BILL NUMBER: SB 45 CHAPTERED
BILL TEXT
CHAPTER 991
FILED WITH SECRETARY OF STATE OCTOBER 10, 1999
APPROVED BY GOVERNOR OCTOBER 10, 1999
PASSED THE SENATE SEPTEMBER 8, 1999
PASSED THE ASSEMBLY SEPTEMBER 7, 1999
AMENDED IN ASSEMBLY AUGUST 30, 1999
AMENDED IN ASSEMBLY JULY 7, 1999
AMENDED IN ASSEMBLY JUNE 22, 1999
AMENDED IN SENATE MAY 28, 1999
AMENDED IN SENATE MAY 18, 1999
AMENDED IN SENATE APRIL 22, 1999
AMENDED IN SENATE APRIL 8, 1999
AMENDED IN SENATE APRIL 6, 1999
AMENDED IN SENATE MARCH 15, 1999
INTRODUCED BY Senator Sher
DECEMBER 7, 1998
An act to amend Sections 7507.13, 22911, 22912, 22914, 22916,
22917, 22921, and 22922 of the Business and Professions Code, to
amend Sections 954.5, 955, 955.1, 1799.100, 1799.103, 1812.601,
2924f, 2944, 2983.8, 3343.5, 3439.08, 3440.1, and 3440.5 of the Civil
Code, to amend Sections 481.020, 481.030, 481.040, 481.080, 481.090,
481.115, 481.117, 481.207, 481.220, 488.375, 488.385, 488.405,
488.500, 680.120, 680.130, 680.140, 680.170, 680.180, 680.210,
680.220, 680.340, 680.350, 697.530, 697.580, 697.590, 697.610,
697.640, 697.650, 697.660, 697.730, 697.740, 697.750, 697.920,
701.040, 730.5, and 2103 of the Code of Civil Procedure, to amend
Sections 1105, 1201, 1206, 2103, 2210, 2326, 2502, 2716, 4210, 6102,
6103, 7503, 8103, 8106, 8110, 8301, 8302, 8510, 8603, 10103, 10303,
10307, 10309, 13102, 13105, and 14106 of, to add Section 5118 to, to
repeal and add Division 9 (commencing with Section 9101) of, and to
repeal and add Section 9321 of, the Commercial Code, to amend Section
911 of the Family Code, to amend Section 22337 of the Financial
Code, to amend Sections 21855, 55702, 57405, 57408, 57409, 57411,
57516, 57517, 57519, 57530, 57531, 57540, 57567, 57568, 57570, 57581,
57582, and 57590 of the Food and Agricultural Code, to amend
Sections 7153, 7154, 7157, 7159, 7170, 7222, 7226, 14735, 16201,
27282, and 54985 of the Government Code, to amend Sections 18035,
18035.2, 18037.5, 18080.7, 18093, 18105, 18106, and 18122 of the
Health and Safety Code, to amend Sections 504b, 538, and 574 of the
Penal Code, to amend Sections 843 and 844 of the Public Utilities
Code, to amend Sections 6703, 7855, 8957, 11452, 18671, 30315, 32387,
38503, 40155, 41123.5, 43444.2, 45605, 46406, 50136, 55205, and
60407 of the Revenue and Taxation Code, and to amend Section 1755 of
the Unemployment Insurance Code, relating to secured transactions,
and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
SB 45, Sher. Commercial law: secured transactions.
Existing provisions of the Commercial Code govern security
interests in personal property and fixtures, as well as certain sales
of accounts, contract rights, and chattel paper.
This bill would, as of July 1, 2001, repeal those provisions and
replace them with new provisions concerning those subjects. Among
other things, the new provisions would (1) broaden the scope of
covered transactions and collateral, (2) expand the duties of secured
parties relating to the release of control and the provision of
information to debtors with respect to collateral and the obligations
it secures, (3) change certain choice-of-law rules and other
requirements regarding the perfection of security interests, (4)
revise and add certain new priority rules for secured interests
generally and certain special priority rules relating to banks and
deposit accounts, (5) revise provisions relative to the relationships
between certain 3rd parties and the parties to secured transactions,
(6) enact new provisions governing the assignment of certain types
of collateral, (7) revise specified filing requirements and financing
statement requisites, and impose certain new reporting and other
duties on the Secretary of State in connection with these changes,
and (8) change certain default and enforcement rules.
This bill would appropriate $128,000 from the Secretary of State's
Business Fees Fund to the Secretary of State to implement these new
provisions. It would revise cross-references and make related
changes in several codes to conform to the bill.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 7507.13 of the Business and Professions Code is
amended to read:
7507.13. (a) A licensed repossession agency is not liable for the
act or omission of a legal owner, debtor, lienholder, lessor, or
lessee in making an assignment to it or for accepting an assignment
from any legal owner, debtor, lienholder, lessor, or lessee and is
entitled to indemnity from the legal owner, debtor, lienholder,
lessor, or lessee for any loss, damage, cost, or expense, including
court costs and attorney's fees, that it may reasonably incur as a
result thereof. Nothing in this subdivision limits the liability of
any person for his or her tortious conduct.
(b) The legal owner, debtor, lienholder, lessor, or lessee is not
liable for any act or omission by a licensed repossession agency in
carrying out an assignment and is entitled to indemnity from the
repossession agency for any loss, damage, cost, or expense, including
court costs and attorney's fees, that the legal owner, debtor,
lienholder, lessor, or lessee may reasonably incur as a result
thereof. Nothing in this subdivision limits the liability of any
person for his or her tortious conduct.
(c) The legal owner, debtor, lienholder, lessor, or lessee is not
guilty of a violation of Section 7502.1 or 7502.2 if, at the time of
the assignment, the party making the assignment has in its possession
a copy of the repossessor's current, unexpired repossession agency
license, and a copy of the current, unexpired repossession agency's
qualified manager's certificate, and does not have actual knowledge
of any order of suspension or revocation of the license or
certificate.
(d) Neither a licensed repossession agency nor a legal owner,
debtor, lienholder, lessor or lessee may, by any means, direct or
indirect, express or implied, instruct or attempt to coerce the other
to violate any law, regulation, or rule regarding the recovery of
any collateral, including, but not limited to, the provisions of this
chapter or Section 9609 of the Commercial Code.
SEC. 1.1. Section 22911 of the Business and Professions Code is
amended to read:
22911. The notice of a claim of lien shall be filed on a form
which is the standard form for the original financing statement
prescribed by the Secretary of State pursuant to Section 9502 of the
Commercial Code. The standard form shall be completed with the
following changes:
(a) The lien claimant may be identified either as a lien claimant
or as a secured party.
(b) The form shall be signed by the lien claimant and need not be
signed by the lien debtor.
(c) In the space for the description of the collateral there shall
instead be entered the information specified in subdivisions (c),
(d), (e), and (g) of Section 22909.
(d) Attached to the form shall be a separately signed statement
containing the information specified in subdivision (f) of Section
22909.
SEC. 1.2. Section 22912 of the Business and Professions Code is
amended to read:
22912. The notice of claim of lien shall be filed, indexed, and
marked in the office of the Secretary of State in the same manner as
a financing statement is filed, indexed, and marked pursuant to
Sections 9516 and 9519 of the Commercial Code.
SEC. 1.3. Section 22914 of the Business and Professions Code is
amended to read:
22914. For the purpose of the Secretary of State's index pursuant
to Sections 9516 and 9519 of the Commercial Code and for the purpose
of the issuance of a certificate pursuant to Section 9523 or 9528 of
the Commercial Code, the Secretary of State shall identify a notice
pursuant to this article as a financing statement.
SEC. 1.4. Section 22916 of the Business and Professions Code is
amended to read:
22916. A member of the public may obtain a certificate from the
Secretary of State identifying whether there is a lien on file and
any notice of claim of lien naming a particular debtor, and if so,
giving the date and time of the filing of each notice, and the names
and addresses of each lienholder in the certificate. The fee for the
certificate is the same as the fee for the certificate issued
pursuant to Section 9523 of the Commercial Code.
SEC. 1.5. Section 22917 of the Business and Professions Code is
amended to read:
22917. A member of the public may obtain a copy of any notice of
an equipment repurchase lien, including notices affecting the notices
from the Secretary of State. The fee for these copies shall be the
same as that prescribed in Section 9525 of the Commercial Code.
SEC. 1.6. Section 22921 of the Business and Professions Code is
amended to read:
22921. (a) A lien created pursuant to this chapter is assignable
or transferable by the holder of the lien, with full rights of
enforcement.
(b) The lienholder shall file a statement of assignment or
transfer with the office of the Secretary of State in the same manner
that a statement is filed pursuant to Section 9514 of the Commercial
Code.
SEC. 1.7. Section 22922 of the Business and Professions Code is
amended to read:
22922. (a) Except to the extent specifically set forth in this
chapter, the lien created by this chapter is subject to Division 9
(commencing with Section 9101) of the Commercial Code.
(b) For the purposes of this chapter, as used in Division 9
(commencing with Section 9101) of the Commercial Code, the following
terms have the following meanings:
(1) "Secured party" refers to the equipment dealer, lien creditor,
lien claimant, or assignee thereof under this chapter.
(2) "Debtor" refers to the supplier, lien debtor, or debtor under
this chapter.
(3) "Collateral" refers to the equipment subject to the lien
created under this chapter.
(c) A security agreement is not necessary to make an equipment
repurchase lien created under this chapter enforceable.
(d) An equipment repurchase lien created under this chapter shall
not continue in the repurchased equipment following the disposition
thereof.
(e) The right of an equipment dealer to enforce the lien created
under this chapter shall be governed by this chapter and shall not be
governed by Chapter 6 (commencing with Section 9601) of Division 9
of the Commercial Code.
SEC. 1.8. Section 954.5 of the Civil Code is amended to read:
954.5. (a) Subject to subdivisions (b) and (c), a transfer of a
right represented by a judgment excluded from coverage of Division 9
of the Commercial Code by paragraph (9) of subdivision (d) of Section
9109 of the Commercial Code shall be deemed perfected as against
third persons upon there being executed and delivered to the
transferee an assignment thereof in writing.
(b) As between bona fide assignees of the same right for value
without notice, the assignee who first becomes an assignee of record,
by filing an acknowledgment of assignment of judgment with the court
as provided in Section 673 of the Code of Civil Procedure or
otherwise becoming an assignee of record, has priority.
(c) The filing of an acknowledgment of assignment of the judgment
with the court under Section 673 of the Code of Civil Procedure is
not, of itself, notice to the judgment debtor so as to invalidate any
payments made by the judgment debtor that would otherwise be applied
to the satisfaction of the judgment.
SEC. 2. Section 955 of the Civil Code is amended to read:
955. A transfer other than one intended to create a security
interest (paragraph (1) or (3) of subdivision (a) of Section 9109 of
the Commercial Code) of a nonnegotiable instrument which is otherwise
negotiable within Division 3 of the Commercial Code but which is not
payable to order or to bearer and a sale of accounts, chattel paper,
payment intangibles, or promissory notes as part of a sale of the
business out of which they arose (paragraph (4) of subdivision (d) of
Section 9109 of the Commercial Code) shall be deemed perfected
against third persons when such property rights have been endorsed or
assigned in writing and in the case of such instruments or chattel
paper delivered to the transferee, whether or not notice of such
transfer or sale has been given to the obligor; but such endorsement,
assignment, or delivery is not, of itself, notice to the obligor so
as to invalidate any payments made by the obligor to the transferor.
SEC. 3. Section 955.1 of the Civil Code is amended to read:
955.1. (a) Except as provided in Sections 954.5 and 955 and
subject to subdivisions (b) and (c), a transfer other than one
intended to create a security interest (paragraph (1) or (3) of
subdivision (a) of Section 9109 of the Commercial Code) of any
payment intangible (Section 9102 of the Commercial Code) and any
transfer of accounts, chattel paper, payment intangibles, or
promissory notes excluded from the coverage of Division 9 of the
Commercial Code by paragraph (4) of subdivision (d) of Section 9109
of the Commercial Code shall be deemed perfected as against third
persons upon there being executed and delivered to the transferee an
assignment thereof in writing.
(b) As between bona fide assignees of the same right for value
without notice, the assignee first giving notice thereof to the
obligor in writing has priority.
(c) The assignment is not, of itself, notice to the obligor so as
to invalidate any payments made by the obligor to the transferor.
(d) This section does not apply to transfers or assignments of
transition property, as defined in Section 840 of the Public
Utilities Code.
SEC. 3.5. Section 1799.100 of the Civil Code is amended to read:
1799.100. (a) It is unlawful for any person to take a security
interest in any household goods, as defined in subdivision (g), in
connection with a consumer credit contract or other credit obligation
incurred primarily for personal, family, or household purposes
unless (1) the person takes possession of the household goods or (2)
the purchase price of the household goods was financed through the
consumer credit contract or credit obligation.
(b) An agreement or other document creating a nonpossessory
security interest in personal property as defined in subdivision (d)
in connection with a consumer credit contract or other credit
obligation incurred primarily for personal, family, or household
purposes shall contain a statement of description reviewed and signed
by the consumer indicating each specific item of the personal
property in which the security interest is taken. A consumer credit
contract or other credit obligation subject to the Unruh Act (Chapter
1 (commencing with Section 1801) of Title 2) that complies with the
provisions of subdivision (a) of Section 1803.3, or of subdivision
(f) of Section 1810.1, shall be deemed to comply with this
subdivision.
(c) Notwithstanding any other provision of law, a person who has a
nonpossessory security interest in personal property, described in
subdivision (d), taken in connection with a consumer credit contract
or other credit obligation incurred primarily for personal, family,
or household purposes shall only enforce the security interest by
judicial action unless the property is abandoned or freely and
voluntarily surrendered by the consumer.
(d) The provisions of subdivisions (b) and (c) apply only to the
following types of personal property:
(1) Any goods, as defined in paragraph (44) of subdivision (a) of
Section 9102 of the Commercial Code, except for vessels, vehicles,
and aircraft, that are used or bought for use primarily for personal,
family, or household purposes and that has a fair market value of
less than one thousand dollars ($1,000) per individual item at the
time the security interest is created.
(2) The property described in Section 704.050 and subdivision (a)
of Section 704.060 of the Code of Civil Procedure, except for
vessels, vehicles, and aircraft.
(e) Any security interest taken in violation of either subdivision
(a) or (b) is void and unenforceable.
(f) Any person injured by a violation of this section may bring a
civil action for the recovery of damages, equitable relief, and
attorney's fees and costs.
(g) For the purpose of this section:
(1) "Household goods" means and includes clothing, furniture,
appliances, one radio, one television, linens, china, crockery,
kitchenware, personal effects, and wedding rings. "Household goods"
does not include works of art, electronic entertainment equipment
(except one radio and one television), items acquired as antiques,
and jewelry (except wedding rings).
(2) "Antique" means any item over one hundred years of age,
including such items that have been repaired or renovated without
changing their original form or character.
SEC. 4. Section 1799.103 of the Civil Code is amended to read:
1799.103. No consumer credit contract or guarantee of a consumer
credit contract shall provide for a security interest in any
investment property, as defined in paragraph (49) of subdivision (a)
of Section 9102 of the Commercial Code, that is pledged as
collateral, unless (a) the contract either specifically identifies
the investment property as collateral or (b) the secured party is a
securities intermediary, as defined in paragraph (14) of subdivision
(a) of Section 8102 of the Commercial Code, or commodity
intermediary, as defined in paragraph (17) of subdivision (a) of
Section 9102 of the Commercial Code, with respect to the investment
property. The identification of an account shall include the name of
the holder, account number, and name of the institute holding the
investment property. In the event that a consumer credit contract or
guarantee does not comply with this section, the security interest
in the investment property is void.
SEC. 5. Section 1812.601 of the Civil Code is amended to read:
1812.601. (a) "Advertisement" means any of the following:
(1) Any written or printed communication for the purpose of
soliciting, describing, or offering to act as an auctioneer or
provide auction company services, including any brochure, pamphlet,
newspaper, periodical, or publication.
(2) A telephone or other directory listing caused or permitted by
an auctioneer or auction company to be published that indicates the
offer to practice auctioneering or auction company services.
(3) A radio, television, or similar airwave transmission that
solicits or offers the practice of auctioneering or auction company
services.
(b) "Auction" means a sale transaction conducted by means of oral
or written exchanges between an auctioneer and the members of his or
her audience, which exchanges consist of a series of invitations for
offers for the purchase of goods made by the auctioneer and offers to
purchase made by members of the audience and culminate in the
acceptance by the auctioneer of the highest or most favorable offer
made by a member of the participating audience. However, auction
does not include either of the following:
(1) A wholesale motor vehicle auction subject to regulation by the
Department of Motor Vehicles.
(2) A sale of real estate or a sale in any sequence of real estate
with personal property or fixtures or both in a unified sale
pursuant to subparagraph (B) of paragraph (1) of subdivision (a) of
Section 9604 of the Commercial Code.
(c) "Auction company" means any person who arranges, manages,
sponsors, advertises, accounts for the proceeds of, or carries out
auction sales at locations, including, but not limited to, any fixed
location, including an auction barn, gallery place of business, sale
barn, sale yard, sale pavilion, and the contiguous surroundings of
each.
(d) "Auctioneer" means any individual who is engaged in, or who by
advertising or otherwise holds himself or herself out as being
available to engage in, the calling for, the recognition of, and the
acceptance of, offers for the purchase of goods at an auction.
(e) "Employee" means an individual who works for an employer, is
listed on the employer's payroll records, and is under the employer's
control.
(f) "Employer" means a person who employs an individual for wages
or salary, lists the individual on the person's payroll records, and
withholds legally required deductions and contributions.
(g) "Goods" means any goods, wares, chattels, merchandise, or
other personal property, including domestic animals and farm
products.
(h) "Person" means an individual, corporation, partnership, trust,
including a business trust, firm, association, organization, or any
other form of business enterprise.
SEC. 6. Section 2924f of the Civil Code is amended to read:
2924f. (a) As used in this section and Sections 2924g and 2924h,
"property" means real property or a leasehold estate therein, and
"calendar week" means Monday through Saturday, inclusive.
(b) (1) Except as provided in subdivision (c), before any sale of
property can be made under the power of sale contained in any deed of
trust or mortgage, or any resale resulting from a rescission for a
failure of consideration pursuant to subdivision (c) of Section
2924h, notice of the sale thereof shall be given by posting a written
notice of the time of sale and of the street address and the
specific place at the street address where the sale will be held, and
describing the property to be sold, at least 20 days before the date
of sale in one public place in the city where the property is to be
sold, if the property is to be sold in a city, or, if not, then in
one public place in the judicial district in which the property is to
be sold, and publishing a copy once a week for three consecutive
calendar weeks, the first publication to be at least 20 days before
the date of sale, in a newspaper of general circulation published in
the city in which the property or some part thereof is situated, if
any part thereof is situated in a city, if not, then in a newspaper
of general circulation published in the judicial district in which
the property or some part thereof is situated, or in case no
newspaper of general circulation is published in the city or judicial
district, as the case may be, in a newspaper of general circulation
published in the county in which the property or some part thereof is
situated, or in case no newspaper of general circulation is
published in the city or judicial district or county, as the case may
be, in a newspaper of general circulation published in the county in
this state that (A) is contiguous to the county in which the
property or some part thereof is situated and (B) has, by comparison
with all similarly contiguous counties, the highest population based
upon total county population as determined by the most recent federal
decennial census published by the Bureau of the Census. A copy of
the notice of sale shall also be posted in a conspicuous place on the
property to be sold at least 20 days before the date of sale, where
possible and where not restricted for any reason. If the property is
a single-family residence the posting shall be on a door of the
residence, but, if not possible or restricted, then the notice shall
be posted in a conspicuous place on the property; however, if access
is denied because a common entrance to the property is restricted by
a guard gate or similar impediment, the property may be posted at
that guard gate or similar impediment to any development community.
Additionally, the notice of sale shall conform to the minimum
requirements of Section 6043 of the Government Code and be recorded
with the county recorder of the county in which the property or some
part thereof is situated at least 14 days prior to the date of sale.
The notice of sale shall contain the name, street address, and
telephone number of the trustee or other person conducting the sale,
and the name of the original trustor, and also shall contain the
statement required by paragraph (3) of subdivision (c). In addition
to any other description of the property, the notice shall describe
the property by giving its street address, if any, or other common
designation, if any, and a county assessor's parcel number; but if
the property has no street address or other common designation, the
notice shall contain a legal description of the property, the name
and address of the beneficiary at whose request the sale is to be
conducted, and a statement that directions may be obtained pursuant
to a written request submitted to the beneficiary within 10 days from
the first publication of the notice. Directions shall be deemed
reasonably sufficient to locate the property if information as to the
location of the property is given by reference to the direction and
approximate distance from the nearest crossroads, frontage road, or
access road. If a legal description or a county assessor's parcel
number and either a street address or another common designation of
the property is given, the validity of the notice and the validity of
the sale shall not be affected by the fact that the street address,
other common designation, name and address of the beneficiary, or the
directions obtained therefrom are erroneous or that the street
address, other common designation, name and address of the
beneficiary, or directions obtained therefrom are omitted. The term
"newspaper of general circulation," as used in this section, has the
same meaning as defined in Article 1 (commencing with Section 6000)
of Chapter 1 of Division 7 of Title 1 of the Government Code.
The notice of sale shall contain a statement of the total amount
of the unpaid balance of the obligation secured by the property to be
sold and reasonably estimated costs, expenses, advances at the time
of the initial publication of the notice of sale, and, if republished
pursuant to a cancellation of a cash equivalent pursuant to
subdivision (d) of Section 2924h, a reference of that fact; provided,
that the trustee shall incur no liability for any good faith error
in stating the proper amount, including any amount provided in good
faith by or on behalf of the beneficiary. An inaccurate statement of
this amount shall not affect the validity of any sale to a bona fide
purchaser for value, nor shall the failure to post the notice of
sale on a door as provided by this subdivision affect the validity of
any sale to a bona fide purchaser for value.
(2) If the sale of the property is to be a unified sale as
provided in subparagraph (B) of paragraph (1) of subdivision (a) of
Section 9604 of the Commercial Code, the notice of sale shall also
contain a description of the personal property or fixtures to be
sold. In the case where it is contemplated that all of the personal
property or fixtures are to be sold, the description in the notice of
the personal property or fixtures shall be sufficient if it is the
same as the description of the personal property or fixtures
contained in the agreement creating the security interest in or
encumbrance on the personal property or fixtures or the filed
financing statement relating to the personal property or fixtures.
In all other cases, the description in the notice shall be sufficient
if it would be a sufficient description of the personal property or
fixtures under Section 9108 of the Commercial Code. Inclusion of a
reference to or a description of personal property or fixtures in a
notice of sale hereunder shall not constitute an election by the
secured party to conduct a unified sale pursuant to subparagraph (B)
of paragraph (1) of subdivision (a) of Section 9604 of the Commercial
Code, shall not obligate the secured party to conduct a unified sale
pursuant to subparagraph (B) of paragraph (1) of subdivision (a) of
Section 9604 of the Commercial Code, and in no way shall render
defective or noncomplying either that notice or a sale pursuant to
that notice by reason of the fact that the sale includes none or less
than all of the personal property or fixtures referred to or
described in the notice. This paragraph shall not otherwise affect
the obligations or duties of a secured party under the Commercial
Code.
(c) (1) This subdivision applies only to deeds of trust or
mortgages which contain a power of sale and which are secured by real
property containing a single-family, owner-occupied residence, where
the obligation secured by the deed of trust or mortgage is contained
in a contract for goods or services subject to the provisions of the
Unruh Act (Chapter 1 (commencing with Section 1801) of Title 2 of
Part 4 of Division 3).
(2) Except as otherwise expressly set forth in this subdivision,
all other provisions of law relating to the exercise of a power of
sale shall govern the exercise of a power of sale contained in a deed
of trust or mortgage described in paragraph (1).
(3) If any default of the obligation secured by a deed of trust or
mortgage described in paragraph (1) has not been cured within 30
days after the recordation of the notice of default, the trustee or
mortgagee shall mail to the trustor or mortgagor, at his or her last
known address, a copy of the following statement:
YOU ARE IN DEFAULT UNDER A
___________________________________________________,
(Deed of trust or mortgage)
DATED ______. UNLESS YOU TAKE ACTION TO PROTECT
YOUR PROPERTY, IT MAY BE SOLD AT A PUBLIC SALE.
IF YOU NEED AN EXPLANATION OF THE NATURE OF THE
PROCEEDING AGAINST YOU, YOU SHOULD CONTACT A LAWYER.
(4) All sales of real property pursuant to a power of sale
contained in any deed of trust or mortgage described in paragraph (1)
shall be held in the county where the residence is located and shall
be made to the person making the highest offer. The trustee may
receive offers during the 10-day period immediately prior to the date
of sale and if any offer is accepted in writing by both the trustor
or mortgagor and the beneficiary or mortgagee prior to the time set
for sale, the sale shall be postponed to a date certain and prior to
which the property may be conveyed by the trustor to the person
making the offer according to its terms. The offer is revocable
until accepted. The performance of the offer, following acceptance,
according to its terms, by a conveyance of the property to the
offeror, shall operate to terminate any further proceeding under the
notice of sale and it shall be deemed revoked.
(5) In addition to the trustee fee pursuant to Section 2924c, the
trustee or mortgagee pursuant to a deed of trust or mortgage subject
to this subdivision shall be entitled to charge an additional fee of
fifty dollars ($50).
(6) This subdivision applies only to property on which notices of
default were filed on or after the effective date of this
subdivision.
SEC. 7. Section 2944 of the Civil Code is amended to read:
2944. None of the
provisions of this chapter applies to any transaction or security
interest governed by the Commercial Code, except to the extent made
applicable by reason of an election made by the secured party
pursuant to subparagraph (B) of paragraph (1) of subdivision (a) of
Section 9604 of the Commercial Code.
SEC. 8. Section 2983.8 of the Civil Code is amended to read:
2983.8. Notwithstanding Section 2983.2 or any other provision of
law, no deficiency judgment shall lie in any event in any of the
following instances:
(a) After any sale of any mobilehome for which a permit is
required pursuant to Section 35780 or 35790 of the Vehicle Code for
failure of the purchaser to complete his or her conditional sale
contract given to the seller to secure payment of the balance of the
purchase price of such mobilehome. The provisions of this
subdivision shall not apply in the event there is substantial damage
to the mobilehome other than wear and tear from normal usage. This
subdivision shall apply only to contracts entered into on or after
the effective date of the act that enacted this subdivision and
before July 1, 1981.
(b) After any sale or other disposition of a motor vehicle unless
the court has determined that the sale or other disposition was in
conformity with the provisions of this chapter and the relevant
provisions of Division 9 (commencing with Section 9101) of the
Commercial Code, including Sections 9610, 9611, 9612, 9613, 9614,
9615, and 9626. The determination may be made upon an affidavit
unless the court requires a hearing in the particular case.
SEC. 8.5. Section 3343.5 of the Civil Code is amended to read:
3343.5. (a) Any one or more of the following who suffers any
damage proximately resulting from one or more acts of unlawful motor
vehicle subleasing, as described in Chapter 12.7 (commencing with
Section 570) of Title 13 of Part 1 of the Penal Code, may bring an
action against the person who has engaged in those acts:
(1) A seller or other secured party under a conditional sale
contract or a security agreement.
(2) A lender under a direct loan agreement.
(3) A lessor under a lease contract.
(4) A buyer under a conditional sale contract.
(5) A purchaser under a direct loan agreement, an agreement which
provides for a security interest, or an agreement which is equivalent
to these types of agreements.
(6) A lessee under a lease contract.
(7) An actual or purported transferee or assignee of any right or
interest of a buyer, a purchaser, or a lessee.
(b) The court in an action under subdivision (a) may award actual
damages; equitable relief, including, but not limited to, an
injunction and restitution of money and property; punitive damages;
reasonable attorney's fees and costs; and any other relief which the
court deems proper.
(c) As used in this section, the following terms have the
following meanings:
(1) "Buyer" has the meaning set forth in subdivision (c) of
Section 2981.
(2) "Conditional sale contract" has the meaning set forth in
subdivision (a) of Section 2981. Notwithstanding subdivision (k) of
Section 2981, "conditional sale contract" includes any contract for
the sale or bailment of a motor vehicle between a buyer and a seller
primarily for business or commercial purposes.
(3) "Direct loan agreement" means an agreement between a lender
and a purchaser whereby the lender has advanced funds pursuant to a
loan secured by the motor vehicle which the purchaser has purchased.
(4) "Lease contract" means a lease contract between a lessor and
lessee as this term and these parties are defined in Section 2985.7.
Notwithstanding subdivision (d) of Section 2985.7, "lease contract"
includes a lease for business or commercial purposes.
(5) "Motor vehicle" means any vehicle required to be registered
under the Vehicle Code.
(6) "Person" means an individual, company, firm, association,
partnership, trust, corporation, limited liability company, or other
legal entity.
(7) "Purchaser" has the meaning set forth in subdivision (33) of
Section 1201 of the Commercial Code.
(8) "Security agreement" and "secured party" have the meanings set
forth, respectively, in paragraphs (73) and (72) of subdivision (a)
of Section 9102 of the Commercial Code. "Security interest" has the
meaning set forth in subdivision (37) of Section 1201 of the
Commercial Code.
(9) "Seller" has the meaning set forth in subdivision (b) of
Section 2981, and includes the present holder of the conditional sale
contract.
(d) The rights and remedies provided in this section are in
addition to any other rights and remedies provided by law.
SEC. 9. Section 3439.08 of the Civil Code is amended to read:
3439.08. (a) A transfer or an obligation is not voidable under
subdivision (a) of Section 3439.04, against a person who took in good
faith and for a reasonably equivalent value or against any
subsequent transferee or obligee.
(b) Except as otherwise provided in this section, to the extent a
transfer is voidable in an action by a creditor under paragraph (1)
of subdivision (a) of Section 3439.07, the creditor may recover
judgment for the value of the asset transferred, as adjusted under
subdivision (c), or the amount necessary to satisfy the creditor's
claim, whichever is less. The judgment may be entered against the
following:
(1) The first transferee of the asset or the person for whose
benefit the transfer was made.
(2) Any subsequent transferee other than a good faith transferee
who took for value or from any subsequent transferee.
(c) If the judgment under subdivision (b) is based upon the value
of the asset transferred, the judgment shall be for an amount equal
to the value of the asset at the time of the transfer, subject to
adjustment as the equities may require.
(d) Notwithstanding voidability of a transfer or an obligation
under this chapter, a good faith transferee or obligee is entitled,
to the extent of the value given the debtor for the transfer or
obligation, to the following:
(1) A lien on or a right to retain any interest in the asset
transferred.
(2) Enforcement of any obligation incurred.
(3) A reduction in the amount of the liability on the judgment.
(e) A transfer is not voidable under subdivision (b) of Section
3439.04 or Section 3439.05 if the transfer results from the
following:
(1) Termination of a lease upon default by the debtor when the
termination is pursuant to the lease and applicable law.
(2) Enforcement of a lien in a noncollusive manner and in
compliance with applicable law, including Division 9 (commencing with
Section 9101) of the Commercial Code, other than a retention of
collateral under Sections 9620 and 9621 of the Commercial Code and
other than a voluntary transfer of the collateral by the debtor to
the lienor in satisfaction of all or part of the secured obligation.
SEC. 10. Section 3440.1 of the Civil Code is amended to read:
3440.1. This chapter does not apply to any of the following:
(a) Things in action.
(b) Ships or cargoes if either are at sea or in a foreign port.
(c) The sale of accounts, chattel paper, payment intangibles, or
promissory notes governed by the Uniform Commercial Code, security
interests, and contracts of bottomry or respondentia.
(d) Wines or brandies in the wineries, distilleries, or wine
cellars of the makers or owners of the wines or brandies, or other
persons having possession, care, and control of the wines or
brandies, and the pipes, casks, and tanks in which the wines or
brandies are contained, if the transfers are made in writing and
executed and acknowledged, and if the transfers are recorded in the
book of official records in the office of the county recorder of the
county in which the wines, brandies, pipes, casks, and tanks are
situated.
(e) A transfer or assignment made for the benefit of creditors
generally or by any assignee acting under an assignment for the
benefit of creditors generally.
(f) Property exempt from enforcement of a money judgment.
(g) Standing timber.
(h) Subject to the limitations in Section 3440.3, a transfer of
personal property if all of the following conditions are satisfied:
(1) Prior to the date of the intended transfer, the transferor or
the transferee files a financing statement, with respect to the
property transferred, signed by the transferor. The financing
statement shall be filed in the office of the Secretary of State in
accordance with Chapter 5 (commencing with Section 9501) of Division
9 of the Commercial Code, but may use the terms "transferor" in lieu
of "debtor" and "transferee" in lieu of "secured party." The
provisions of Chapter 5 (commencing with Section 9501) of Division 9
of the Commercial Code shall apply as appropriate to the financing
statement.
(2) The transferor or the transferee publishes a notice of the
intended transfer one time in a newspaper of general circulation
published in the judicial district in which the personal property is
located, if there is one, and if there is none in the judicial
district, then in a newspaper of general circulation in the county
embracing the judicial district. The publication shall be completed
not less than 10 days before the date the transfer occurs. The
notice shall contain the name and address of the transferor and
transferee and a general statement of the character of the personal
property intended to be transferred, and shall indicate the place
where the personal property is located and a date on or after which
the transfer is to be made.
(i) Personal property not located within this state at the time of
the transfer or attachment of the lien if the provisions of this
subdivision are not used for the purpose of evading this chapter.
(j) A transfer of property which (1) is subject to a statute or
treaty of the United States or a statute of this state that provides
for the registration of transfers of title or issuance of
certificates of title and (2) is so far perfected under that statute
or treaty that a bona fide purchaser cannot acquire an interest in
the property transferred that is superior to the interest of the
transferee.
(k) A transfer of personal property in connection with a
transaction in which the property is immediately thereafter leased by
the transferor from the transferee provided the transferee purchased
the property for value and in good faith (subdivision (c) of Section
10308 of the Commercial Code).
(l) Transition property, as defined in Section 840 of the Public
Utilities Code.
SEC. 11. Section 3440.5 of the Civil Code is amended to read:
3440.5. (a) This chapter does not affect the rights of a secured
party who, for value and in good faith, acquires a security interest
in the transferred personal property from the transferee, or from the
transferee's successor in interest, if the transferor is no longer
in possession of the personal property at the time the security
interest attaches.
(b) Additionally, except as provided in Section 3440.3, this
chapter does not affect the rights of a secured party who acquires a
security interest from the transferee, or from the tranferee's
successor in interest, in the personal property, if all of the
following conditions are satisfied:
(1) On or before the date the security agreement is executed, the
intended debtor or secured party files a financing statement with
respect to the property transferred, signed by the intended debtor.
The financing statement shall be filed in the office of the Secretary
of State in accordance with Chapter 5 (commencing with Section 9501)
of Division 9 of the Commercial Code, but shall use the terms
"transferor" in lieu of "debtor," "transferee" in lieu of "secured
party," and "secured party" in lieu of "assignee of secured party."
The provisions of Chapter 5 (commencing with Section 9501) of
Division 9 of the Commercial Code shall apply as appropriate to such
a statement. For the purpose of indexing, and in any certification
of search, the Secretary of State may refer to any financing
statement filed pursuant to this paragraph as a financing statement
under the Commercial Code and may describe the transferor as a debtor
and the transferee as a secured party.
Compliance with this paragraph shall, however, not perfect the
security interest of the secured party. Perfection of such a
security interest shall be governed by Division 9 (commencing with
Section 9101) of the Commercial Code.
(2) The intended debtor or secured party publishes a notice of the
transfer one time in a newspaper of general circulation published in
the judicial district in which the personal property is located, if
there is one, and if there is none in the judicial district, then in
a newspaper of general circulation in the county embracing the
judicial district. The publication shall be completed not less than
10 days before the date of execution by the intended debtor of the
intended security agreement. The notice shall contain the names and
addresses of the transferor and transferee and of the intended debtor
and secured party, a general statement of the character of the
personal property transferred and intended to be subject to the
security interest, the location of the personal property, and the
date on or after which the security agreement is to be executed by
the intended debtor.
SEC. 11.5. Section 481.020 of the Code of Civil Procedure is
amended to read:
481.020. "Account debtor" means "account debtor" as defined in
paragraph (3) of subdivision (a) of Section 9102 of the Commercial
Code.
SEC. 12. Section 481.030 of the Code of Civil Procedure is amended
to read:
481.030. "Account receivable" means "account" as defined in
paragraph (2) of subdivision (a) of Section 9102 of the Commercial
Code.
SEC. 12.1. Section 481.040 of the Code of Civil Procedure is
amended to read:
481.040. "Chattel paper" means "chattel paper" as defined in
paragraph (11) of subdivision (a) of Section 9102 of the Commercial
Code.
SEC. 12.2. Section 481.080 of the Code of Civil Procedure is
amended to read:
481.080. "Deposit account" means "deposit account" as defined in
paragraph (29) of subdivision (a) of Section 9102 of the Commercial
Code.
SEC. 12.3. Section 481.090 of the Code of Civil Procedure is
amended to read:
481.090. "Document of title" means "document" as defined in
paragraph (30) of subdivision (a) of Section 9102 of the Commercial
Code. A document of title is negotiable if it is negotiable within
the meaning of Section 7104 of the Commercial Code.
SEC. 13. Section 481.115 of the Code of Civil Procedure is amended
to read:
481.115. "General intangibles" means "general intangibles," as
defined in paragraph (42) of subdivision (a) of Section 9102 of the
Commercial Code, consisting of rights to payment.
SEC. 13.1. Section 481.117 of the Code of Civil Procedure is
amended to read:
481.117. "Instrument" means "instrument" as defined in paragraph
(47) of subdivision (a) of Section 9102 of the Commercial Code.
SEC. 13.2. Section 481.207 of the Code of Civil Procedure is
amended to read:
481.207. "Secured party" means "secured party" as defined in
paragraph (72) of subdivision (a) of Section 9102 of the Commercial
Code.
SEC. 13.3. Section 481.220 of the Code of Civil Procedure is
amended to read:
481.220. "Security agreement" means a "security agreement" as
defined by paragraph (73) of subdivision (a) of Section 9102 of the
Commercial Code.
SEC. 13.4. Section 488.375 of the Code of Civil Procedure is
amended to read:
488.375. (a) Except as provided by Section 488.385, to attach
equipment of a going business in the possession or under the control
of the defendant, the levying officer shall file with the office of
the Secretary of State a notice of attachment, in the form prescribed
by the Secretary of State, which shall contain all of the following:
(1) The name and mailing address of the plaintiff.
(2) The name and last known mailing address of the defendant.
(3) The title of the court where the action is pending and the
cause and number of the action.
(4) A description of the specific property attached.
(5) A statement that the plaintiff has acquired an attachment lien
on the specified property of the defendant.
(b) Upon presentation of a notice of attachment under this section
for filing, and tender of the filing fee to the office of the
Secretary of State, the notice of attachment shall be filed, marked,
and indexed in the same manner as a financing statement. The fee for
filing in the office of the Secretary of State is the same as the
fee for filing a financing statement in the standard form.
(c) Upon the request of any person, the Secretary of State shall
issue a certificate showing whether there is on file in that office
on the date and hour stated therein any notice of attachment filed
against the equipment of a particular person named in the request.
If a notice of attachment is on file, the certificate shall state the
date and hour of filing of each such notice and any notice affecting
any such notice of attachment and the name and address of the
plaintiff. Upon request, the Secretary of State shall furnish a copy
of any notice of attachment or notice affecting a notice of
attachment. The certificate shall be issued as part of a combined
certificate pursuant to Section 9528 of the Commercial Code, and the
fee for the certificate and copies shall be in accordance with that
section.
(d) The fee for filing, indexing, and furnishing filing data for a
notice of extension of attachment is the same as the fee for a
continuation statement under Section 9525 of the Commercial Code.
The fee for filing, indexing, and furnishing filing data for a notice
of release of attachment is the same as the fee for a statement of
release under Section 9525 of the Commercial Code.
(e) If property subject to an attachment lien under this section
becomes a fixture (as defined in Section 9313 of the Commercial
Code), the attachment lien under this section is extinguished.
SEC. 13.5. Section 488.385 of the Code of Civil Procedure is
amended to read:
488.385. (a) To attach a vehicle or vessel for which a
certificate of ownership has been issued by the Department of Motor
Vehicles, or a mobilehome or commercial coach for which a certificate
of title has been issued by the Department of Housing and Community
Development, which is equipment of a going business in the possession
or under the control of the defendant, the levying officer shall
file with the appropriate department a notice of attachment, in the
form prescribed by the appropriate department, which shall contain
all of the following:
(1) The name and mailing address of the plaintiff.
(2) The name and last known mailing address of the defendant.
(3) The title of the court where the action is pending and the
cause and number of the action.
(4) A description of the specific property attached.
(5) A statement that the plaintiff has acquired an attachment lien
on the specific property of the defendant.
(b) Upon presentation of a notice of attachment, notice of
extension, or notice of release under this section for filing and
tender of the filing fee to the appropriate department, the notice
shall be filed and indexed. The fee for filing and indexing the
notice is three dollars ($3).
(c) Upon the request of any person, the department shall issue its
certificate showing whether there is on file in that department on
the date and hour stated therein any notice of attachment filed
against the property of a particular person named in the request. If
a notice of attachment is on file, the certificate shall state the
date and hour of filing of each such notice of attachment and any
notice affecting any such notice of attachment and the name and
address of the plaintiff. The fee for the certificate issued
pursuant to this subdivision is three dollars ($3). Upon request,
the department shall furnish a copy of any notice of attachment or
notice affecting a notice of attachment for a fee of one dollar ($1)
per page.
(d) If property subject to an attachment lien under this section
becomes a fixture (as defined in paragraph (41) of subdivision (a) of
Section 9102 of the Commercial Code), the attachment lien under this
section is extinguished.
SEC. 14. Section 488.405 of the Code of Civil Procedure is amended
to read:
488.405. (a) This section provides an alternative method of
attaching farm products or inventory of a going business in the
possession or under the control of the defendant, but this section
does not apply to property described in Section 488.325. This
section applies if the plaintiff instructs the levying officer to
attach the farm products or inventory under this section.
(b) To attach under this section farm products or inventory of a
going business in the possession or under the control of the
defendant, the levying officer shall file a notice of attachment with
the Secretary of State.
(c) Except as provided in subdivisions (d) and (e), the filing of
the notice of attachment gives the plaintiff an attachment lien on
all of the following:
(1) The farm products or inventory described in the notice.
(2) Identifiable cash proceeds (as that term is used in Section
9315 of the Commercial Code).
(3) If permitted by the writ of attachment or court order,
after-acquired property.
(d) The attachment lien created by the filing of the notice of
attachment under this section does not extend to either of the
following:
(1) A vehicle or vessel required to be registered with the
Department of Motor Vehicles or a mobilehome or commercial coach
required to be registered pursuant to the Health and Safety Code.
(2) The inventory of a retail merchant held for sale except to the
extent that the inventory of the retail merchant consists of durable
goods having a unit retail value of at least five hundred dollars
($500). For the purposes of this paragraph, "retail merchant" does
not include (A) a person whose sales for resale exceeded 75 percent
in dollar volume of the person's total sales of all goods during the
12 months preceding the filing of the notice of attachment or (B) a
cooperative association organized pursuant to Chapter 1 (commencing
with Section 54001) of Division 20 of the Food and Agricultural Code
(agricultural cooperative associations) or Part 3 (commencing with
Section 13200) of Division 3 of Title 1 of the Corporations Code
(Fish Marketing Act).
(e) If property subject to an attachment lien under this section
becomes a fixture (as defined in paragraph (41) of subdivision (a) of
Section 9102 of the Commercial Code), the attachment lien under this
section is extinguished.
(f) The notice of attachment shall be in the form prescribed by
the Secretary of State and shall contain all of the following:
(1) The name and mailing address of the plaintiff.
(2) The name and last known mailing address of the defendant.
(3) The title of the court where the action is pending and the
cause and number of the action.
(4) A description of the farm products and inventory attached.
(5) A statement that the plaintiff has acquired an attachment lien
on the described property and on identifiable cash proceeds (as that
term is used in Section 9315 of the Commercial Code) and, if
permitted by the writ of attachment or court order, on after-acquired
property.
(g) Upon presentation of a notice of attachment under this section
for filing and tender of the filing fee to the office of the
Secretary of State, the notice of attachment shall be filed, marked,
and indexed in the same manner as a financing statement. The fee for
filing in the office of the Secretary of State is the same as the
fee for filing a financing statement in the standard form.
(h) Upon the request of any person, the Secretary of State shall
issue a certificate showing whether there is on file in that office
on the date and hour stated therein any notice of attachment filed
against the farm products or inventory of a particular person named
in the request. If a notice of attachment is on file, the
certificate shall state the date and hour of filing of each such
notice of attachment and any notice affecting any such notice of
attachment and the name and address of the plaintiff. Upon request,
the Secretary of State shall furnish a copy of any notice of
attachment or notice affecting a notice of attachment. The
certificate shall be issued as part of a combined certificate
pursuant to Section 9528 of the Commercial Code, and the fee for the
certificate and copies shall be in accordance with that section.
(i) The fee for filing, indexing, and furnishing filing data for a
notice of extension of attachment is the same as the fee for a
continuation statement under Section 9525 of the Commercial Code.
The fee for filing, indexing, and furnishing filing data for a notice
of release of attachment is the same as the fee for a statement of
release under Section 9519 of the Commercial Code.
SEC. 15. Section 488.500 of the Code of Civil Procedure is amended
to read:
488.500. (a) A levy on property under a writ of attachment
creates an attachment lien on the property from the time of levy
until the expiration of the time provided by Section 488.510.
(b) Except as provided in subdivisions (c) and (d), if property
subject to an attachment lien is transferred or encumbered, the
property transferred or encumbered remains subject to the lien after
the transfer or encumbrance to the same extent that the property
would remain subject to an execution lien pursuant to Sections
697.720 to 697.750, inclusive.
(c) Except as otherwise provided in this title, if equipment is
attached pursuant to Section 488.375 or farm products or inventory is
attached pursuant to Section 488.405, the attachment lien on the
property covered by the attachment lien has the same force and effect
as a judgment lien on personal property created at the same time
would have pursuant to Sections 697.590 to 697.620, inclusive.
(d) If equipment consisting of a vehicle, vessel, mobilehome, or
commercial coach is attached pursuant to Section 488.385, the
attachment lien on the specified property does not affect the rights
of a person who is a bona fide purchaser or encumbrancer and obtains
possession of both the property and its certificate of ownership
issued by the Department of Motor Vehicles or its certificate of
title or registration card issued by the Department of Housing
and Community
Development. If the levying officer obtains possession of the
certificate of ownership or certificate of title or registration
card, the attachment lien has the priority of the lien of a lien
creditor under Sections 9317 and 9323 of the Commercial Code as of
the time possession is obtained by the levying officer. If the
levying officer does not obtain possession of the certificate of
ownership or certificate of title or registration card, the
attachment lien has the same force and effect as an unperfected
security interest that attached at the same time as the notice of
attachment was filed.
(e) If an attachment lien is created on property that is subject
to the lien of a temporary protective order or a lien under Article 1
(commencing with Section 491.110) of Chapter 11, the priority of the
attachment lien relates back to the date the earlier lien was
created. Nothing in this subdivision affects priorities or rights of
third persons established while the lien of the temporary protective
order or the lien under Article 1 (commencing with Section 491.110)
of Chapter 11 was in effect as determined under the law governing the
effect of such lien.
SEC. 15.5. Section 680.120 of the Code of Civil Procedure is
amended to read:
680.120. "Account debtor" means "account debtor" as defined in
paragraph (3) of subdivision (a) of Section 9102 of the Commercial
Code.
SEC. 16. Section 680.130 of the Code of Civil Procedure is amended
to read:
680.130. "Account receivable" means "account" as defined in
paragraph (2) of subdivision (a) of Section 9102 of the Commercial
Code.
SEC. 16.1. Section 680.140 of the Code of Civil Procedure is
amended to read:
680.140. "Chattel paper" means "chattel paper" as defined in
paragraph (11) of subdivision (a) of Section 9102 of the Commercial
Code.
SEC. 16.2. Section 680.170 of the Code of Civil Procedure is
amended to read:
680.170. "Deposit account" means "deposit account" as defined in
paragraph (29) of subdivision (a) of Section 9102 of the Commercial
Code.
SEC. 16.3. Section 680.180 of the Code of Civil Procedure is
amended to read:
680.180. "Document of title" means "document" as defined in
paragraph (30) of subdivision (a) of Section 9102 of the Commercial
Code. A document of title is negotiable if it is negotiable within
the meaning of Section 7104 of the Commercial Code.
SEC. 17. Section 680.210 of the Code of Civil Procedure is amended
to read:
680.210. "General intangibles" means "general intangibles," as
defined in paragraph (42) of subdivision (a) of Section 9102 of the
Commercial Code, consisting of rights to payment.
SEC. 17.1. Section 680.220 of the Code of Civil Procedure is
amended to read:
680.220. "Instrument" means "instrument", as defined in paragraph
(47) of subdivision (a) of Section 9102 of the Commercial Code.
SEC. 17.2. Section 680.340 of the Code of Civil Procedure is
amended to read:
680.340. "Secured party" means "secured party" as defined in
paragraph (72) of subdivision (a) of Section 9102 of the Commercial
Code.
SEC. 17.3. Section 680.350 of the Code of Civil Procedure is
amended to read:
680.350. "Security agreement" means "security agreement" as
defined in paragraph (73) of subdivision (a) of Section 9102 of the
Commercial Code.
SEC. 17.4. Section 697.530 of the Code of Civil Procedure is
amended to read:
697.530. (a) A judgment lien on personal property is a lien on
all interests in the following personal property that are subject to
enforcement of the money judgment against the judgment debtor
pursuant to Article 1 (commencing with Section 695.010) of Chapter 1
at the time the lien is created if a security interest in the
property could be perfected under the Commercial Code by filing a
financing statement at that time with the Secretary of State:
(1) Accounts receivable.
(2) Chattel paper.
(3) Equipment.
(4) Farm products.
(5) Inventory.
(6) Negotiable documents of title.
(b) If any interest in personal property on which a judgment lien
could be created under subdivision (a) is acquired after the judgment
lien was created, the judgment lien attaches to the interest at the
time it is acquired.
(c) To the extent provided by Section 697.620, a judgment lien on
personal property continues on the proceeds received upon the sale,
collection, or other disposition of the property subject to the
judgment lien.
(d) Notwithstanding any other provision of this section, the
judgment lien does not attach to:
(1) A vehicle or vessel required to be registered with the
Department of Motor Vehicles or a mobilehome or commercial coach
required to be registered pursuant to the Health and Safety Code.
(2) The inventory of a retail merchant held for sale except to the
extent that the inventory of the retail merchant consists of durable
goods having a unit retail value of at least five hundred dollars
($500). For the purposes of this paragraph, "retail merchant" does
not include (A) a person whose sales for resale exceeded 75 percent
in dollar volume of the person's total sales of all goods during the
12 months preceding the filing of the notice of judgment lien on
personal property or (B) a cooperative association organized pursuant
to Chapter 1 (commencing with Section 54001) of Division 20 of the
Food and Agricultural Code (agricultural cooperative associations) or
Part 3 (commencing with Section 13200) of Division 3 of Title 1 of
the Corporations Code (Fish Marketing Act).
(e) If property subject to a lien under this article becomes a
fixture (as defined in paragraph (41) of subdivision (a) of Section
9102 of the Commercial Code), the judgment lien on such property is
extinguished.
(f) Notwithstanding the filing of a notice of judgment lien,
subject to the provisions of Chapter 6 (commencing with Section
708.010), a person obligated on an account receivable or chattel
paper is authorized to pay or compromise the amount without notice to
or consent of the judgment creditor unless and until there is a levy
pursuant to Chapter 3 (commencing with Section 699.010).
SEC. 17.5. Section 697.580 of the Code of Civil Procedure is
amended to read:
697.580. (a) Upon the request of any person, the Secretary of
State shall issue a certificate showing whether there is on file in
that office on the date and hour stated therein any notice of
judgment lien on personal property filed against the property of a
particular person named in the request. If a notice of judgment lien
is on file, the certificate shall state the date and hour of filing
of each such notice and any notice affecting any such notice of
judgment lien and the name and address of the judgment creditor.
(b) Upon request, the Secretary of State shall furnish a copy of
any notice of judgment lien or notice affecting a notice of judgment
lien. The certificate shall be issued as part of a combined
certificate pursuant to Section 9528 of the Commercial Code, and the
fee for the certificate and copies shall be in accordance with that
section.
SEC. 18. Section 697.590 of the Code of Civil Procedure is amended
to read:
697.590. (a) As used in this section:
(1) "Filing" means:
(A) With respect to a judgment lien on personal property, the
filing of a notice of judgment lien in the office of the Secretary of
State to create a judgment lien on personal property under this
article.
(B) With respect to a security interest, the filing of a financing
statement pursuant to Division 9 (commencing with Section 9101) of
the Commercial Code.
(2) "Perfection" means perfection of a security interest pursuant
to Division 9 (commencing with Section 9101) of the Commercial Code.
(3) "Personal property" means:
(A) With respect to a judgment lien on personal property, the
property to which a judgment lien has attached pursuant to this
article.
(B) With respect to a security interest, the collateral subject to
a security interest pursuant to Division 9 (commencing with Section
9101) of the Commercial Code.
(4) "Purchase money security interest" means "purchase money
security interest" as defined in Section 9103 of the Commercial Code.
(b) Except as provided in subdivisions (d) and (e), priority
between a judgment lien on personal property and a conflicting
security interest in the same personal property shall be determined
according to this subdivision. Conflicting interests rank according
to priority in time of filing or perfection. In the case of a
judgment lien, priority dates from the time filing is first made
covering the personal property. In the case of a security interest,
priority dates from the time a filing is first made covering the
personal property or the time the security interest is first
perfected, whichever is earlier, provided that there is no period
thereafter when there is neither filing nor perfection.
(c) For the purposes of subdivision (b), a date of filing or
perfection as to personal property is also a date of filing or
perfection as to proceeds.
(d) A purchase money security interest has priority over a
conflicting judgment lien on the same personal property or its
proceeds if the purchase money security interest is perfected at the
time the judgment debtor (as a debtor under the security agreement)
receives possession of the personal property or within 20 days
thereafter.
(e) If a purchase money security interest in inventory has
priority over a judgment lien pursuant to subdivision (d) and a
conflicting security interest has priority over the purchase money
security interest in the same inventory pursuant to Section 9324 of
the Commercial Code, the conflicting security interest also has
priority over the judgment lien on the inventory subject to the
purchase money security interest notwithstanding that the conflicting
security interest would not otherwise have priority over the
judgment lien.
(f) A judgment lien that has attached to personal property and
that is also subordinate under subdivision (b) to a security interest
in the same personal property is subordinate to the security
interest only to the extent that the security interest secures
advances made before the judgment lien attached or within 45 days
thereafter or made without knowledge of the judgment lien or pursuant
to a commitment entered into without knowledge of the judgment lien.
For the purpose of this subdivision, a secured party shall be
deemed not to have knowledge of a judgment lien on personal property
until (1) the judgment creditor serves a copy of the notice of
judgment lien on the secured party personally or by mail and (2) the
secured party has knowledge of the judgment lien on personal
property, as "knowledge" is defined in Section 1201 of the Commercial
Code. If service on the secured party is by mail, it shall be sent
to the secured party at the address shown in the financing statement
or security agreement.
SEC. 19. Section 697.610 of the Code of Civil Procedure is amended
to read:
697.610. Except as provided in Sections 9617 and 9622 of the
Commercial Code, a judgment lien on personal property continues
notwithstanding the sale, exchange, or other disposition of the
property, unless the person receiving the property is one of the
following:
(a) A buyer in ordinary course of business (as defined in Section
1201 of the Commercial Code) who, under Section 9320 of the
Commercial Code, would take free of a security interest created by
the seller.
(b) A lessee in ordinary course of business (as defined in
paragraph (15) of subdivision (a) of Section 10103 of the Commercial
Code) who, under Section 9321 of the Commercial Code, would take free
of a security interest created by the lessor.
(c) A holder to whom a negotiable document of title has been duly
negotiated within the meaning of Section 7501 of the Commercial Code.
(d) A purchaser of chattel paper who, under Section 9330 of the
Commercial Code, would have priority over another security interest
in the chattel paper.
SEC. 20. Section 697.640 of the Code of Civil Procedure is amended
to read:
697.640. (a) The judgment creditor, judgment debtor, owner of
property subject to a judgment lien on personal property created
under the judgment, or a person having a security interest in or a
lien on the property subject to the judgment lien, may file in the
office of the Secretary of State an acknowledgment of satisfaction of
judgment executed as provided in Section 724.060 or a court clerk's
certificate of satisfaction of judgment issued pursuant to Section
724.100, together with a statement containing the name of the
judgment creditor, the name and address of the judgment debtor, and
the file number of the notice of judgment lien. Upon such filing,
the judgment lien created under the judgment that has been satisfied
is extinguished as a matter of record. The fee for filing the
acknowledgment or certificate is the same as the fee for filing a
termination statement under Section 9404 of the Commercial Code.
(b) The filing officer shall treat an acknowledgment of
satisfaction of judgment, or court clerk's certificate of
satisfaction of judgment, and statement filed pursuant to this
section in the same manner as a termination statement filed pursuant
to Section 9525 of the Commercial Code.
SEC. 21. Section 697.650 of the Code of Civil Procedure is amended
to read:
697.650. (a) The judgment creditor may by a writing do any of the
following:
(1) Release the judgment lien on all the personal property subject
to the lien of a sole judgment debtor or of all the judgment
debtors.
(2) If the notice of judgment lien names more than one judgment
debtor, release the judgment lien on all the personal property
subject to the lien of one or more but of less than all the judgment
debtors.
(3) Release the judgment lien on all or a part of the personal
property subject to the lien.
(4) Subordinate to a security interest or other lien or
encumbrance the judgment lien on all or a part of the personal
property subject to the judgment lien.
(b) A statement of release or subordination is sufficient if it is
signed by the judgment creditor and contains the name and address of
the judgment debtor, the file number of the notice of judgment lien,
and wording appropriate to bring the statement within one of the
paragraphs of subdivision (a). In the case of a release under
paragraph (3) of subdivision (a), the statement of release shall also
describe the property being released. In the case of a
subordination under paragraph (4) of subdivision (a), the statement
of subordination shall also describe the property on which the
judgment lien is being subordinated and describe the security
interest or other lien or encumbrance to which the judgment lien is
being subordinated.
(c) The filing officer shall treat the filing of a statement of
release pursuant to paragraph (1) of subdivision (a) of this section
in the same manner as a termination statement filed pursuant to
Sections 9513 and 9519 of the Commercial Code. The filing officer
shall treat the filing of a statement of release pursuant to
paragraph (2) of subdivision (a) of this section in the same manner
as a comparable amendment filed pursuant to Sections 9512 and 9519 of
the Commercial Code. The filing officer shall treat the filing of a
statement of release pursuant to paragraph (3) of subdivision (a) of
this section and the filing of a statement of subordination filed
pursuant to paragraph (4) of subdivision (a) of this section in the
same manner as a statement of release filed pursuant to Sections 9512
and 9519 of the Commercial Code.
(d) The fee for filing the statement is the same as that provided
in Section 9525 of the Commercial Code.
SEC. 21.5. Section 697.660 of the Code of Civil Procedure is
amended to read:
697.660. (a) If a notice of judgment lien on personal property
filed in the office of the Secretary of State appears to create a
judgment lien on personal property of a person who is not the
judgment debtor because the name of the property owner is the same as
or similar to that of the judgment debtor, the erroneously
identified property owner or a person having a security interest in
or a lien on the property may deliver to the judgment creditor a
written demand that the judgment creditor file in the office of the
Secretary of State a statement releasing the lien as to the property
of such owner. The demand shall be accompanied by proof to the
satisfaction of the judgment creditor that the property owner is not
the judgment debtor and that the property is not subject to
enforcement of the judgment against the judgment debtor.
(b) Within 15 days after receipt of the demand and proof
satisfactory to the judgment creditor that the property owner is not
the judgment debtor and that the property is not subject to
enforcement of the judgment, the judgment creditor shall file in the
office of the Secretary of State a statement releasing the lien on
the property of such owner. If the judgment creditor improperly
fails to file the statement of release within the time allowed, the
judgment creditor is liable to the person who made the demand for all
damages sustained by reason of such failure and shall also forfeit
one hundred dollars ($100) to such person.
(c) If the judgment creditor does not file a statement of release
pursuant to subdivision (b), the person who made the demand may apply
to the court on noticed motion for an order releasing the judgment
lien on the property of such owner. Notice of motion shall be served
on the judgment creditor. Service shall be made personally or by
mail. Upon presentation of evidence to the satisfaction of the court
that the property owner is not the judgment debtor and that the
property is not subject to enforcement of the judgment, the court
shall order the judgment creditor to prepare and file the statement
of release or shall itself order the release of the judgment lien on
the property of such owner. The court order may be filed in the
office of the Secretary of State with the same effect as the
statement of release demanded under subdivision (a).
(d) The court shall award reasonable attorney's fees to the
prevailing party in any action or proceeding maintained pursuant to
this section.
(e) The damages provided by this section are not in derogation of
any other damages or penalties to which an aggrieved person may be
entitled by law.
(f) The fee for filing a statement of release or court order under
this section is the same as that provided in Section 9525 of the
Commercial Code.
SEC. 22. Section 697.730 of the Code of Civil Procedure is amended
to read:
697.730. (a) Subject to Section 701.630 and except as provided in
subdivision (b), if tangible personal property subject to an
execution lien is in the custody of a levying officer and is
transferred or encumbered, the property remains subject to the lien
after the transfer or encumbrance.
(b) If a levy upon tangible personal property of a going business
is made by the levying officer placing a keeper in charge of the
business, a purchaser or lessee of property subject to the execution
lien takes the property free of the execution lien if the purchaser
or lessee is one of the following:
(1) A buyer in ordinary course of business (as defined in Section
1201 of the Commercial Code) who, under Section 9320 of the
Commercial Code, would take free of a security interest created by
his or her seller.
(2) A lessee in ordinary course of business (as defined in
paragraph (15) of subdivision (a) of Section 10103 of the Commercial
Code) who, under Section 9321 of the Commercial Code, would take free
of a security interest created by the lessor.
SEC. 23. Section 697.740 of the Code of Civil Procedure is amended
to read:
697.740. Except as provided in Sections 9617 and 9622 of the
Commercial Code and in Section 701.630, if personal property subject
to an execution lien is not in the custody of a levying officer and
the property is transferred or encumbered, the property remains
subject to the lien after the transfer or encumbrance except where
the transfer or encumbrance is made to one of the following persons:
(a) A person who acquires an interest in the property under the
law of this state for reasonably equivalent value without knowledge
of the lien. For purposes of this subdivision, value is given for a
transfer or encumbrance if, in exchange for the transfer or
encumbrance, property is transferred or an antecedent debt is secured
or satisfied.
(b) A buyer in ordinary course of business (as defined in Section
1201 of the Commercial Code) who, under Section 9320 of the
Commercial Code, would take free of a security interest created by
the seller or encumbrancer.
(c) A lessee in ordinary course of business (as defined in
paragraph (15) of subdivision (a) of Section 10103 of the Commercial
Code) or a licensee in the ordinary course of business (as defined in
subdivision (a) of Section 9321 of the Commercial Code) who, under
Section 9321 of the Commercial Code, would take free of a security
interest created by the lessor or the licensor.
(d) A holder in due course (as defined in Section 3302 of the
Commercial Code) of a negotiable instrument within the meaning of
Section 3104 of the Commercial Code.
(e) A holder to whom a negotiable document of title has been duly
negotiated within the meaning of Section 7501 of the Commercial Code.
(f) A protected purchaser (as defined in Section 8303 of the
Commercial Code) of a security or a person entitled to the benefits
of Section 8502 or 8510 of the Commercial Code.
(g) A purchaser of chattel paper who gives new value and takes
possession of the chattel paper in good faith and in the ordinary
course of the purchaser's business or a purchaser of an instrument
who gives value and takes possession of the instrument in good faith.
(h) A holder of a purchase money security interest (as defined in
Section 9103 of the Commercial Code).
(i) A collecting bank holding a security interest in items being
collected, accompanying documents and proceeds, pursuant to Section
4210 of the Commercial Code.
(j) A person who acquires any right or interest in letters of
credit, advices of credit, or money.
(k) A person who acquires any right or interest in property
subject to a certificate of title statute of another jurisdiction
under the law of which indication of a security interest on the
certificate of title is required as a condition of perfection of the
security interest.
SEC. 23.1. Section 697.750 of the Code of Civil Procedure is
amended to read:
697.750. Notwithstanding Section 697.740, except as provided in
Section 9617 of the Commercial Code and in Section 701.630, if (1)
growing crops, (2) timber to be cut, or (3) minerals or the like
(including oil or gas) to be extracted or accounts receivable
resulting from the sale thereof at wellhead or minehead are subject
to an execution lien and are transferred or encumbered, the property
remains subject to the execution lien after the transfer or
encumbrance.
SEC. 23.2. Section 697.920 of the Code of Civil Procedure is
amended to read:
697.920. Except as provided in Section 9617 of the Commercial
Code and in Section 701.630, a lien described in Section 697.910
continues on property subject to the lien, notwithstanding the
transfer or encumbrance of the property subject to the lien, unless
the transfer or encumbrance is made to a person listed in Section
697.740.
SEC. 24. Section 701.040 of the Code of Civil Procedure, as
amended by Section 17 of Chapter 932 of the Statutes of 1998, is
amended to read:
701.040. (a) Except as otherwise ordered by the court upon a
determination that the judgment creditor's lien has priority over the
security interest, if property levied upon is subject to a security
interest that attached prior to levy, the property or obligation is
subject to enforcement of the security interest without regard to the
levy unless the property is in the custody of the levying officer;
but, if the execution lien has priority over the security interest,
the secured party is liable to the judgment creditor for any proceeds
received by the secured party from the property to the extent of the
execution lien.
(b) After the security interest is satisfied, the secured party
shall deliver any excess property, and pay any excess payments or
proceeds of property, remaining in the possession of the secured
party to the levying officer for the purposes of the levy, as
provided in Section 9615 of the Commercial Code, unless otherwise
ordered by the court or directed by the levying officer.
(c) This section shall be repealed on January 1, 2002.
SEC. 24.5. Section 701.040 of the Code of Civil Procedure, as
added by Section 1.5 of Chapter 1125 of the Statutes of 1990, is
amended to read:
701.040. (a) Except as otherwise ordered by the court upon a
determination that the judgment creditor's lien has priority over the
security interest, if property levied upon is subject to a security
interest that attached prior to levy, the property or obligation is
subject to enforcement of the security interest without regard to the
levy unless the property is in the custody of the levying officer;
but, if the execution lien has priority over the security interest,
the secured party is liable to the judgment creditor for any proceeds
received by the secured party from the property to the extent of the
execution lien.
(b) After the security interest is satisfied, the secured party
shall deliver any excess property, and pay any excess payments or
proceeds of property, remaining in the possession of the secured
party to the levying officer for the purposes of the levy, as
provided in Section 9615 of the Commercial Code, unless otherwise
ordered by the court or directed by the levying officer.
SEC. 25. Section 730.5 of the Code of Civil Procedure is amended
to read:
730.5. Except as otherwise provided by Section 9604 of the
Commercial Code, none of the provisions of this chapter or of Section
580a, 580b, 580c, or 580d applies to any security interest in
personal property or fixtures governed by the Commercial Code.
SEC. 25.5. Section 2103 of the Code of Civil Procedure is amended
to read:
2103. (a) If a notice of federal lien, a refiling of a notice of
federal lien, or a notice of revocation of any certificate described
in subdivision (b) is presented to a filing officer who is:
(1) The Secretary of State,
he or she shall cause the notice to be marked, held, and indexed in
accordance with the provisions of Sections 9515, 9516, and 9522 of
the Commercial Code as if the notice were a financing statement
within the meaning of that code; or
(2) A county recorder, he or she shall accept for filing, file for
record in the manner set forth in Section 27320 of the Government
Code, and index the document by the name of the person against whose
interest the lien applies in the general index.
(b) If a certificate of release, nonattachment, discharge, or
subordination of any lien is presented to the Secretary of State for
filing he or she shall:
(1) Cause a certificate of release or nonattachment to be marked,
held, and indexed as if the certificate were a termination statement
within the meaning of the Commercial Code, but the notice of lien to
which the certificate relates may not be removed from the files; and
(2) Cause a certificate of discharge or subordination to be
marked, held, and indexed as if the certificate were a release of
collateral within the meaning of the Commercial Code.
(c) If a refiled notice of federal lien referred to in subdivision
(a) or any of the certificates or notices referred to in subdivision
(b) is presented for filing to a county recorder, he or she shall
accept for filing, file for record in the manner set forth in Section
27320 of the Government Code, and index the document by the name of
the person against whose interest the lien applies in the general
index.
(d) Upon request of any person, the filing officer shall issue his
or her certificate showing whether there is on file, on the date and
hour stated therein, any notice of lien or certificate or notice
affecting any lien filed after January 1, 1968, under this title or
former Chapter 14 (commencing with Section 7200) of Division 7 of
Title 1 of the Government Code, naming a particular person, and if a
notice or certificate is on file, giving the date and hour of filing
of each notice or certificate. Upon request, the filing officer
shall furnish a copy of any notice of federal lien, or notice or
certificate affecting a federal lien. If the filing officer is a
county recorder, the fee for a certificate for each name searched
shall be set by the filing officer in an amount that covers actual
costs, but that, in no event, exceeds fifteen dollars ($15), and the
fee for copies shall be in accordance with Section 27366 of the
Government Code. If the filing officer is the Secretary of State,
the certificate shall be issued as part of a combined certificate
pursuant to Section 9528 of the Commercial Code, and the fee for the
certificate and copies shall be in accordance with that section.
SEC. 26. Section 1105 of the Commercial Code is amended to read:
1105. (1) Except as provided hereafter 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. Failing such agreement this code applies to
transactions bearing an appropriate relation to this state.
(2) Where one of the following provisions of this code specifies
the applicable law, that provision governs and a contrary agreement
is effective only to the extent permitted by the law (including the
conflict of laws rules) so specified:
Rights of creditors against sold goods. Section 2402.
Applicability of the division on leases. Sections 10105 and
10106.
Applicability of the division on bank deposits and collections.
Section 4102.
Letters of credit. Section 5116.
Bulk sales subject to the division on bulk sales. Section 6103.
Applicability of the division on investment securities. Section
8110.
Law governing perfection, the effect of perfection or
nonperfection, and the priority of security interests and
agricultural liens. Sections 9301 to 9307, inclusive.
SEC. 26.5. Section 1201 of the Commercial Code is amended to read:
1201. The following definitions apply for purposes of this code,
subject to additional definitions contained in the subsequent
divisions of this code that apply to specific divisions or chapters
thereof, and unless the context otherwise requires:
(1) "Action," in the sense of a judicial proceeding, includes
recoupment, counterclaim, setoff, suit in equity, and any other
proceedings in which rights are determined.
(2) "Aggrieved party" means a party entitled to resort to a
remedy.
(3) "Agreement" means the bargain of the parties in fact as found
in their language or by implication from other circumstances,
including course of dealing, usage of trade, and course of
performance as provided in this code (Sections 1205, 2208, and
10207). Whether an agreement has legal consequences is determined by
the provisions of this code, if applicable, and otherwise by the law
of contracts (Section 1103). (Compare "contract.")
(4) "Bank" means any person engaged in the business of banking.
(5) "Bearer" means the person in possession of an instrument,
document of title, or certificated security payable to bearer or
indorsed in blank.
(6) "Bill of lading" means a document evidencing the receipt of
goods for shipment issued by a person engaged in the business of
transporting or forwarding goods, and that, by its terms, evidences
the intention of the issuer that the person entitled under the
document (Section 7403(4)) has the right to receive, hold, and
dispose of the document and the goods it covers. Designation of a
document by the issuer as a "bill of lading" is conclusive evidence
of that intention. "Bill of lading" includes an airbill. "Airbill"
means a document serving for air transportation as a bill of lading
does for marine or rail transportation, and includes an air
consignment note or air waybill.
(7) "Branch" includes a separately incorporated foreign branch of
a bank.
(8) "Burden of establishing" a fact means the burden of persuading
the triers of fact that the existence of the fact is more probable
than its 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 the 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 (commencing with Section 2101) may be
a buyer in ordinary course of business. A person that acquires
goods in a transfer in bulk or as security for or in total or partial
satisfaction of a money debt is not a buyer in ordinary course of
business.
(10) "Conspicuous." A term or clause is conspicuous when it is so
written that a reasonable person against whom it is to operate ought
to have noticed it. A printed heading in capitals (as:
NONNEGOTIABLE BILL OF LADING) is conspicuous. Language in the body
of a form is "conspicuous" if it is in larger or other contrasting
type or color, except that in a telegram any stated term is
"conspicuous." Whether a term or clause is "conspicuous" or not is
for decision by the court.
(11) "Contract" means the total legal obligation that results from
the parties' agreement as affected by this code and any other
applicable rules of law. (Compare "agreement.")
(12) "Creditor" includes a general creditor, a secured creditor, a
lien creditor, and any representative of creditors, including an
assignee for the benefit of creditors, a trustee in bankruptcy, a
receiver in equity, and an executor or administrator of an insolvent
debtor's or assignor's estate.
(13) "Defendant" includes a person in the position of defendant in
a cross-action or counterclaim.
(14) "Delivery," with respect to instruments, documents of title,
chattel paper, or certificated securities, means the voluntary
transfer of possession.
(15) "Document of title" includes a bill of lading, dock warrant,
dock receipt, warehouse receipt, gin ticket, or compress receipt, and
any other document that, in the regular course of business or
financing, is treated as adequately evidencing that the person
entitled under the document (Section 7403(4)) has the right to
receive, hold, and dispose of the document and the goods it covers.
To be a document of title, a document shall purport to be issued by a
bailee and purport to cover goods in the bailee's possession that
either are identified as or are fungible portions of an identified
mass.
(16) "Fault" means wrongful act, omission, or breach.
(17) "Fungible," with respect to goods or securities, means goods
or securities of which any unit is, by nature or usage of trade, the
equivalent of any other like unit. Goods that are not fungible shall
be deemed fungible for the purposes of this code to the extent that,
under a particular agreement or document, unlike units are treated
as equivalents.
(18) "Genuine" means free of forgery or counterfeiting.
(19) "Good faith" means honesty in fact in the conduct or
transaction concerned.
(20) "Holder," with respect to a negotiable instrument, means the
person in possession if the instrument is payable to bearer or, in
the case of an instrument payable to an identified person, if the
identified person is in possession. "Holder," with respect to a
document of title, means the person in possession if the goods are
deliverable to bearer or to the order of the person in possession.
(21) To "honor" is to pay or to accept and pay or, where a credit
so engages, to purchase or discount a draft complying with the terms
of the credit.
(22) "Insolvency proceedings" includes any assignment for the
benefit of creditors or other proceedings intended to liquidate or
rehabilitate the estate of the person involved.
(23) A person is "insolvent" who either has ceased to pay his or
her debts in the ordinary course of business, cannot pay his or her
debts as they become due, or is insolvent within the meaning of the
federal bankruptcy law.
(24) "Money" means a medium of exchange authorized or adopted by a
domestic or foreign government and includes a monetary unit of
account established by an intergovernmental organization or by
agreement between two or more nations.
(25) A person has "notice" of a fact when any of the following
occurs:
(a) He or she has actual knowledge of it.
(b) He or she has received a notice or notification of it.
(c) From all the facts and circumstances known to him or her at
the time in question, he or she has reason to know that it exists. A
person "knows" or has "knowledge" of a fact when he or she has
actual knowledge of it. "Discover" or "learn," or a word or phrase
of similar import, refers to knowledge rather than to reason to know.
The time and circumstances under which a notice or notification may
cease to be effective are not determined by this code.
(26) A person "notifies" or "gives" a notice or notification to
another by taking those steps that may be reasonably required to
inform the other in ordinary course whether or not the other actually
comes to know of it. A person "receives" a notice or notification
when any of the following occurs:
(a) It comes to his or her attention.
(b) It is duly delivered at the place of business through which
the contract was made or at any other place held out by him or her as
the place for receipt of these communications.
(27) 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 his or her 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 his or her regular duties, or unless he or
she has reason to know of the transaction and that the transaction
would be materially affected by the information.
(28) "Organization" includes a corporation, government or
governmental subdivision or agency, business trust, estate, trust,
partnership or association, two or more persons having a joint or
common interest, or any other legal or commercial entity.
(29) "Party," as distinct from "third party," means a person who
has engaged in a transaction or made an agreement within this
division.
(30) "Person" includes an individual or an organization. (See
Section 1102.)
(31) "Purchase" includes taking by sale, discount, negotiation,
mortgage, pledge, lien, security interest, issue or reissue, gift, or
any other voluntary transaction creating an interest in property.
(32) "Purchaser" means a person who takes by purchase.
(33) "Remedy" means any remedial right to which an aggrieved party
is entitled with or without resort to a tribunal.
(34) "Representative" includes an agent, an officer of a
corporation or association, a trustee, executor, or administrator of
an estate, or any other person empowered to act for another.
(35) "Rights" includes remedies.
(36) (a) "Security interest" means an interest in personal
property or fixtures that secures payment or performance of an
obligation. The term also includes any interest of a cosignor and a
buyer of accounts, chattel paper, a payment intangible, or a
promissory note in a transaction that is subject to Division 9
(commencing with Section 9101). The special property interest of a
buyer of goods on identification of those goods to a contract for
sale under Section 2401 is not a "security interest," but a buyer may
also acquire a "security interest" by complying with Division 9
(commencing with Section 9101). Except as otherwise provided in
Section 2505, the right of a seller or lessor of goods under Article
2 (commencing with Section 2101) or Article 10 (commencing with
Section 10101) 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 (commencing with
Section 9101). The retention or reservation of title by a seller of
goods notwithstanding shipment or delivery to the buyer (Section
2401) is limited in effect to a reservation of a "security interest."
(b) Whether a transaction creates a lease or security interest is
determined by the facts of each case. However, a transaction creates
a security interest if the consideration the lessee is to pay the
lessor for the right to possession and use of the goods is an
obligation for the term of the lease not subject to termination by
the lessee, and any of the following conditions applies:
(i) The original term of the lease is equal to or greater than the
remaining economic life of the goods.
(ii) 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.
(iii) The lessee has an option to renew the lease for the
remaining economic life of the goods for no additional consideration
or nominal additional consideration upon compliance with the lease
agreement.
(iv) The lessee has an option to become the owner of the goods for
no additional consideration or nominal additional consideration upon
compliance with the lease agreement.
(c) A transaction does not create a security interest merely
because it provides one or more of the following:
(i) That 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 greater than the fair market
value of the goods at the time the lease is entered into.
(ii) That the lessee assumes risk of loss of the goods, or agrees
to pay taxes, insurance, filing, recording, or registration fees, or
service or maintenance costs with respect to the goods.
(iii) That the lessee has an option to renew the lease or to
become the owner of the goods.
(iv) That 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.
(v) That 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.
(vi) In the case of a motor vehicle, as defined in Section 415 of
the Vehicle Code, or a trailer, as defined in Section 630 of that
code, that is not to be used primarily for personal, family, or
household purposes, that the amount of rental payments may be
increased or decreased by reference to the amount realized by the
lessor upon sale or disposition of the vehicle or trailer. Nothing
in this subparagraph affects the application or administration of the
Sales and Use Tax Law (Part 1 (commencing with Section 6001),
Division 2, Revenue and Taxation Code).
(d) For purposes of this subdivision (36), all of the following
apply:
(i) Additional consideration is not nominal if (A) 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 (B)
when the option to become the owner of the goods is granted to the
lessee, the price is stated to be the fair market value of the goods
determined at the time the option is to be performed. Additional
consideration is nominal if it is less than the lessee's reasonably
predictable cost of performing under the lease agreement if the
option is not exercised.
(ii) "Reasonably predictable" and "remaining economic life of the
goods" are to be determined with reference to the facts and
circumstances at the time the transaction is entered into.
(iii) "Present value" means the amount as of a date certain of one
or more sums payable in the future, discounted to the date certain.
The discount is determined by the interest rate specified by the
parties if the rate is not manifestly unreasonable at the time the
transaction is entered into; otherwise, the discount is determined by
a commercially reasonable rate that takes into account the facts and
circumstances of each case at the time the transaction was entered
into.
(37) "Send," in connection with any writing or notice, means to
deposit in the mail or deliver for transmission by any other usual
means of communication with postage or cost of transmission provided
for and properly addressed and, in the case of an instrument, to an
address specified thereon or otherwise agreed or, if there be none,
to any address reasonable under the circumstances. The receipt of
any writing or notice within the time in which it would have arrived
if properly sent has the effect of a proper sending. When a writing
or notice is required to be sent by registered or certified mail,
proof of mailing is sufficient, and proof of receipt by the addressee
is not required unless the words "with return receipt requested" are
also used.
(38) "Signed" includes any symbol executed or adopted by a party
with present intention to authenticate a writing.
(39) "Surety" includes guarantor.
(40) "Telegram" includes a message transmitted by radio, teletype,
cable, any mechanical method of transmission, or the like.
(41) "Term" means that portion of an agreement that relates to a
particular matter.
(42) "Unauthorized" signature means one made without actual,
implied, or apparent authority, and includes a forgery.
(43) "Value." Except as otherwise provided with respect to
negotiable instruments and bank collections (Sections 3303, 4210, and
4211), a person gives "value" for rights if he or she acquires them
in any of the following ways:
(a) In return for a binding commitment to extend credit or for the
extension of immediately available credit whether or not drawn upon
and whether or not a chargeback is provided for in the event of
difficulties in collection.
(b) As security for, or in total or partial satisfaction of, a
preexisting claim.
(c) By accepting delivery pursuant to a preexisting contract for
purchase.
(d) Generally, in return for any consideration sufficient to
support a simple contract.
(44) "Warehouse receipt" means a document evidencing the receipt
of goods for storage issued by a warehouseman (Section 7102), and
that, by its terms, evidences the intention of the issuer that the
person entitled under the document (Section 7403(4)) has the right to
receive, hold, and dispose of the document and the goods it covers.
Designation of a document by the issuer as a "warehouse receipt" is
conclusive evidence of that intention.
(45) "Written" or "writing" includes printing, typewriting, or any
other intentional reduction to tangible form.
SEC. 27. Section 1206 of the Commercial Code is amended to read:
1206. (1) Except in the cases described in subdivision (2) of
this section a contract for the sale of personal property is not
enforceable by way of action or defense beyond five thousand dollars
($5,000) in amount or value of remedy unless there is some writing
which indicates that a contract for sale has been made between the
parties at a defined or stated price, reasonably identifies the
subject matter, and is signed by the party against whom enforcement
is sought or by his or her authorized agent.
(2) Subdivision (1) of this section does not apply to contracts
for the sale of goods (Section 2201) nor of securities (Section 8113)
nor to security agreements (Sections 9201 and 9203).
(3) Subdivision (1) of this section does not apply to a qualified
financial contract as that term is defined in paragraph (2) of
subdivision (b) of Section 1624 of the Civil Code if either (a) there
is, as provided in paragraph (3) of subdivision (b) of Section 1624
of the Civil Code, sufficient evidence to indicate that a contract
has been made or (b) the parties thereto, by means of a prior or
subsequent written contract, have agreed to be bound by the terms of
the qualified financial contract from the time they reach agreement
(by telephone, by exchange of electronic messages, or otherwise) on
those terms.
SEC. 28. Section 2103 of the Commercial Code is amended to read:
2103. (1) In this division unless the context otherwise requires:
(a) "Buyer" means a person who buys or contracts to buy goods.
(b) "Good faith" in the case of a merchant means honesty in fact
and the observance of reasonable commercial standards of fair dealing
in the trade.
(c) "Receipt" of goods means taking physical possession of them.
(d) "Seller" means a person who sells or contracts to sell goods.
(2) Other definitions applying to this division or to specified
chapters thereof, and the sections in which they appear are:
"Acceptance." Section 2606.
"Banker's credit." Section 2325.
"Between merchants." Section 2104.
"Cancellation." Section 2106(4).
"Commercial unit." Section 2105.
"Confirmed credit." Section 2325.
"Conforming to contract." Section 2106.
"Contract for sale." Section 2106.
"Cover." Section 2712.
"Entrusting." Section 2403.
"Financing agency." Section 2104.
"Future goods." Section 2105.
"Goods." Section 2105.
"Identification." Section 2501.
"Installment contract." Section 2612.
"Letter of Credit." Section 2325.
"Lot." Section 2105.
"Merchant." Section 2104.
"Overseas." Section 2323.
"Person in position of seller." Section 2707.
"Present sale." Section 2106.
"Sale." Section 2106.
"Sale on approval." Section 2326.
"Sale or return." Section 2326.
"Termination." Section 2106.
(3) The following definitions in other divisions apply to this
division:
"Check." Section 3104.
"Consignee." Section 7102.
"Consignor." Section 7102.
"Consumer goods." Section 9102.
"Dishonor." Section 3502.
"Draft." Section 3104.
(4) In addition Division 1 contains general definitions and
principles of construction and interpretation applicable throughout
this division.
SEC. 28.1. Section 2210 of the Commercial Code is amended to read:
2210. (1) A party may perform his or her duty through a delegate
unless otherwise agreed or unless the other party has a substantial
interest in having his or her 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 9406, 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 or
her by his or her contract, or impair materially his or her 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 or her 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 within the purview of
subdivision (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 (A) 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 (B) 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 or her 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 or her rights against the assignor demand
assurances from the assignee (Section 2609).
SEC. 28.2. Section 2326 of the Commercial Code is amended to read:
2326. (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 primarily for
use, and
(b) A "sale or return" if the goods are delivered primarily for
resale.
(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 division (Section 2201) and as contradicting the sale aspect
of the contract within the provisions of this division on parol or
extrinsic evidence (Section 2202).
(4) If a person delivers or consigns for sale goods which the
person used or bought for use for personal, family, or household
purposes, these goods do not become the property of the deliveree or
consignee unless the deliveree or consignee purchases and fully pays
for the goods. Nothing in this subdivision shall prevent the
deliveree or consignee from acting as the deliverer's agent to
transfer title to these goods to a buyer who pays the full purchase
price. Any payment received by the deliveree or consignee from a
buyer of these goods, less any amount which the deliverer expressly
agreed could be deducted from the payment for commissions, fees, or
expenses, is the property of the deliverer and shall not be subject
to the claims of the deliveree's or consignee's creditors.
SEC. 28.3. Section 2502 of the Commercial Code is amended to read:
2502. (1) Subject to subdivisions (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 or she 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 either:
(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.
(b) In all cases, the seller becomes insolvent within 10 days
after receipt of the first installment on their price.
(2) The buyer's right to recover the goods under paragraph (a) of
subdivision (1) 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 or her special property has
been made by the buyer he or she acquires the right to recover the
goods only if they conform to the contract for sale.
SEC. 28.4. Section 2716 of the Commercial Code is amended to read:
2716. (1) Specific performance may be decreed where the goods are
unique or in other proper circumstances.
(2) The decree 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 or she 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.
SEC. 29. Section 4210 of the Commercial Code is amended to read:
4210. (a) A collecting bank has a security interest in an item
and any accompanying documents or the proceeds of either:
(1) In case of an item deposited in an account to the extent to
which credit given for the item has been withdrawn or applied.
(2) In case of an item for which it has given credit available for
withdrawal as of right, to the extent of the credit given, whether
or not the credit is drawn upon or there is a right of chargeback.
(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
accompanying documents for purposes other than collection, the
security interest continues to that extent and is subject to Division
9 (commencing with Section 9101), but all of the following are
applicable:
(1) No security agreement is necessary to make the security
interest enforceable (subparagraph (A) of paragraph (3) of
subdivision (b) of Section 9203).
(2) No filing is required to perfect the security interest.
(3) The security interest has priority over conflicting perfected
security interests in the item, accompanying documents, or proceeds.
SEC. 29.5. Section 5118 is added to the Commercial Code, to read:
5118. (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
subdivision (a), the security interest continues and is subject to
Division 9 (commencing with Section 9101), subject to all of the
following:
(1) A security agreement is not necessary to make the security
interest enforceable under paragraph (3) of subdivision (b) of
section 9203.
(2) If the document is presented in a medium other than a written
or other tangible medium, the security interest is perfected.
(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.
SEC. 30. Section 6102 of the Commercial Code is amended to read:
6102. (a) In this division, unless the context otherwise
requires:
(1) "Assets" means the inventory and equipment that is the subject
of a bulk sale and any tangible and intangible personal property
used or held for use primarily in, or arising from, the seller's
business and sold in connection with that inventory and equipment,
but the term does not include any of the following:
(i) Fixtures (paragraph (41) of subdivision (a) of Section 9102)
other than readily removable factory and office machines.
(ii) The lessee's interest in a lease of real property.
(iii) Property to the extent it is generally exempt from creditor
process under nonbankruptcy law.
(2) "Auctioneer" means a person whom the seller engages to direct,
conduct, control, or be responsible for a sale by auction.
(3) "Bulk sale" means either of the following:
(i) In the case of a sale by auction or a sale or series of sales
conducted by a liquidator on the seller's behalf, a sale or series of
sales not in the ordinary course of the seller's business of more
than half of the seller's inventory and equipment, as measured by a
value on the date of the bulk-sale agreement.
(ii) In all other cases, a sale not in the ordinary course of the
seller's business of more than half the seller's inventory and
equipment, as measured by value on the date of the bulk-sale
agreement.
(4) "Claim" means a right to payment from the seller, whether or
not the right is reduced to judgment, liquidated, fixed, matured,
disputed, secured, legal, or equitable. The term includes costs of
collection and attorney's fees only to the extent that the laws of
this state permit the holder of the claim to recover them in an
action against the obligor.
(5) "Claimant" means a person holding a claim incurred in the
seller's business other than any of the following:
(i) An unsecured and unmatured claim for employment compensation
and benefits, including commissions and vacation, severance, and
sick-leave pay.
(ii) A claim for injury to an individual or to property, or for
breach of warranty, unless all of the following are satisfied:
(A) A right of action for the claim has accrued.
(B) The claim has been asserted against the seller.
(C) The seller knows the identity of the person asserting the
claim and the basis upon which the person has asserted it.
(iii) A claim for taxes owing to a governmental unit, if both of
the following are satisfied:
(A) A statute governing the enforcement of the claim permits or
requires notice of the bulk sale to be given to the governmental unit
in a manner other than by compliance with the requirements of this
division.
(B) Notice is given in accordance with the statute.
(6) "Creditor" means a claimant or other person holding a claim.
(7) (i) "Date of the bulk sale" means either of the following:
(A) If the sale is by auction or is conducted by a liquidator on
the seller's behalf, the date on which more than 10 percent of the
net proceeds is paid to or for the benefit of the seller.
(B) In all other cases, the later of the date on which either of
the following occurs:
(I) More than 10 percent of the net contract price is paid to or
for the benefit of the seller.
(II) More than 10 percent of the assets, as measured by value, are
transferred to the buyer.
(ii) For purposes of this subdivision the following shall apply:
(A) Delivery of a negotiable instrument (subdivision (1) of
Section 3104) to or for the benefit of the seller in exchange for
assets constitutes payment of the contract price pro tanto.
(B) To the extent that the contract price is deposited in an
escrow, the contract price is paid to or for the benefit of the
seller when the seller acquires the unconditional right to receive
the deposit or when the deposit is delivered to the seller or for the
benefit of the seller, whichever is earlier.
(C) An asset is transferred when a person holding an unsecured
claim can no longer obtain through judicial proceedings rights to the
asset that are superior to those of the buyer arising as a result of
the bulk sale. A person holding an unsecured claim can obtain those
superior rights to a tangible asset at least until the buyer has an
unconditional right, under the bulk-sale agreement, to possess the
asset, and a person holding an unsecured claim can obtain those
superior rights to an intangible asset at least until the buyer has
an unconditional right, under the bulk-sale agreement, to use the
asset.
(8) "Date of the bulk-sale agreement" means either of the
following:
(i) In the case of a sale by auction or conducted by a liquidator
(subparagraph (i) of paragraph (3)), the date on which the seller
engages the auctioneer or liquidator.
(ii) In all other cases, the date on which a bulk-sale agreement
becomes enforceable between the buyer and the seller.
(9) "Debt" means liability on a claim.
(10) "Liquidator" means a person who is regularly engaged in the
business of disposing of assets for businesses contemplating
liquidation or dissolution.
(11) "Net contract price" means the new consideration the buyer is
obligated to pay for the assets less each of the following:
(i) The amount of any proceeds of the sale of an asset, to the
extent the proceeds are applied in partial or total satisfaction of a
debt secured by the asset.
(ii) The amount of any debt to the extent it is secured by a
security interest or lien that is enforceable against the asset
before and after it has been sold to a buyer. If a debt is secured
by an asset and other property of the seller, the amount of the debt
secured by a security interest or lien that is enforceable against
the asset is determined by multiplying the debt by a fraction, the
numerator of which is the value of the new consideration for the
asset on the date of the bulk sale and the denominator of which is
the value of all property securing the debt on the date of the bulk
sale.
(12) "Net proceeds" means the new consideration received for
assets sold at a sale by auction or a sale conducted by a liquidator
on the seller's behalf less each of the following:
(i) Commissions and reasonable expenses of the sale.
(ii) The amount of any proceeds of the sale of an asset, to the
extent the proceeds are applied in partial or total satisfaction of a
debt secured by the asset.
(iii) The amount of any debt to the extent it is secured by a
security interest or lien that is enforceable against the asset
before and after it has been sold to a buyer. If a debt is secured
by an asset and other property of the seller, the amount of the debt
secured by a security interest or lien that is enforceable against
the asset is determined by multiplying the debt by a fraction, the
numerator of which is the value of the new consideration for the
asset on the date of the bulk sale and the denominator of which is
the value of all property securing the debt on the date of the bulk
sale.
(13) A sale is "in the ordinary course of the seller's business"
if the sale comports with 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.
(14) "United States" includes its territories and possessions and
the Commonwealth of Puerto Rico.
(15) "Value" means fair market value.
(16) "Verified" means signed and sworn to or affirmed.
(b) The following definitions in other divisions apply to this
division:
(1) "Buyer." Paragraph (a) of subdivision (1) of Section 2103.
(2) "Equipment." Paragraph (33) of subdivision (a) of Section
9102.
(3) "Inventory." Paragraph (48) of subdivision (a) of Section
9102.
(4) "Sale." Subdivision (1) of Section 2106.
(5) "Seller." Paragraph (d) of subdivision (1) of Section 2103.
(c) In addition, Division 1 (commencing with Section 1101)
contains general definitions and principles of construction and
interpretation applicable throughout this division.
SEC. 31. Section 6103 of the Commercial Code is amended to read:
6103. (a) Except as otherwise provided in subdivision (c), this
division applies to a bulk sale if both of the following are
satisfied:
(1) The seller's principal business is the sale of inventory from
stock, including those who manufacture what they sell, or that