer transaction or that goods are not consumer goods, if the secured party's belief is based on its reasonable reliance on:
(1) a debtor's representation concerning the purpose
| | for which collateral was to be used, acquired, or held; or
|
| (2) an obligor's representation concerning the
| | purpose for which a secured obligation was incurred.
|
| (d) Limitation of liability for statutory damages. A secured party is not liable to any person under Section 9-625(c)(2) for its failure to comply with Section 9-616.
(e) Limitation of multiple liability for statutory damages. A secured party is not liable under Section 9-625(c)(2) more than once with respect to any one secured obligation.
(f) Exception: Limitation of liability under subsections (a) and (b) does not apply. Subsections (a) and (b) do not apply to limit the liability of a secured party to a person if, at the time the secured party obtains control of collateral that is a controllable account, controllable electronic record, or controllable payment intangible or at the time the security interest attaches to the collateral, whichever is later:
(1) the person is a debtor or obligor; and
(2) the secured party knows that the information in
| | subsection (b)(1)(A), (B), or (C) relating to the person is not provided by the collateral, a record attached to or logically associated with the collateral, or the system in which the collateral is recorded.
|
| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/Art. 9 Pt. 7
(810 ILCS 5/Art. 9 Pt. 7 heading)
PART 7.
TRANSITION
|
810 ILCS 5/9-701
(810 ILCS 5/9-701)
Sec. 9-701.
Effective date.
(See Section 99 of the Public Act adding this
Section to this Act.)
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-702
(810 ILCS 5/9-702)
Sec. 9-702.
Savings clause.
(a) Pre-effective-date transactions or liens. Except as otherwise
provided in this Part, this Act applies to a transaction or lien within its
scope, even
if the transaction or lien was entered into or created before the effective
date of this
amendatory Act of the 91st General Assembly.
(b) Continuing validity. Except as otherwise provided in
subsection (c) and Sections 9-703 through 9-709:
(1) transactions and liens that were not governed by | | Article 9 as it existed before the effective date of this amendatory Act of the 91st General Assembly, were validly entered into or created before the effective date of this amendatory Act of the 91st General Assembly, and would be subject to this Act if they had been entered into or created after the effective date of this amendatory Act of the 91st General Assembly, and the rights, duties, and interests flowing from those transactions and liens remain valid after the effective date of this amendatory Act of the 91st General Assembly; and
|
|
(2) the transactions and liens may be terminated,
| | completed, consummated, and enforced as required or permitted by this Act or by the law that otherwise would apply if this Act had not taken effect.
|
|
(c) Pre-effective-date proceedings. This amendatory Act of the
91st General Assembly does not affect an action, case, or proceeding commenced
before the effective date of this amendatory Act of the 91st General
Assembly.
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-703
(810 ILCS 5/9-703)
Sec. 9-703.
Security interest perfected before effective date.
(a) Continuing priority over lien creditor: perfection
requirements satisfied. A security interest that is enforceable immediately
before
the effective date of this amendatory Act of the 91st General Assembly and
would
have priority over the rights of a person that becomes a lien creditor at that
time is a
perfected security interest under this Act if, on the effective date of this
amendatory
Act of the 91st General Assembly, the applicable requirements for enforceability
and perfection under this Act are satisfied without further action.
(b) Continuing priority over lien creditor: perfection
requirements not satisfied. Except as otherwise provided in Section 9-705, if,
immediately before the effective date of this amendatory Act of the 91st General
Assembly, a security interest is enforceable and would have priority over the rights
of a person that becomes a lien creditor at that time, but the applicable requirements
for enforceability or perfection under this Act are not satisfied on the effective date
of this amendatory Act of the 91st General Assembly, the security interest:
(1) is a perfected security interest for one year | | after the effective date of this amendatory Act of the 91st General Assembly;
|
|
(2) remains enforceable thereafter only if the
| | security interest becomes enforceable under Section 9-203 before the year expires; and
|
|
(3) remains perfected thereafter only if the
| | applicable requirements for perfection under this Act are satisfied before the year expires.
|
|
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-704
(810 ILCS 5/9-704)
Sec. 9-704.
Security interest unperfected before effective date.
A
security interest that is enforceable immediately before the effective date of
this
amendatory Act of the 91st General Assembly but which would be subordinate to
the rights of a person that becomes a lien creditor at that time:
(1) remains an enforceable security interest for one | | year after the effective date of this amendatory Act of the 91st General Assembly;
|
|
(2) remains enforceable thereafter if the security
| | interest becomes enforceable under Section 9-203 on the effective date of this amendatory Act of the 91st General Assembly or within one year thereafter; and
|
|
(3) becomes perfected:
(A) without further action, on the effective date
| | of this amendatory Act of the 91st General Assembly if the applicable requirements for perfection under this Act are satisfied before or at that time; or
|
|
(B) when the applicable requirements for
| | perfection are satisfied if the requirements are satisfied after that time.
|
|
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-705
(810 ILCS 5/9-705)
Sec. 9-705.
Effectiveness of action taken before effective date.
(a) Pre-effective-date action; one-year perfection period unless
reperfected. If action, other than the filing of a financing statement, is
taken
before the effective date of this amendatory Act of the 91st General Assembly
and
the action would have resulted in priority of a security interest over the
rights of a
person that becomes a lien creditor had the security interest become
enforceable
before the effective date of this amendatory Act of the 91st General Assembly, the
action is effective to perfect a security interest that attaches under this Act within
one year after the effective date of this amendatory Act of the 91st General
Assembly. An attached security interest becomes unperfected one year after the
effective date of this amendatory Act of the 91st General Assembly unless the
security interest becomes a perfected security interest under this Act before the
expiration of that period.
(b) Pre-effective-date filing. The filing of a financing statement
before the effective date of this amendatory Act of the 91st General Assembly is
effective to perfect a security interest to the extent the filing would satisfy the
applicable requirements for perfection under this Act.
(c) Pre-effective-date filing in jurisdiction formerly governing
perfection. This Act does not render ineffective an effective financing statement
that, before the effective date of this amendatory Act of the 91st General
Assembly,
is filed and satisfies the applicable requirements for perfection under the law
of the
jurisdiction governing perfection as provided in Section 9-103
of the Uniform Commercial Code as it existed before the effective date of
this amendatory Act of the 91st General Assembly.
However,
except as otherwise provided in subsections (d) and (e) and Section 9-706, the
financing statement ceases to be effective at the earlier of:
(1) the time the financing statement would have | | ceased to be effective under the law of the jurisdiction in which it is filed; or
|
|
(2) June 30, 2006.
(d) Continuation statement. The filing of a continuation statement
after the effective date of this amendatory Act of the 91st General Assembly
does
not continue the effectiveness of the financing statement filed before the
effective
date of this amendatory Act of the 91st General Assembly. However, upon the
timely filing of a continuation statement after the effective date of this
amendatory
Act of the 91st General Assembly and in accordance with the law of the
jurisdiction governing perfection as provided in Part 3, the effectiveness of a
financing statement filed in the same office in that jurisdiction before the effective
date of this amendatory Act of the 91st General Assembly continues for the period
provided by the law of that jurisdiction.
(e) Application of subsection (c)(2) to transmitting utility
financing statement. Subsection (c)(2) applies to a financing statement that,
before the effective date of this amendatory Act of the 91st General Assembly,
is
filed against a transmitting utility and satisfies the applicable requirements
for
perfection under the law of the jurisdiction governing perfection as provided
in Section 9-103, as that Section existed before the effective date of this
amendatory Act of the 91st General Assembly, only to the extent that Part 3
provides that the law of
a
jurisdiction other than jurisdiction in which the financing statement is filed
governs
perfection of a security interest in collateral covered by the financing
statement.
(f) Application of Part 5. A financing statement that includes a
financing statement filed before the effective date of this amendatory Act of
the
91st General Assembly and a continuation statement filed after the effective
date of
this amendatory Act of the 91st General Assembly is effective only to the
extent
that it satisfies the requirements of Part 5 for an initial financing
statement.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-706
(810 ILCS 5/9-706)
Sec. 9-706.
When initial financing statement suffices to continue
effectiveness of financing statement.
(a) Initial financing statement in lieu of continuation statement.
The filing of an initial financing statement in the office specified in Section
9-501
continues the effectiveness of a financing statement filed before the effective
date
of this amendatory Act of the 91st General Assembly if:
(1) the filing of an initial financing statement in | | that office would be effective to perfect a security interest under this Act;
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|
(2) the pre-effective-date financing statement was
| | filed in an office in another State or another office in this State; and
|
|
(3) the initial financing statement satisfies
| |
(b) Period of continued effectiveness. The filing of an initial
financing statement under subsection (a) continues the effectiveness of the
pre-effective-date financing statement:
(1) if the initial financing statement is filed
| | before the effective date of this amendatory Act of the 91st General Assembly, for the period provided in Section 9-403 of the Uniform Commercial Code as it existed before the effective date of this amendatory Act of the 91st General Assembly with respect to a financing statement; and
|
|
(2) if the initial financing statement is filed after
| | the effective date of this amendatory Act of the 91st General Assembly, for the period provided in Section 9-515 with respect to an initial financing statement.
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|
(c) Requirements for initial financing statement under
subsection (a). To be effective for purposes of subsection (a), an initial financing
statement must:
(1) satisfy the requirements of Part 5 for an initial
| |
(2) identify the pre-effective-date financing
| | statement by indicating the office in which the financing statement was filed and providing the dates of filing and file numbers, if any, of the financing statement and of the most recent continuation statement filed with respect to the financing statement; and
|
|
(3) indicate that the pre-effective-date financing
| | statement remains effective.
|
|
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-707
(810 ILCS 5/9-707)
Sec. 9-707.
Amendment of pre-effective-date financing statement.
(a) "Pre-effective-date financing statement". In this Section,
"pre-effective-date financing statement" means a financing statement filed
before
the effective date of this amendatory Act of the 91st General Assembly.
(b) Applicable law. After the effective date of this amendatory Act of the
91st General Assembly, a person may add or
delete collateral covered by, continue or terminate the effectiveness of, or
otherwise amend the information provided in, a pre-effective-date financing
statement only in accordance with the law of the jurisdiction governing
perfection as provided in Part 3. However, the effectiveness of a
pre-effective-date financing statement also may be terminated in accordance
with
the law of the jurisdiction in which the financing statement is filed.
(c) Method of amending: general rule. Except as otherwise provided in
subsection (d), if the law of this State governs perfection of a security
interest, the information in a pre-effective-date financing statement may be
amended after the effective date of this amendatory Act of the 91st General
Assembly only if:
(1) the pre-effective-date financing statement and an | | amendment are filed in the office specified in Section 9-501;
|
|
(2) an amendment is filed in the office specified in
| | Section 9-501 concurrently with, or after the filing in that office of, an initial financing statement that satisfies Section 9-706(c); or
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|
(3) an initial financing statement that provides the
| | information as amended and satisfies Section 9-706(c) is filed in the office specified in Section 9-501.
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|
(d) Method of amending: continuation. If the law of this State governs
perfection of a security interest, the effectiveness of a pre-effective-date
financing statement may be continued only under Section 9-705(d) and (f) or
Section 9-706.
(e) Method of amending: additional termination rule. Whether or not the
law of this State governs perfection of a security interest, the effectiveness
of a pre-effective-date financing statement filed in this State may be
terminated after the effective date of this amendatory Act of the 91st General
Assembly by filing a termination statement in
the office in which the pre-effective-date financing statement is filed,
unless an initial financing statement that satisfies Section 9-706(c) has been
filed in the office specified by the law of the jurisdiction governing
perfection as provided in Part 3 as the office in which to file a financing
statement.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-708
(810 ILCS 5/9-708)
Sec. 9-708.
Persons entitled to file initial financing
statement or
continuation statement. A person may file an initial financing statement or a
continuation statement under this Part if:
(1) the secured party of record authorizes the | |
(2) the filing is necessary under this Part:
(A) to continue the effectiveness of a financing
| | statement filed before the effective date of this amendatory Act of the 91st General Assembly; or
|
|
(B) to perfect or continue the perfection of a
| |
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-709
(810 ILCS 5/9-709)
Sec. 9-709.
Priority.
(a) Law governing priority. This Act determines the priority of
conflicting claims to collateral. However, if the relative priorities of the
claims
were established before the effective date of this amendatory Act of the 91st
General Assembly, Article 9 as it existed before the effective date of this
amendatory Act of the 91st General Assembly determines priority.
(b) Priority if security interest becomes enforceable under
Section 9-203. For purposes of Section 9-322(a), the priority of a security
interest
that becomes enforceable under Section 9-203 of this Act dates from the
effective
date of this amendatory Act of the 91st General Assembly if the security
interest is
perfected under this Act by the filing of a financing statement before the
effective
date of this amendatory Act of the 91st General Assembly which would not have
been effective to perfect the security interest under Article 9 as it existed
before the
effective date of this amendatory Act of the 91st General Assembly. This
subsection does not apply to conflicting security interests each of which is
perfected by the filing of such a financing statement.
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/9-710
(810 ILCS 5/9-710)
Sec. 9-710.
Local-filing office responsibilities for filings under the
Uniform Commercial Code prior to this amendatory Act of the 91st General
Assembly.
(a) In this Section:
(1) "Local-filing office" means a filing office, | | other than the office of the Secretary of State, that is designated as the proper place to file a financing statement under Section 9-401(1) of the Uniform Commercial Code as in effect immediately before the effective date of this amendatory Act of the 91st General Assembly. The term applies only with respect to a record that covers a type of collateral as to which the filing office is designated in that Section as the proper place to file.
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(2) "Former-Article-9 records" means:
(A) financing statements and other records that
| | have been filed in a local-filing office before July 1, 2001, and that are, or upon processing and indexing will be, reflected in the index maintained, as of June 30, 2001, by the local-filing office for financing statements and other records filed in the local filing office before July 1, 2001.
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(B) the index as of June 30, 2001.
(b) Except for a record terminating a former-Article-9 record, a
local-filing office must not accept for filing a record presented after June
30,
2001, whether or not the record relates to a financing statement filed in the
local-filing office before July 1, 2001. If the record terminating such
former-Article-9 record statement is in the standard form prescribed by the
Secretary of State, the uniform fee for filing and indexing the termination
statement in the office of a county recorder shall be $5 and otherwise shall
be $10, plus in each case an additional fee of $5 for each name more than one
at each address listed against which the record is required to be indexed.
(c) Until July 1, 2001, each local-filing office must maintain all
former-Article-9 records in accordance with the Uniform Commercial Code as in
effect immediately before the effective date of this amendatory Act of the
91st General Assembly. A former-Article-9 record that is not reflected on the
index maintained on June 30, 2001, by the local-filing office must be
processed and indexed, and reflected on the index as of June 30, 2001, as soon
as practicable but in any event no later than July 30, 2001.
(d) Until at least June 30, 2008, each local-filing office must respond
to requests for information with respect to former-Article-9 records relating
to a debtor and issue certificates, in accordance with the Uniform Commercial
Code as in effect immediately before this amendatory Act of the 91st General
Assembly. The fees charged for responding to requests for information relating
to the debtor issuing the certificates with respect to former-Article-9
records must be the fees in effect under the Uniform Commercial Code as in
effect immediately before the effective date of this amendatory Act of the
91st General Assembly on June 30, 2001, unless a different fee is later set by
the local filing office. However, the different fee must not exceed $10 for
responding to a request for information relating to a debtor or $10 for
issuing a certificate.
(e) After June 30, 2008, each local-filing office may remove and
destroy, in accordance with any then applicable record retention law of this
State, all former-Article-9 records, including the related index.
(f) This Section does not apply, with respect to financing statements
and other records, to a filing office in which mortgages or records of
mortgages on real property are required to be filed or recorded if:
(1) the collateral is timber to be cut or
| | as-extracted collateral, or
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|
(2) the record is or relates to a financing statement
| | filed as a fixture filing and the collateral is goods that are or are to become fixtures.
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(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/Art. 9 Pt. 8
(810 ILCS 5/Art. 9 Pt. 8 heading)
PART 8. TRANSITION PROVISIONS FOR 2010 AMENDMENTS
(Source: P.A. 97-1034, eff. 7-1-13.) |
810 ILCS 5/9-801 (810 ILCS 5/9-801) Sec. 9-801. Effective date. (See Section 99 of the Public Act adding this Section to this Act.)
(Source: P.A. 97-1034, eff. 7-1-13.) |
810 ILCS 5/9-802 (810 ILCS 5/9-802) Sec. 9-802. Savings clause. (a) Pre-effective-date transactions or liens. Except as otherwise provided in this Part, this Act applies to a transaction or lien within its scope, even if the transaction or lien was entered into or created before the effective date of this amendatory Act of the 97th General Assembly. (b) Pre-effective-date proceedings. This amendatory Act of the 97th General Assembly does not affect an action, case, or proceeding commenced before the effective date of this amendatory Act of the 97th General Assembly.
(Source: P.A. 97-1034, eff. 7-1-13.) |
810 ILCS 5/9-803 (810 ILCS 5/9-803) Sec. 9-803. Security interest perfected before effective date. (a) Continuing perfection: perfection requirements satisfied. A security interest that is a perfected security interest immediately before the effective date of this amendatory Act of the 97th General Assembly is a perfected security interest under Article 9 as amended by this amendatory Act of the 97th General Assembly if, on the effective date of this amendatory Act of the 97th General Assembly, the applicable requirements for attachment and perfection under Article 9 as amended by this amendatory Act of the 97th General Assembly are satisfied without further action. (b) Continuing perfection: perfection requirements not satisfied. Except as otherwise provided in Section 9-805, if, immediately before the effective date of this amendatory Act of the 97th General Assembly, a security interest is a perfected security interest, but the applicable requirements for perfection under Article 9 as amended by this amendatory Act of the 97th General Assembly are not satisfied when this amendatory Act of the 97th General Assembly takes effect, the security interest remains perfected thereafter only if the applicable requirements for perfection under Article 9 as amended by this amendatory Act of the 97th General Assembly are satisfied within one year after the effective date of this amendatory Act of the 97th General Assembly.
(Source: P.A. 97-1034, eff. 7-1-13.) |
810 ILCS 5/9-804 (810 ILCS 5/9-804) Sec. 9-804. Security interest unperfected before the effective date of this amendatory Act of the 97th General Assembly. A security interest that is an unperfected security interest immediately before the effective date of this amendatory Act of the 97th General Assembly becomes a perfected security interest: (1) without further action, when this amendatory Act | | of the 97th General Assembly takes effect if the applicable requirements for perfection under Article 9 as amended by this amendatory Act of the 97th General Assembly are satisfied before or at that time; or
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| (2) when the applicable requirements for perfection
| | are satisfied if the requirements are satisfied after that time.
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|
(Source: P.A. 97-1034, eff. 7-1-13.)
|
810 ILCS 5/9-805 (810 ILCS 5/9-805) Sec. 9-805. Effectiveness of action taken before the effective date of this amendatory Act of the 97th General Assembly. (a) Pre-effective-date filing effective. The filing of a financing statement before the effective date of this amendatory Act of the 97th General Assembly is effective to perfect a security interest to the extent the filing would satisfy the applicable requirements for perfection under Article 9 as amended by this amendatory Act of the 97th General Assembly. (b) When pre-effective-date filing becomes ineffective. This amendatory Act of the 97th General Assembly does not render ineffective an effective financing statement that, before the effective date of this amendatory Act of the 97th General Assembly, is filed and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in Article 9 as it existed before the effective date of this amendatory Act of the 97th General Assembly. However, except as otherwise provided in subsections (c) and (d) and Section 9-806, the financing statement ceases to be effective: (1) if the financing statement is filed in this | | State, at the time the financing statement would have ceased to be effective had this amendatory Act of the 97th General Assembly not taken effect; or
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| (2) if the financing statement is filed in another
| | jurisdiction, at the earlier of:
|
| (A) the time the financing statement would have
| | ceased to be effective under the law of that jurisdiction; or
|
| (B) June 30, 2018.
(c) Continuation statement. The filing of a continuation statement after the effective date of this amendatory Act of the 97th General Assembly does not continue the effectiveness of a financing statement filed before the effective date of this amendatory Act of the 97th General Assembly. However, upon the timely filing of a continuation statement after the effective date of this amendatory Act of the 97th General Assembly and in accordance with the law of the jurisdiction governing perfection as provided in Article 9, the effectiveness of a financing statement filed in the same office in that jurisdiction before the effective date of this amendatory Act of the 97th General Assembly continues for the period provided by the law of that jurisdiction.
(d) Application of subsection (b)(2)(B) to transmitting utility financing statement. Subsection (b)(2)(B) applies to a financing statement that, before the effective date of this amendatory Act of the 97th General Assembly, is filed against a transmitting utility and satisfies the applicable requirements for perfection under the law of the jurisdiction governing perfection as provided in Article 9 as it existed before the effective date of this amendatory Act of the 97th General Assembly, only to the extent that Article 9 as amended by this amendatory Act of the 97th General Assembly provides that the law of a jurisdiction other than the jurisdiction in which the financing statement is filed governs perfection of a security interest in collateral covered by the financing statement.
(e) Application of Part 5. A financing statement that includes a financing statement filed before the effective date of this amendatory Act of the 97th General Assembly and a continuation statement filed after the effective date of this amendatory Act of the 97th General Assembly is effective only to the extent that it satisfies the requirements of Part 5 as amended by this amendatory Act of the 97th General Assembly for an initial financing statement. A financing statement that indicates that the debtor is a decedent's estate indicates that the collateral is being administered by a personal representative within the meaning of Section 9-503(a)(2) as amended by this amendatory Act of the 97th General Assembly. A financing statement that indicates that the debtor is a trust or is a trustee acting with respect to property held in trust indicates that the collateral is held in a trust within the meaning of Section 9-503(a)(3) as amended by this amendatory Act of the 97th General Assembly.
(Source: P.A. 97-1034, eff. 7-1-13.)
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810 ILCS 5/9-806 (810 ILCS 5/9-806) Sec. 9-806. When initial financing statement suffices to continue effectiveness of financing statement. (a) Initial financing statement in lieu of continuation statement. The filing of an initial financing statement in the office specified in Section 9-501 continues the effectiveness of a financing statement filed before the effective date of this amendatory Act of the 97th General Assembly if: (1) the filing of an initial financing statement in | | that office would be effective to perfect a security interest under Article 9 as amended by this amendatory Act of the 97th General Assembly;
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| (2) the pre-effective-date financing statement was
| | filed in an office in another State; and
|
| (3) the initial financing statement satisfies
| | (b) Period of continued effectiveness. The filing of an initial financing statement under subsection (a) continues the effectiveness of the pre-effective-date financing
statement:
(1) if the initial financing statement is filed
| | before the effective date of this amendatory Act of the 97th General Assembly, for the period provided in Section 9-515 as it existed before the effective date of this amendatory Act of the 97th General Assembly with respect to an initial financing statement; and
|
| (2) if the initial financing statement is filed after
| | the effective date of this amendatory Act of the 97th General Assembly, for the period provided in Section 9-515 as amended by this amendatory Act of the 97th General Assembly with respect to an initial financing statement.
|
| (c) Requirements for initial financing statement under subsection (a). To be effective for purposes of subsection (a), an initial financing statement must:
(1) satisfy the requirements of Part 5 as amended by
| | this amendatory Act of the 97th General Assembly for an initial financing statement;
|
| (2) identify the pre-effective-date financing
| | statement by indicating the office in which the financing statement was filed and providing the dates of filing and file numbers, if any, of the financing statement and of the most recent continuation statement filed with respect to the financing statement; and
|
| (3) indicate that the pre-effective-date financing
| | statement remains effective.
|
|
(Source: P.A. 97-1034, eff. 7-1-13.)
|
810 ILCS 5/9-807 (810 ILCS 5/9-807) Sec. 9-807. Amendment of pre-effective-date financing statement. (a) "Pre-effective-date financing statement". In this Section, "pre-effective-date financing statement" means a financing statement filed before the effective date of this amendatory Act of the 97th General Assembly. (b) Applicable law. After this amendatory Act of the 97th General Assembly takes effect, a person may add or delete collateral covered by, continue or terminate the effectiveness of, or otherwise amend the information provided in, a pre-effective-date financing statement only in accordance with the law of the jurisdiction governing perfection as provided in Article 9 as amended by this amendatory Act of the 97th General Assembly. However, the effectiveness of a pre-effective-date financing statement also may be terminated in accordance with the law of the jurisdiction in which the financing statement is filed. (c) Method of amending: general rule. Except as otherwise provided in subsection (d), if the law of this State governs perfection of a security interest, the information in a pre-effective-date financing statement may be amended after the effective date of this amendatory Act of the 97th General Assembly only if: (1) the pre-effective-date financing statement and an | | amendment are filed in the office specified in Section 9-501;
|
| (2) an amendment is filed in the office specified in
| | Section 9-501 concurrently with, or after the filing in that office of, an initial financing statement that satisfies Section 9-806(c); or
|
| (3) an initial financing statement that provides the
| | information as amended and satisfies Section 9-806(c) is filed in the office specified in Section 9-501.
|
| (d) Method of amending: continuation. If the law of this State governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement may be continued only under Section 9-805(c) and (e) or 9-806.
(e) Method of amending: additional termination rule. Whether or not the law of this State governs perfection of a security interest, the effectiveness of a pre-effective-date financing statement filed in this State may be terminated after the effective date of this amendatory Act of the 97th General Assembly by filing a termination statement in the office in which the pre-effective-date financing statement is filed, unless an initial financing statement that satisfies Section 9-806(c) has been filed in the office specified by the law of the jurisdiction governing perfection as provided in Article 9 as amended by this amendatory Act of the 97th General Assembly as the office in which to file a financing statement.
(Source: P.A. 97-1034, eff. 7-1-13.)
|
810 ILCS 5/9-808 (810 ILCS 5/9-808) Sec. 9-808. Person entitled to file initial financing statement or continuation statement. A person may file an initial financing statement or a continuation statement under this part if: (1) the secured party of record authorizes the | | (2) the filing is necessary under this Part:
(A) to continue the effectiveness of a financing
| | statement filed before the effective date of this amendatory Act of the 97th General Assembly; or
|
| (B) to perfect or continue the perfection of a
| |
(Source: P.A. 97-1034, eff. 7-1-13.)
|
810 ILCS 5/9-809 (810 ILCS 5/9-809) Sec. 9-809. Priority. This Act determines the priority of conflicting claims to collateral. However, if the relative priorities of the claims were established before the effective date of this amendatory Act of the 97th General Assembly, Article 9 as it existed before the effective date of this amendatory Act of the 97th General Assembly determines priority.
(Source: P.A. 97-1034, eff. 7-1-13.) |
810 ILCS 5/Art. 9 Pt. 99
(810 ILCS 5/Art. 9 Pt. 99 heading)
PART 99.
(BLANK)
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810 ILCS 5/9-9901
(810 ILCS 5/9-9901) (from Ch. 26, par. 9-9901)
Sec. 9-9901.
(Blank).
(Source: P.A. 91-893, eff. 7-1-01.)
|
810 ILCS 5/9-9902
(810 ILCS 5/9-9902) (from Ch. 26, par. 9-9902)
Sec. 9-9902.
(Blank).
(Source: P.A. 91-893, eff. 7-1-01.)
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810 ILCS 5/Art. 10
(810 ILCS 5/Art. 10 heading)
ARTICLE 10
EFFECTIVE DATE AND REPEALER
|
810 ILCS 5/10-101
(810 ILCS 5/10-101) (from Ch. 26, par. 10-101)
Sec. 10-101.
Effective date.
This Act shall take effect at midnight on July 1, 1962. It applies to
transactions entered into and events occurring after that date.
(Source: Laws 1961, 1st S.S., p. 7.)
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810 ILCS 5/10-102
(810 ILCS 5/10-102) (from Ch. 26, par. 10-102)
Sec. 10-102.
Specific repealer; provision for transition.
(1) The following acts and parts of acts and all other acts and parts of
acts inconsistent herewith are hereby repealed:
"An Act in regard to negotiable instruments payable in money", approved
June 5, 1907, as amended;
"An Act in regard to warehouse receipts", approved May 29, 1907, as
amended;
"An Act to make uniform the law relating to sales", approved June 29,
1915;
"An Act to regulate the sale or transfer of goods, wares, merchandise
and other chattels in bulk and to provide certain penalties in connection
therewith", approved May 3, 1913, as amended;
"Uniform Stock Transfer Act", filed June 28, 1917;
"An Act concerning contracts for the conditional sale or lease of
railroad, street car and motor vehicle equipment and rolling stock, and
providing for the record thereof", approved June 20, 1893, as amended;
"Uniform Trust Receipts Act", filed July 12, 1935, as amended;
"An Act to regulate the foreclosure of chattel mortgages on household
goods, wearing apparel and mechanics' tools", approved June 5, 1889;
"Factors Lien Act", approved July 18, 1955;
"An Act relating to assignment of accounts receivable", approved July
22, 1943;
"An Act to regulate the assignment of notes secured by chattel
mortgages, and to regulate the sale of property under the power of sale
contained in chattel mortgages", approved June 21, 1895, as amended;
"Uniform Bills of Lading Act", approved June 5, 1911.
(2) Transactions validly entered into before the effective date
specified in Section 10-101 and the rights, duties and interests flowing
from them remain valid thereafter and may be terminated, completed,
consummated or enforced as required or permitted by any statute or other
law amended or repealed by this Act as though such repeal or amendment had
not occurred.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/10-103
(810 ILCS 5/10-103) (from Ch. 26, par. 10-103)
Sec. 10-103.
General repealer.
Except as provided in the following Section, all acts and parts of acts
inconsistent with this Act are hereby repealed.
(Source: Laws 1961, p. 2101.)
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810 ILCS 5/10-104
(810 ILCS 5/10-104) (from Ch. 26, par. 10-104)
Sec. 10-104.
(Repealed).
(Source: Laws 1961, p. 2101. Repealed by P.A. 95-895, eff. 1-1-09.)
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810 ILCS 5/Art. 11
(810 ILCS 5/Art. 11 heading)
ARTICLE 11
EFFECTIVE DATE AND TRANSITION
AMENDATORY ACT OF 1972
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810 ILCS 5/11-101
(810 ILCS 5/11-101) (from Ch. 26, par. 11-101)
Sec. 11-101.
Effective Date.
This amendatory Act of 1972 shall take effect at 12:01 A.M. on July 1,
1973.
(Source: P.A. 77-2810.)
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810 ILCS 5/11-102
(810 ILCS 5/11-102) (from Ch. 26, par. 11-102)
Sec. 11-102.
Preservation of Old Transition Provision.
The provisions of Article 10 of the "Uniform Commercial Code", approved
July 31, 1961, as amended, shall continue to apply to this amendatory Act
of 1972 and for this purpose the Uniform Commercial Code, approved July 31,
1961, as amended, and this amendatory Act of 1972 shall be considered one
continuous statute.
(Source: P.A. 77-2810.)
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810 ILCS 5/11-103
(810 ILCS 5/11-103) (from Ch. 26, par. 11-103)
Sec. 11-103.
Transition to Amendatory Act of 1972; General Rule.
Transactions validly entered into after July 1, 1962 and before July 1,
1973 and which were subject to the provisions of the "Uniform Commercial
Code", approved July 31, 1961, as amended, and which would be subject to
this amendatory Act of 1972 if they had been entered into after July 1,
1973 and the rights, duties and interest flowing from such transactions
remain valid after the latter date, and may be terminated, completed,
consummated or enforced as required or permitted by this amendatory Act of
1972. Security interests arising out of such transactions which are
perfected when this amendatory Act of 1972 becomes effective shall remain
perfected until they lapse as provided in this amendatory Act of 1972, and
may be continued as permitted by this amendatory Act of 1972, except as
stated in Section 11-105.
(Source: P.A. 78-238.)
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810 ILCS 5/11-104
(810 ILCS 5/11-104) (from Ch. 26, par. 11-104)
Sec. 11-104.
Transition Provision on Change or Requirement of Filing.
A security interest for the perfection of which filing or the taking of
possession was required under the Uniform Commercial Code, approved July
31, 1961, as amended, and which attached prior to July 1, 1973, but was not
perfected shall be deemed perfected on July 1, 1973 if this amendatory Act
of 1972 permits perfection without filing or authorizes filing in the
office or offices where a prior ineffective filing was made.
(Source: P.A. 77-2810.)
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810 ILCS 5/11-105
(810 ILCS 5/11-105) (from Ch. 26, par. 11-105)
Sec. 11-105.
Transition Provision on Change of Place of Filing.
(1) A financing statement or continuation statement filed prior to July
1, 1973 which shall not have lapsed prior to July 1, 1973 shall remain
effective for the period provided in the Uniform Commercial Code, approved
July 31, 1961, as amended, but not less than 5 years after the filing.
(2) With respect to any collateral acquired by the debtor subsequent to
July 1, 1973 any effective financing statement or continuation statement
described in this Section shall apply only if the filing or filings are in
the office or offices that would be appropriate to perfect the security
interests in the new collateral under this amendatory Act of 1972.
(3) The effectiveness of any financing statement or continuation
statement filed prior to July 1, 1973 may be continued by a continuation
statement as permitted by this amendatory Act of 1972, except that if this
amendatory Act of 1972 requires a filing in an office where there was no
previous financing statement, a new financing statement conforming to
Section 11-106 shall be filed in that office.
(4) If the record of a mortgage of real estate would have been effective
as a fixture filing of goods described therein if this amendatory Act of
1972 had been in effect on the date of recording the mortgage, the mortgage
shall be deemed effective as a fixture filing as to such goods under
subsection (6) of Section 9-402 of this amendatory Act of 1972 on the
effective date of this amendatory Act of 1972.
(Source: P.A. 77-2810.)
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810 ILCS 5/11-106
(810 ILCS 5/11-106) (from Ch. 26, par. 11-106)
Sec. 11-106.
Required Refilings.
(1) If a security interest is perfected or has priority when this
amendatory Act of 1972 takes effect as to all persons or as to certain
persons without any filing or recording, and if the filing of a financing
statement would be required for the perfection or priority of the security
interest against those persons under this amendatory Act of 1972, the
perfection and priority rights of the security interest continue until 3
years after July 1, 1973. The perfection will then lapse unless a financing
statement is filed as provided in subsection (4) or unless the security
interest is perfected otherwise than by filing.
(2) If a security interest is perfected when this amendatory Act of 1972
takes effect under a law other than the Uniform Commercial Code which
requires no further filing, refiling or recording to continue its
perfection, perfection continues until and will lapse 3 years after this
amendatory Act of 1972 takes effect, unless a financing statement is filed
as provided in subsection (4) or unless the security interest is perfected
otherwise than by filing, or unless under subsection (3) of Section 9-302
the other law continues to govern filing.
(3) If a security interest is perfected by a filing, refiling or
recording under a law repealed by this amendatory Act of 1972 which
required further filing, refiling or recording to continue its perfection,
perfection continues and will lapse on the date provided by the law so
repealed for such further filing, refiling or recording unless a financing
statement is filed as provided in subsection (4) or unless the security
interest is perfected otherwise than by filing.
(4) A financing statement may be filed within 6 months before the
perfection of a security interest would otherwise lapse. Any such financing
statement may be signed by either the debtor or the secured party. It must
identify the security agreement, statement or notice (however denominated
in any statute or other law repealed or modified by this amendatory Act of
1972), state the office where and the date when the last filing, refiling
or recording, if any, was made with respect thereto, and the filing number,
if any, or book and page, if any, of recording and further state that the
security agreement, statement or notice, however denominated, in another
filing office under the Uniform Commercial Code or under any statute or
other law repealed or modified by this amendatory Act of 1972 is still
effective. Section 9-401 and Section 9-103 determine the proper place to
file such a financing statement. Except as specified in this subsection,
the provisions of Section 9-403 (3) for continuation statements apply to
such a financing statement.
(Source: P.A. 77-2810.)
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810 ILCS 5/11-107
(810 ILCS 5/11-107) (from Ch. 26, par. 11-107)
Sec. 11-107.
Transition Provisions as to Priorities.
Except as otherwise provided in Article 11, the Uniform Commercial Code,
approved July 31, 1961, as amended, shall apply to any questions of
priority if the positions of the parties were fixed prior to July 1, 1973.
In other cases questions of priority shall be determined by this amendatory
Act of 1972.
(Source: P.A. 77-2810.)
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810 ILCS 5/11-108
(810 ILCS 5/11-108) (from Ch. 26, par. 11-108)
Sec. 11-108.
Presumption that Rule of Law Continues Unchanged.
Unless a change in law has clearly been made, the provisions of this
amendatory Act of 1972 shall be deemed declaratory of the meaning of the
Uniform Commercial Code, approved July 31, 1961, as amended.
(Source: P.A. 77-2810.)
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810 ILCS 5/Art. 11A
(810 ILCS 5/Art. 11A heading) (was 810 ILCS 5/Art. 12 heading)
ARTICLE 11A EFFECTIVE DATE AND TRANSITIONAMENDATORY ACT OF 1987(Until January 1, 2025, the text of this Section appears at 810 ILCS 5/Art. 12 heading)(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/11A-101 (810 ILCS 5/11A-101) (was 810 ILCS 5/12-101) (Until January 1, 2025, the text of this Section appears at 810 ILCS 5/Art. 12-101) Sec. 11A-101. Effective Date. This amendatory Act of 1987 shall take effect on January 1, 1988.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/11A-102 (810 ILCS 5/11A-102) (was 810 ILCS 5/12-102) (Until January 1, 2025, the text of this Section appears at 810 ILCS 5/12-102) Sec. 11A-102. Transition to Amendatory Act of 1987. (1) Transactions validly entered into after July 1, 1962 and before January 1, 1988 and which were subject to the provisions of the "Uniform Commercial Code", approved July 31, 1961, as amended, and which would be subject to this amendatory Act of 1987 if they had been entered into after December 31, 1987 and the rights, duties and interest flowing from such transactions remain valid after the latter date, and may be terminated, completed, consummated or enforced as required or permitted by this amendatory Act of 1987. Security interests arising out of such transactions which are perfected when this amendatory Act of 1987 becomes effective shall remain perfected until they lapse as provided in this amendatory Act of 1987, and may be continued as permitted by this amendatory Act of 1987. (2) The persons shown on the books of the issuer as the holders of uncertificated securities outstanding when this amendatory Act of 1987 becomes effective shall be deemed to be the registered owners thereof. Prior to the 90th day after this amendatory Act of 1987 takes effect, the issuer of any uncertificated security outstanding when this amendatory Act of 1987 takes effect shall send to the registered owner a written statement containing: (a) A description of the issue of which the uncertificated security is a part; (b) The number of shares or other units owned by the registered owner; (c) The name and address and (if known to the issuer) any taxpayer identification number of the registered owner; (d) A notation of any liens or restrictions of the issuer and any adverse claims (as to which the issuer has a duty under Section 8-403(4)) to which the uncertificated security is or may be subject at the time when the statement is prepared or a statement that there are no such liens, restrictions or adverse claims; and (e) The date the statement was prepared. Statements sent pursuant to this subsection shall be signed by or on behalf of the issuer; shall be identified as "initial transaction statement"; and shall be deemed to be initial transaction statements for the purposes of Article 8 as amended by this amendatory Act of 1987. (3) If a security interest in an uncertificated security outstanding prior to January 1, 1988, is perfected or has priority as to all persons or as to certain persons when this amendatory Act of 1987 takes effect by virtue of the previous filing of a financing statement, and if other acts would be required for the perfection or priority of the security interest against those persons under this amendatory Act of 1987, the perfection and priority rights of the security interest shall continue and shall lapse on the date provided by the "Uniform Commercial Code", approved July 31, 1961, as amended prior to this amendatory Act of 1987, (whether or not a continuation statement is filed with respect to such security interest) unless the security interest is perfected in accordance with this amendatory Act of 1987. (4) If an issuer's lien or restriction on an uncertificated security outstanding prior to January 1, 1988, or a term of such a security is valid and effective against all persons or against certain persons when this amendatory Act of 1987 takes effect, and if the notation of such lien, restriction or term on an initial transaction statement would be required for its validity or effectiveness against those persons under this amendatory Act of 1987, such lien, restriction or term shall remain valid and effective until the earlier of (i) the time when an initial transaction statement is sent by the issuer to the registered owner (after which the validity and effectiveness of the lien, restriction or term shall be governed by this amendatory Act of 1987), or (ii) 3 years from the effective date of this amendatory Act of 1987. If an initial transaction statement regarding an uncertificated security outstanding on the effective date of this amendatory Act of 1987 is not sent to the registered owner thereof within 3 years after that date, any issuer's lien required to be noted thereon shall cease to be valid, and any restriction or term required to be noted thereon shall cease to be effective except as to those persons against whom an unnoted restriction or term would be effective under Article 8 as amended by this amendatory Act of 1987.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/Art. 12
(810 ILCS 5/Art. 12 heading)
(Text of Section before amendment by P.A. 103-1036)
(This version was renumbered as 810 ILCS 5/Art. 11A heading by P.A. 103-1036, eff. 1-1-25)
ARTICLE 12 EFFECTIVE DATE AND TRANSITIONAMENDATORY ACT OF 1987
(Text of Section after amendment by P.A. 103-1036)ARTICLE 12CONTROLLABLE ELECTRONIC RECORDS(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/12-101 (810 ILCS 5/12-101) (from Ch. 26, par. 12-101) (Text of Section before amendment by P.A. 103-1036) (This version was renumbered as 810 ILCS 5/Art. 11A-101 by P.A. 103-1036, eff. 1-1-25) Sec. 12-101. Effective Date. This amendatory Act of 1987 shall take effect on January 1, 1988.(Source: P.A. 85-997.) (Text of Section after amendment by P.A. 103-1036) Sec. 12-101. Title. This Article may be cited as Uniform Commercial Code--Controllable Electronic Records.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/12-102 (810 ILCS 5/12-102) (from Ch. 26, par. 12-102) (Text of Section before amendment by P.A. 103-1036) (This version was renumbered as 810 ILCS 5/Art. 11A-102 by P.A. 103-1036, eff. 1-1-25) Sec. 12-102. Transition to Amendatory Act of 1987. (1) Transactions validly entered into after July 1, 1962 and before January 1, 1988 and which were subject to the provisions of the "Uniform Commercial Code", approved July 31, 1961, as amended, and which would be subject to this amendatory Act of 1987 if they had been entered into after December 31, 1987 and the rights, duties and interest flowing from such transactions remain valid after the latter date, and may be terminated, completed, consummated or enforced as required or permitted by this amendatory Act of 1987. Security interests arising out of such transactions which are perfected when this amendatory Act of 1987 becomes effective shall remain perfected until they lapse as provided in this amendatory Act of 1987, and may be continued as permitted by this amendatory Act of 1987. (2) The persons shown on the books of the issuer as the holders of uncertificated securities outstanding when this amendatory Act of 1987 becomes effective shall be deemed to be the registered owners thereof. Prior to the 90th day after this amendatory Act of 1987 takes effect, the issuer of any uncertificated security outstanding when this amendatory Act of 1987 takes effect shall send to the registered owner a written statement containing: (a) A description of the issue of which the uncertificated security is a part; (b) The number of shares or other units owned by the registered owner; (c) The name and address and (if known to the issuer) any taxpayer identification number of the registered owner; (d) A notation of any liens or restrictions of the issuer and any adverse claims (as to which the issuer has a duty under Section 8-403(4) to which the uncertificated security is or may be subject at the time when the statement is prepared or a statement that there are no such liens, restrictions or adverse claims; and (e) The date the statement was prepared. Statements sent pursuant to this subsection shall be signed by or on behalf of the issuer; shall be identified as "initial transaction statement"; and shall be deemed to be initial transaction statements for the purposes of Article 8 as amended by this amendatory Act of 1987. (3) If a security interest in an uncertificated security outstanding prior to January 1, 1988, is perfected or has priority as to all persons or as to certain persons when this amendatory Act of 1987 takes effect by virtue of the previous filing of a financing statement, and if other acts would be required for the perfection or priority of the security interest against those persons under this amendatory Act of 1987, the perfection and priority rights of the security interest shall continue and shall lapse on the date provided by the "Uniform Commercial Code", approved July 31, 1961, as amended prior to this amendatory Act of 1987, (whether or not a continuation statement is filed with respect to such security interest) unless the security interest is perfected in accordance with this amendatory Act of 1987. (4) If an issuer's lien or restriction on an uncertificated security outstanding prior to January 1, 1988, or a term of such a security is valid and effective against all persons or against certain persons when this amendatory Act of 1987 takes effect, and if the notation of such lien, restriction or term on an initial transaction statement would be required for its validity or effectiveness against those persons under this amendatory Act of 1987, such lien, restriction or term shall remain valid and effective until the earlier of (i) the time when an initial transaction statement is sent by the issuer to the registered owner (after which the validity and effectiveness of the lien, restriction or term shall be governed by this amendatory Act of 1987), or (ii) 3 years from the effective date of this amendatory Act of 1987. If an initial transaction statement regarding an uncertificated security outstanding on the effective date of this amendatory Act of 1987 is not sent to the registered owner thereof within 3 years after that date, any issuer's lien required to be noted thereon shall cease to be valid, and any restriction or term required to be noted thereon shall cease to be effective except as to those persons against whom an unnoted restriction or term would be effective under Article 8 as amended by this amendatory Act of 1987.(Source: P.A. 85-997.) (Text of Section after amendment by P.A. 103-1036) Sec. 12-102. Definitions. (a) In this Article: (1) "Controllable electronic record" means a record | | stored in an electronic medium that can be subjected to control under Section 12-105. The term does not include a controllable account, a controllable payment intangible, a deposit account, an electronic copy of a record evidencing chattel paper, an electronic document of title, electronic money, investment property, or a transferable record.
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| (2) "Qualifying purchaser" means a purchaser of a
| | controllable electronic record or an interest in a controllable electronic record that obtains control of the controllable electronic record for value, in good faith, and without notice of a claim of a property right in the controllable electronic record.
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| (3) "Transferable record" has the meaning provided
| | (A) Section 201(a)(1) of the Electronic
| | Signatures in Global and National Commerce Act, 15 U.S.C. Section 7021(a)(1), as amended; or
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| (B) Section 16(a) of the Uniform Electronic
| | (4) "Value" has the meaning provided in Section
| | 3-303(a), as if references in that subsection to an "instrument" were references to a controllable account, controllable electronic record, or controllable payment intangible.
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| (b) Definitions in Article 9. The definitions in Article 9 of "account debtor", "controllable account", "controllable payment intangible", "chattel paper", "deposit account", "electronic money", and "investment property" apply to this Article.
(c) Article 1 definitions and principles. Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/12-103 (810 ILCS 5/12-103) (This Section may contain text from a Public Act with a delayed effective date) Sec. 12-103. Relation to Article 9 and consumer laws. (a) Article 9 governs in case of conflict. If there is conflict between this Article and Article 9, Article 9 governs. (b) Applicable consumer law and other laws. A transaction subject to this Article is subject to any applicable rule of law, statute, or regulation which establishes a different rule for consumers including, without limitation, the Consumer Installment Loan Act, the Predatory Loan Prevention Act, the Consumer Fraud and Deceptive Business Practices Act, any other statute or regulation that regulates the rates, charges, agreements, and practices for loans, credit sales, or other extensions of credit, and any consumer protection statute or regulation.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/12-104 (810 ILCS 5/12-104) (This Section may contain text from a Public Act with a delayed effective date) Sec. 12-104. Rights in controllable account, controllable electronic record, and controllable payment intangible. (a) Applicability of Section to controllable account and controllable payment intangible. This Section applies to the acquisition and purchase of rights in a controllable account or controllable payment intangible, including the rights and benefits under subsections (c), (d), (e), (g), and (h) of a purchaser and qualifying purchaser, in the same manner this Section applies to a controllable electronic record. (b) Control of controllable account and controllable payment intangible. To determine whether a purchaser of a controllable account or a controllable payment intangible is a qualifying purchaser, the purchaser obtains control of the account or payment intangible if it obtains control of the controllable electronic record that evidences the account or payment intangible. (c) Applicability of other law to acquisition of rights. Except as provided in this Section, law other than this Article determines whether a person acquires a right in a controllable electronic record and the right the person acquires. (d) Shelter principle and purchase of limited interest. A purchaser of a controllable electronic record acquires all rights in the controllable electronic record that the transferor had or had power to transfer, except that a purchaser of a limited interest in a controllable electronic record acquires rights only to the extent of the interest purchased. (e) Rights of qualifying purchaser. A qualifying purchaser acquires its rights in the controllable electronic record free of a claim of a property right in the controllable electronic record. (f) Limitation of rights of qualifying purchaser in other property. Except as provided in subsections (a) and (e) for a controllable account and a controllable payment intangible or law other than this Article, a qualifying purchaser takes a right to payment, right to performance, or other interest in property evidenced by the controllable electronic record subject to a claim of a property right in the right to payment, right to performance, or other interest in property. (g) No-action protection for qualifying purchaser. An action may not be asserted against a qualifying purchaser based on both a purchase by the qualifying purchaser of a controllable electronic record and a claim of a property right in another controllable electronic record, whether the action is framed in conversion, replevin, constructive trust, equitable lien, or other theory. (h) Filing not notice. Filing of a financing statement under Article 9 is not notice of a claim of a property right in a controllable electronic record.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/12-105 (810 ILCS 5/12-105) (This Section may contain text from a Public Act with a delayed effective date) Sec. 12-105. Control of controllable electronic record. (a) General rule: control of controllable electronic record. A person has control of a controllable electronic record if the electronic record, a record attached to or logically associated with the electronic record, or a system in which the electronic record is recorded: (1) gives the person: (A) power to avail itself of substantially all | | the benefit from the electronic record; and
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| (B) exclusive power, subject to subsection (b),
| | (i) prevent others from availing themselves
| | of substantially all the benefit from the electronic record; and
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| (ii) transfer control of the electronic
| | record to another person or cause another person to obtain control of another controllable electronic record as a result of the transfer of the electronic record; and
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| (2) enables the person readily to identify itself in
| | any way, including by name, identifying number, cryptographic key, office, or account number, as having the powers specified in paragraph (1).
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| (b) Meaning of exclusive. Subject to subsection (c), a power is exclusive under subsection (a)(1)(B)(i) and (ii) even if:
(1) the controllable electronic record, a record
| | attached to or logically associated with the electronic record, or a system in which the electronic record is recorded limits the use of the electronic record or has a protocol programmed to cause a change, including a transfer or loss of control or a modification of benefits afforded by the electronic record; or
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| (2) the power is shared with another person.
(c) When power not shared with another person. A power of a person is not shared with another person under subsection (b)(2) and the person's power is not exclusive if:
(1) the person can exercise the power only if the
| | power also is exercised by the other person; and
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| (2) the other person:
(A) can exercise the power without exercise of
| | the power by the person; or
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| (B) is the transferor to the person of an
| | interest in the controllable electronic record or a controllable account or controllable payment intangible evidenced by the controllable electronic record.
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| (d) Presumption of exclusivity of certain powers. If a person has the powers specified in subsection (a)(1)(B)(i) and (ii), the powers are presumed to be exclusive.
(e) Control through another person. A person has control of a controllable electronic record if another person, other than the transferor to the person of an interest in the controllable electronic record or a controllable account or controllable payment intangible evidenced by the controllable electronic record:
(1) has control of the electronic record and
| | acknowledges that it has control on behalf of the person; or
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| (2) obtains control of the electronic record after
| | having acknowledged that it will obtain control of the electronic record on behalf of the person.
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| (f) No requirement to acknowledge. A person that has control under this Section is not required to acknowledge that it has control on behalf of another person.
(g) No duties or confirmation. If a person acknowledges that it has or will obtain control on behalf of another person, unless the person otherwise agrees or law other than this Article or Article 9 otherwise provides, the person does not owe any duty to the other person and is not required to confirm the acknowledgment to any other person.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/12-106 (810 ILCS 5/12-106) (This Section may contain text from a Public Act with a delayed effective date) Sec. 12-106. Discharge of account debtor on controllable account or controllable payment intangible. (a) Discharge of account debtor. An account debtor on a controllable account or controllable payment intangible may discharge its obligation by paying: (1) the person having control of the controllable | | electronic record that evidences the controllable account or controllable payment intangible; or
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| (2) except as provided in subsection (b), a person
| | that formerly had control of the controllable electronic record.
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| (b) Content and effect of notification. Subject to subsection (d), the account debtor may not discharge its obligation by paying a person that formerly had control of the controllable electronic record if the account debtor receives a notification that:
(1) is signed by a person that formerly had control
| | or the person to which control was transferred;
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| (2) reasonably identifies the controllable account or
| | controllable payment intangible;
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| (3) notifies the account debtor that control of the
| | controllable electronic record that evidences the controllable account or controllable payment intangible was transferred;
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| (4) identifies the transferee, in any reasonable way,
| | including by name, identifying number, cryptographic key, office, or account number; and
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| (5) provides a commercially reasonable method by
| | which the account debtor is to pay the transferee.
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| (c) Discharge following effective notification. After receipt of a notification that complies with subsection (b), the account debtor may discharge its obligation by paying in accordance with the notification and may not discharge the obligation by paying a person that formerly had control.
(d) When notification ineffective. Subject to subsection (h), notification is ineffective under subsection (b):
(1) unless, before the notification is sent, the
| | account debtor and the person that, at that time, had control of the controllable electronic record that evidences the controllable account or controllable payment intangible agree in a signed record to a commercially reasonable method by which a person may furnish reasonable proof that control has been transferred;
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| (2) to the extent an agreement between the account
| | debtor and seller of a payment intangible limits the account debtor's duty to pay a person other than the seller and the limitation is effective under law other than this Article; or
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| (3) at the option of the account debtor, if the
| | notification notifies the account debtor to:
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| (A) divide a payment;
(B) make less than the full amount of an
| | installment or other periodic payment; or
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| (C) pay any part of a payment by more than one
| | method or to more than one person.
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| (e) Proof of transfer of control. Subject to subsection (h), if requested by the account debtor, the person giving the notification under subsection (b) seasonably shall furnish reasonable proof, using the method in the agreement referred to in subsection (d)(1), that control of the controllable electronic record has been transferred. Unless the person complies with the request, the account debtor may discharge its obligation by paying a person that formerly had control, even if the account debtor has received a notification under subsection (b).
(f) What constitutes reasonable proof. A person furnishes reasonable proof under subsection (e) that control has been transferred if the person demonstrates, using the method in the agreement referred to in subsection (d)(1), that the transferee has the power to:
(1) avail itself of substantially all the benefit
| | from the controllable electronic record;
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| (2) prevent others from availing themselves of
| | substantially all the benefit from the controllable electronic record; and
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| (3) transfer the powers specified in paragraphs (1)
| | and (2) to another person.
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| (g) Rights not waivable. Subject to subsection (h), an account debtor may not waive or vary its rights under subsections (d)(1) and (e) or its option under subsection (d)(3).
(h) Rule for individual under other law. This Section is subject to law other than this Article which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/12-107 (810 ILCS 5/12-107) (This Section may contain text from a Public Act with a delayed effective date) Sec. 12-107. Governing law. (a) Governing law: general rule. Except as provided in subsection (b), the local law of a controllable electronic record's jurisdiction governs a matter covered by this Article. (b) Governing law: Section 12-106. For a controllable electronic record that evidences a controllable account or controllable payment intangible, the local law of the controllable electronic record's jurisdiction governs a matter covered by Section 12-106 unless an effective agreement determines that the local law of another jurisdiction governs. (c) Controllable electronic record's jurisdiction. The following rules determine a controllable electronic record's jurisdiction under this Section: (1) If the controllable electronic record, or a | | record attached to or logically associated with the controllable electronic record and readily available for review, expressly provides that a particular jurisdiction is the controllable electronic record's jurisdiction for purposes of this Article or the Uniform Commercial Code, that jurisdiction is the controllable electronic record's jurisdiction.
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| (2) If paragraph (1) does not apply and the rules of
| | the system in which the controllable electronic record is recorded are readily available for review and expressly provide that a particular jurisdiction is the controllable electronic record's jurisdiction for purposes of this Article or the Uniform Commercial Code, that jurisdiction is the controllable electronic record's jurisdiction.
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| (3) If paragraphs (1) and (2) do not apply and the
| | controllable electronic record, or a record attached to or logically associated with the controllable electronic record and readily available for review, expressly provides that the controllable electronic record is governed by the law of a particular jurisdiction, that jurisdiction is the controllable electronic record's jurisdiction.
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| (4) If paragraphs (1), (2), and (3) do not apply and
| | the rules of the system in which the controllable electronic record is recorded are readily available for review and expressly provide that the controllable electronic record or the system is governed by the law of a particular jurisdiction, that jurisdiction is the controllable electronic record's jurisdiction.
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| (5) If paragraphs (1) through (4) do not apply, the
| | controllable electronic record's jurisdiction is the District of Columbia.
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| (d) Applicability of Article 12. If subsection (c)(5) applies and Article 12 is not in effect in the District of Columbia without material modification, the governing law for a matter covered by this Article is the law of the District of Columbia as though Article 12 were in effect in the District of Columbia without material modification. In this subsection, "Article 12" means Article 12 of Uniform Commercial Code Amendments (2022).
(e) Relation of matter or transaction to controllable electronic record's jurisdiction not necessary. To the extent subsections (a) and (b) provide that the local law of the controllable electronic record's jurisdiction governs a matter covered by this Article, that law governs even if the matter or a transaction to which the matter relates does not bear any relation to the controllable electronic record's jurisdiction.
(f) Rights of purchasers determined at time of purchase. The rights acquired under Section 12-104 by a purchaser or qualifying purchaser are governed by the law applicable under this Section at the time of purchase.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/Art. 12A
(810 ILCS 5/Art. 12A heading)
ARTICLE 12ATRANSITIONAL PROVISIONS FOR UNIFORM COMMERCIAL CODE AMENDMENTS OF THE 103RD GENERAL ASSEMBLY
(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/Art. 12A Pt. 1
(810 ILCS 5/Art. 12A Pt. 1 heading)
PART 1GENERAL PROVISIONS AND DEFINITIONS
(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/12A-101 (810 ILCS 5/12A-101) (This Section may contain text from a Public Act with a delayed effective date) Sec. 12A-101. Title. This Article may be cited as Transitional Provisions for Uniform Commercial Code Amendments of the 103rd General Assembly.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/12A-102 (810 ILCS 5/12A-102) (This Section may contain text from a Public Act with a delayed effective date) Sec. 12A-102. Definitions. (a) In this Article: (1) "Adjustment date" means July 1, 2025, or the date | | that is one year after the effective date of this amendatory Act of the 103rd General Assembly, whichever is later.
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| (2) "Article 12" means Article 12 of the Uniform
| | (3) "Article 12 property" means a controllable
| | account, controllable electronic record, or controllable payment intangible.
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| (b) Definitions in other Articles. The following definitions in other Articles of the Uniform Commercial Code apply to this Article.
"Controllable account". Section 9-102.
"Controllable electronic record". Section 12-102.
"Controllable payment intangible". Section 9-102.
"Electronic money". Section 9-102.
"Financing statement". Section 9-102.
(c) Article 1 definitions and principles. Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/Art. 12A Pt. 2
(810 ILCS 5/Art. 12A Pt. 2 heading)
PART 2GENERAL TRANSITIONAL PROVISION
(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/12A-201 (810 ILCS 5/12A-201) (This Section may contain text from a Public Act with a delayed effective date) Sec. 12A-201. Saving clause. Except as provided in Part 3, a transaction validly entered into before the effective date of this amendatory Act of the 103rd General Assembly and the rights, duties, and interests flowing from the transaction remain valid thereafter and may be terminated, completed, consummated, or enforced as required or permitted by law other than the Uniform Commercial Code or, if applicable, the Uniform Commercial Code, as though this amendatory Act of the 103rd General Assembly had not taken effect.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/Art. 12A Pt. 3
(810 ILCS 5/Art. 12A Pt. 3 heading)
PART 3TRANSITIONAL PROVISIONS FOR ARTICLES 9 AND 12
(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/12A-301 (810 ILCS 5/12A-301) (This Section may contain text from a Public Act with a delayed effective date) Sec. 12A-301. Saving clause. (a) Pre-effective-date transaction, lien, or interest. Except as provided in this Part, Article 9 as amended by this amendatory Act of the 103rd General Assembly and Article 12 apply to a transaction, lien, or other interest in property, even if the transaction, lien, or interest was entered into, created, or acquired before the effective date of this amendatory Act of the 103rd General Assembly. (b) Continuing validity. Except as provided in subsection (c) and Sections 12A-302 through 12A-306: (1) a transaction, lien, or interest in property that | | was validly entered into, created, or transferred before the effective date of this amendatory Act of the 103rd General Assembly and was not governed by the Uniform Commercial Code, but would be subject to Article 9 as amended by this amendatory Act of the 103rd General Assembly or Article 12 if it had been entered into, created, or transferred on or after the effective date of this amendatory Act of the 103rd General Assembly, including the rights, duties, and interests flowing from the transaction, lien, or interest, remains valid on and after the effective date of this amendatory Act of the 103rd General Assembly; and
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| (2) the transaction, lien, or interest may be
| | terminated, completed, consummated, and enforced as required or permitted by this amendatory Act of the 103rd General Assembly or by the law that would apply if this amendatory Act of the 103rd General Assembly had not taken effect.
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| (c) Pre-effective-date proceeding. This amendatory Act of the 103rd General Assembly does not affect an action, case, or proceeding commenced before the effective date of this amendatory Act of the 103rd General Assembly.
(Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/12A-302 (810 ILCS 5/12A-302) (This Section may contain text from a Public Act with a delayed effective date) Sec. 12A-302. Security interest perfected before effective date. (a) Continuing perfection: perfection requirements satisfied. A security interest that is enforceable and perfected immediately before the effective date of this amendatory Act of the 103rd General Assembly is a perfected security interest under this amendatory Act of the 103rd General Assembly if, on the effective date of this amendatory Act of the 103rd General Assembly, the requirements for enforceability and perfection under this amendatory Act of the 103rd General Assembly are satisfied without further action. (b) Continuing perfection: enforceability or perfection requirements not satisfied. If a security interest is enforceable and perfected immediately before the effective date of this amendatory Act of the 103rd General Assembly, but the requirements for enforceability or perfection under this amendatory Act of the 103rd General Assembly are not satisfied on the effective date of this amendatory Act of the 103rd General Assembly, the security interest: (1) is a perfected security interest until the | | earlier of the time perfection would have ceased under the law in effect immediately before the effective date of this amendatory Act of the 103rd General Assembly or the adjustment date;
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| (2) remains enforceable thereafter only if the
| | security interest satisfies the requirements for enforceability under Section 9-203, as amended by this amendatory Act of the 103rd General Assembly, before the adjustment date; and
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| (3) remains perfected thereafter only if the
| | requirements for perfection under this amendatory Act of the 103rd General Assembly are satisfied before the time specified in paragraph (1).
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| (Source: P.A. 103-1036, eff. 1-1-25.)
|
810 ILCS 5/12A-303 (810 ILCS 5/12A-303) (This Section may contain text from a Public Act with a delayed effective date) Sec. 12A-303. Security interest unperfected before effective date. A security interest that is enforceable immediately before the effective date of this amendatory Act of the 103rd General Assembly but is unperfected at that time: (1) remains an enforceable security interest until | | (2) remains enforceable thereafter if the security
| | interest becomes enforceable under Section 9-203, as amended by this amendatory Act of the 103rd General Assembly, on the effective date of this amendatory Act of the 103rd General Assembly or before the adjustment date; and
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| (3) becomes perfected:
(A) without further action, on the effective date
| | of this amendatory Act of the 103rd General Assembly if the requirements for perfection under this amendatory Act of the 103rd General Assembly are satisfied before or at that time; or
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| (B) when the requirements for perfection are
| | satisfied if the requirements are satisfied after that time.
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| (Source: P.A. 103-1036, eff. 1-1-25.)
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810 ILCS 5/12A-304 (810 ILCS 5/12A-304) (This Section may contain text from a Public Act with a delayed effective date) Sec. 12A-304. Effectiveness of actions taken before effective date. (a) Pre-effective-date action; attachment and perfection before adjustment date. If action, other than the filing of a financing statement, is taken before the effective date of this amendatory Act of the 103rd General Assembly and the action would have resulted in perfection of the security interest had the security interest become enforceable before the effective date of this amendatory Act of the 103rd General Assembly, the action is effective to perfect a security interest that attaches under this amendatory Act of the 103rd General Assembly before the adjustment date. An attached security interest becomes unperfected on the adjustment date unless the security interest becomes a perfected security interest under this amendatory Act of the 103rd General Assembly before the adjustment date. (b) Pre-effective-date filing. The filing of a financing statement before the effective date of this amendatory Act of the 103rd General Assembly is effective to perfect a security interest on the effective date of this amendatory Act of the 103rd General Assembly to the extent the filing would satisfy the requirements for perfection under this amendatory Act of the 103rd General Assembly. (c) Pre-effective-date enforceability action. The taking of an action before the effective date of this amendatory Act of the 103rd General Assembly is sufficient for the enforceability of a security interest on the effective date of this amendatory Act of the 103rd General Assembly if the action would satisfy the requirements for enforceability under this amendatory Act of the 103rd General Assembly.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/12A-305 (810 ILCS 5/12A-305) (This Section may contain text from a Public Act with a delayed effective date) Sec. 12A-305. Priority. (a) Determination of priority. Subject to subsections (b) and (c), this amendatory Act of the 103rd General Assembly determines the priority of conflicting claims to collateral. (b) Established priorities. Subject to subsection (c), if the priorities of claims to collateral were established before the effective date of this amendatory Act of the 103rd General Assembly, Article 9 as in effect before the effective date of this amendatory Act of the 103rd General Assembly determines priority. (c) Determination of certain priorities on adjustment date. On the adjustment date, to the extent the priorities determined by Article 9 as amended by this amendatory Act of the 103rd General Assembly modify the priorities established before the effective date of this amendatory Act of the 103rd General Assembly, the priorities of claims to Article 12 property and electronic money established before the effective date of this amendatory Act of the 103rd General Assembly cease to apply.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/12A-306 (810 ILCS 5/12A-306) (This Section may contain text from a Public Act with a delayed effective date) Sec. 12A-306. Priority of claims when priority rules of Article 9 do not apply. (a) Determination of priority. Subject to subsections (b) and (c), Article 12 determines the priority of conflicting claims to Article 12 property when the priority rules of Article 9 as amended by this amendatory Act of the 103rd General Assembly do not apply. (b) Established priorities. Subject to subsection (c), when the priority rules of Article 9 as amended by this amendatory Act of the 103rd General Assembly do not apply and the priorities of claims to Article 12 property were established before the effective date of this amendatory Act of the 103rd General Assembly, law other than Article 12 determines priority. (c) Determination of certain priorities on adjustment date. When the priority rules of Article 9 as amended by this amendatory Act of the 103rd General Assembly do not apply, to the extent the priorities determined by this amendatory Act of the 103rd General Assembly modify the priorities established before the effective date of this amendatory Act of the 103rd General Assembly, the priorities of claims to Article 12 property established before the effective date of this amendatory Act of the 103rd General Assembly cease to apply on the adjustment date.(Source: P.A. 103-1036, eff. 1-1-25.) |
810 ILCS 5/Art. 13
(810 ILCS 5/Art. 13 heading)
ARTICLE 13.
EFFECTIVE DATE AND TRANSITION
PROVISIONS FOR AMENDATORY ACT OF 1996
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810 ILCS 5/13-101
(810 ILCS 5/13-101)
Sec. 13-101.
Effective date.
This amendatory Act of 1996 takes effect on
January 1, 1997.
(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/13-102
(810 ILCS 5/13-102)
Sec. 13-102.
Applicability.
This amendatory Act of 1996 applies to a
letter of credit that is issued on or after the effective date of this
amendatory Act of 1996. This amendatory Act of 1996
does not apply to a transaction, event, obligation, or duty arising out of or
associated with a letter of credit that was issued before the effective date of
this amendatory Act of 1996.
(Source: P.A. 89-534, eff. 1-1-97.)
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810 ILCS 5/13-103
(810 ILCS 5/13-103)
Sec. 13-103.
Savings clause.
A transaction arising out of
or associated with a letter of credit that was issued before the effective date
of this amendatory Act of 1996 and the rights, obligations, and interests
flowing from
that transaction are governed by any statute or other law amended
by this amendatory Act of 1996 as if amendment had not occurred and may be
terminated, completed, consummated, or enforced under that statute or
other law.
(Source: P.A. 89-534, eff. 1-1-97.)
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