Connecticut Seal

Substitute House Bill No. 5212

Public Act No. 04-64

AN ACT ADOPTING REVISED ARTICLE 7 OF THE UNIFORM COMMERCIAL CODE CONCERNING DOCUMENTS OF TITLE.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 42a-7-101 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

This article [shall be known and] and sections 6, 41 and 42 of this act may be cited as "Uniform Commercial Code-Documents of Title".

Sec. 2. Section 42a-7-102 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1) In this article, unless the context otherwise requires: (a) "Bailee" means the person who by a warehouse receipt, bill of lading or other document of title acknowledges possession of goods and contracts to deliver them. (b) "Consignee" means the person named in a bill to whom or to whose order the bill promises delivery. (c) "Consignor" means the person named in a bill as the person from whom the goods have been received for shipment. (d) "Delivery order" means a written order to deliver goods directed to a warehouseman, carrier or other person who in the ordinary course of business issues warehouse receipts or bills of lading. (e) "Document" means document of title as defined in the general definitions in section 42a-1-201. (f) "Goods" means all things which are treated as movable for the purposes of a contract of storage or transportation. (g) "Issuer" means a bailee who issues a document except that in relation to an unaccepted delivery order it means the person who orders the possessor of goods to deliver. Issuer includes any person for whom an agent or employee purports to act in issuing a document if the agent or employee has real or apparent authority to issue documents, notwithstanding that the issuer received no goods or that the goods were misdescribed or that in any other respect the agent or employee violated his instructions. (h) "Warehouseman" is a person engaged in the business of storing goods for hire.

(2) Other definitions applying to this article or to specified parts thereof and the sections in which they appear are:

 

"Duly negotiate". Section 42a-7-501.

 

"Person entitled under the document". Section 42a-7-403(4).

(3) Definitions in other articles applying to this article and the sections in which they appear are:

 

"Contract for sale". Section 42a-2-106.

 

"Overseas". Section 42a-2-323.

 

"Receipt" of goods. Section 42a-2-103.

(4) In addition article 1 contains general definitions and principles of construction and interpretation applicable throughout this article. ]

(a) In this article and sections 6, 41 and 42 of this act, unless the context otherwise requires:

(1) "Bailee" means a person that by a warehouse receipt, bill of lading or other document of title acknowledges possession of goods and contracts to deliver them.

(2) "Carrier" means a person that issues a bill of lading.

(3) "Consignee" means a person named in a bill of lading to which or to whose order the bill promises delivery.

(4) "Consignor" means a person named in a bill of lading as the person from which the goods have been received for shipment.

(5) "Delivery order" means a record that contains an order to deliver goods directed to a warehouse, carrier or other person that in the ordinary course of business issues warehouse receipts or bills of lading.

(6) "Good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing.

(7) "Goods" means all things that are treated as movable for the purposes of a contract for storage or transportation.

(8) "Issuer" means a bailee that issues a document of title or, in the case of an unaccepted delivery order, the person that orders the possessor of goods to deliver. The term includes a person for which an agent or employee purports to act in issuing a document if the agent or employee has real or apparent authority to issue documents, even if the issuer did not receive any goods, the goods were misdescribed, or in any other respect the agent or employee violated the issuer's instructions.

(9) "Person entitled under the document" means the holder, in the case of a negotiable document of title, or the person to which delivery of the goods is to be made by the terms of, or pursuant to instructions in a record under, a nonnegotiable document of title.

(10) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(11) "Sign" means, with present intent to authenticate or adopt a record:

(A) To execute or adopt a tangible symbol; or

(B) To attach to or logically associate with the record an electronic sound, symbol or process.

(12) "Shipper" means a person that enters into a contract of transportation with a carrier.

(13) "Warehouse" means a person engaged in the business of storing goods for hire.

(b) Definitions in other articles applying to this article and sections 6, 41 and 42 of this act and the sections in which they appear are:

(1) "Contract for sale". Section 42a-2-106.

(2) "Lessee in ordinary course of business". Section 42a-2A-102, as amended by this act.

(3) ""Receipt" of goods". Section 42a-2-103, as amended by this act.

(c) In addition, article 1 contains general definitions and principles of construction and interpretation applicable throughout this article and sections 6, 41 and 42 of this act.

Sec. 3. Section 42a-7-103 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[To the extent that any treaty or statute of the United States, regulatory statute of this state or tariff, classification or regulation filed or issued pursuant thereto is applicable, the provisions of this article are subject thereto. ]

(a) This article and sections 6, 41 and 42 of this act are subject to any treaty or statute of the United States or a regulatory statute of this state to the extent the treaty, statute or regulatory statute is applicable.

(b) This article and sections 6, 41 and 42 of this act do not modify or repeal any law prescribing the form or content of a document of title or the services or facilities to be afforded by a bailee, or otherwise regulating a bailee's businesses in respects not specifically treated in this article and sections 6, 41 and 42 of this act. However, violation of such a law does not affect the status of a document of title that otherwise is within the definition of a document of title.

(c) This article and sections 6, 41 and 42 of this act modify, limit and supersede the federal Electronic Signatures in Global and National Commerce Act, 15 USC 7001 et seq., but do not modify, limit or supersede Section 101(c) of said act, 15 USC 7001(c), or authorize electronic delivery of any of the notices described in Section 103(b) of said act, 15 USC Section 7003(b).

(d) To the extent there is a conflict between the Connecticut Uniform Electronic Transactions Act, sections 1-266 to 1-286, inclusive, and this article and sections 6, 41 and 42 of this act, this article and sections 6, 41 and 42 of this act govern.

Sec. 4. Section 42a-7-104 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1) A warehouse receipt, bill of lading or other document of title is negotiable (a) if by its terms the goods are to be delivered to bearer or to the order of a named person; or (b) where recognized in overseas trade, if it runs to a named person or assigns.

(2) Any other document is nonnegotiable. A bill of lading in which it is stated that the goods are consigned to a named person is not made negotiable by a provision that the goods are to be delivered only against a written order signed by the same or another named person. ]

(a) Except as otherwise provided in subsection (c) of this section, a document of title is negotiable if by its terms the goods are to be delivered to bearer or to the order of a named person.

(b) A document of title other than one described in subsection (a) of this section is nonnegotiable. A bill of lading that states that the goods are consigned to a named person is not made negotiable by a provision that the goods are to be delivered only against an order in a record signed by the same or another named person.

(c) A document of title is nonnegotiable if, at the time it is issued, the document has a conspicuous legend, however expressed, that it is nonnegotiable.

Sec. 5. Section 42a-7-105 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[The omission from either part 2 or part 3 of this article of a provision corresponding to a provision made in the other part does not imply that a corresponding rule of law is not applicable. ]

(a) Upon request of a person entitled under an electronic document of title, the issuer of the electronic document may issue a tangible document of title as a substitute for the electronic document if:

(1) The person entitled under the electronic document surrenders control of the document to the issuer; and

(2) The tangible document when issued contains a statement that it is issued in substitution for the electronic document.

(b) Upon issuance of a tangible document of title in substitution for an electronic document of title in accordance with subsection (a) of this section:

(1) The electronic document ceases to have any effect or validity; and

(2) The person that procured issuance of the tangible document warrants to all subsequent persons entitled under the tangible document that the warrantor was a person entitled under the electronic document when the warrantor surrendered control of the electronic document to the issuer.

(c) Upon request of a person entitled under a tangible document of title, the issuer of the tangible document may issue an electronic document of title as a substitute for the tangible document if:

(1) The person entitled under the tangible document surrenders possession of the document to the issuer; and

(2) The electronic document when issued contains a statement that it is issued in substitution for the tangible document.

(d) Upon issuance of an electronic document of title in substitution for a tangible document of title in accordance with subsection (c) of this section:

(1) The tangible document ceases to have any effect or validity; and

(2) The person that procured issuance of the electronic document warrants to all subsequent persons entitled under the electronic document that the warrantor was a person entitled under the tangible document when the warrantor surrendered possession of the tangible document to the issuer.

Sec. 6. (NEW) (Effective October 1, 2004) (a) A person has control of an electronic document of title if a system employed for evidencing the transfer of interests in the electronic document reliably establishes that person as the person to which the electronic document was issued or transferred.

(b) A system satisfies subsection (a) of this section, and a person is deemed to have control of an electronic document of title, if the document is created, stored and assigned in such a manner that:

(1) A single authoritative copy of the document exists which is unique, identifiable and, except as otherwise provided in subdivisions (4), (5) and (6) of this subsection, unalterable;

(2) The authoritative copy identifies the person asserting control as:

(A) The person to which the document was issued; or

(B) If the authoritative copy indicates that the document has been transferred, the person to which the document was most recently transferred;

(3) The authoritative copy is communicated to and maintained by the person asserting control or its designated custodian;

(4) Copies or amendments that add or change an identified assignee of the authoritative copy can be made only with the consent of the person asserting control;

(5) Each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy; and

(6) Any amendment of the authoritative copy is readily identifiable as authorized or unauthorized.

Sec. 7. Section 42a-7-201 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) A warehouse receipt may be issued by any [warehouseman] warehouse.

[(2) Where] (b) If goods, including distilled spirits and agricultural commodities, are stored under a statute requiring a bond against withdrawal or a license for the issuance of receipts in the nature of warehouse receipts, a receipt issued for the goods [has like effect as] is deemed to be a warehouse receipt even [though] if issued by a person [who] that is the owner of the goods and is not a [warehouseman] warehouse.

Sec. 8. Section 42a-7-202 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) A warehouse receipt need not be in any particular form.

[(2)] (b) Unless a warehouse receipt [embodies within its written or printed terms] provides for each of the following, the [warehouseman] warehouse is liable for damages caused [by the omission] to a person injured [thereby] by its omission:

[(a) The] (1) A statement of the location of the warehouse facility where the goods are stored;

[(b) the] (2) The date of issue of the receipt;

[(c) the consecutive number] (3) The unique identification code of the receipt;

[(d) a] (4) A statement whether the goods received will be delivered to the bearer, to a [specified] named person, or to a [specified] named person or [his] its order;

[(e) the] (5) The rate of storage and handling charges, [except that where] unless goods are stored under a field warehousing arrangement, in which case a statement of that fact is sufficient on a nonnegotiable receipt;

[(f) a] (6) A description of the goods or [of] the packages containing them;

[(g) the] (7) The signature of the [warehouseman, which may be made by his authorized] warehouse or its agent;

[(h) if] (8) If the receipt is issued for goods [of which the warehouseman is owner] that the warehouse owns, either solely, [or] jointly or in common with others, a statement of the fact of [such] that ownership; and

[(i) a] (9) A statement of the amount of advances made and of liabilities incurred for which the [warehouseman] warehouse claims a lien or security interest, [as provided in section 42a-7-209. If] unless the precise amount of [such] advances made or [of such] liabilities incurred, [is,] at the time of the issue of the receipt, is unknown to the [warehouseman or to his agent who issues it,] warehouse or to its agent that issued the receipt, in which case a statement of the fact that advances have been made or liabilities incurred and the purpose [thereof] of the advances or liabilities is sufficient.

[(3) A warehouseman may insert in his receipt any other terms which are not contrary to the provisions of this title and do not impair his obligation of delivery or his duty of care. Any contrary provisions shall be ineffective. ]

(c) A warehouse may insert in its receipt any terms that are not contrary to this title and do not impair its obligation of delivery under section 42a-7-403, as amended by this act, or its duty of care under section 42a-7-204, as amended by this act. Any contrary provision is ineffective.

Sec. 9. Section 42a-7-203 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

A party to or purchaser for value in good faith of a document of title, other than a bill of lading, [relying in either case] that relies upon the description [therein] of the goods in the document may recover from the issuer damages caused by the nonreceipt or misdescription of the goods, except to the extent that:

[the] (1) The document conspicuously indicates that the issuer does not know whether [any part or] all or part of the goods in fact were received or conform to the description, [as where] such as a case in which the description is in terms of marks or labels or kind, quantity or condition, or the receipt or description is qualified by "contents, condition and quality unknown", "said to contain" or [the like, if such] words of similar import, if the indication is true; [,] or

[the] (2) The party or purchaser otherwise has notice of the nonreceipt or misdescription.

Sec. 10. Section 42a-7-204 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1) A warehouseman] (a) A warehouse is liable for damages for loss of or injury to the goods caused by [his] its failure to exercise [such] care [in] with regard to [them as] the goods that a reasonably careful [man] person would exercise under [like] similar circumstances. [but unless] Unless otherwise agreed, [he] the warehouse is not liable for damages [which] that could not have been avoided by the exercise of [such] that care.

[(2)] (b) Damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in case of loss or damage [, and setting forth a specific liability per article or item, or value per unit of weight, beyond which the warehouseman shall not be liable; provided, however, that such liability may on written request of the bailor at the time of signing such storage agreement or within a reasonable time after receipt of the warehouse receipt be increased on part or all of the goods thereunder, in which event increased rates may be charged based on such increased valuation, but that no such increase shall be permitted contrary to a lawful limitation of liability contained in the warehouseman's tariff, if any. No such limitation is effective with respect to the warehouseman's liability for conversion to his own use] beyond which the warehouse is not liable. Such a limitation is not effective with respect to the warehouse's liability for conversion to its own use. On request of the bailor in a record at the time of signing the storage agreement or within a reasonable time after receipt of the warehouse receipt, the warehouse's liability may be increased on part or all of the goods covered by the storage agreement or the warehouse receipt. In this event, increased rates may be charged based on an increased valuation of the goods.

[(3)] (c) Reasonable provisions as to the time and manner of presenting claims and [instituting] commencing actions based on the bailment may be included in the warehouse receipt or [tariff] storage agreement.

Sec. 11. Section 42a-7-205 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

A buyer in [the] ordinary course of business of fungible goods sold and delivered by a [warehouseman who] warehouse that is also in the business of buying and selling such goods takes the goods free of any claim under a warehouse receipt even [though it] if the receipt is negotiable and has been duly negotiated.

Sec. 12. Section 42a-7-206 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1) A warehouseman may on notifying] (a) A warehouse, by giving notice to the person on whose account the goods are held and any other person known to claim an interest in the goods, may require payment of any charges and removal of the goods from the warehouse at the termination of the period of storage fixed by the document [,] of title or, if [no] a period is not fixed, within a stated period not less than thirty days after the [notification] warehouse gives notice. If the goods are not removed before the date specified in the [notification] notice, the [warehouseman] warehouse may sell them [in accordance with the provisions of] pursuant to section 42a-7-210, [on enforcement of a warehouseman's lien] as amended by this act.

[(2) If a warehouseman] (b) If a warehouse in good faith believes that [the] goods are about to deteriorate or decline in value to less than the amount of [his] its lien within the time [prescribed in subsection (1) for notification, advertisement and sale, the warehouseman] provided in subsection (a) of this section and section 42a-7-210, as amended by this act, the warehouse may specify in the [notification] notice given under subsection (a) of this section any reasonable shorter time for removal of the goods and, [in case] if the goods are not removed, may sell them at public sale held not less than one week after a single advertisement or posting.

[(3)] (c) If, as a result of a quality or condition of the goods of which the [warehouseman had no] warehouse did not have notice at the time of deposit, the goods are a hazard to other property, [or to] the warehouse facilities or [to] other persons, the [warehouseman] warehouse may sell the goods at public or private sale without advertisement or posting on reasonable notification to all persons known to claim an interest in the goods. If the [warehouseman] warehouse, after a reasonable effort, is unable to sell the goods, [he] it may dispose of them in any lawful manner and [shall incur no] does not incur liability by reason of [such] that disposition.

[(4) The warehouseman must] (d) A warehouse shall deliver the goods to any person entitled to them under this article and sections 6, 41 and 42 of this act upon due demand made at any time [prior to] before sale or other disposition under this section.

[(5) The warehouseman may satisfy his] (e) A warehouse may satisfy its lien from the proceeds of any sale or disposition under this section but [must] shall hold the balance for delivery on the demand of any person to [whom he] which the warehouse would have been bound to deliver the goods.

Sec. 13. Section 42a-7-207 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) Unless the warehouse receipt [otherwise] provides otherwise, a [warehouseman must] warehouse shall keep separate the goods covered by each receipt so as to permit at all times identification and delivery of those goods. [except that] However, different lots of fungible goods may be commingled.

[(2) Fungible] (b) If different lots of fungible goods [so] are commingled, the goods are owned in common by the persons entitled thereto and the [warehouseman] warehouse is severally liable to each owner for that owner's share. [Where] If, because of overissue, a mass of fungible goods is insufficient to meet all the receipts [which the warehouseman] the warehouse has issued against it, the persons entitled include all holders to [whom] which overissued receipts have been duly negotiated.

Sec. 14. Section 42a-7-208 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[Where] If a blank in a negotiable tangible warehouse receipt has been filled in without authority, a good faith purchaser for value and without notice of the [want] lack of authority may treat the insertion as authorized. Any other unauthorized alteration leaves any tangible or electronic warehouse receipt enforceable against the issuer according to its original tenor.

Sec. 15. Section 42a-7-209 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1) A warehouseman] (a) A warehouse has a lien against the bailor on the goods covered by a warehouse receipt or storage agreement or on the proceeds thereof in [his] its possession for charges for storage or transportation, including demurrage and terminal charges, insurance, labor, or other charges, present or future, in relation to the goods, and for expenses necessary for preservation of the goods or reasonably incurred in their sale pursuant to law. If the person on whose account the goods are held is liable for [like] similar charges or expenses in relation to other goods whenever deposited and it is stated in the warehouse receipt or storage agreement that a lien is claimed for charges and expenses in relation to other goods, the [warehouseman] warehouse also has a lien against [him for such] the goods covered by the warehouse receipt or storage agreement or on the proceeds thereof in its possession for those charges and expenses, whether or not the other goods have been delivered by the [warehouseman. But] warehouse. However, as against a person to [whom] which a negotiable warehouse receipt is duly negotiated, a [warehouseman's] warehouse's lien is limited to charges in an amount or at a rate specified [on] in the warehouse receipt or, if no charges are so specified, [then] to a reasonable charge for storage of the specific goods covered by the receipt subsequent to the date of the receipt.

[(2) The warehouseman] (b) A warehouse may also reserve a security interest against the bailor for [a] the maximum amount specified on the receipt for charges other than those specified in subsection [(1)] (a) of this section, such as for money advanced and interest. [Such a] The security interest is governed by article 9.

[(3) A warehouseman's] (c) A warehouse's lien for charges and expenses under subsection [(1)] (a) of this section or a security interest under subsection [(2)] (b) of this section is also effective against any person [who] that so entrusted the bailor with possession of the goods that a pledge of them by [him] the bailor to a good faith purchaser for value would have been valid. [but] However, the lien or security interest is not effective against a person [as to whom the document confers no right in the goods covered by it under section 42a-7-503. ] that before issuance of a document of title had a legal interest or a perfected security interest in the goods and that did not:

(1) Deliver or entrust the goods or any document of title covering the goods to the bailor or the bailor's nominee with: (A) Actual or apparent authority to ship, store or sell; (B) power to obtain delivery under section 42a-7-403, as amended by this act; or (C) power of disposition under section 42a-2-403, 42a-2A-404, 42a-2A-405 or 42a-9-320, subsection (c) of section 42a-9-321 or other statute or rule of law; or

(2) Acquiesce in the procurement by the bailor or its nominee of any document.

(d) A warehouse's lien on household goods for charges and expenses in relation to the goods under subsection (a) of this section is also effective against all persons if the depositor was the legal possessor of the goods at the time of deposit. In this subsection, "household goods" means furniture, furnishings or personal effects used by the depositor in a dwelling.

[(4) A warehouseman loses his] (e) A warehouse loses its lien on any goods [which he] that it voluntarily delivers or [which he] unjustifiably refuses to deliver.

Sec. 16. Section 42a-7-210 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) Except as otherwise provided in subsection [(2)] (b) of this section, a [warehouseman's] warehouse's lien may be enforced by public or private sale of the goods, in [bloc] bulk or in [parcels] packages, at any time or place and on any terms [which] that are commercially reasonable, after notifying all persons known to claim an interest in the goods. [Such] The notification must include a statement of the amount due, the nature of the proposed sale and the time and place of any public sale. The fact that a better price could have been obtained by a sale at a different time or in a different method from that selected by the [warehouseman] warehouse is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. [If the warehouseman either] The warehouse sells in a commercially reasonable manner if the warehouse sells the goods in the usual manner in any recognized market therefor, [or if he] sells at the price current in [such] that market at the time of [his] the sale, or [if he has otherwise sold] otherwise sells in conformity with commercially reasonable practices among dealers in the type of goods sold. [, he has sold in a commercially reasonable manner. ] A sale of more goods than apparently necessary to be offered to [insure] ensure satisfaction of the obligation is not commercially reasonable, except in cases covered by the preceding sentence.

[(2) A warehouseman's] (b) A warehouse may enforce its lien on goods, other than goods stored by a merchant in the course of [his] its business, [may be enforced only as follows] only if the following requirements are satisfied:

[(a)] (1) All persons known to claim an interest in the goods must be notified.

[(b) The notification must be delivered in person or sent by registered letter or by certified mail receipted for on mailing to the last-known address of any person to be notified. ]

[(c)] (2) The notification must include an itemized statement of the claim, a description of the goods subject to the lien, a demand for payment within a specified time not less than ten days after receipt of the notification, and a conspicuous statement that unless the claim is paid within that time the goods will be advertised for sale and sold by auction at a specified time and place.

[(d)] (3) The sale must conform to the terms of the notification.

[(e)] (4) The sale must be held at the nearest suitable place to [that] where the goods are held or stored.

[(f)] (5) After the expiration of the time given in the notification, an advertisement of the sale must be published once a week for two weeks consecutively in a newspaper of general circulation where the sale is to be held. The advertisement must include a description of the goods, the name of the person on whose account [they] the goods are being held, and the time and place of the sale. The sale must take place at least fifteen days after the first publication. If there is no newspaper of general circulation where the sale is to be held, the advertisement must be posted at least ten days before the sale in not [less] fewer than six conspicuous places in the neighborhood of the proposed sale.

[(3)] (c) Before any sale pursuant to this section, any person claiming a right in the goods may pay the amount necessary to satisfy the lien and the reasonable expenses incurred [under] in complying with this section. In that event, the goods [must] may not be sold [,] but must be retained by the [warehouseman] warehouse subject to the terms of the receipt and this article and sections 6, 41 and 42 of this act.

[(4) The warehouseman] (d) A warehouse may buy at any public sale held pursuant to this section.

[(5)] (e) A purchaser in good faith of goods sold to enforce a [warehouseman's] warehouse's lien takes the goods free of any rights of persons against [whom] which the lien was valid, despite the warehouse's noncompliance [by the warehouseman with the requirements of] with this section.

[(6) The warehouseman may satisfy his] (f) A warehouse may satisfy its lien from the proceeds of any sale pursuant to this section but [must] shall hold the balance, if any, for delivery on demand to any person to [whom he] which the warehouse would have been bound to deliver the goods.

[(7)] (g) The rights provided by this section [shall be] are in addition to all other rights allowed by law to a creditor against [his] a debtor.

[(8) Where] (h) If a lien is on goods stored by a merchant in the course of [his] its business, the lien may be enforced in accordance with [either subsection (1) or (2)] subsection (a) or (b) of this section.

[(9) The warehouseman] (i) A warehouse is liable for damages caused by failure to comply with the requirements for sale under this section and, in case of wilful violation, is liable for conversion.

Sec. 17. Section 42a-7-301 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) A consignee of a nonnegotiable bill [who] of lading which has given value in good faith, or a holder to [whom] which a negotiable bill has been duly negotiated, relying [in either case] upon the description [therein] of the goods [,] in the bill or upon the date [therein] shown in the bill, may recover from the issuer damages caused by the misdating of the bill or the nonreceipt or misdescription of the goods, except to the extent that the [document] bill indicates that the issuer does not know whether any part or all of the goods in fact were received or conform to the description, [as where] such as in a case in which the description is in terms of marks or labels or kind, quantity, or condition or the receipt or description is qualified by "contents or condition of contents of packages unknown", "said to contain", "shipper's weight, load and count" or [the like, if such indication be] words of similar import, if that indication is true.

[(2) When goods are loaded by an issuer who is a common carrier, the issuer must count the packages of goods if package freight and ascertain the kind and quantity if bulk freight. In such cases "shipper's weight, load and count", or other words indicating that the description was made by the shipper are ineffective except as to freight concealed by packages.

(3) When bulk freight is loaded by a shipper who makes available to the issuer adequate facilities for weighing such freight, an issuer who is a common carrier must ascertain the kind and quantity within a reasonable time after receiving the written request of the shipper to do so. In such cases "shipper's weight" or other words of like purport are ineffective.

(4) The issuer may by inserting in the bill the words "shipper's weight, load and count" or other words of like purport indicate that the goods were loaded by the shipper and if such statement is true the issuer shall not be liable for damages caused by the improper loading; but the omission of such words does not imply liability for such damages.

(5) The shipper shall be deemed to have guaranteed to the issuer the accuracy at the time of shipment of the description, marks, labels, number, kind, quantity, condition and weight, as furnished by him; and the shipper shall indemnify the issuer against damage caused by inaccuracies in such particulars. The right of the issuer to such indemnity shall in no way limit his responsibility and liability under the contract of carriage to any person other than the shipper. ]

(b) If goods are loaded by the issuer of a bill of lading:

(1) The issuer shall count the packages of goods if shipped in packages and ascertain the kind and quantity if shipped in bulk; and

(2) Words such as "shipper's weight, load and count" or words of similar import indicating that the description was made by the shipper are ineffective except as to goods concealed in packages.

(c) If bulk goods are loaded by a shipper that makes available to the issuer of a bill of lading adequate facilities for weighing those goods, the issuer shall ascertain the kind and quantity within a reasonable time after receiving the shipper's request in a record to do so. In that case, "shipper's weight" or words of similar import are ineffective.

(d) The issuer of a bill of lading, by including in the bill the words "shipper's weight, load and count", or words of similar import, may indicate that the goods were loaded by the shipper, and, if that statement is true, the issuer is not liable for damages caused by the improper loading. However, omission of such words does not imply liability for damages caused by improper loading.

(e) A shipper guarantees to an issuer the accuracy at the time of shipment of the description, marks, labels, number, kind, quantity, condition and weight, as furnished by the shipper, and the shipper shall indemnify the issuer against damage caused by inaccuracies in those particulars. This right of indemnity does not limit the issuer's responsibility or liability under the contract of carriage to any person other than the shipper.

Sec. 18. Section 42a-7-302 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) The issuer of a through bill of lading, or other document of title embodying an undertaking to be performed in part by [persons acting as its agents or by connecting carriers is liable to anyone] a person acting as its agent or by a performing carrier, is liable to any person entitled to recover on the bill or other document for any breach by [such other persons or by a connecting] the other person or the performing carrier of its obligation under the bill or other document. [but] However, to the extent that the bill or other document covers an undertaking to be performed overseas or in territory not contiguous to the continental United States or an undertaking including matters other than transportation, this liability for breach by the other person or the performing carrier may be varied by agreement of the parties.

[(2) Where] (b) If goods covered by a through bill of lading or other document of title embodying an undertaking to be performed in part by [persons] a person other than the issuer are received by [any such] that person, [he] the person is subject, with respect to [his] its own performance while the goods are in [his] its possession, to the obligation of the issuer. [His] The person's obligation is discharged by delivery of the goods to another [such] person pursuant to the bill or other document [,] and does not include liability for breach by any other [such persons] person or by the issuer.

[(3) The issuer of such through bill of lading or other document shall be entitled to recover from the connecting carrier or such other person in possession of the goods when the breach of the obligation under the document occurred, the amount it may be required to pay to anyone entitled to recover on the document therefor, as may be evidenced by any receipt, judgment, or transcript thereof, and the amount of any expense reasonably incurred by it in defending any action brought by anyone entitled to recover on the document therefor. ]

(c) The issuer of a through bill of lading or other document of title described in subsection (a) of this section is entitled to recover from the performing carrier, or other person in possession of the goods when the breach of the obligation under the bill or other document occurred:

(1) The amount it may be required to pay to any person entitled to recover on the bill or other document for the breach, as may be evidenced by any receipt, judgment or transcript of judgment; and

(2) The amount of any expense reasonably incurred by the issuer in defending any action commenced by any person entitled to recover on the bill or other document for the breach.

Sec. 19. Section 42a-7-303 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) Unless the bill of lading otherwise provides, [the] a carrier may deliver the goods to a person or destination other than that stated in the bill or may otherwise dispose of the goods, without liability for misdelivery, on instructions from:

[(a) the] (1) The holder of a negotiable bill;

[or (b) the] (2) The consignor on a nonnegotiable bill, [notwithstanding contrary instructions from] even if the consignee has given contrary instructions;

[or (c) the] (3) The consignee on a nonnegotiable bill in the absence of contrary instructions from the consignor, if the goods have arrived at the billed destination or if the consignee is in possession of the tangible bill or in control of the electronic bill; or

[(d) the] (4) The consignee on a nonnegotiable bill, if [he] the consignee is entitled as against the consignor to dispose of [them] the goods.

[(2)] (b) Unless [such] instructions described in subsection (a) of this section are [noted on] included in a negotiable bill of lading, a person to [whom] which the bill is duly negotiated [can] may hold the bailee according to the original terms.

Sec. 20. Section 42a-7-304 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) Except [where] as customary in [overseas] international transportation, a tangible bill of lading [must] may not be issued in a set of parts. The issuer is liable for damages caused by violation of this subsection.

[(2) Where] (b) If a tangible bill of lading is lawfully [drawn] issued in a set of parts, each of which [is numbered] contains an identification code and is expressed to be valid only if the goods have not been delivered against any other part, the whole of the parts [constitute] constitutes one bill.

[(3) Where] (c) If a tangible negotiable bill of lading is lawfully issued in a set of parts and different parts are negotiated to different persons, the title of the holder to [whom] which the first due negotiation is made prevails as to both the document of title and the goods even [though] if any later holder may have received the goods from the carrier in good faith and discharged the carrier's obligation by [surrender of his] surrendering its part.

[(4) Any person who] (d) A person that negotiates or transfers a single part of a tangible bill of lading [drawn] issued in a set is liable to holders of that part as if it were the whole set.

[(5)] (e) The bailee [is obliged to] shall deliver in accordance with part 4 of this article against the first presented part of a tangible bill of lading lawfully [drawn] issued in a set. [Such delivery] Delivery in this manner discharges the bailee's obligation on the whole bill.

Sec. 21. Section 42a-7-305 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) Instead of issuing a bill of lading to the consignor at the place of shipment, a carrier, [may] at the request of the consignor, may procure the bill to be issued at destination or at any other place designated in the request.

[(2)] (b) Upon request of [anyone] any person entitled as against [the] a carrier to control the goods while in transit and on surrender of possession or control of any outstanding bill of lading or other receipt covering [such] the goods, the issuer, subject to section 42a-7-105, as amended by this act, may procure a substitute bill to be issued at any place designated in the request.

Sec. 22. Section 42a-7-307 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) A carrier has a lien on the goods covered by a bill of lading or on the proceeds thereof in its possession for charges [subsequent to] after the date of [its] the carrier's receipt of the goods for storage or transportation, including demurrage and terminal charges, and for expenses necessary for preservation of the goods incident to their transportation or reasonably incurred in their sale pursuant to law. [But] However, against a purchaser for value of a negotiable bill of lading, a carrier's lien is limited to charges stated in the bill or the applicable tariffs [,] or, if no charges are stated, [then to] a reasonable charge.

[(2)] (b) A lien for charges and expenses under subsection [(1)] (a) of this section on goods [which] that the carrier was required by law to receive for transportation is effective against the consignor or any person entitled to the goods unless the carrier had notice that the consignor lacked authority to subject the goods to [such] those charges and expenses. Any other lien under subsection [(1)] (a) of this section is effective against the consignor and any person [who] that permitted the bailor to have control or possession of the goods unless the carrier had notice that the bailor lacked [such] authority.

[(3)] (c) A carrier loses [his] its lien on any goods [which he] that it voluntarily delivers or [which he] unjustifiably refuses to deliver.

Sec. 23. Section 42a-7-308 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) A carrier's lien on goods may be enforced by public or private sale of the goods, in [bloc] bulk or in [parcels] packages, at any time or place and on any terms [which] that are commercially reasonable, after notifying all persons known to claim an interest in the goods. [Such] The notification must include a statement of the amount due, the nature of the proposed sale and the time and place of any public sale. The fact that a better price could have been obtained by a sale at a different time or in a [different] method different from that selected by the carrier is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. [If the carrier either] The carrier sells goods in a commercially reasonable manner if the carrier sells the goods in the usual manner in any recognized market therefor, [or if he] sells at the price current in [such] that market at the time of [his] the sale, or [if he has otherwise sold] otherwise sells in conformity with commercially reasonable practices among dealers in the type of goods sold. [he has sold in a commercially reasonable manner. ] A sale of more goods than apparently necessary to be offered to ensure satisfaction of the obligation is not commercially reasonable, except in cases covered by the preceding sentence.

[(2)] (b) Before any sale pursuant to this section, any person claiming a right in the goods may pay the amount necessary to satisfy the lien and the reasonable expenses incurred [under] in complying with this section. In that event, the goods [must] may not be sold [,] but must be retained by the carrier, subject to the terms of the bill of lading and this article and sections 6, 41 and 42 of this act.

[(3) The] (c) A carrier may buy at any public sale pursuant to this section.

[(4)] (d) A purchaser in good faith of goods sold to enforce a carrier's lien takes the goods free of any rights of persons against [whom] which the lien was valid, despite the carrier's noncompliance [by the carrier with the requirements of] with this section.

[(5) The] (e) A carrier may satisfy [his] its lien from the proceeds of any sale pursuant to this section but [must] shall hold the balance, if any, for delivery on demand to any person to [whom he] which the carrier would have been bound to deliver the goods.

[(6)] (f) The rights provided by this section [shall be] are in addition to all other rights allowed by law to a creditor against [his] a debtor.

[(7)] (g) A carrier's lien may be enforced [in accordance with] pursuant to either subsection [(1)] (a) of this section or the procedure set forth in subsection [(2)] (b) of section 42a-7-210, as amended by this act.

[(8) The] (h) A carrier is liable for damages caused by failure to comply with the requirements for sale under this section and, in case of wilful violation, is liable for conversion.

Sec. 24. Section 42a-7-309 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) A carrier [who] that issues a bill of lading, whether negotiable or nonnegotiable, [must] shall exercise the degree of care in relation to the goods which a reasonably careful [man] person would exercise under [like] similar circumstances. This subsection does not [repeal or change any law or rule of law which] affect any statute, regulation or rule of law that imposes liability upon a common carrier for damages not caused by its negligence.

[(2)] (b) Damages may be limited by a [provision] term in the bill of lading or in a transportation agreement that the carrier's liability [shall] may not exceed a value stated in the [document] bill or transportation agreement if the carrier's rates are dependent upon value and the consignor [by the carrier's tariff] is afforded an opportunity to declare a higher value [or a value as lawfully provided in the tariff, or where no tariff is filed he is otherwise advised of such opportunity; but no] and the consignor is advised of the opportunity. However, such a limitation is not effective with respect to the carrier's liability for conversion to its own use.

[(3)] (c) Reasonable provisions as to the time and manner of presenting claims and [instituting] commencing actions based on the shipment may be included in a bill of lading or [tariff] a transportation agreement.

Sec. 25. Section 42a-7-401 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

The obligations imposed by this article and sections 6, 41 and 42 of this act on an issuer apply to a document of title [regardless of the fact that] even if:

[(a) the] (1) The document [may] does not comply with the requirements of this article and sections 6, 41 and 42 of this act or of any other [law] statute, rule or regulation regarding its issue, form or content;

[or (b) the] (2) The issuer [may have] violated laws regulating the conduct of [his] its business;

[or (c) the] (3) The goods covered by the document were owned by the bailee [at the time] when the document was issued; or

[(d) the] (4) The person issuing the document [does not come within the definition of warehouseman if it] is not a warehouse but the document purports to be a warehouse receipt.

Sec. 26. Section 42a-7-402 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[Neither a duplicate nor] A duplicate or any other document of title purporting to cover goods already represented by an outstanding document of the same issuer [confers] does not confer any right in the goods, except as provided in the case of tangible bills of lading in a set of parts, overissue of documents for fungible goods, [and] substitutes for lost, stolen or destroyed documents, [but the] or substitute documents issued pursuant to section 42a-7-105, as amended by this act. The issuer is liable for damages caused by [his] its overissue or failure to identify a duplicate document [as such] by a conspicuous notation. [on its face. ]

Sec. 27. Section 42a-7-403 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1) The bailee must] (a) A bailee shall deliver the goods to a person entitled under [the] a document [who] of title if the person complies with subsections [(2) and (3)] (b) and (c) of this section, unless and to the extent that the bailee establishes any of the following:

[(a)] (1) Delivery of the goods to a person whose receipt was rightful as against the claimant;

[(b) damage] (2) Damage to or delay, [or] loss or destruction of the goods for which the bailee is not liable;

[(c) previous] (3) Previous sale or other disposition of the goods in lawful enforcement of a lien or on [warehouseman's] a warehouse's lawful termination of storage;

[(d) the] (4) The exercise by a seller of [his] its right to stop delivery pursuant to [the provisions of] section 42a-2-705, as amended by this act, or by a lessor of its right to stop delivery pursuant to section 42a-2A-719, as amended by this act;

[(e) a] (5) A diversion, reconsignment or other disposition pursuant to [the provisions of] section 42a-7-303, [or tariff regulating such right] as amended by this act;

[(f) release] (6) Release, satisfaction or any other [fact affording a] personal defense against the claimant; or

[(g) any] (7) Any other lawful excuse.

[(2)] (b) A person claiming goods covered by a document of title [must] shall satisfy the bailee's lien [where] if the bailee so requests or [where] if the bailee is prohibited by law from delivering the goods until the charges are paid.

[(3) Unless the] (c) Unless a person claiming the goods is [one against whom the document confers no] a person against which the document of title does not confer a right under [section 42a-7-503(1) he must surrender for cancellation or notation of partial deliveries] subsection (a) of section 42a-7-503, as amended by this act:

(1) The person claiming under a document shall surrender possession or control of any outstanding negotiable document covering the goods [,] for cancellation or indication of partial deliveries; and [the bailee must]

(2) The bailee shall cancel the document or conspicuously [note] indicate in the document the partial delivery [thereon or be] or the bailee is liable to any person to [whom] which the document is duly negotiated.

[(4) "Person entitled under the document" means holder in the case of a negotiable document, or the person to whom delivery is to be made by the terms of or pursuant to written instructions under a nonnegotiable document. ]

Sec. 28. Section 42a-7-404 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

A bailee [who] that in good faith [including observance of reasonable commercial standards] has received goods and delivered or otherwise disposed of [them] the goods according to the terms of [the] a document of title or pursuant to this article and sections 6, 41 and 42 of this act is not liable [therefor. This rule applies even though the person from whom he received the goods had no authority to procure the document or to dispose of the goods and even though the person to whom he delivered the goods had no authority to receive them. ] for the goods even if:

(1) The person from which the bailee received the goods did not have authority to procure the document or to dispose of the goods; or

(2) The person to which the bailee delivered the goods did not have authority to receive the goods.

Sec. 29. Section 42a-7-501 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1) A negotiable document of title running to the order of a named person is negotiated by his endorsement and delivery. After his endorsement in blank or to bearer any person can negotiate it by delivery alone.

(2) (a) A negotiable document of title is also negotiated by delivery alone when by its original terms it runs to bearer. (b) When a document running to the order of a named person is delivered to him the effect is the same as if the document had been negotiated.

(3) Negotiation of a negotiable document of title after it has been endorsed to a specified person requires endorsement by the special endorsee as well as delivery.

(4) A negotiable document of title is "duly negotiated" when it is negotiated in the manner stated in this section to a holder who purchases it in good faith without notice of any defense against or claim to it on the part of any person and for value, unless it is established that the negotiation is not in the regular course of business or financing or involves receiving the document in settlement or payment of a money obligation.

(5) Endorsement of a nonnegotiable document neither makes it negotiable nor adds to the transferee's rights.

(6) The naming in a negotiable bill of a person to be notified of the arrival of the goods does not limit the negotiability of the bill nor constitute notice to a purchaser thereof of any interest of such person in the goods. ]

(a) The following rules apply to a negotiable tangible document of title:

(1) If the document's original terms run to the order of a named person, the document is negotiated by the named person's endorsement and delivery. After the named person's endorsement in blank or to bearer, any person may negotiate the document by delivery alone.

(2) If the document's original terms run to bearer, it is negotiated by delivery alone.

(3) If the document's original terms run to the order of a named person and it is delivered to the named person, the effect is the same as if the document had been negotiated.

(4) Negotiation of the document after it has been endorsed to a named person requires endorsement by the named person and delivery.

(5) A document is duly negotiated if it is negotiated in the manner stated in this subsection to a holder that purchases it in good faith, without notice of any defense against or claim to it on the part of any person, and for value, unless it is established that the negotiation is not in the regular course of business or financing or involves receiving the document in settlement or payment of a monetary obligation.

(b) The following rules apply to a negotiable electronic document of title:

(1) If the document's original terms run to the order of a named person or to bearer, the document is negotiated by delivery of the document to another person. Endorsement by the named person is not required to negotiate the document.

(2) If the document's original terms run to the order of a named person and the named person has control of the document, the effect is the same as if the document had been negotiated.

(3) A document is duly negotiated if it is negotiated in the manner stated in this subsection to a holder that purchases it in good faith, without notice of any defense against or claim to it on the part of any person, and for value, unless it is established that the negotiation is not in the regular course of business or financing or involves taking delivery of the document in settlement or payment of a monetary obligation.

(c) Endorsement of a nonnegotiable document of title neither makes it negotiable nor adds to the transferee's rights.

(d) The naming in a negotiable bill of lading of a person to be notified of the arrival of the goods does not limit the negotiability of the bill or constitute notice to a purchaser of the bill of any interest of that person in the goods.

Sec. 30. Section 42a-7-502 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1) Subject to the following section and to the provisions of section 42a-7-205 on fungible goods, a holder to whom] (a) Subject to sections 42a-7-205, as amended by this act, and 42a-7-503, as amended by this act, a holder to which a negotiable document of title has been duly negotiated acquires thereby:

[(a)] (1) Title to the document;

[(b) title] (2) Title to the goods;

[(c) all] (3) All rights accruing under the law of agency or estoppel, including rights to goods delivered to the bailee after the document was issued; and

[(d) the] (4) The direct obligation of the issuer to hold or deliver the goods according to the terms of the document free of any defense or claim by [him] the issuer except those arising under the terms of the document or under this article [. In] and sections 6, 41 and 42 of this act, but in the case of a delivery order, the bailee's obligation accrues only upon the bailee's acceptance of the delivery order and the obligation acquired by the holder is that the issuer and any endorser will procure the acceptance of the bailee.

[(2)] (b) Subject to [the following section] section 42a-7-503, as amended by this act, title and rights [so] acquired by due negotiation are not defeated by any stoppage of the goods represented by the document of title or by surrender of [such] the goods by the bailee [,] and are not impaired even [though the] if:

(1) The due negotiation or any prior due negotiation constituted a breach of duty; [or even though any]

(2) Any person has been deprived of possession of [the] a negotiable tangible document or control of a negotiable electronic document by misrepresentation, fraud, accident, mistake, duress, loss, theft or conversion; [,] or [even though a]

(3) A previous sale or other transfer of the goods or document has been made to a third person.

Sec. 31. Section 42a-7-503 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) A document of title confers no right in goods against a person [who] that before issuance of the document had a legal interest or a perfected security interest in [them and who neither (a) delivered or entrusted them] the goods and that did not:

(1) Deliver or entrust the goods or any document of title covering [them] the goods to the bailor or [his] the bailor's nominee with: [actual] (A) Actual or apparent authority to ship, store or sell; [or with] (B) power to obtain delivery under section 42a-7-403, as amended by this act; or [with] (C) power of disposition under [sections] section 42a-2-403, [and] 42a-2A-404, 42a-2A-405 or 42a-9-320, subsection (c) of section 42a-9-321 or other statute or rule of law; [nor (b) acquiesced] or

(2) Acquiesce in the procurement by the bailor or [his] its nominee of any document. [of title. ]

[(2)] (b) Title to goods based upon an unaccepted delivery order is subject to the rights of [anyone to whom] any person to which a negotiable warehouse receipt or bill of lading covering the goods has been duly negotiated. [Such a] That title may be defeated under [the next] section 42a-7-504, as amended by this act, to the same extent as the rights of the issuer or a transferee from the issuer.

[(3)] (c) Title to goods based upon a bill of lading issued to a freight forwarder is subject to the rights of [anyone to whom] any person to which a bill issued by the freight forwarder is duly negotiated. [; but] However, delivery by the carrier in accordance with part 4 of this article pursuant to its own bill of lading discharges the carrier's obligation to deliver.

Sec. 32. Section 42a-7-504 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) A transferee of a document of title, whether negotiable or nonnegotiable, to [whom] which the document has been delivered but not duly negotiated, acquires the title and rights [which his] that its transferor had or had actual authority to convey.

[(2)] (b) In the case of a nonnegotiable document of title, until but not after the bailee receives [notification] notice of the transfer, the rights of the transferee may be defeated:

[(a) by] (1) By those creditors of the transferor [who] which could treat the [sale] transfer as void under section 42a-2-402 or 42a-2A-408;

[or (b) by] (2) By a buyer from the transferor in ordinary course of business if the bailee has delivered the goods to the buyer or received notification of [his] the buyer's rights;

(3) By a lessee from the transferor in ordinary course of business if the bailee has delivered the goods to the lessee or received notification of the lessee's rights; or

[(c) as] (4) As against the bailee, by good faith dealings of the bailee with the transferor.

[(3)] (c) A diversion or other change of shipping instructions by the consignor in a nonnegotiable bill of lading which causes the bailee not to deliver the goods to the consignee defeats the consignee's title to the goods if [they] the goods have been delivered to a buyer in ordinary course of business or a lessee in ordinary course of business and, in any event, defeats the consignee's rights against the bailee.

[(4)] (d) Delivery of the goods pursuant to a nonnegotiable document of title may be stopped by a seller under section 42a-2-705, [and] as amended by this act, or a lessor under section 42a-2A-719, as amended by this act, subject to the [requirement] requirements of due notification [there provided] in said sections. A bailee [honoring] that honors the seller's or lessor's instructions is entitled to be indemnified by the seller or lessor against any resulting loss or expense.

Sec. 33. Section 42a-7-505 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

The endorsement of a tangible document of title issued by a bailee does not make the endorser liable for any default by the bailee or [by] previous endorsers.

Sec. 34. Section 42a-7-506 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

The transferee of a negotiable tangible document of title has a specifically enforceable right to have [his] its transferor supply any necessary endorsement, but the transfer becomes a negotiation only as of the time the endorsement is supplied.

Sec. 35. Section 42a-7-507 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[Where] If a person negotiates or [transfers] delivers a document of title for value, otherwise than as a mere intermediary under [the next following section, then] section 42a-7-508, as amended by this act, unless otherwise agreed, [he warrants to his immediate purchaser only] the transferor, in addition to any warranty made in selling or leasing the goods, [(a)] warrants to its immediate purchaser only that:

[the] (1) The document is genuine;

[and (b) that he has no] (2) The transferor does not have knowledge of any fact [which] that would impair [its] the document's validity or worth; and

[(c) that his] (3) The negotiation or [transfer] delivery is rightful and fully effective with respect to the title to the document and the goods it represents.

Sec. 36. Section 42a-7-508 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

A collecting bank or other intermediary known to be entrusted with documents of title on behalf of another or with collection of a draft or other claim against delivery of documents warrants by [such] the delivery of the documents only its own good faith and authority [. This rule applies even though the] even if the collecting bank or other intermediary has purchased or made advances against the claim or draft to be collected.

Sec. 37. Section 42a-7-509 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[The question whether] Whether a document of title is adequate to fulfill the obligations of a contract for sale, a contract for lease or the conditions of a letter of credit is [governed by articles 2 and] determined by article 2, 2A or 5.

Sec. 38. Section 42a-7-601 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[(1)] (a) If a document [has been] of title is lost, stolen or destroyed, a court may order delivery of the goods or issuance of a substitute document and the bailee may without liability to any person comply with [such] the order. If the document was negotiable, [the claimant must post security approved by the court to indemnify any person who may suffer loss as a result of nonsurrender of the document. If the document was not negotiable, such security may be required at the discretion of the court] a court may not order delivery of the goods or issuance of a substitute document without the claimant's posting security unless it finds that any person that may suffer loss as a result of nonsurrender of possession or control of the document is adequately protected against the loss. If the document was nonnegotiable, the court may require security. The court may also [in its discretion] order payment of the bailee's reasonable costs and [counsel] attorney's fees in any action under this subsection.

[(2)] (b) A bailee [who] that, without court order, delivers goods to a person claiming under a missing negotiable document of title is liable to any person injured thereby. [, and if] If the delivery is not in good faith, [becomes] the bailee is liable for conversion. Delivery in good faith is not conversion if [made in accordance with a field classification or tariff or, where no classification or tariff is filed, if] the claimant posts security with the bailee in an amount at least double the value of the goods at the time of posting to indemnify any person injured by the delivery [who] which files a notice of claim within one year after the delivery.

Sec. 39. Section 42a-7-602 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

[Except where the] Unless a document of title was originally issued upon delivery of the goods by a person [who had no] that did not have power to dispose of them, [no lien attaches] a lien does not attach by virtue of any judicial process to goods in the possession of a bailee for which a negotiable document of title is outstanding unless possession or control of the document [be] is first surrendered to the bailee or [its] the document's negotiation is enjoined. [, and the bailee shall] The bailee may not be compelled to deliver the goods pursuant to process until possession or control of the document is surrendered to [him or impounded by] the bailee or to the court. [One who purchases] A purchaser of the document for value without notice of the process or injunction takes free of the lien imposed by judicial process.

Sec. 40. Section 42a-7-603 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

If more than one person claims title to or possession of the goods, the bailee is excused from delivery until [he has had] the bailee has a reasonable time to ascertain the validity of the adverse claims or to [bring an action to compel all claimants to interplead and may compel such interpleader,] commence an action for interpleader. The bailee may assert an interpleader either in defending an action for nondelivery of the goods [,] or by original action. [, whichever is appropriate. ]

Sec. 41. (NEW) (Effective October 1, 2004) Article 7 and other provisions of title 42a of the general statutes, as amended by this act, and sections 6, 41 and 42 of this act apply to a document of title that is issued or a bailment that arises on or after the effective date of this section. Article 7 and other provisions of title 42a of the general statutes, as amended by this act, and sections 6, 41 and 42 of this act do not apply to a document of title that is issued or a bailment that arises before the effective date of this section even if the document of title or bailment would be subject to article 7 and other provisions of title 42a of the general statutes, as amended by this act, and sections 6, 41 and 42 of this act if the document of title had been issued or bailment had arisen on or after the effective date of this section. Article 7 and other provisions of title 42a of the general statutes, as amended by this act, and sections 6, 41 and 42 of this act do not apply to a right of action that has accrued before the effective date of this section.

Sec. 42. (NEW) (Effective October 1, 2004) A document of title issued or a bailment that arises before the effective date of this section and the rights, obligations and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this act as if amendment or repeal had not occurred and may be terminated, completed, consummated or enforced under that statute or other rule.

Sec. 43. Section 42a-1-201 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

Subject to additional definitions contained in the subsequent articles of this title which are applicable to specific articles or parts thereof, and unless the context otherwise requires, in this title:

(1) "Action" in the sense of a judicial proceeding includes recoupment, counterclaim, set-off, suit in equity and any other proceedings in which rights are determined.

(2) "Aggrieved party" means a party entitled to resort to a remedy.

(3) "Agreement" means the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in sections 42a-1-205 and 42a-2-208. Whether an agreement has legal consequences is determined by the provisions of this title, if applicable; otherwise by the law of contracts.

(4) "Bank" means any person engaged in the business of banking.

(5) "Bearer" means [the] a person in control of a negotiable electronic document of title or a person in possession of an instrument, a negotiable tangible document of title, or a certificated security payable to bearer or endorsed in blank.

(6) "Bill of lading" means a document of title evidencing the receipt of goods for shipment issued by a person engaged in the business of directly or indirectly transporting or forwarding goods. [, and includes an airbill. "Airbill" means a document serving for air transportation as a bill of lading does for marine or rail transportation, and includes an air consignment note or air waybill] The term does not include a warehouse receipt.

(7) "Branch" includes a separately incorporated foreign branch of a bank.

(8) "Burden of establishing of 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 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. In a telegram any stated term is "conspicuous". Whether a term or clause is "conspicuous" or not is for decision by the court] with reference to a term, means so written, displayed or presented that a reasonable person against which it is to operate ought to have noticed it. Whether a term is "conspicuous" or not is a decision for the court. Conspicuous terms include the following:

(A) A heading in capitals equal to or greater in size than the surrounding text, or in contrasting type, font or color to the surrounding text of the same or lesser size; and

(B) Language in the body of a record or display in larger type than the surrounding text, or in contrasting type, font or color to the surrounding text of the same size, or set off from surrounding text of the same size by symbols or other marks that call attention to the language.

(11) "Contract" means the total legal obligation which results from the parties' agreement as affected by this title and any other applicable rules of law.

(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 an electronic document of title means voluntary transfer of control and with respect to instruments, tangible documents of title, chattel paper, or certificated securities means voluntary transfer of possession.

(15) "Document of title" [includes bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, and also any other document which] means a record (A) that in the regular course of business or financing is treated as adequately evidencing that the person in possession [of it] or control of the record is entitled to receive, control, hold and dispose of the [document] record and the goods [it] the record covers, [. To be a document of title a document must purport to be issued by or addressed to a bailee and purport to cover goods in the bailee's possession which are either identified or are fungible portions of an identified mass] and (B) that purports to be issued by or addressed to a bailee and to cover goods in the bailee's possession which are either identified or are fungible portions of an identified mass. The term includes a bill of lading, transport document, dock warrant, dock receipt, warehouse receipt and order for delivery of goods. An electronic document of title means a document of title evidenced by a record consisting of information stored in an electronic medium. A tangible document of title means a document of title evidenced by a record consisting of information that is inscribed on a tangible medium.

(16) "Fault" means wrongful act, omission or breach.

(17) "Fungible" with respect to goods or securities means goods or securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit. Goods which are not fungible shall be deemed fungible for the purposes of this title 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] means:

(A) The person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession;

(B) The person in possession of a negotiable tangible document of title if the goods are deliverable either to bearer or to the order of the person in possession; or

(C) The person in control of a negotiable electronic document of title.

(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 debts in the ordinary course of business or cannot pay his debts as they become due or is insolvent within the meaning of the federal bankruptcy law.

(24) "Money" means a medium of exchange authorized or adopted by a domestic or foreign government and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more nations.

(25) [A] Subject to subdivision (27) of this section, a person has "notice" of a fact [when (a) he has] if the person:

(A) Has actual knowledge of it; [or (b) he has]

(B) Has received a notice or notification of it; or

[(c) from] (C) From all the facts and circumstances known to [him] the person at the time in question, [he] has reason to know that it exists.

A person "knows" or has "knowledge" of a fact when [he] the person 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 title.

(26) A person "notifies" or "gives" a notice or notification to another person by taking such steps as may be reasonably required to inform the other person in ordinary course, whether or not [such] the other person actually comes to know of it. [A] Subject to subdivision (27) of this section, a person "receives" a notice or notification when: [(a) it]

(A) It comes to [his] that person's attention; or

[(b) it] (B) It is duly delivered in a form reasonable under the circumstances at the place of business through which the contract was made or at [any other place] another location held out by [him] that person as the place for receipt of such communications.

(27) Notice, knowledge or a notice or notification received by an organization is effective for a particular transaction from the time when it is brought to the attention of the individual conducting that transaction, and in any event, from the time when it would have been brought to [his] the individual's attention if the organization had exercised due diligence. An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines. Due diligence does not require an individual acting for the organization to communicate information unless such communication is part of [his] the individual's regular duties or [unless he] the individual 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 title.

(30) "Person" includes an individual or an organization.

(31) "Presumption" or "presumed" means that the trier of fact must find the existence of the fact presumed unless and until evidence is introduced which would support a finding of its nonexistence.

(32) "Purchase" includes taking by sale, discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift or any other voluntary transaction creating an interest in property.

(33) "Purchaser" means a person who takes by purchase.

(34) "Remedy" means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal.

(35) "Representative" includes an agent, an officer of a corporation or association, and a trustee, executor or administrator of an estate, or any other person empowered to act for another.

(36) "Rights" include remedies.

(37) "Security interest" means an interest in personal property or fixtures which secures payment or performance of an obligation. The term also includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible or a promissory note in a transaction that is subject to article 9. The special property interest of a buyer of goods on identification of such goods to a contract for sale under section 42a-2-401, as amended by this act, is not a "security interest", but a buyer may also acquire a "security interest" by complying with article 9. Except as otherwise provided in section 42a-2-505, as amended by this act, the right of a seller or lessor of goods under article 2 or 2A to retain or acquire possession of the goods is not a "security interest", but a seller or lessor may also acquire a "security interest" by complying with article 9. The retention or reservation of title by a seller of goods, notwithstanding shipment or delivery to the buyer pursuant to section 42a-2-401, as amended by this act, is limited in effect to a reservation of a "security interest". Whether a transaction creates a lease or a "security interest" is determined by the facts of each case; however, a transaction creates a "security interest" if the consideration the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease not subject to termination by the lessee, and (a) the original term of the lease is equal to or greater than the remaining economic life of the goods, (b) the lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become owner of the goods, (c) the lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement, or (d) the lessee has an option to become the owner of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement. A transaction does not create a "security interest" merely because it provides that (A) the present value of the consideration the lessee is obligated to pay the lessor for the right to possession and use of the goods is substantially equal to or is greater than the fair market value of the goods at the time the lease is entered into, (B) the lessee assumes risk of loss of the goods, or agrees to pay taxes, insurance, filing, recording or registration fees, or service or maintenance costs with respect to the goods, (C) the lessee has an option to renew the lease or to become the owner of the goods, (D) the lessee has an option to renew the lease for a fixed rent that is equal to or greater than the reasonably predictable fair market rent for the use of the goods for the term of the renewal at the time the option is to be performed, or (E) the lessee has an option to become the owner of the goods for a fixed price that is equal to or greater than the reasonably predictable fair market value of the goods at the time the option is to be performed. For the purposes of this subdivision: (i) Additional consideration is not nominal if (I) when the option to renew the lease is granted to the lessee, the rent is stated to be the fair market rent for the use of the goods for the term of the renewal determined at the time the option is to be performed, or (II) when the option to become the owner of the goods is granted to the lessee, the price is stated to be the fair market value of the goods determined at the time the option is to be performed; (ii) 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; (iii) "reasonably predictable" and "remaining economic life of the goods" are to be determined with reference to the facts and circumstances at the time the transaction is entered into; and (iv) "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.

(38) "Send" in connection with [any] a writing, record or notice means: [to]

(A) To deposit in the mail or deliver for transmission by any other usual means of communication with postage or cost of transmission provided for and properly addressed and, in the case of an instrument, to an address specified thereon or otherwise agreed, or if there be none to any address reasonable under the circumstances; [. The receipt of any writing or notice within the time at which it would have arrived if properly sent has the effect of a proper sending] or

(B) In any other way to cause to be received any record or notice within the time it would have arrived if properly sent.

(39) "Signed" includes any symbol executed or adopted by a party with present intention to authenticate a writing.

(40) "Surety" includes guarantor.

(41) "Telegram" includes a message transmitted by radio, teletype, cable, any mechanical method of transmission, or the like.

(42) "Term" means that portion of an agreement which relates to a particular matter.

(43) "Unauthorized signature" means one made without actual, implied, or apparent authority and includes a forgery.

(44) "Value". Except as otherwise provided by sections 42a-3-303, 42a-4-210, as amended by this act, and 42a-4-211 with respect to negotiable instruments and bank collections a person gives "value" for rights if he acquires them (a) in return for a binding commitment to extend credit or for the extension of immediately available credit whether or not drawn upon and whether or not a charge-back is provided for in the event of difficulties in collection; or (b) as security for or in total or partial satisfaction of a preexisting claim; or (c) by accepting delivery pursuant to a preexisting contract for purchase; or (d) generally, in return for any consideration sufficient to support a simple contract.

(45) "Warehouse receipt" means a [receipt] document of title issued by a person engaged in the business of storing goods for hire.

(46) "Written" or "writing" includes printing, typewriting or any other intentional reduction to tangible form.

Sec. 44. Subsection (3) of section 42a-2-103 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(3) [The] "Control" as provided in section 6 of this act and the following definitions in other articles apply to this article:

 

"Check". Section 42a-3-104.

 

"Consignee". Section 42a-7-102, as amended by this act.

 

"Consignor". Section 42a-7-102, as amended by this act.

 

"Consumer goods". Section 42a-9-102, as amended by this act.

 

"Dishonor". Section 42a-3-502.

 

"Draft". Section 42a-3-104.

Sec. 45. Subsection (2) of section 42a-2-104 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(2) "Financing agency" means a bank, finance company or other person who in the ordinary course of business makes advances against goods or documents of title or who by arrangement with either the seller or the buyer intervenes in ordinary course to make or collect payment due or claimed under the contract for sale, as by purchasing or paying the seller's draft or making advances against it or by merely taking it for collection whether or not documents of title accompany or are associated with the draft. "Financing agency" includes also a bank or other person who similarly intervenes between persons who are in the position of seller and buyer in respect to the goods as provided by section 42a-2-707.

Sec. 46. Section 42a-2-310 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

Unless otherwise agreed, (a) payment is due at the time and place at which the buyer is to receive the goods even though the place of shipment is the place of delivery; and (b) if the seller is authorized to send the goods he may ship them under reservation, and may tender the documents of title, but the buyer may inspect the goods after their arrival before payment is due unless such inspection is inconsistent with the terms of the contract; and (c) if delivery is authorized and made by way of documents of title otherwise than by subsection (b) of this section then payment is due regardless of where the goods are to be received (1) at the time and place at which the buyer is to receive delivery of the tangible documents, [regardless of where the goods are to be received] or (2) at the time the buyer is to receive delivery of the electronic documents and at the seller's place of business or if none, the seller's residence; and (d) where the seller is required or authorized to ship the goods on credit the credit period runs from the time of shipment but postdating the invoice or delaying its dispatch will correspondingly delay the starting of the credit period.

Sec. 47. Subsection (2) of section 42a-2-323 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(2) Where in a case within subsection (1) of this section a tangible bill of lading has been issued in a set of parts, unless otherwise agreed if the documents are not to be sent from abroad the buyer may demand tender of the full set; otherwise only one part of the bill of lading need be tendered. Even if the agreement expressly requires a full set (a) due tender of a single part is acceptable within the provisions of subsection (1) of section 42a-2-508 on cure of improper delivery; and (b) even though the full set is demanded, if the documents are sent from abroad the person tendering an incomplete set may nevertheless require payment upon furnishing an indemnity which the buyer in good faith deems adequate.

Sec. 48. Subdivision (3) of section 42a-2-401 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(3) Unless otherwise explicitly agreed where delivery is to be made without moving the goods, (a) if the seller is to deliver a tangible document of title, title passes at the time when and the place where he delivers such documents and if the seller is to deliver an electronic document of title, title passes when the seller delivers the document; or (b) if the goods are at the time of contracting already identified and no documents of title are to be delivered, title passes at the time and place of contracting.

Sec. 49. Subsections (4) and (5) of section 42a-2-503 of the general statutes are repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(4) Where goods are in the possession of a bailee and are to be delivered without being moved (a) tender requires that the seller either tender a negotiable document of title covering such goods or procure acknowledgment by the bailee of the buyer's right to possession of the goods; but (b) tender to the buyer of a nonnegotiable document of title or of a [written direction to] record directing the bailee to deliver is sufficient tender unless the buyer seasonably objects, and except as otherwise provided in article 9 receipt by the bailee of notification of the buyer's rights fixes those rights as against the bailee and all third persons; but risk of loss of the goods and of any failure by the bailee to honor the nonnegotiable document of title or to obey the direction remains on the seller until the buyer has had a reasonable time to present the document or direction, and a refusal by the bailee to honor the document or to obey the direction defeats the tender.

(5) Where the contract requires the seller to deliver documents (a) he must tender all such documents in correct form, except as provided in subsection (2) of section 42a-2-323 with respect to bills of lading in a set; and (b) tender through customary banking channels is sufficient and dishonor of a draft accompanying or associated with the documents constitutes nonacceptance or rejection.

Sec. 50. Section 42a-2-505 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(1) Where the seller has identified goods to the contract by or before shipment: (a) His procurement of a negotiable bill of lading to his own order or otherwise reserves in him a security interest in the goods. His procurement of the bill to the order of a financing agency or of the buyer indicates in addition only the seller's expectation of transferring that interest to the person named. (b) A nonnegotiable bill of lading to himself or his nominee reserves possession of the goods as security but except in a case of conditional delivery as provided by subsection (2) of section 42a-2-507 a nonnegotiable bill of lading naming the buyer as consignee reserves no security interest even though the seller retains possession or control of the bill of lading.

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

Sec. 51. Subsection (2) of section 42a-2-506 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

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

Sec. 52. Subsection (2) of section 42a-2-509 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(2) Where the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the buyer (a) on his receipt of possession or control of a negotiable document of title covering the goods; or (b) on acknowledgment by the bailee of the buyer's right to possession of the goods; or (c) after his receipt of possession or control of a nonnegotiable document of title or other [written] direction to deliver in a record, as provided in subsection (4) (b) of section 42a-2-503, as amended by this act.

Sec. 53. Subsection (2) of section 42a-2-605 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(2) Payment against documents made without reservation of rights precludes recovery of the payment for defects apparent [on the face of] in the documents.

Sec. 54. Section 42a-2-705 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(1) The seller may stop delivery of goods in the possession of a carrier or other bailee when he discovers the buyer to be insolvent as provided in section 42a-2-702 and may stop delivery of carload, truckload, planeload or larger shipments of express or freight when the buyer repudiates or fails to make a payment due before delivery or if for any other reason the seller has a right to withhold or reclaim the goods.

(2) As against such buyer the seller may stop delivery until (a) receipt of the goods by the buyer; or (b) acknowledgment to the buyer by any bailee of the goods except a carrier that the bailee holds the goods for the buyer; or (c) such acknowledgment to the buyer by a carrier by reshipment or as [warehouseman] a warehouse; or (d) negotiation to the buyer of any negotiable document of title covering the goods.

(3) (a) To stop delivery the seller must so notify as to enable the bailee by reasonable diligence to prevent delivery of the goods. (b) After such notification the bailee must hold and deliver the goods according to the directions of the seller but the seller is liable to the bailee for any ensuing charges or damages. (c) If a negotiable document of title has been issued for goods the bailee is not obliged to obey a notification to stop until surrender of possession or control of the document. (d) A carrier who has issued a nonnegotiable bill of lading is not obliged to obey a notification to stop received from a person other than the consignor.

Sec. 55. Subdivision (23) of subsection (a) of section 42a-2A-102 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(23) "Lessee in ordinary course of business" means a person that, in good faith and without knowledge that the person's lease is in violation of ownership rights, a security interest or a leasehold interest of a third party in the goods, leases in the ordinary course from a person in the business of selling or leasing goods of that kind for cash or by exchange of other property or on secured or unsecured credit, including [receiving] acquiring goods or documents of title under a preexisting lease contract, but not including a transfer in bulk, or as security for or in total or partial satisfaction of a money debt. The term does not include a pawnbroker.

Sec. 56. Subsection (c) of section 42a-2A-719 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(c) As against a lessee under subsection (b) of this section, the lessor may stop delivery until:

(1) Receipt of the goods by the lessee;

(2) Acknowledgment to the lessee by any bailee of the goods, other than a carrier, or a carrier by reshipment or as a [warehouseman] warehouse, that the bailee holds the goods for the lessee; or

(3) Acknowledgment to the lessee by a carrier by reshipment or as [warehouseman] a warehouse that the carrier holds the goods for the lessee.

Sec. 57. Subsection (c) of section 42a-4-104 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(c) [The] "Control" as provided in section 6 of this act and the following definitions in other articles apply to this article:

 

"Acceptance". Section 42a-3-409.

 

"Alteration". Section 42a-3-407.

 

"Cashier's check". Section 42a-3-104.

 

"Certificate of deposit". Section 42a-3-104.

 

"Certified check". Section 42a-3-409.

 

"Check". Section 42a-3-104.

 

"Good faith". Section 42a-3-103.

 

"Holder in due course". Section 42a-3-302.

 

"Instrument". Section 42a-3-104.

 

"Notice of dishonor". Section 42a-3-503.

 

"Order". Section 42a-3-103.

 

"Ordinary care". Section 42a-3-103.

 

"Person entitled to enforce". Section 42a-3-301.

 

"Presentment". Section 42a-3-501.

 

"Promise". Section 42a-3-103.

 

"Prove". Section 42a-3-103.

 

"Teller's check". Section 42a-3-104.

 

"Unauthorized signature". Section 42a-3-403.

Sec. 58. Subsection (c) of section 42a-4-210 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(c) Receipt by a collecting bank of a final settlement for an item is a realization on its security interest in the item, accompanying documents, and proceeds. So long as the bank does not receive final settlement for the item or give up possession of the item or possession or control of the accompanying documents for purposes other than collection, the security interest continues to that extent and is subject to article 9, but: (1) No security agreement is necessary to make the security interest enforceable, as provided in subsection (b)(3)(A) of section 42a-9-203, as amended by this act; (2) no filing is required to perfect the security interest; and (3) the security interest has priority over conflicting perfected security interests in the item, accompanying documents or proceeds.

Sec. 59. Section 42a-8-103 of the general statutes is amended by adding subsection (g) as follows (Effective October 1, 2004):

(NEW) (g) A document of title is not a financial asset unless subdivision (10)(iii) of subsection (a) of section 42a-8-102 applies.

Sec. 60. Subdivision (30) of subsection (a) of section 42a-9-102 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(30) "Document" means a document of title or a receipt of the type described in subsection [(2)] (b) of section 42a-7-201, as amended by this act.

Sec. 61. Subsection (b) of section 42a-9-102 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(b) [The] "Control" as provided in section 6 of this act and the following definitions in other articles apply to this article:

 

"Applicant". Section 42a-5-102.

 

"Beneficiary". Section 42a-5-102.

 

"Broker". Section 42a-8-102.

 

"Certificated security". Section 42a-8-102.

 

"Check". Section 42a-3-104.

 

"Clearing corporation". Section 42a-8-102.

 

"Contract for sale". Section 42a-2-106.

 

"Customer". Section 42a-4-104, as amended by this act.

 

"Entitlement holder". Section 42a-8-102.

 

"Financial asset". Section 42a-8-102.

 

"Holder in due course". Section 42a-3-302.

 

"Issuer" (with respect to a letter of credit or letter-of-credit right).

 

Section 42a-5-102.

 

"Issuer" (with respect to a security). Section 42a-8-201.

 

"Issuer" (with respect to documents of title). Section 42a-7-102,

 

as amended by this act.

 

"Lease". Section 42a-2A-102, as amended by this act.

 

"Lease agreement". Section 42a-2A-102, as amended by this act.

 

"Lease contract". Section 42a-2A-102, as amended by this act.

 

"Leasehold interest". Section 42a-2A-102, as amended by this

 

act.

 

"Lessee". Section 42a-2A-102, as amended by this act.

 

"Lessee in ordinary course of business". Section 42a-2A-102, as

 

amended by this act.

 

"Lessor". Section 42a-2A-102, as amended by this act.

 

"Lessor's residual interest". Section 42a-2A-102, as amended by

 

this act.

 

"Letter of credit". Section 42a-5-102.

 

"Merchant". Section 42a-2-104, as amended by this act.

 

"Negotiable instrument". Section 42a-3-104.

 

"Nominated person". Section 42a-5-102.

 

"Note". Section 42a-3-104.

 

"Proceeds of a letter of credit". Section 42a-5-114.

 

"Prove". Section 42a-3-103.

 

"Sale". Section 42a-2-106.

 

"Securities account". Section 42a-8-501.

 

"Securities intermediary". Section 42a-8-102.

 

"Security". Section 42a-8-102.

 

"Security certificate". Section 42a-8-102.

 

"Security entitlement". Section 42a-8-102.

 

"Uncertificated security". Section 42a-8-102.

Sec. 62. Subsection (b) of section 42a-9-203 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(b) Except as otherwise provided in subsections (c) to (i), inclusive, of this section, a security interest is enforceable against the debtor and third parties with respect to the collateral only if:

(1) Value has been given;

(2) The debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party; and

(3) One of the following conditions is met:

(A) The debtor has authenticated a security agreement that provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned;

(B) The collateral is not a certificated security and is in the possession of the secured party under section 42a-9-313, as amended by this act, pursuant to the debtor's security agreement;

(C) The collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under section 42a-8-301 pursuant to the debtor's security agreement; or

(D) The collateral is deposit accounts, electronic chattel paper, investment property, [or] letter-of-credit rights or electronic documents, and the secured party has control under section 6 of this act or section 42a-9-104, 42a-9-105, 42a-9-106 or 42a-9-107 pursuant to the debtor's security agreement.

Sec. 63. Subsection (c) of section 42a-9-207 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(c) Except as otherwise agreed by a debtor other than a consumer debtor or as otherwise provided in subsection (d) of this section, a secured party having possession of collateral or control of collateral under section 6 of this act or section 42a-9-104, 42a-9-105, 42a-9-106 or 42a-9-107:

(1) May hold as additional security any proceeds, except money or funds, received from the collateral;

(2) Shall apply money or funds received from the collateral to reduce the secured obligation, unless remitted to the debtor; and

(3) May create a security interest in the collateral.

Sec. 64. Subsection (b) of section 42a-9-208 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(b) Within ten days after receiving an authenticated demand by the debtor:

(1) A secured party having control of a deposit account under subdivision (2) of subsection (a) of section 42a-9-104 shall send to the bank with which the deposit account is maintained an authenticated statement that releases the bank from any further obligation to comply with instructions originated by the secured party;

(2) A secured party having control of a deposit account under subdivision (3) of subsection (a) of section 42a-9-104 shall:

(A) Pay the debtor the balance on deposit in the deposit account; or

(B) Transfer the balance on deposit into a deposit account in the debtor's name;

(3) A secured party, other than a buyer, having control of electronic chattel paper under section 42a-9-105 shall:

(A) Communicate the authoritative copy of the electronic chattel paper to the debtor or its designated custodian;

(B) If the debtor designates a custodian that is the designated custodian with which the authoritative copy of the electronic chattel paper is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and

(C) Take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy which add or change an identified assignee of the authoritative copy without the consent of the secured party;

(4) A secured party having control of investment property under subdivision (2) of subsection (d) of section 42a-8-106 or subsection (b) of section 42a-9-106 shall send to the securities intermediary or commodity intermediary with which the security entitlement or commodity contract is maintained an authenticated record that releases the securities intermediary or commodity intermediary from any further obligation to comply with entitlement orders or directions originated by the secured party; [and]

(5) A secured party having control of a letter-of-credit right under section 42a-9-107 shall send to each person having an unfulfilled obligation to pay or deliver proceeds of the letter of credit to the secured party an authenticated release from any further obligation to pay or deliver proceeds of the letter of credit to the secured party; and

(6) A secured party having control of an electronic document shall:

(A) Give control of the electronic document to the debtor or its designated custodian;

(B) If the debtor designates a custodian that is the designated custodian with which the authoritative copy of the electronic document is maintained for the secured party, communicate to the custodian an authenticated record releasing the designated custodian from any further obligation to comply with instructions originated by the secured party and instructing the custodian to comply with instructions originated by the debtor; and

(C) Take appropriate action to enable the debtor or its designated custodian to make copies of or revisions to the authoritative copy which add or change an identified assignee of the authoritative copy without the consent of the secured party.

Sec. 65. Subdivision (3) of section 42a-9-301 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(3) Except as otherwise provided in subdivision (4) of this section, while tangible negotiable documents, goods, instruments, money or tangible chattel paper is located in a jurisdiction, the local law of that jurisdiction governs:

(A) Perfection of a security interest in the goods by filing a fixture filing;

(B) Perfection of a security interest in timber to be cut; and

(C) The effect of perfection or nonperfection and the priority of a nonpossessory security interest in the collateral.

Sec. 66. Subsection (b) of section 42a-9-310 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(b) The filing of a financing statement is not necessary to perfect a security interest:

(1) That is perfected under subsection (d), (e), (f) or (g) of section 42a-9-308;

(2) That is perfected under section 42a-9-309 when it attaches;

(3) In property subject to a statute, regulation or treaty described in subsection (a) of section 42a-9-311, as amended;

(4) In goods in possession of a bailee which is perfected under subdivision (1) or (2) of subsection (d) of section 42a-9-312;

(5) In certificated securities, documents, goods or instruments which is perfected without filing, control or possession under subsection (e), (f) or (g) of section 42a-9-312, as amended by this act;

(6) In collateral in the secured party's possession under section 42a-9-313, as amended by this act;

(7) In a certificated security which is perfected by delivery of the security certificate to the secured party under section 42a-9-313, as amended by this act;

(8) In deposit accounts, electronic chattel paper, electronic documents, investment property or letter-of-credit rights which is perfected by control under section 42a-9-314, as amended by this act;

(9) In proceeds which is perfected under section 42a-9-315; or

(10) That is perfected under section 42a-9-316.

Sec. 67. Subsection (e) of section 42a-9-312 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(e) A security interest in certificated securities, negotiable documents or instruments is perfected without filing or the taking of possession or control for a period of twenty days from the time it attaches to the extent that it arises for new value given under an authenticated security agreement.

Sec. 68. Subsection (a) of section 42a-9-313 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(a) Except as otherwise provided in subsection (b) of this section, a secured party may perfect a security interest in tangible negotiable documents, goods, instruments, money or tangible chattel paper by taking possession of the collateral. A secured party may perfect a security interest in certificated securities by taking delivery of the certificated securities under section 42a-8-301.

Sec. 69. Section 42a-9-314 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(a) A security interest in investment property, deposit accounts, letter-of-credit rights, [or] electronic chattel paper or electronic documents may be perfected by control of the collateral under section 6 of this act or section 42a-9-104, 42a-9-105, 42a-9-106 or 42a-9-107.

(b) A security interest in deposit accounts, electronic chattel paper, [or] letter-of-credit rights or electronic documents is perfected by control under section 6 of this act or section 42a-9-104, 42a-9-105 or 42a-9-107 when the secured party obtains control and remains perfected by control only while the secured party retains control.

(c) A security interest in investment property is perfected by control under section 42a-9-106 from the time the secured party obtains control and remains perfected by control until:

(1) The secured party does not have control; and

(2) One of the following occurs:

(A) If the collateral is a certificated security, the debtor has or acquires possession of the security certificate;

(B) If the collateral is an uncertificated security, the issuer has registered or registers the debtor as the registered owner; or

(C) If the collateral is a security entitlement, the debtor is or becomes the entitlement holder.

Sec. 70. Section 42a-9-317 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(a) A security interest or agricultural lien is subordinate to the rights of:

(1) A person entitled to priority under section 42a-9-322; and

(2) Except as otherwise provided in subsection (e) of this section, a person that becomes a lien creditor before the earlier of the time:

(A) The security interest or agricultural lien is perfected; or

(B) One of the conditions specified in subdivision (3) of subsection (b) of section 42a-9-203, as amended by this act, is met and a financing statement covering the collateral is filed.

(b) Except as otherwise provided in subsection (e) of this section, a buyer, other than a secured party, of tangible chattel paper, tangible documents, goods, instruments or a security certificate takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

(c) Except as otherwise provided in subsection (e) of this section, a lessee of goods takes free of a security interest or agricultural lien if the lessee gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.

(d) A licensee of a general intangible or a buyer, other than a secured party, of accounts, electronic chattel paper, electronic documents, general intangibles or investment property other than a certificated security takes free of a security interest if the licensee or buyer gives value without knowledge of the security interest and before it is perfected.

(e) Except as otherwise provided in sections 42a-9-320 and 42a-9-321, if a person files a financing statement with respect to a purchase-money security interest before or within twenty days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee or lien creditor which arise between the time the security interest attaches and the time of filing.

Sec. 71. Section 42a-9-338 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

If a security interest or agricultural lien is perfected by a filed financing statement providing information described in subdivision (5) of subsection (b) of section 42a-9-516 which is incorrect at the time the financing statement is filed:

(1) The security interest or agricultural lien is subordinate to a conflicting perfected security interest in the collateral to the extent that the holder of the conflicting security interest gives value in reasonable reliance upon the incorrect information; and

(2) A purchaser, other than a secured party, of the collateral takes free of the security interest or agricultural lien to the extent that, in reasonable reliance upon the incorrect information, the purchaser gives value and, in the case of tangible chattel paper, tangible documents, goods, instruments or a security certificate, receives delivery of the collateral.

Sec. 72. Subsection (b) of section 42a-9-601 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(b) A secured party in possession of collateral or control of collateral under section 6 of this act or section 42a-9-104, 42a-9-105, 42a-9-106 or 42a-9-107 has the rights and duties provided in section 42a-9-207, as amended by this act.

Sec. 73. Section 40-53 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

A warehouseman, or any officer, agent or servant of a warehouseman, who issues or aids in issuing a duplicate or additional negotiable receipt for goods knowing that a former negotiable receipt for the same goods or any part of them is outstanding and uncancelled, without plainly placing upon the face thereof the word "Duplicate", except in the case of a lost, stolen or destroyed receipt after proceedings as provided for in subsection [(1)] (a) of section 42a-7-601, as amended by this act, shall, for each offense, be fined not more than five thousand dollars or imprisoned not more than five years or both.

Sec. 74. Section 40-55 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

A warehouseman, or any officer, agent or servant of a warehouseman, who delivers goods out of the possession of such warehouseman, knowing that a negotiable receipt the negotiation of which would transfer the right to the possession of such goods is outstanding and uncancelled, without obtaining the possession of such receipt at or before the time of such delivery, shall, except in the cases provided for in subsection [(1)] (a) of section 42a-7-601, as amended by this act, or in case of good faith delivery upon the posting of security as provided in subsection [(2)] (b) of said section, or after compliance with section 42a-7-210, as amended by this act, be fined not more than one thousand dollars or imprisoned not more than one year or both.

Sec. 75. Subdivision (1) of section 42-159 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(1) "Self-service storage facility" means any real property designed and used for the renting or leasing of individual self-contained units of storage space to occupants who are to have access to such units for storing and removing personal property only, and not for residential purposes. A self-service storage facility [is not a warehouse] and an owner [is not a warehouseman] are not a warehouse, as defined in section 42a-7-102, as amended by this act, except that if an owner issues a document of title, as defined in section 42a-1-201, as amended by this act, for the personal property stored, the owner and the occupant are subject to the provisions of article 7 of the Uniform Commercial Code and the provisions of this chapter do not apply.

Sec. 76. (Effective October 1, 2004) Section 42a-10-104 of the general statutes is repealed.

Approved May 10, 2004