§ 1—101. Short titles
(a) This title may be cited as the Uniform Commercial Code.
(b) This article may be cited as Uniform Commercial Code—General Provisions. (2007, No. 99 (Adj. Sess.), § 2.)
§ 1—102. Scope of article
This article applies to a transaction to the extent that it is governed by another
article of this title. (2007, No. 99 (Adj. Sess.), § 2.)
§ 1—103. Construction of this title to promote its purposes and policies; applicability of
supplemental principles of law
(a) This title must be liberally construed and applied to promote its underlying purposes
and policies, which are:
(1) to simplify, clarify, and modernize the law governing commercial transactions;
(2) to permit the continued expansion of commercial practices through custom, usage, and
agreement of the parties; and
(3) to make uniform the law among the various jurisdictions.
(b) Unless displaced by the particular provisions of this title, the principles of law
and equity, including the law merchant and the law relative to capacity to contract,
principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake,
bankruptcy, and other validating or invalidating cause supplement its provisions. (2007, No. 99 (Adj. Sess.), § 2.)
§ 1—104. Construction against implied repeal
This title being a general act intended as a unified coverage of its subject matter,
no part of it shall be deemed to be impliedly repealed by subsequent legislation if
such construction can reasonably be avoided. (2007, No. 99 (Adj. Sess.), § 2.)
§ 1—105. Severability
If any provision or clause of this title or its application to any person or circumstance
is held invalid, the invalidity does not affect other provisions or applications of
this title which can be given effect without the invalid provision or application,
and to this end the provisions of this title are severable. (Amended 2007, No. 99 (Adj. Sess.), § 2.)
§ 1—106. Use of singular and plural; gender
In this title, unless the statutory context otherwise requires:
(1) words in the singular number include the plural, and those in the plural include the
singular; and
(2) words of any gender also refer to any other gender. (Amended 2007, No. 99 (Adj. Sess.), § 2.)
§ 1—107. Section captions
Section captions are parts of this title. (Amended 2007, No. 99 (Adj. Sess.), § 2.)
§ 1—108. Relation to electronic signatures in Global and National Commerce Act
This title modifies, limits, and supersedes the Federal Electronic Signatures in Global
and National Commerce Act (15 U.S.C. section 7001 et seq.), but does not modify, limit, or supersede section 101(c) of that act (15 U.S.C. section 7001(c)) or authorize electronic delivery of any of the notices described in section 103(b)
of that act (15 U.S.C. section 7003(b)). (Amended 2007, No. 99 (Adj. Sess.), § 2.)
§ 1—109. Repealed. 2007, No. 99 (Adj. Sess.), § 2.
§ 1—201. General definitions
(a) Unless the context otherwise requires, words or phrases defined in this section, or
in the additional definitions contained in other articles of this title that apply
to particular articles or parts thereof, have the meanings stated.
(b) Subject to definitions contained in other articles of this title that apply to particular
articles or parts thereof:
(1) “Action,” in the sense of a judicial proceeding, includes recoupment, counterclaim,
set-off, suit in equity, and any other proceeding in which rights are determined.
(2) “Aggrieved party” means a party entitled to pursue a remedy.
(3) “Agreement,” as distinguished from “contract,” means the bargain of the parties in
fact, as found in their language or inferred from other circumstances, including course
of performance, course of dealing, or usage of trade as provided in section 1—303 of this title.
(4) “Bank” means a person engaged in the business of banking and includes a savings bank,
savings and loan association, credit union, and trust company.
(5) “Bearer” means a person in control of a negotiable electronic document of title or
a person in possession of a negotiable instrument, negotiable tangible document of
title, or certificated security that is payable to bearer or indorsed 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. The term does not include a warehouse receipt.
(7) “Branch” includes a separately incorporated foreign branch of a bank.
(8) “Burden of establishing” a fact means the burden of persuading the trier of fact that
the existence of the fact is more probable than its nonexistence.
(9) “Buyer in ordinary course of business” means a person that buys goods in good faith,
without knowledge that the sale violates the rights of another person in the goods,
and in the ordinary course from a person, other than a pawnbroker, in the business
of selling goods of that kind. A person buys goods in the ordinary course if the sale
to the person comports with the usual or customary practices in the kind of business
in which the seller is engaged or with the seller’s own usual or customary practices.
A person that sells oil, gas, or other minerals at the wellhead or minehead is a person
in the business of selling goods of that kind. A buyer in ordinary course of business
may buy for cash, by exchange of other property, or on secured or unsecured credit,
and may acquire goods or documents of title under a preexisting contract for sale.
Only a buyer that takes possession of the goods or has a right to recover the goods
from the seller under Article 2 of this title may be a buyer in ordinary course of
business. “Buyer in ordinary course of business” does not include a person that acquires
goods in a transfer in bulk or as security for or in total or partial satisfaction
of a money debt.
(10) “Conspicuous,” with reference to a term, means so written, displayed, or presented
that, based on the totality of the circumstances, a reasonable person against which
it is to operate ought to have noticed it. Whether a term is “conspicuous” or not
is a decision for the court.
(11) “Consumer” means an individual who enters into a transaction primarily for personal,
family, or household purposes.
(12) “Contract,” as distinguished from “agreement,” means the total legal obligation that
results from the parties’ agreement as determined by this title as supplemented by
any other applicable laws.
(13) “Creditor” includes a general creditor, a secured creditor, a lien creditor, and any
representative of creditors, including an assignee for the benefit of creditors, a
trustee in bankruptcy, a receiver in equity, and an executor or administrator of an
insolvent debtor’s or assignor’s estate.
(14) “Defendant” includes a person in the position of defendant in a counterclaim, cross-claim,
or third-party claim.
(15) “Delivery,” with respect to an electronic document of title means voluntary transfer
of control and with respect to an instrument, a tangible document of title, or an
authoritative tangible copy of a record evidencing chattel paper, means voluntary
transfer of possession.
(16) “Document of title” means a record (i) that in the regular course of business or financing
is treated as adequately evidencing that the person in possession or control of the
record is entitled to receive, control, hold, and dispose of the record and the goods
the record covers; and (ii) 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.
(16A) “Electronic” means relating to technology having electrical, digital, magnetic, wireless,
optical, electromagnetic, or similar capabilities.
(17) “Fault” means a default, breach, or wrongful act or omission.
(18) “Fungible goods” means:
(A) goods of which any unit, by nature or usage of trade, is the equivalent of any other
like unit; or
(B) goods that by agreement are treated as equivalent.
(19) “Genuine” means free of forgery or counterfeiting.
(20) “Good faith,” except as otherwise provided in Article 5 of this title, means honesty
in fact and the observance of reasonable commercial standards of fair dealing.
(21) “Holder” means:
(A) the person in possession of a negotiable instrument that is payable either to bearer
or to an identified person that is the person in possession;
(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, other than pursuant to subsection 7—106(g) of this title, of a negotiable electronic document of title.
(22) “Insolvency proceeding” includes an assignment for the benefit of creditors or other
proceeding intended to liquidate or rehabilitate the estate of the person involved.
(23) “Insolvent” means:
(A) having generally ceased to pay debts in the ordinary course of business other than
as a result of bona fide dispute;
(B) being unable to pay debts as they become due; or
(C) being insolvent within the meaning of federal bankruptcy law.
(24) “Money” means a medium of exchange that is currently authorized or adopted by a domestic
or foreign government. The term includes a monetary unit of account established by
an intergovernmental organization or by agreement between two or more countries. The
term does not include an electronic record that is a medium of exchange recorded and
transferable in a system that existed and operated for the medium of exchange before
the medium of exchange was authorized or adopted by the government.
(25) “Organization” means a person other than an individual.
(26) “Party,” as distinguished from “third party,” means a person that has engaged in a
transaction or made an agreement subject to this title.
(27) “Person” means an individual, corporation, business trust, estate, trust, partnership,
limited liability company, association, joint venture, government, governmental subdivision,
agency, or instrumentality, or any other legal or commercial entity. The term includes
a protected series, however denominated, of an entity if the protected series is established
under law other than provided in this title that limits, or limits if conditions specified
under the law are satisfied, the ability of a creditor of the entity or of any other
protected series of the entity to satisfy a claim from assets of the protected series.
(28) “Present value” means the amount as of a date certain of one or more sums payable
in the future, discounted to the date certain by use of either an interest rate specified
by the parties if that rate is not manifestly unreasonable at the time the transaction
is entered into or, if an interest rate is not so specified, a commercially reasonable
rate that takes into account the facts and circumstances at the time the transaction
is entered into.
(29) “Purchase” means taking by sale, lease, discount, negotiation, mortgage, pledge, lien,
security interest, issue or reissue, gift, or any other voluntary transaction creating
an interest in property.
(30) “Purchaser” means a person that takes by purchase.
(31) “Record” means information that is inscribed on a tangible medium or that is stored
in an electronic or other medium and is retrievable in perceivable form.
(32) “Remedy” means any remedial right to which an aggrieved party is entitled with or
without resort to a tribunal.
(33) “Representative” means a person empowered to act for another, including an agent,
an officer of a corporation or association, and a trustee, executor, or administrator
of an estate.
(34) “Right” includes remedy.
(35) “Security interest” means an interest in personal property or fixtures which secures
payment or performance of an obligation. “Security interest” includes any interest
of a consignor and a buyer of accounts, chattel paper, a payment intangible, or a
promissory note in a transaction that is subject to Article 9 of this title. “Security
interest” does not include the special property interest of a buyer of goods on identification
of those goods to a contract for sale under section 2—401 of this title, but a buyer may also acquire a “security interest” by complying with Article 9 of
this title. Except as otherwise provided in section 2—505 of this title, the right of a seller or lessor of goods under Article 2 or 2A of this title 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 of this
title. The retention or reservation of title by a seller of goods notwithstanding
shipment or delivery to the buyer under section 2—401 of this title is limited in effect to a reservation of a “security interest.” Whether a transaction
in the form of a lease creates a “security interest” is determined pursuant to section 1—203 of this title.
(36) “Send,” in connection with a record or notification, means:
(A) to deposit in the mail, deliver for transmission, or transmit by any other usual means
of communication, with postage or cost of transmission provided for, addressed to
any address reasonable under the circumstances; or
(B) to cause the record or notification to be received within the time it would have been
received if properly sent under subdivision (A) of this subdivision (b)(36).
(37) “Sign,” “signed,” “signing,” and “signature” means, with present intent to authenticate
or adopt a record:
(A) execute or adopt a tangible symbol; or
(B) attach to or logically associate with the record an electronic symbol, sound, or process.
(38) “State” means a State of the United States, the District of Columbia, Puerto Rico,
the United States Virgin Islands, or any territory or insular possession subject to
the jurisdiction of the United States.
(39) “Surety” includes a guarantor or other secondary obligor.
(40) “Term” means a portion of an agreement that relates to a particular matter.
(41) “Unauthorized signature” means a signature made without actual, implied, or apparent
authority. The term includes a forgery.
(42) “Warehouse receipt” means a document of title issued by a person engaged in the business
of storing goods for hire.
(43) “Writing” includes printing, typewriting, or any other intentional reduction to tangible
form. “Written” has a corresponding meaning. (Amended 1993, No. 158 (Adj. Sess.), § 3, eff. Jan. 1, 1995; 1999, No. 106 (Adj. Sess.), § 4, eff. July 1, 2001; 2007, No. 99 (Adj. Sess.), § 2; 2015, No. 51, § B.4, eff. June 3, 2015; 2025, No. 17, § 1, eff. July 1, 2025.)
§ 1—202. Notice; knowledge
(a) Subject to subsection (f) of this section, a person has “notice” of a fact if the
person:
(1) has actual knowledge of it;
(2) has received a notice or notification of it; or
(3) from all the facts and circumstances known to the person at the time in question,
has reason to know that it exists.
(b) “Knowledge” means actual knowledge. “Knows” has a corresponding meaning.
(c) “Discover,” “learn,” or words of similar import refer to knowledge rather than to
reason to know.
(d) A person “notifies” or “gives” a notice or notification to another person by taking
such steps as may be reasonably required to inform the other person in ordinary course,
whether or not the other person actually comes to know of it.
(e) Subject to subsection (f) of this section, a person “receives” a notice or notification
when:
(1) it comes to that person’s attention; or
(2) it is duly delivered in a form reasonable under the circumstances at the place of
business through which the contract was made or at another location held out by that
person as the place for receipt of such communications.
(f) Notice, knowledge, or a notice or notification received by an organization is effective
for a particular transaction from the time it is brought to the attention of the individual
conducting that transaction and, in any event, from the time it would have been brought
to the individual’s attention if the organization had exercised due diligence. An
organization exercises due diligence if it maintains reasonable routines for communicating
significant information to the person conducting the transaction and there is reasonable
compliance with the routines. Due diligence does not require an individual acting
for the organization to communicate information unless the communication is part of
the individual’s regular duties or the individual has reason to know of the transaction
and that the transaction would be materially affected by the information. (Amended 2007, No. 99 (Adj. Sess.), § 2.)
§ 1—203. Lease distinguished from security interest
(a) Whether a transaction in the form of a lease creates a lease or security interest
is determined by the facts of each case.
(b) A transaction in the form of a lease creates a security interest if the consideration
that the lessee is to pay the lessor for the right to possession and use of the goods
is an obligation for the term of the lease and is not subject to termination by the
lessee, and:
(1) the original term of the lease is equal to or greater than the remaining economic
life of the goods;
(2) the lessee is bound to renew the lease for the remaining economic life of the goods
or is bound to become the owner of the goods;
(3) the lessee has an option to renew the lease for the remaining economic life of the
goods for no additional consideration or for nominal additional consideration upon
compliance with the lease agreement; or
(4) the lessee has an option to become the owner of the goods for no additional consideration
or for nominal additional consideration upon compliance with the lease agreement.
(c) A transaction in the form of a lease does not create a security interest merely because:
(1) the present value of the consideration the lessee is obligated to pay the lessor for
the right to possession and use of the goods is substantially equal to or is greater
than the fair market value of the goods at the time the lease is entered into;
(2) the lessee assumes risk of loss of the goods;
(3) the lessee agrees to pay, with respect to the goods, taxes, insurance, filing, recording,
or registration fees, or service or maintenance costs;
(4) the lessee has an option to renew the lease or to become the owner of the goods;
(5) the lessee has an option to renew the lease for a fixed rent that is equal to or greater
than the reasonably predictable fair market rent for the use of the goods for the
term of the renewal at the time the option is to be performed; or
(6) the lessee has an option to become the owner of the goods for a fixed price that is
equal to or greater than the reasonably predictable fair market value of the goods
at the time the option is to be performed.
(d) Additional consideration is nominal if it is less than the lessee’s reasonably predictable
cost of performing under the lease agreement if the option is not exercised. Additional
consideration is not nominal if:
(1) when the option to renew the lease is granted to the lessee, the rent is stated to
be the fair market rent for the use of the goods for the term of the renewal determined
at the time the option is to be performed; or
(2) when the option to become the owner of the goods is granted to the lessee, the price
is stated to be the fair market value of the goods determined at the time the option
is to be performed.
(e) The “remaining economic life of the goods” and “reasonably predictable” fair market
rent, fair market value, or cost of performing under the lease agreement must be determined
with reference to the facts and circumstances at the time the transaction is entered
into. (Amended 2007, No. 99 (Adj. Sess.), § 2.)
§ 1—204. Value
Except as otherwise provided in Articles 3, 4, 5, 6, and 12 of this title, a person
gives value for rights if the person acquires them:
(1) in return for a binding commitment to extend credit or for the extension of immediately
available credit, whether or not drawn upon and whether or not a charge-back is provided
for in the event of difficulties in collection;
(2) as security for, or in total or partial satisfaction of, a preexisting claim;
(3) by accepting delivery under a preexisting contract for purchase; or
(4) in return for any consideration sufficient to support a simple contract. (Amended 2007, No. 99 (Adj. Sess.), § 2; 2025, No. 17, § 1, eff. July 1, 2025.)
§ 1—205. Reasonable time; seasonableness
(a) Whether a time for taking an action required by this title is reasonable depends on
the nature, purpose, and circumstances of the action.
(b) An action is taken seasonably if it is taken at or within the time agreed or, if no
time is agreed, at or within a reasonable time. (Amended 2007, No. 99 (Adj. Sess.), § 2.)
§ 1—206. Presumptions
Whenever this title creates a “presumption” with respect to a fact, or provides that
a fact is “presumed,” the trier of fact must find the existence of the fact unless
and until evidence is introduced that supports a finding of its nonexistence. (Added 2007, No. 99 (Adj. Sess.), § 2.)
§§ 1—207-1—209. Repealed. 2007, No. 99 (Adj. Sess.), § 2.
§ 1—301. Territorial applicability; parties’ power to choose applicable law
(a) Except as provided hereafter in this section, when a transaction bears a reasonable
relation to this state and also to another state or nation the parties may agree that
the law either of this state or of such other state or nation shall govern their rights
and duties.
(b) In the absence of an agreement effective under subsection (a) of this section, and
except as provided in subsection (c), this title applies to transactions bearing an
appropriate relation to this state.
(c) If one of the following provisions of this title specifies the applicable law, that
provision governs and a contrary agreement is effective only to the extent permitted
by the law so specified:
(1) Section 2—402. Rights of Creditors Against Sold Goods;
(2) Sections 2A—105 and 2A—106. Applicability of this Article on Leases;
(3) Section 4—102. Applicability of the Article on Bank Deposits;
(4) Section 4A—507. Governing Law in the Article on Funds Transfers;
(5) Section 5—116. Letters of Credit;
(6) Section 8—110. Applicability of the Article on Investment Securities;
(7) Sections 9—301 through 9—307. Law Governing Perfection, the Effect of Perfection or
Nonperfection, and the Priority of Security Interests;
(8) Section 12—107. Governing Law. (Amended 1993, No. 158 (Adj. Sess.), § 2, eff. Jan. 1, 1995; 1995, No. 92 (Adj. Sess.), § 18, eff. Jan. 1, 1997; 1997, No. 65 (Adj. Sess.), § 2, eff. Jan. 1, 1999; 1999, No. 106 (Adj. Sess.), § 3, eff. July 1, 2001; 2007, No. 99 (Adj. Sess.), § 2; 2025, No. 17, § 1, eff. July 1, 2025.)
§ 1—302. Variation by agreement
(a) Except as otherwise provided in subsection (b) of this section or elsewhere in this
title, the effect of provisions of this title may be varied by agreement.
(b) The obligations of good faith, diligence, reasonableness, and care prescribed by this
title may not be disclaimed by agreement. The parties, by agreement, may determine
the standards by which the performance of those obligations is to be measured if those
standards are not manifestly unreasonable. Whenever this title requires an action
to be taken within a reasonable time, a time that is not manifestly unreasonable may
be fixed by agreement.
(c) The presence in certain provisions of this title of the phrase “unless otherwise agreed,”
or words of similar import, does not imply that the effect of other provisions may
not be varied by agreement under this section. (Added 2007, No. 99 (Adj. Sess.), § 2.)
§ 1—303. Course of performance, course of dealing, and usage of trade
(a) A “course of performance” is a sequence of conduct between the parties to a particular
transaction that exists if:
(1) the agreement of the parties with respect to the transaction involves repeated occasions
for performance by a party; and
(2) the other party, with knowledge of the nature of the performance and opportunity for
objection to it, accepts the performance or acquiesces in it without objection.
(b) A “course of dealing” is a sequence of conduct concerning previous transactions between
the parties to a particular transaction that is fairly to be regarded as establishing
a common basis of understanding for interpreting their expressions and other conduct.
(c) A “usage of trade” is any practice or method of dealing having such regularity of
observance in a place, vocation, or trade as to justify an expectation that it will
be observed with respect to the transaction in question. The existence and scope of
such a usage must be proved as facts. If it is established that such a usage is embodied
in a trade code or similar record, the interpretation of the record is a question
of law.
(d) A course of performance or course of dealing between the parties or usage of trade
in the vocation or trade in which they are engaged or of which they are or should
be aware is relevant in ascertaining the meaning of the parties’ agreement, may give
particular meaning to specific terms of the agreement, and may supplement or qualify
the terms of the agreement. A usage of trade applicable in the place in which part
of the performance under the agreement is to occur may be so utilized as to that part
of the performance.
(e) Except as otherwise provided in subsection (f) of this section, the express terms
of an agreement and any applicable course of performance, course of dealing, or usage
of trade must be construed whenever reasonable as consistent with each other. If such
a construction is unreasonable:
(1) express terms prevail over course of performance, course of dealing, and usage of
trade;
(2) course of performance prevails over course of dealing and usage of trade; and
(3) course of dealing prevails over usage of trade.
(f) Subject to section 2—209 of this title, a course of performance is relevant to show a waiver or modification of any term
inconsistent with the course of performance.
(g) Evidence of a relevant usage of trade offered by one party is not admissible unless
that party has given the other party notice that the court finds sufficient to prevent
unfair surprise to the other party. (Added 2007, No. 99 (Adj. Sess.), § 2.)
§ 1—304. Obligation of good faith
Every contract or duty within this title imposes an obligation of good faith in its
performance and enforcement. (Added 2007, No. 99 (Adj. Sess.), § 2.)
§ 1—305. Remedies to be liberally administered
(a) The remedies provided by this title must be liberally administered to the end that
the aggrieved party may be put in as good a position as if the other party had fully
performed but neither consequential or special damages nor penal damages may be had
except as specifically provided in this title or by other rule of law.
(b) Any right or obligation declared by this title is enforceable by action unless the
provision declaring it specifies a different and limited effect. (Added 2007, No. 99 (Adj. Sess.), § 2.)
§ 1—306. Waiver or renunciation of claim or right after breach
A claim or right arising out of an alleged breach may be discharged in whole or in
part without consideration by agreement of the aggrieved party in a signed record. (Added 2007, No. 99 (Adj. Sess.), § 2; amended 2025, No. 17, § 1, eff. July 1, 2025.)
§ 1—307. Prima facie evidence by third-party documents
A document in due form purporting to be a bill of lading, policy or certificate of
insurance, official weigher’s or inspector’s certificate, consular invoice, or any
other document authorized or required by the contract to be issued by a third party
is prima facie evidence of its own authenticity and genuineness and of the facts stated
in the document by the third party. (Added 2007, No. 99 (Adj. Sess.), § 2.)
§ 1—308. Performance or acceptance under reservation of rights
(a) A party that with explicit reservation of rights performs or promises performance
or assents to performance in a manner demanded or offered by the other party does
not thereby prejudice the rights reserved. Such words as “without prejudice,” “under
protest,” or the like are sufficient.
(b) Subsection (a) of this section does not apply to an accord and satisfaction. (Added 2007, No. 99 (Adj. Sess.), § 2.)
§ 1—309. Option to accelerate at will
A term providing that one party or that party’s successor in interest may accelerate
payment or performance or require collateral or additional collateral “at will” or
when the party “deems itself insecure,” or words of similar import, means that the
party has power to do so only if that party in good faith believes that the prospect
of payment or performance is impaired. The burden of establishing lack of good faith
is on the party against which the power has been exercised. (Added 2007, No. 99 (Adj. Sess.), § 2.)
§ 1—310. Subordinated obligations
An obligation may be issued as subordinated to performance of another obligation of
the person obligated, or a creditor may subordinate its right to performance of an
obligation by agreement with either the person obligated or another creditor of the
person obligated. Subordination does not create a security interest as against either
the common debtor or a subordinated creditor. (Added 2007, No. 99 (Adj. Sess.), § 2.)