103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3696
 
Introduced 2/9/2024, by Sen. Michael W. Halpin
 
SYNOPSIS AS INTRODUCED:

See Index
 Amends the Uniform Commercial Code to adopt changes recommended by the Uniform Law Commission with respect to the addition of a Controllable Electronic Records Article and transitional provisions and the amendment of other provisions of the Code. Makes other changes. Effective January 1, 2025.


LRB103 37687 SPS 67814 b


 
 
A BILL FOR
 
SB3696LRB103 37687 SPS 67814 b


1 AN ACT concerning commercial transactions.

2 Be it enacted by the People of the State of Illinois, 
3represented in the General Assembly:

4 Section 2. The Transmitters of Money Act is amended by 
5changing Section 5 as follows:

6 (205 ILCS 657/5)
7 Sec. 5. Definitions. As used in this Act, unless the 
8context otherwise requires, the words and phrases defined in 
9this Section have the meanings set forth in this Section.
10 "Authorized seller" means a person not an employee of a 
11licensee who engages in the business regulated by this Act on 
12behalf of a licensee under a contract between that person and 
13the licensee.
14 "Bill payment service" means the business of transmitting 
15money on behalf of an Illinois resident for the purpose of 
16paying the resident's bills.
17 "Controlling person" means a person owning or holding the 
18power to vote 25% or more of the outstanding voting securities 
19of a licensee or the power to vote the securities of another 
20controlling person of the licensee. For purposes of 
21determining the percentage of a licensee controlled by a 
22controlling person, the person's interest shall be combined 
23with the interest of any other person controlled, directly or 
 
 
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1indirectly, by that person or by a spouse, parent, or child of 
2that person.
3 "Department" means the Department of Financial 
4Institutions.
5 "Director" means the Director of Financial Institutions.
6 "Licensee" means a person licensed under this Act.
7 "Location" means a place of business at which activity 
8regulated by this Act occurs.
9 "Material litigation" means any litigation that, according 
10to generally accepted accounting principles, is deemed 
11significant to a licensee's financial health and would be 
12required to be referenced in a licensee's annual audited 
13financial statements, reports to shareholders, or similar 
14documents.
15 "Money" means a medium of exchange that is authorized or 
16adopted by a domestic or foreign government as a part of its 
17currency and that is customarily used and accepted as a medium 
18of exchange in the country of issuance. The term does not 
19include an electronic record that is a medium of exchange 
20recorded and transferable in a system that existed and 
21operated for the medium of exchange before the medium of 
22exchange was authorized or adopted by the government.
23 "Money transmitter" means a person who is located in or 
24doing business in this State and who directly or through 
25authorized sellers does any of the following in this State: 
26  (1) Sells or issues payment instruments. 
 
 
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1  (2) Engages in the business of receiving money for 
2 transmission or transmitting money. 
3  (3) Engages in the business of exchanging, for 
4 compensation, money of the United States Government or a 
5 foreign government to or from money of another government.
6 "Outstanding payment instrument" means, unless otherwise 
7treated by or accounted for under generally accepted 
8accounting principles on the books of the licensee, a payment 
9instrument issued by the licensee that has been sold in the 
10United States directly by the licensee or has been sold in the 
11United States by an authorized seller of the licensee and 
12reported to the licensee as having been sold, but has not been 
13paid by or for the licensee.
14 "Payment instrument" means a check, draft, money order, 
15traveler's check, stored value card, or other instrument or 
16memorandum, written order or written receipt for the 
17transmission or payment of money sold or issued to one or more 
18persons whether or not that instrument or order is negotiable. 
19Payment instrument does not include an instrument that is 
20redeemable by the issuer in merchandise or service, a credit 
21card voucher, or a letter of credit. A written order for the 
22transmission or payment of money that results in the issuance 
23of a check, draft, money order, traveler's check, or other 
24instrument or memorandum is not a payment instrument.
25 "Person" means an individual, partnership, association, 
26joint stock association, corporation, or any other form of 
 
 
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1business organization.
2 "Stored value card" means any magnetic stripe card or 
3other electronic payment instrument given in exchange for 
4money and other similar consideration, including but not 
5limited to checks, debit payments, money orders, drafts, 
6credit payments, and traveler's checks, where the card or 
7other electronic payment instrument represents a dollar value 
8that the consumer can either use or give to another 
9individual.
10 "Transmitting money" means the transmission of money by 
11any means, including transmissions to or from locations within 
12the United States or to and from locations outside of the 
13United States by payment instrument, facsimile or electronic 
14transfer, or otherwise, and includes bill payment services.
15(Source: P.A. 92-400, eff. 1-1-02; 93-535, eff. 1-1-04.)

16 Section 5. The Uniform Commercial Code is amended by 
17renumbering and changing Article 12 as added by Public Act 
1885-997, by changing Sections 1-201, 1-204, 1-301, 1-306, 
192-102, 2-106, 2-201, 2-202, 2-203, 2-205, 2-209, 2A-102, 
202A-103, 2A-107, 2A-201, 2A-202, 2A-203, 2A-205, 2A-208, 3-104, 
213-105, 3-401, 3-604, 4A-103, 4A-201, 4A-202, 4A-203, 4A-207, 
224A-208, 4A-210, 4A-211, 4A-305, 5-104, 5-116, 7-102, 7-106, 
238-102, 8-103, 8-106, 8-110, 8-303, 9-102, 9-104, 9-105, 9-203, 
249-204, 9-207, 9-208, 9-209, 9-210, 9-301, 9-304, 9-305, 9-310, 
259-312, 9-313, 9-314, 9-316, 9-317, 9-323, 9-324, 9-330, 9-331, 
 
 
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19-332, 9-334, 9-341, 9-404, 9-406, 9-408, 9-509, 9-513, 9-601, 
29-605, 9-608, 9-611, 9-613, 9-614, 9-615, 9-616, 9-619, 9-620, 
39-621, 9-624, and 9-628, and by adding Articles 12 and 12A and 
4Sections 9-105A, 9-107A, 9-107B, 9-306A, 9-306B, 9-314A, and 
59-326A as follows:

6 (810 ILCS 5/1-201) (from Ch. 26, par. 1-201)
7 Sec. 1-201. General Definitions. 
8 (a) Unless the context otherwise requires, words or 
9phrases defined in this Section, or in the additional 
10definitions contained in other Articles of the Uniform 
11Commercial Code that apply to particular Articles or parts 
12thereof, have the meanings stated. 
13 (b) Subject to definitions contained in other Articles of 
14the Uniform Commercial Code that apply to particular Articles 
15or parts thereof: 
16  (1) "Action", in the sense of a judicial proceeding, 
17 includes recoupment, counterclaim, set-off, suit in 
18 equity, and any other proceeding in which rights are 
19 determined.
20  (2) "Aggrieved party" means a party entitled to pursue 
21 a remedy.
22  (3) "Agreement", as distinguished from "contract", 
23 means the bargain of the parties in fact, as found in their 
24 language or inferred from other circumstances, including 
25 course of performance, course of dealing, or usage of 
 
 
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1 trade as provided in Section 1-303.
2  (4) "Bank" means a person engaged in the business of 
3 banking and includes a savings bank, savings and loan 
4 association, credit union, and trust company.
5  (5) "Bearer" means a person in possession of a 
6 negotiable instrument, document of title, or certificated 
7 security that is payable to bearer or indorsed in blank.
8  (6) "Bill of lading" means a document evidencing the 
9 receipt of goods for shipment issued by a person engaged 
10 in the business of transporting or forwarding goods.
11  (7) "Branch" includes a separately incorporated 
12 foreign branch of a bank.
13  (8) "Burden of establishing" a fact means the burden 
14 of persuading the trier of fact that the existence of the 
15 fact is more probable than its nonexistence.
16  (9) "Buyer in ordinary course of business" means a 
17 person that buys goods in good faith, without knowledge 
18 that the sale violates the rights of another person in the 
19 goods, and in the ordinary course from a person, other 
20 than a pawnbroker, in the business of selling goods of 
21 that kind. A person buys goods in the ordinary course if 
22 the sale to the person comports with the usual or 
23 customary practices in the kind of business in which the 
24 seller is engaged or with the seller's own usual or 
25 customary practices. A person that sells oil, gas, or 
26 other minerals at the wellhead or minehead is a person in 
 
 
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1 the business of selling goods of that kind. A buyer in 
2 ordinary course of business may buy for cash, by exchange 
3 of other property, or on secured or unsecured credit, and 
4 may acquire goods or documents of title under a 
5 preexisting contract for sale. Only a buyer that takes 
6 possession of the goods or has a right to recover the goods 
7 from the seller under Article 2 may be a buyer in ordinary 
8 course of business. "Buyer in ordinary course of business" 
9 does not include a person that acquires goods in a 
10 transfer in bulk or as security for or in total or partial 
11 satisfaction of a money debt.
12  (10) "Conspicuous", with reference to a term, means so 
13 written, displayed, or presented that, based on the 
14 totality of the circumstances, a reasonable person against 
15 which it is to operate ought to have noticed it. Whether a 
16 term is "conspicuous" or not is a decision for the court. 
17 Conspicuous terms include the following:
18   (A) a heading in capitals equal to or greater in 
19 size than the surrounding text, or in contrasting 
20 type, font, or color to the surrounding text of the 
21 same or lesser size; and
22   (B) language in the body of a record or display in 
23 larger type than the surrounding text, or in 
24 contrasting type, font, or color to the surrounding 
25 text of the same size, or set off from surrounding text 
26 of the same size by symbols or other marks that call 
 
 
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1 attention to the language.
2  (11) "Consumer" means an individual who enters into a 
3 transaction primarily for personal, family, or household 
4 purposes.
5  (12) "Contract", as distinguished from "agreement", 
6 means the total legal obligation that results from the 
7 parties' agreement as determined by the Uniform Commercial 
8 Code as supplemented by any other applicable laws.
9  (13) "Creditor" includes a general creditor, a secured 
10 creditor, a lien creditor, and any representative of 
11 creditors, including an assignee for the benefit of 
12 creditors, a trustee in bankruptcy, a receiver in equity, 
13 and an executor or administrator of an insolvent debtor's 
14 or assignor's estate.
15  (14) "Defendant" includes a person in the position of 
16 defendant in a counterclaim, cross-claim, or third-party 
17 claim.
18  (15) "Delivery", with respect to an electronic 
19 document of title, means voluntary transfer of control 
20 and, with respect to an instrument, document of title, or 
21 an authoritative tangible copy of a record evidencing 
22 chattel paper, means voluntary transfer of possession.
23  (16) "Document of title" includes bill of lading, dock 
24 warrant, dock receipt, warehouse receipt or order for the 
25 delivery of goods, and also any other document which in 
26 the regular course of business or financing is treated as 
 
 
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1 adequately evidencing that the person in possession of it 
2 is entitled to receive, hold, and dispose of the document 
3 and the goods it covers. To be a document of title, a 
4 document must purport to be issued by or addressed to a 
5 bailee and purport to cover goods in the bailee's 
6 possession which are either identified or are fungible 
7 portions of an identified mass.
8  (16A) "Electronic" means relating to technology having 
9 electrical, digital, magnetic, wireless, optical, 
10 electromagnetic, or similar capabilities. 
11  (17) "Fault" means a default, breach, or wrongful act 
12 or omission.
13  (18) "Fungible goods" means:
14   (A) goods of which any unit, by nature or usage of 
15 trade, is the equivalent of any other like unit; or
16   (B) goods that by agreement are treated as 
17 equivalent.
18  (19) "Genuine" means free of forgery or 
19 counterfeiting.
20  (20) "Good faith" means honesty in fact in the conduct 
21 or transaction concerned.
22  (21) "Holder" means:
23   (A) the person in possession of a negotiable 
24 instrument that is payable either to bearer or to an 
25 identified person that is the person in possession; or
26   (B) the person in possession of a document of 
 
 
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1 title if the goods are deliverable either to bearer or 
2 to the order of the person in possession; or .
3   (C) the person in control, other than pursuant to 
4 Section 7-106(g), of a negotiable electronic document 
5 of title. 
6  (22) "Insolvency proceeding" includes an assignment 
7 for the benefit of creditors or other proceeding intended 
8 to liquidate or rehabilitate the estate of the person 
9 involved.
10  (23) "Insolvent" means:
11   (A) having generally ceased to pay debts in the 
12 ordinary course of business other than as a result of 
13 bona fide dispute;
14   (B) being unable to pay debts as they become due; 
15 or
16   (C) being insolvent within the meaning of federal 
17 bankruptcy law.
18  (24) "Money" means a medium of exchange that is 
19 currently authorized or adopted by a domestic or foreign 
20 government. The term includes a monetary unit of account 
21 established by an intergovernmental organization or by 
22 agreement between two or more countries. The term does not 
23 include an electronic record that is a medium of exchange 
24 recorded and transferable in a system that existed and 
25 operated for the medium of exchange before the medium of 
26 exchange was authorized or adopted by the government. 
 
 
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1  (25) "Organization" means a person other than an 
2 individual.
3  (26) "Party", as distinguished from "third party", 
4 means a person that has engaged in a transaction or made an 
5 agreement subject to the Uniform Commercial Code.
6  (27) "Person" means an individual, corporation, 
7 business trust, estate, trust, partnership, limited 
8 liability company, association, joint venture, government, 
9 governmental subdivision, agency, or instrumentality, 
10 public corporation, or any other legal or commercial 
11 entity. The term includes a protected series, however 
12 denominated, of an entity if the protected series is 
13 established under law other than the Uniform Commercial 
14 Code that limits, or limits if conditions specified under 
15 the law are satisfied, the ability of a creditor of the 
16 entity or of any other protected series of the entity to 
17 satisfy a claim from assets of the protected series. 
18  (28) "Present value" means the amount as of a date 
19 certain of one or more sums payable in the future, 
20 discounted to the date certain by use of either an 
21 interest rate specified by the parties if that rate is not 
22 manifestly unreasonable at the time the transaction is 
23 entered into or, if an interest rate is not so specified, a 
24 commercially reasonable rate that takes into account the 
25 facts and circumstances at the time the transaction is 
26 entered into.
 
 
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1  (29) "Purchase" means taking by sale, lease, discount, 
2 negotiation, mortgage, pledge, lien, security interest, 
3 issue or reissue, gift, or any other voluntary transaction 
4 creating an interest in property.
5  (30) "Purchaser" means a person that takes by 
6 purchase.
7  (31) "Record" means information that is inscribed on a 
8 tangible medium or that is stored in an electronic or 
9 other medium and is retrievable in perceivable form.
10  (32) "Remedy" means any remedial right to which an 
11 aggrieved party is entitled with or without resort to a 
12 tribunal.
13  (33) "Representative" means a person empowered to act 
14 for another, including an agent, an officer of a 
15 corporation or association, and a trustee, executor, or 
16 administrator of an estate.
17  (34) "Right" includes remedy.
18  (35) "Security interest" means an interest in personal 
19 property or fixtures which secures payment or performance 
20 of an obligation. "Security interest" includes any 
21 interest of a consignor and a buyer of accounts, chattel 
22 paper, a payment intangible, or a promissory note in a 
23 transaction that is subject to Article 9. "Security 
24 interest" does not include the special property interest 
25 of a buyer of goods on identification of those goods to a 
26 contract for sale under Section 2-401, but a buyer may 
 
 
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1 also acquire a "security interest" by complying with 
2 Article 9. Except as otherwise provided in Section 2-505, 
3 the right of a seller or lessor of goods under Article 2 or 
4 2A to retain or acquire possession of the goods is not a 
5 "security interest", but a seller or lessor may also 
6 acquire a "security interest" by complying with Article 9. 
7 The retention or reservation of title by a seller of goods 
8 notwithstanding shipment or delivery to the buyer under 
9 Section 2-401 is limited in effect to a reservation of a 
10 "security interest". Whether a transaction in the form of 
11 a lease creates a "security interest" is determined 
12 pursuant to Section 1-203.
13  (36) "Send", in connection with a writing, record, or 
14 notification, notice means:
15   (A) to deposit in the mail, or deliver for 
16 transmission, or transmit by any other usual means of 
17 communication, with postage or cost of transmission 
18 provided for, addressed and properly addressed and, in 
19 the case of an instrument, to an address specified 
20 thereon or otherwise agreed, or if there be none to any 
21 address reasonable under the circumstances; or
22   (B) to cause the record or notification to be 
23 received within the time it would have been received 
24 if properly sent under subparagraph (A) in any other 
25 way to cause to be received any record or notice within 
26 the time it would have arrived if properly sent.
 
 
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1  (37) "Sign" means, with present intent to authenticate 
2 or adopt a record: "Signed" includes using any symbol 
3 executed or adopted with present intention to adopt or 
4 accept a writing.
5   (A) execute or adopt a tangible symbol; or
6   (B) attach to or logically associate with the 
7 record an electronic symbol, sound, or process. 
8  "Signed", "signing", and "signature" have 
9 corresponding meanings. 
10  (38) "State" means a State of the United States, the 
11 District of Columbia, Puerto Rico, the United States 
12 Virgin Islands, or any territory or insular possession 
13 subject to the jurisdiction of the United States.
14  (39) "Surety" includes a guarantor or other secondary 
15 obligor.
16  (40) "Term" means a portion of an agreement that 
17 relates to a particular matter.
18  (41) "Unauthorized signature" means a signature made 
19 without actual, implied, or apparent authority. The term 
20 includes a forgery.
21  (42) "Warehouse receipt" means a receipt issued by a 
22 person engaged in the business of storing goods for hire.
23  (43) "Writing" includes printing, typewriting, or any 
24 other intentional reduction to tangible form. "Written" 
25 has a corresponding meaning. 
26(Source: P.A. 95-895, eff. 1-1-09.)

 
 
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1 (810 ILCS 5/1-204) (from Ch. 26, par. 1-204)
2 Sec. 1-204. Value. Except as otherwise provided in 
3Articles 3, 4, 5, and 6, and 12, a person gives value for 
4rights if the person acquires them: 
5  (1) in return for a binding commitment to extend 
6 credit or for the extension of immediately available 
7 credit, whether or not drawn upon and whether or not a 
8 charge-back is provided for in the event of difficulties 
9 in collection;
10  (2) as security for, or in total or partial 
11 satisfaction of, a preexisting claim;
12  (3) by accepting delivery under a preexisting contract 
13 for purchase; or
14  (4) in return for any consideration sufficient to 
15 support a simple contract. 
16(Source: P.A. 95-895, eff. 1-1-09.)

17 (810 ILCS 5/1-301)
18 Sec. 1-301. Territorial applicability; parties' power to 
19choose applicable law.
20 (a) Except as otherwise provided in this Section, when a 
21transaction bears a reasonable relation to this State and also 
22to another state or nation the parties may agree that the law 
23either of this State or of such other state or nation shall 
24govern their rights and duties.
 
 
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1 (b) In the absence of an agreement effective under 
2subsection (a), and except as provided in subsection (c), the 
3Uniform Commercial Code applies to transactions bearing an 
4appropriate relation to this State.
5 (c) If one of the following provisions of the Uniform 
6Commercial Code specifies the applicable law, that provision 
7governs and a contrary agreement is effective only to the 
8extent permitted by the law so specified:
9  (1) Section 2-402;
10  (2) Sections 2A-105 and 2A-106;
11  (3) Section 4-102;
12  (4) Section 4A-507;
13  (5) Section 5-116;
14  (6) Section 8-110;
15  (7) Sections 9-301 through 9-307; .
16  (8) Section 12-107. 
17(Source: P.A. 95-895, eff. 1-1-09.)

18 (810 ILCS 5/1-306)
19 Sec. 1-306. Waiver or renunciation of claim or right after 
20breach. A claim or right arising out of an alleged breach may 
21be discharged in whole or in part without consideration by 
22agreement of the aggrieved party in a signed an authenticated 
23record.
24(Source: P.A. 95-895, eff. 1-1-09.)

 
 
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1 (810 ILCS 5/2-102) (from Ch. 26, par. 2-102)
2 Sec. 2-102. Scope; certain security and other transactions 
3excluded from this Article. 
4 (1) Unless the context otherwise requires, and except as 
5provided in subsection (3), this Article applies to 
6transactions in goods and, in the case of a hybrid 
7transaction, it applies to the extent provided in subsection 
8(2).
9 (2) In a hybrid transaction:
10  (a) If the sale-of-goods aspects do not predominate, 
11 only the provisions of this Article which relate primarily 
12 to the sale-of-goods aspects of the transaction apply, and 
13 the provisions that relate primarily to the transaction as 
14 a whole do not apply.
15  (b) If the sale-of-goods aspects predominate, this 
16 Article applies to the transaction but does not preclude 
17 application in appropriate circumstances of other law to 
18 aspects of the transaction that do not relate to the sale 
19 of goods.
20 (3) This Article does not:
21  (a) apply to a transaction that, even though in the 
22 form of an unconditional contract to sell or present sale, 
23 operates only to create a security interest; or
24  (b) impair or repeal a statute regulating sales to 
25 consumers, farmers, or other specified classes of buyers. 
26 Unless the context otherwise requires, this Article 
 
 
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1applies to transactions in goods; it does not apply to any 
2transaction which although in the form of an unconditional 
3contract to sell or present sale is intended to operate only as 
4a security transaction nor does this Article impair or repeal 
5any statute regulating sales to consumers, farmers or other 
6specified classes of buyers.
7(Source: Laws 1961, p. 2101.)

8 (810 ILCS 5/2-106) (from Ch. 26, par. 2-106)
9 Sec. 2-106. Definitions: "contract"; "agreement"; 
10"contract for sale"; "sale"; "present sale"; "conforming" to 
11contract; "termination"; "cancellation"; "hybrid 
12transaction".
13 (1) In this Article unless the context otherwise requires 
14"contract" and "agreement" are limited to those relating to 
15the present or future sale of goods. "Contract for sale" 
16includes both a present sale of goods and a contract to sell 
17goods at a future time. A "sale" consists in the passing of 
18title from the seller to the buyer for a price (Section 2-401). 
19A "present sale" means a sale which is accomplished by the 
20making of the contract.
21 (2) Goods or conduct including any part of a performance 
22are "conforming" or conform to the contract when they are in 
23accordance with the obligations under the contract.
24 (3) "Termination" occurs when either party pursuant to a 
25power created by agreement or law puts an end to the contract 
 
 
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1otherwise than for its breach. On "termination" all 
2obligations which are still executory on both sides are 
3discharged but any right based on prior breach or performance 
4survives.
5 (4) "Cancellation" occurs when either party puts an end to 
6the contract for breach by the other and its effect is the same 
7as that of "termination" except that the cancelling party also 
8retains any remedy for breach of the whole contract or any 
9unperformed balance.
10 (5) "Hybrid transaction" means a single transaction 
11involving a sale of goods and:
12  (a) the provision of services;
13  (b) a lease of other goods; or
14  (c) a sale, lease, or license of property other than 
15 goods. 
16(Source: Laws 1961, 1st SS., p. 7.)

17 (810 ILCS 5/2-201) (from Ch. 26, par. 2-201)
18 Sec. 2-201. Formal requirements; statute of frauds. 
19 (1) Except as otherwise provided in this Section a 
20contract for the sale of goods for the price of $500 or more is 
21not enforceable by way of action or defense unless there is a 
22record some writing sufficient to indicate that a contract for 
23sale has been made between the parties and signed by the party 
24against whom enforcement is sought or by the party's his 
25authorized agent or broker. A record writing is not 
 
 
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1insufficient because it omits or incorrectly states a term 
2agreed upon but the contract is not enforceable under this 
3subsection paragraph beyond the quantity of goods shown in the 
4record such writing.
5 (2) Between merchants if within a reasonable time a record 
6writing in confirmation of the contract and sufficient against 
7the sender is received and the party receiving it has reason to 
8know its contents, it satisfies the requirements of subsection 
9(1) against the such party unless written notice in a record of 
10objection to its contents is given within 10 days after it is 
11received.
12 (3) A contract which does not satisfy the requirements of 
13subsection (1) but which is valid in other respects is 
14enforceable
15  (a) if the goods are to be specially manufactured for 
16 the buyer and are not suitable for sale to others in the 
17 ordinary course of the seller's business and the seller, 
18 before notice of repudiation is received and under 
19 circumstances which reasonably indicate that the goods are 
20 for the buyer, has made either a substantial beginning of 
21 their manufacture or commitments for their procurement; or
22  (b) if the party against whom enforcement is sought 
23 admits in his pleading, testimony or otherwise in court 
24 that a contract for sale was made, but the contract is not 
25 enforceable under this provision beyond the quantity of 
26 goods admitted; or
 
 
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1  (c) with respect to goods for which payment has been 
2 made and accepted or which have been received and accepted 
3 (Section 2-606).
4(Source: Laws 1961, 1st SS., p. 7.)

5 (810 ILCS 5/2-202) (from Ch. 26, par. 2-202)
6 Sec. 2-202. Final written expression: parol or extrinsic 
7evidence. Terms with respect to which the confirmatory 
8memoranda of the parties agree or which are otherwise set 
9forth in a record writing intended by the parties as a final 
10expression of their agreement with respect to such terms as 
11are included therein may not be contradicted by evidence of 
12any prior agreement or of a contemporaneous oral agreement but 
13may be explained or supplemented: 
14  (a) by course of performance, course of dealing, or 
15 usage of trade (Section 1-303); and
16  (b) by evidence of consistent additional terms unless 
17 the court finds the record writing to have been intended 
18 also as a complete and exclusive statement of the terms of 
19 the agreement.
20(Source: P.A. 95-895, eff. 1-1-09.)

21 (810 ILCS 5/2-203) (from Ch. 26, par. 2-203)
22 Sec. 2-203. Seals inoperative. The affixing of a seal to a 
23record writing evidencing a contract for sale or an offer to 
24buy or sell goods does not constitute the record writing a 
 
 
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1sealed instrument and the law with respect to sealed 
2instruments does not apply to such a contract or offer.
3(Source: Laws 1961, p. 2101.)

4 (810 ILCS 5/2-205) (from Ch. 26, par. 2-205)
5 Sec. 2-205. Firm offers. An offer by a merchant to buy or 
6sell goods in a signed record writing which by its terms gives 
7assurance that it will be held open is not revocable, for lack 
8of consideration, during the time stated or if no time is 
9stated for a reasonable time, but in no event may such period 
10of irrevocability exceed 3 months; but any such term of 
11assurance on a form supplied by the offeree must be separately 
12signed by the offeror.
13(Source: Laws 1961, 1st SS., p. 7.)

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

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

10 (810 ILCS 5/2A-103) (from Ch. 26, par. 2A-103)
11 Sec. 2A-103. Definitions and index of definitions. 
12 (1) In this Article unless the context otherwise requires: 
13  (a) "Buyer in ordinary course of business" means a 
14 person who, in good faith and without knowledge that the 
15 sale to him or her is in violation of the ownership rights 
16 or security interest or leasehold interest of a third 
17 party in the goods, buys in ordinary course from a person 
18 in the business of selling goods of that kind but does not 
19 include a pawnbroker. "Buying" may be for cash or by 
20 exchange of other property or on secured or unsecured 
21 credit and includes acquiring goods or documents of title 
22 under a pre-existing contract for sale but does not 
23 include a transfer in bulk or as security for or in total 
24 or partial satisfaction of a money debt. 
25  (b) "Cancellation" occurs when either party puts an 
 
 
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1 end to the lease contract for default by the other party. 
2  (c) "Commercial unit" means such a unit of goods as by 
3 commercial usage is a single whole for purposes of lease 
4 and division of which materially impairs its character or 
5 value on the market or in use. A commercial unit may be a 
6 single article, as a machine, or a set of articles, as a 
7 suite of furniture or a line of machinery, or a quantity, 
8 as a gross or carload, or any other unit treated in use or 
9 in the relevant market as a single whole. 
10  (d) "Conforming" goods or performance under a lease 
11 contract means goods or performance that are in accordance 
12 with the obligations under the lease contract. 
13  (e) "Consumer lease" means a lease that a lessor 
14 regularly engaged in the business of leasing or selling 
15 makes to a lessee who is an individual and who takes under 
16 the lease primarily for a personal, family, or household 
17 purpose, if the total payments to be made under the lease 
18 contract, excluding payments for options to renew or buy, 
19 do not exceed $40,000. 
20  (f) "Fault" means wrongful act, omission, breach, or 
21 default. 
22  (g) "Finance lease" means a lease with respect to 
23 which: 
24   (i) the lessor does not select, manufacture, or 
25 supply the goods; 
26   (ii) the lessor acquires the goods or the right to 
 
 
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1 possession and use of the goods in connection with the 
2 lease; and 
3   (iii) one of the following occurs: 
4    (A) the lessee receives a copy of the contract 
5 by which the lessor acquired the goods or the 
6 right to possession and use of the goods before 
7 signing the lease contract; 
8    (B) the lessee's approval of the contract by 
9 which the lessor acquired the goods or the right 
10 to possession and use of the goods is a condition 
11 to effectiveness of the lease contract; 
12    (C) the lessee, before signing the lease 
13 contract, receives an accurate and complete 
14 statement designating the promises and warranties, 
15 and any disclaimers of warranties, limitations or 
16 modifications of remedies, or liquidated damages, 
17 including those of a third party, such as the 
18 manufacturer of the goods, provided to the lessor 
19 by the person supplying the goods in connection 
20 with or as part of the contract by which the lessor 
21 acquired the goods or the right to possession and 
22 use of the goods; or 
23    (D) if the lease is not a consumer lease, the 
24 lessor, before the lessee signs the lease 
25 contract, informs the lessee in writing (a) of the 
26 identity of the person supplying the goods to the 
 
 
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1 lessor, unless the lessee has selected that person 
2 and directed the lessor to acquire the goods or 
3 the right to possession and use of the goods from 
4 that person, (b) that the lessee is entitled under 
5 this Article to the promises and warranties, 
6 including those of any third party, provided to 
7 the lessor by the person supplying the goods in 
8 connection with or as part of the contract by 
9 which the lessor acquired the goods or the right 
10 to possession and use of the goods, and (c) that 
11 the lessee may communicate with the person 
12 supplying the goods to the lessor and receive an 
13 accurate and complete statement of those promises 
14 and warranties, including any disclaimers and 
15 limitations of them or of remedies. 
16  (h) "Goods" means all things that are movable at the 
17 time of identification to the lease contract, or are 
18 fixtures (Section 2A-309), but the term does not include 
19 money, documents, instruments, accounts, chattel paper, 
20 general intangibles, or minerals or the like, including 
21 oil and gas, before extraction. The term also includes the 
22 unborn young of animals.
23  (h.1) "Hybrid lease" means a single transaction 
24 involving a lease of goods and:
25   (i) the provision of services;
26   (ii) a sale of other goods; or
 
 
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1   (iii) a sale, lease, or license of property other 
2 than goods.  
3  (i) "Installment lease contract" means a lease 
4 contract that authorizes or requires the delivery of goods 
5 in separate lots to be separately accepted, even though 
6 the lease contract contains a clause "each delivery is a 
7 separate lease" or its equivalent. 
8  (j) "Lease" means a transfer of the right to 
9 possession and use of goods for a term in return for 
10 consideration, but a sale, including a sale on approval or 
11 a sale or return, or retention or creation of a security 
12 interest is not a lease. Unless the context clearly 
13 indicates otherwise, the term includes a sublease. 
14  (k) "Lease agreement" means the bargain, with respect 
15 to the lease, of the lessor and the lessee in fact as found 
16 in their language or by implication from other 
17 circumstances including course of dealing or usage of 
18 trade or course of performance as provided in this 
19 Article. Unless the context clearly indicates otherwise, 
20 the term includes a sublease agreement. 
21  (l) "Lease contract" means the total legal obligation 
22 that results from the lease agreement as affected by this 
23 Article and any other applicable rules of law. Unless the 
24 context clearly indicates otherwise, the term includes a 
25 sublease contract. 
26  (m) "Leasehold interest" means the interest of the 
 
 
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1 lessor or the lessee under a lease contract. 
2  (n) "Lessee" means a person who acquires the right to 
3 possession and use of goods under a lease. Unless the 
4 context clearly indicates otherwise, the term includes a 
5 sublessee. 
6  (o) "Lessee in ordinary course of business" means a 
7 person who in good faith and without knowledge that the 
8 lease to him or her is in violation of the ownership rights 
9 or security interest or leasehold interest of a third 
10 party in the goods leases in ordinary course from a person 
11 in the business of selling or leasing goods of that kind 
12 but does not include a pawnbroker. "Leasing" may be for 
13 cash or by exchange of other property or on secured or 
14 unsecured credit and includes acquiring goods or documents 
15 of title under a pre-existing lease contract but does not 
16 include a transfer in bulk or as security for or in total 
17 or partial satisfaction of a money debt. 
18  (p) "Lessor" means a person who transfers the right to 
19 possession and use of goods under a lease. Unless the 
20 context clearly indicates otherwise, the term includes a 
21 sublessor. 
22  (q) "Lessor's residual interest" means the lessor's 
23 interest in the goods after expiration, termination, or 
24 cancellation of the lease contract. 
25  (r) "Lien" means a charge against or interest in goods 
26 to secure payment of a debt or performance of an 
 
 
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1 obligation, but the term does not include a security 
2 interest. 
3  (s) "Lot" means a parcel or a single article that is 
4 the subject matter of a separate lease or delivery, 
5 whether or not it is sufficient to perform the lease 
6 contract. 
7  (t) "Merchant lessee" means a lessee that is a 
8 merchant with respect to goods of the kind subject to the 
9 lease. 
10  (u) "Present value" means the amount as of a date 
11 certain of one or more sums payable in the future, 
12 discounted to the date certain. The discount is determined 
13 by the interest rate specified by the parties if the rate 
14 was not manifestly unreasonable at the time the 
15 transaction was entered into; otherwise, the discount is 
16 determined by a commercially reasonable rate that takes 
17 into account the facts and circumstances of each case at 
18 the time the transaction was entered into. 
19  (v) "Purchase" includes taking by sale, lease, 
20 mortgage, security interest, pledge, gift, or any other 
21 voluntary transaction creating an interest in goods. 
22  (w) "Sublease" means a lease of goods the right to 
23 possession and use of which was acquired by the lessor as a 
24 lessee under an existing lease. 
25  (x) "Supplier" means a person from whom a lessor buys 
26 or leases goods to be leased under a finance lease. 
 
 
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1  (y) "Supply contract" means a contract under which a 
2 lessor buys or leases goods to be leased. 
3  (z) "Termination" occurs when either party pursuant to 
4 a power created by agreement or law puts an end to the 
5 lease contract otherwise than for default.
6 (2) Other definitions applying to this Article and the 
7Sections in which they appear are:
8  "Accessions". Section 2A-310(1).
9  "Construction mortgage". Section 2A-309(1)(d).
10  "Encumbrance". Section 2A-309(1)(e).
11  "Fixtures". Section 2A-309(1)(a).
12  "Fixture filing". Section 2A-309(1)(b).
13  "Purchase money lease". Section 2A-309(1)(c).
14 (3) The following definitions in other Articles apply to 
15this Article:
16  "Account". Section 9-102(a)(2).
17  "Between merchants". Section 2-104(3).
18  "Buyer". Section 2-103(1)(a).
19  "Chattel paper". Section 9-102(a)(11).
20  "Consumer goods". Section 9-102(a)(23).
21  "Document". Section 9-102(a)(30).
22  "Entrusting". Section 2-403(3).
23  "General intangible". Section 9-102(a)(42).
24  "Good faith". Section 2-103(1)(b).
25  "Instrument". Section 9-102(a)(47).
26  "Merchant". Section 2-104(1).
 
 
SB3696- 32 -LRB103 37687 SPS 67814 b


1  "Mortgage". Section 9-102(a)(55).
2  "Pursuant to commitment". Section 9-102(a)(69).
3  "Receipt". Section 2-103(1)(c).
4  "Sale". Section 2-106(1).
5  "Sale on approval". Section 2-326.
6  "Sale or return". Section 2-326.
7  "Seller". Section 2-103(1)(d).
8 (4) In addition, Article 1 contains general definitions 
9and principles of construction and interpretation applicable 
10throughout this Article.
11(Source: P.A. 97-1034, eff. 7-1-13.)

12 (810 ILCS 5/2A-107) (from Ch. 26, par. 2A-107)
13 Sec. 2A-107. Waiver or renunciation of claim or right 
14after default. Any claim or right arising out of an alleged 
15default or breach of warranty may be discharged in whole or in 
16part without consideration by a written waiver or renunciation 
17in a signed record and delivered by the aggrieved party.
18(Source: P.A. 87-493.)

19 (810 ILCS 5/2A-201) (from Ch. 26, par. 2A-201)
20 Sec. 2A-201. Statute of frauds. 
21 (1) A lease contract is not enforceable by way of action or 
22defense unless: 
23  (a) the total payments to be made under the lease 
24 contract, excluding payments for options to renew or buy, 
 
 
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1 are less than $1,000; or 
2  (b) there is a record writing, signed by the party 
3 against whom enforcement is sought or by that party's 
4 authorized agent, sufficient to indicate that a lease 
5 contract has been made between the parties and to describe 
6 the goods leased and the lease term.
7 (2) Any description of leased goods or of the lease term is 
8sufficient and satisfies subsection (1)(b), whether or not it 
9is specific, if it reasonably identifies what is described.
10 (3) A record writing is not insufficient because it omits 
11or incorrectly states a term agreed upon, but the lease 
12contract is not enforceable under subsection (1)(b) beyond the 
13lease term and the quantity of goods shown in the record 
14writing.
15 (4) A lease contract that does not satisfy the 
16requirements of subsection (1), but which is valid in other 
17respects, is enforceable: 
18  (a) if the goods are to be specially manufactured or 
19 obtained for the lessee and are not suitable for lease or 
20 sale to others in the ordinary course of the lessor's 
21 business, and the lessor, before notice of repudiation is 
22 received and under circumstances that reasonably indicate 
23 that the goods are for the lessee, has made either a 
24 substantial beginning of their manufacture or commitments 
25 for their procurement; 
26  (b) if the party against whom enforcement is sought 
 
 
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1 admits in that party's pleading, testimony, or otherwise 
2 in court that a lease contract was made, but the lease 
3 contract is not enforceable under this provision beyond 
4 the quantity of goods admitted; or 
5  (c) with respect to goods that have been received and 
6 accepted by the lessee.
7 (5) The lease term under a lease contract referred to in 
8subsection (4) is: 
9  (a) if there is a record writing signed by the party 
10 against whom enforcement is sought or by that party's 
11 authorized agent specifying the lease term, the term so 
12 specified; 
13  (b) if the party against whom enforcement is sought 
14 admits in that party's pleading, testimony, or otherwise 
15 in court a lease term, the term so admitted; or 
16  (c) a reasonable lease term.
17(Source: P.A. 87-493.)

18 (810 ILCS 5/2A-202) (from Ch. 26, par. 2A-202)
19 Sec. 2A-202. Final written expression; parol or extrinsic 
20evidence. Terms with respect to which the confirmatory 
21memoranda of the parties agree or which are otherwise set 
22forth in a record writing intended by the parties as a final 
23expression of their agreement with respect to such terms as 
24are included therein may not be contradicted by evidence of 
25any prior agreement or of a contemporaneous oral agreement but 
 
 
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1may be explained or supplemented: 
2  (a) by course of dealing or usage of trade or by course 
3 of performance; and 
4  (b) by evidence of consistent additional terms unless 
5 the court finds the record writing to have been intended 
6 also as a complete and exclusive statement of the terms of 
7 the agreement.
8(Source: P.A. 87-493.)

9 (810 ILCS 5/2A-203) (from Ch. 26, par. 2A-203)
10 Sec. 2A-203. Seals inoperative. The affixing of a seal to 
11a record writing evidencing a lease contract or an offer to 
12enter into a lease contract does not render the record writing 
13a sealed instrument and the law with respect to sealed 
14instruments does not apply to the lease contract or offer.
15(Source: P.A. 87-493.)

16 (810 ILCS 5/2A-205) (from Ch. 26, par. 2A-205)
17 Sec. 2A-205. Firm offers. An offer by a merchant to lease 
18goods to or from another person in a signed record writing that 
19by its terms gives assurance it will be held open is not 
20revocable, for lack of consideration, during the time stated 
21or, if no time is stated, for a reasonable time, but in no 
22event may the period of irrevocability exceed 3 months. Any 
23such term of assurance on a form supplied by the offeree must 
24be separately signed by the offeror.
 
 
SB3696- 36 -LRB103 37687 SPS 67814 b


1(Source: P.A. 87-493.)

2 (810 ILCS 5/2A-208) (from Ch. 26, par. 2A-208)
3 Sec. 2A-208. Modification, rescission, and waiver. 
4 (1) An agreement modifying a lease contract needs no 
5consideration to be binding.
6 (2) A signed lease agreement that excludes modification or 
7rescission except by a signed record writing may not be 
8otherwise modified or rescinded, but, except as between 
9merchants, such a requirement on a form supplied by a merchant 
10must be separately signed by the other party.
11 (3) Although an attempt at modification or rescission does 
12not satisfy the requirements of subsection (2), it may operate 
13as a waiver.
14 (4) A party who has made a waiver affecting an executory 
15portion of a lease contract may retract the waiver by 
16reasonable notification received by the other party that 
17strict performance will be required of any term waived, unless 
18the retraction would be unjust in view of a material change of 
19position in reliance on the waiver.
20(Source: P.A. 87-493.)

21 (810 ILCS 5/3-104) (from Ch. 26, par. 3-104)
22 Sec. 3-104. Negotiable instrument. 
23 (a) Except as provided in subsections (c) and (d), 
24"negotiable instrument" means an unconditional promise or 
 
 
SB3696- 37 -LRB103 37687 SPS 67814 b


1order to pay a fixed amount of money, with or without interest 
2or other charges described in the promise or order, if it: 
3  (1) is payable to bearer or to order at the time it is 
4 issued or first comes into possession of a holder; 
5  (2) is payable on demand or at a definite time; and 
6  (3) does not state any other undertaking or 
7 instruction by the person promising or ordering payment to 
8 do any act in addition to the payment of money, but the 
9 promise or order may contain (i) an undertaking or power 
10 to give, maintain, or protect collateral to secure 
11 payment, (ii) an authorization or power to the holder to 
12 confess judgment or realize on or dispose of collateral, 
13 or (iii) a waiver of the benefit of any law intended for 
14 the advantage or protection of any obligor, (iv) a term 
15 that specifies the law that governs the promise or order, 
16 or (v) an undertaking to resolve in a specified forum a 
17 dispute concerning the promise or order.
18 (b) "Instrument" means a negotiable instrument.
19 (c) An order that meets all of the requirements of 
20subsection (a), except paragraph (1), and otherwise falls 
21within the definition of "check" in subsection (f) is a 
22negotiable instrument and a check.
23 (d) A promise or order other than a check is not an 
24instrument if, at the time it is issued or first comes into 
25possession of a holder, it contains a conspicuous statement, 
26however expressed, to the effect that the promise or order is 
 
 
SB3696- 38 -LRB103 37687 SPS 67814 b


1not negotiable or is not an instrument governed by this 
2Article.
3 (e) An instrument is a "note" if it is a promise and is a 
4"draft" if it is an order. If an instrument falls within the 
5definition of both "note" and "draft", a person entitled to 
6enforce the instrument may treat it as either.
7 (f) "Check" means (i) a draft, other than a documentary 
8draft, payable on demand and drawn on a bank or (ii) a 
9cashier's check or teller's check. An instrument may be a 
10check even though it is described on its face by another term, 
11such as "money order".
12 (g) "Cashier's check" means a draft with respect to which 
13the drawer and drawee are the same bank or branches of the same 
14bank.
15 (h) "Teller's check" means a draft drawn by a bank (i) on 
16another bank, or (ii) payable at or through a bank.
17 (i) "Traveler's check" means an instrument that (i) is 
18payable on demand, (ii) is drawn on or payable at or through a 
19bank, (iii) is designated by the term "traveler's check" or by 
20a substantially similar term, and (iv) requires, as a 
21condition to payment, a countersignature by a person whose 
22specimen signature appears on the instrument.
23 (j) "Certificate of deposit" means an instrument 
24containing an acknowledgment by a bank that a sum of money has 
25been received by the bank and a promise by the bank to repay 
26the sum of money. A certificate of deposit is a note of the 
 
 
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1bank.
2(Source: P.A. 87-582; 87-1135.)

3 (810 ILCS 5/3-105) (from Ch. 26, par. 3-105)
4 Sec. 3-105. Issue of instrument. 
5 (a) "Issue" means: 
6  (1) the first delivery of an instrument by the maker 
7 or drawer, whether to a holder or nonholder, for the 
8 purpose of giving rights on the instrument to any person; 
9 or
10  (2) if agreed by the payee, the first transmission by 
11 the drawer to the payee of an image of an item and 
12 information derived from the item that enables the 
13 depositary bank to collect the item by transferring or 
14 presenting under federal law an electronic check.
15 (b) An unissued instrument, or an unissued incomplete 
16instrument that is completed, is binding on the maker or 
17drawer, but nonissuance is a defense. An instrument that is 
18conditionally issued or is issued for a special purpose is 
19binding on the maker or drawer, but failure of the condition or 
20special purpose to be fulfilled is a defense.
21 (c) "Issuer" applies to issued and unissued instruments 
22and means a maker or drawer of an instrument.
23(Source: P.A. 87-582; 87-1135.)

24 (810 ILCS 5/3-401) (from Ch. 26, par. 3-401)
 
 
SB3696- 40 -LRB103 37687 SPS 67814 b


1 Sec. 3-401. Signature necessary for liability on 
2instrument. (a) A person is not liable on an instrument unless 
3(i) the person signed the instrument, or (ii) the person is 
4represented by an agent or representative who signed the 
5instrument and the signature is binding on the represented 
6person under Section 3-402.
7 (b) A signature may be made (i) manually or by means of a 
8device or machine, and (ii) by the use of any name, including 
9any trade or assumed name, or by a word, mark, or symbol 
10executed or adopted by a person with present intention to 
11authenticate a writing.
12(Source: P.A. 87-582; 87-1135.)

13 (810 ILCS 5/3-604) (from Ch. 26, par. 3-604)
14 Sec. 3-604. Discharge by cancellation or renunciation. 
15 (a) A person entitled to enforce an instrument, with or 
16without consideration, may discharge the obligation of a party 
17to pay the instrument (i) by an intentional voluntary act, 
18such as surrender of the instrument to the party, destruction, 
19mutilation, or cancellation of the instrument, cancellation or 
20striking out of the party's signature, or the addition of 
21words to the instrument indicating discharge, or (ii) by 
22agreeing not to sue or otherwise renouncing rights against the 
23party by a signed record writing. The obligation of a party to 
24pay a check is not discharged solely by destruction of the 
25check in connection with a process in which information is 
 
 
SB3696- 41 -LRB103 37687 SPS 67814 b


1extracted from the check and an image of the check is made and, 
2subsequently, the information and image are transmitted for 
3payment. 
4 (b) Cancellation or striking out of an indorsement 
5pursuant to subsection (a) does not affect the status and 
6rights of a party derived from the indorsement.
7(Source: P.A. 87-582; 87-1135.)

8 (810 ILCS 5/4A-103) (from Ch. 26, par. 4A-103)
9 Sec. 4A-103. Payment order; definitions. 
10 (a) In this Article: 
11  (1) "Payment order" means an instruction of a sender 
12 to a receiving bank, transmitted orally or in a record, 
13 electronically, or in writing, to pay, or to cause another 
14 bank to pay, a fixed or determinable amount of money to a 
15 beneficiary if: 
16   (i) the instruction does not state a condition to 
17 payment to the beneficiary other than time of payment, 
18   (ii) the receiving bank is to be reimbursed by 
19 debiting an account of, or otherwise receiving payment 
20 from, the sender, and 
21   (iii) the instruction is transmitted by the sender 
22 directly to the receiving bank or to an agent, funds 
23 transfer system, or communication system for 
24 transmittal to the receiving bank. 
25  (2) "Beneficiary" means the person to be paid by the 
 
 
SB3696- 42 -LRB103 37687 SPS 67814 b


1 beneficiary's bank. 
2  (3) "Beneficiary's bank" means the bank identified in 
3 a payment order in which an account of the beneficiary is 
4 to be credited pursuant to the order or which otherwise is 
5 to make payment to the beneficiary if the order does not 
6 provide for payment to an account. 
7  (4) "Receiving bank" means the bank to which the 
8 sender's instruction is addressed. 
9  (5) "Sender" means the person giving the instruction 
10 to the receiving bank.
11 (b) If an instruction complying with subsection (a)(1) is 
12to make more than one payment to a beneficiary, the 
13instruction is a separate payment order with respect to each 
14payment.
15 (c) A payment order is issued when it is sent to the 
16receiving bank.
17(Source: P.A. 86-1291.)

18 (810 ILCS 5/4A-201) (from Ch. 26, par. 4A-201)
19 Sec. 4A-201. Security procedure. "Security procedure" 
20means a procedure established by agreement of a customer and a 
21receiving bank for the purpose of (i) verifying that a payment 
22order or communication amending or cancelling a payment order 
23is that of the customer, or (ii) detecting error in the 
24transmission or the content of the payment order or 
25communication. A security procedure may impose an obligation 
 
 
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1on the receiving bank or the customer and may require the use 
2of algorithms or other codes, identifying words, or numbers, 
3symbols, sounds, biometrics, encryption, callback procedures, 
4or similar security devices. Comparison of a signature on a 
5payment order or communication with an authorized specimen 
6signature of the customer or requiring a payment order to be 
7sent from a known email address, IP address, or telephone 
8number is not by itself a security procedure.
9(Source: P.A. 86-1291.)

10 (810 ILCS 5/4A-202) (from Ch. 26, par. 4A-202)
11 Sec. 4A-202. Authorized and verified payment orders. 
12 (a) A payment order received by the receiving bank is the 
13authorized order of the person identified as sender if that 
14person authorized the order or is otherwise bound by it under 
15the law of agency.
16 (b) If a bank and its customer have agreed that the 
17authenticity of payment orders issued to the bank in the name 
18of the customer as sender will be verified pursuant to a 
19security procedure, a payment order received by the receiving 
20bank is effective as the order of the customer, whether or not 
21authorized, if (i) the security procedure is a commercially 
22reasonable method of providing security against unauthorized 
23payment orders, and (ii) the bank proves that it accepted the 
24payment order in good faith and in compliance with the bank's 
25obligations under the security procedure and any written 
 
 
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1agreement or instruction of the customer, evidenced by a 
2record, restricting acceptance of payment orders issued in the 
3name of the customer. The bank is not required to follow an 
4instruction that violates an a written agreement with the 
5customer, evidenced by a record, or notice of which is not 
6received at a time and in a manner affording the bank a 
7reasonable opportunity to act on it before the payment order 
8is accepted.
9 (c) Commercial reasonableness of a security procedure is a 
10question of law to be determined by considering the wishes of 
11the customer expressed to the bank, the circumstances of the 
12customer known to the bank, including the size, type, and 
13frequency of payment orders normally issued by the customer to 
14the bank, alternative security procedures offered to the 
15customer, and security procedures in general use by customers 
16and receiving banks similarly situated. A security procedure 
17is deemed to be commercially reasonable if (i) the security 
18procedure was chosen by the customer after the bank offered, 
19and the customer refused, a security procedure that was 
20commercially reasonable for that customer, and (ii) the 
21customer expressly agreed in a record writing to be bound by 
22any payment order, whether or not authorized, issued in its 
23name and accepted by the bank in compliance with the bank's 
24obligations under the security procedure chosen by the 
25customer.
26 (d) The term "sender" in this Article includes the 
 
 
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1customer in whose name a payment order is issued if the order 
2is the authorized order of the customer under subsection (a), 
3or it is effective as the order of the customer under 
4subsection (b).
5 (e) This Section applies to amendments and cancellations 
6of payment orders to the same extent it applies to payment 
7orders.
8 (f) Except as provided in this Section and in Section 
94A-203(a)(1), rights and obligations arising under this 
10Section or Section 4A-203 may not be varied by agreement.
11(Source: P.A. 86-1291.)

12 (810 ILCS 5/4A-203) (from Ch. 26, par. 4A-203)
13 Sec. 4A-203. Unenforceability of certain verified payment 
14orders. 
15 (a) If an accepted payment order is not, under Section 
164A-202(a), an authorized order of a customer identified as 
17sender, but is effective as an order of the customer pursuant 
18to Section 4A-202(b), the following rules apply: 
19  (1) By express written agreement evidenced by a 
20 record, the receiving bank may limit the extent to which 
21 it is entitled to enforce or retain payment of the payment 
22 order. 
23  (2) The receiving bank is not entitled to enforce or 
24 retain payment of the payment order if the customer proves 
25 that the order was not caused, directly or indirectly, by 
 
 
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1 a person (i) entrusted at any time with duties to act for 
2 the customer with respect to payment orders or the 
3 security procedure, or (ii) who obtained access to 
4 transmitting facilities of the customer or who obtained, 
5 from a source controlled by the customer and without 
6 authority of the receiving bank, information facilitating 
7 breach of the security procedure, regardless of how the 
8 information was obtained or whether the customer was at 
9 fault. Information includes any access device, computer 
10 software, or the like.
11 (b) This Section applies to amendments of payment orders 
12to the same extent it applies to payment orders.
13(Source: P.A. 86-1291.)

14 (810 ILCS 5/4A-207) (from Ch. 26, par. 4A-207)
15 Sec. 4A-207. Misdescription of beneficiary. 
16 (a) Subject to subsection (b), if, in a payment order 
17received by the beneficiary's bank, the name, bank account 
18number, or other identification of the beneficiary refers to a 
19nonexistent or unidentifiable person or account, no person has 
20rights as a beneficiary of the order and acceptance of the 
21order cannot occur.
22 (b) If a payment order received by the beneficiary's bank 
23identifies the beneficiary both by name and by an identifying 
24or bank account number and the name and number identify 
25different persons, the following rules apply: 
 
 
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1  (1) Except as otherwise provided in subsection (c), if 
2 the beneficiary's bank does not know that the name and 
3 number refer to different persons, it may rely on the 
4 number as the proper identification of the beneficiary of 
5 the order. The beneficiary's bank need not determine 
6 whether the name and number refer to the same person. 
7  (2) If the beneficiary's bank pays the person 
8 identified by name or knows that the name and number 
9 identify different persons, no person has rights as 
10 beneficiary except the person paid by the beneficiary's 
11 bank if that person was entitled to receive payment from 
12 the originator of the funds transfer. If no person has 
13 rights as beneficiary, acceptance of the order cannot 
14 occur.
15 (c) If (i) a payment order described in subsection (b) is 
16accepted, (ii) the originator's payment order described the 
17beneficiary inconsistently by name and number, and (iii) the 
18beneficiary's bank pays the person identified by number as 
19permitted by subsection (b)(1), the following rules apply: 
20  (1) If the originator is a bank, the originator is 
21 obligated to pay its order. 
22  (2) If the originator is not a bank and proves that the 
23 person identified by number was not entitled to receive 
24 payment from the originator, the originator is not obliged 
25 to pay its order unless the originator's bank proves that 
26 the originator, before acceptance of the originator's 
 
 
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1 order, had notice that payment of a payment order issued 
2 by the originator might be made by the beneficiary's bank 
3 on the basis of an identifying or bank account number 
4 event if it identifies a person different from the named 
5 beneficiary. Proof of notice may be made by any admissible 
6 evidence. The originator's bank satisfies the burden of as 
7 proof if it proves that the originator, before the payment 
8 order was accepted, signed a record writing stating the 
9 information to which the notice relates.
10 (d) In a case governed by subsection (b)(1), if the 
11beneficiary's bank rightfully pays the person identified by 
12number and that person was not entitled to receive payment 
13from the originator, the amount paid may be recovered from 
14that person to the extent allowed by the law governing mistake 
15and restitution as follows: 
16  (1) If the originator is obligated to pay its payment 
17 order as stated in subsection (c), the originator has the 
18 right to recover. 
19  (2) If the originator is not a bank and is not 
20 obligated to pay its payment order, the originator's bank 
21 has the right to recover.
22(Source: P.A. 86-1291.)

23 (810 ILCS 5/4A-208) (from Ch. 26, par. 4A-208)
24 Sec. 4A-208. Misdescription of intermediary bank or 
25beneficiary's bank. 
 
 
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1 (a) This subsection applies to a payment order identifying 
2an intermediary bank or the beneficiary's bank only by an 
3identifying number. 
4  (1) The receiving bank may rely on the number as the 
5 proper identification of the intermediary or beneficiary's 
6 bank and need not determine whether the number identifies 
7 a bank. 
8  (2) The sender is obliged to compensate the receiving 
9 bank for any loss and expenses incurred by the receiving 
10 bank as a result of its reliance on the number in executing 
11 or attempting to execute the order.
12 (b) This subsection applies to a payment order identifying 
13an intermediary bank or the beneficiary's bank both by name 
14and an identifying number if the name and number identify 
15different persons. 
16  (1) If the sender is a bank, the receiving bank may 
17 rely on the number as the proper identification of the 
18 intermediary or beneficiary's bank if the receiving bank, 
19 when it executes the sender's order, does not know that 
20 the name and number identify different persons. The 
21 receiving bank need not determine whether the name and 
22 number refer to the same person or whether the number 
23 refers to a bank. The sender is obliged to compensate the 
24 receiving bank for any loss and expenses incurred by the 
25 receiving bank as a result of its reliance on the number in 
26 executing or attempting to execute the order. 
 
 
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1  (2) If the sender is not a bank and the receiving bank 
2 proves that the sender, before the payment order was 
3 accepted, had notice that the receiving bank might rely on 
4 the number as the proper identification of the 
5 intermediary or beneficiary's bank even if it identifies a 
6 person different from the bank identified by name, the 
7 rights and obligations of the sender and the receiving 
8 bank are governed by subsection (b)(1), as though the 
9 sender were a bank. Proof of notice may be made by any 
10 admissible evidence. The receiving bank satisfies the 
11 burden of proof if it proves that the sender, before the 
12 payment order was accepted, signed a record writing 
13 stating the information to which the notice relates. 
14  (3) Regardless of whether the sender is a bank, the 
15 receiving bank may rely on the name as the proper 
16 identification of the intermediary or beneficiary's bank 
17 if the receiving bank, at the time it executes the 
18 sender's order, does not know that the name and number 
19 identify different persons. The receiving bank need not 
20 determine whether the name and number refer to the same 
21 person. 
22  (4) If the receiving bank knows that the name and 
23 number identify different persons, reliance on either the 
24 name or the number in executing the sender's payment order 
25 is a breach of the obligation stated in Section 
26 4A-302(a)(1).
 
 
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1(Source: P.A. 86-1291.)

2 (810 ILCS 5/4A-210) (from Ch. 26, par. 4A-210)
3 Sec. 4A-210. Rejection of payment order. 
4 (a) A payment order is rejected by the receiving bank by a 
5notice of rejection transmitted to the sender orally, 
6electronically, or in a record writing. A notice of rejection 
7need not use any particular words and is sufficient if it 
8indicates that the receiving bank is rejecting the order or 
9will not execute or pay the order. Rejection is effective when 
10the notice is given if transmission is by a means that is 
11reasonable in the circumstances. If notice of rejection is 
12given by a means that is not reasonable, rejection is 
13effective when the notice is received. If an agreement of the 
14sender and receiving bank establishes the means to be used to 
15reject a payment order, (i) any means complying with the 
16agreement is reasonable and (ii) any means not complying is 
17not reasonable unless no significant delay in receipt of the 
18notice resulted from the use of the noncomplying means.
19 (b) This subsection applies if a receiving bank other than 
20the beneficiary's bank fails to execute a payment order 
21despite the existence on the execution date of a withdrawable 
22credit balance in an authorized account of the sender 
23sufficient to cover the order. If the sender does not receive 
24notice of rejection of the order on the execution date and the 
25authorized account of the sender does not bear interest, the 
 
 
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1bank is obliged to pay interest to the sender on the amount of 
2the order for the number of days elapsing after the execution 
3date to the earlier of the day the order is canceled pursuant 
4to Section 4A-211(d) or the day the sender receives notice or 
5learns that the order was not executed, counting the final day 
6of the period as an elapsed day. If the withdrawable credit 
7balance during that period falls below the amount of the 
8order, the amount of interest is reduced accordingly.
9 (c) If a receiving bank suspends payments, all unaccepted 
10payment orders issued to it are deemed rejected at the time the 
11bank suspends payments.
12 (d) Acceptance of a payment order precludes a later 
13rejection of the order. Rejection of a payment order precludes 
14a later acceptance of the order.
15(Source: P.A. 86-1291.)

16 (810 ILCS 5/4A-211) (from Ch. 26, par. 4A-211)
17 Sec. 4A-211. Cancellation and amendment of payment order. 
18 (a) A communication of the sender of a payment order 
19cancelling or amending the order may be transmitted to the 
20receiving bank orally, electronically, or in a record writing. 
21If a security procedure is in effect between the sender and the 
22receiving bank, the communication is not effective to cancel 
23or amend the order unless the communication is verified 
24pursuant to the security procedure or the bank agrees to the 
25cancellation or amendment.
 
 
SB3696- 53 -LRB103 37687 SPS 67814 b


1 (b) Subject to subsection (a), a communication by the 
2sender cancelling or amending a payment order is effective to 
3cancel or amend the order if notice of the communication is 
4received at a time and in a manner affording the receiving bank 
5a reasonable opportunity to act on the communication before 
6the bank accepts the payment order.
7 (c) After a payment order has been accepted, cancellation 
8or amendment of the order is not effective unless the 
9receiving bank agrees or a funds transfer system rule allows 
10cancellation or amendment without agreement of the bank. 
11  (1) With respect to a payment order accepted by a 
12 receiving bank other than the beneficiary's bank, 
13 cancellation or amendment is not effective unless a 
14 conforming cancellation or amendment of the payment order 
15 issued by the receiving bank is also made. 
16  (2) With respect to a payment order accepted by the 
17 beneficiary's bank, cancellation or amendment is not 
18 effective unless the order was issued in execution of an 
19 unauthorized payment order, or because of a mistake by a 
20 sender in the funds transfer which resulted in the 
21 issuance of a payment order (i) that is a duplicate of a 
22 payment order previously issued by the sender, (ii) that 
23 orders payment to a beneficiary not entitled to receive 
24 payment from the originator, or (iii) that orders payment 
25 in an amount greater than the amount the beneficiary was 
26 entitled to receive from the originator. If the payment 
 
 
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1 order is canceled or amended, the beneficiary's bank is 
2 entitled to recover from the beneficiary any amount paid 
3 to the beneficiary to the extent allowed by the law 
4 governing mistake and restitution.
5 (d) An unaccepted payment order is canceled by operation 
6of law at the close of the fifth funds transfer business day of 
7the receiving bank after the execution date or payment date of 
8the order.
9 (e) A canceled payment order cannot be accepted. If an 
10accepted payment order is canceled, the acceptance is 
11nullified and no person has any right or obligation based on 
12the acceptance. Amendment of a payment order is deemed to be 
13cancellation of the original order at the time of amendment 
14and issue of a new payment order in the amended form at the 
15same time.
16 (f) Unless otherwise provided in an agreement of the 
17parties or in a funds transfer system rule, if the receiving 
18bank, after accepting a payment order, agrees to cancellation 
19or amendment of the order by the sender or is bound by a funds 
20transfer system rule allowing cancellation or amendment 
21without the bank's agreement, the sender, whether or not 
22cancellation or amendment is effective, is liable to the bank 
23for any loss and expenses, including reasonable attorney's 
24fees, incurred by the bank as a result of the cancellation or 
25amendment or attempted cancellation or amendment.
26 (g) A payment order is not revoked by the death or legal 
 
 
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1incapacity of the sender unless the receiving bank knows of 
2the death or of an adjudication of incapacity by a court of 
3competent jurisdiction and has reasonable opportunity to act 
4before acceptance of the order.
5 (h) A funds transfer system rule is not effective to the 
6extent it conflicts with subsection (c)(2).
7(Source: P.A. 97-813, eff. 7-13-12.)

8 (810 ILCS 5/4A-305) (from Ch. 26, par. 4A-305)
9 Sec. 4A-305. Liability for late or improper execution or 
10failure to execute payment order. 
11 (a) If a funds transfer is completed but execution of a 
12payment order by the receiving bank in breach of Section 
134A-302 results in delay in payment to the beneficiary, the 
14bank is obliged to pay interest to either the originator or the 
15beneficiary of the funds transfer for the period of delay 
16caused by the improper execution. Except as provided in 
17subsection (c), additional damages are not recoverable.
18 (b) If execution of a payment order by a receiving bank in 
19breach of Section 4A-302 results in (i) noncompletion of the 
20funds transfer, (ii) failure to use an intermediary bank 
21designated by the originator, or (iii) issuance of a payment 
22order that does not comply with the terms of the payment order 
23of the originator, the bank is liable to the originator for its 
24expenses in the funds transfer and for incidental expenses and 
25interest losses, to the extent not covered by subsection (a), 
 
 
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1resulting from the improper execution. Except as provided in 
2subsection (c), additional damages are not recoverable.
3 (c) In addition to the amounts payable under subsections 
4(a) and (b), damages, including consequential damages, are 
5recoverable to the extent provided in an express written 
6agreement of the receiving bank, evidenced by a record.
7 (d) If a receiving bank fails to execute a payment order it 
8was obliged by express agreement to execute, the receiving 
9bank is liable to the sender for its expenses in the 
10transaction and for incidental expenses and interest losses 
11resulting from the failure to execute. Additional damages, 
12including consequential damages, are recoverable to the extent 
13provided in an express written agreement of the receiving 
14bank, evidenced by a record, but are not otherwise 
15recoverable.
16 (e) Reasonable attorney's fees are recoverable if demand 
17for compensation under subsection (a) or (b) is made and 
18refused before an action is brought on the claim. If a claim is 
19made for breach of an agreement under subsection (d) and the 
20agreement does not provide for damages, reasonable attorney's 
21fees are recoverable if demand for compensation under 
22subsection (d) is made and refused before an action is brought 
23on the claim.
24 (f) Except as stated in this Section, the liability of a 
25receiving bank under subsections (a) and (b) may not be varied 
26by agreement.
 
 
SB3696- 57 -LRB103 37687 SPS 67814 b


1(Source: P.A. 86-1291.)

2 (810 ILCS 5/5-104) (from Ch. 26, par. 5-104)
3 Sec. 5-104. Formal requirements.  A letter of credit, 
4confirmation, advice, transfer, amendment, or cancellation may 
5be issued in any form that is a signed record and is 
6authenticated (i) by a signature or (ii) in accordance with 
7the agreement of the parties or the standard practice referred 
8to in Section 5-108(e).
9(Source: P.A. 89-534, eff. 1-1-97.)

10 (810 ILCS 5/5-116) (from Ch. 26, par. 5-116)
11 Sec. 5-116. Choice of law and forum. 
12 (a) The liability of an issuer, nominated person, or 
13adviser for action or omission is governed by the law of the 
14jurisdiction chosen by an agreement in the form of a record 
15signed or otherwise authenticated by the affected parties in 
16the manner provided in Section 5-104 or by a provision in the 
17person's letter of credit, confirmation, or other undertaking. 
18The jurisdiction whose law is chosen need not bear any 
19relation to the transaction.
20 (b) Unless subsection (a) applies, the liability of an 
21issuer, nominated person, or adviser for action or omission is 
22governed by the law of the jurisdiction in which the person is 
23located. The person is considered to be located at the address 
24indicated in the person's undertaking. If more than one 
 
 
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1address is indicated, the person is considered to be located 
2at the address from which the person's undertaking was issued. 
3 (c) For the purpose of jurisdiction, choice of law, and 
4recognition of interbranch letters of credit, but not 
5enforcement of a judgment, all branches of a bank are 
6considered separate juridical entities and a bank is 
7considered to be located at the place where its relevant 
8branch is considered to be located under this subsection (d).
9 (d) A branch of a bank is considered to be located at the 
10address indicated in the branch's undertaking. If more than 
11one address is indicated, the branch is considered to be 
12located at the address from which the undertaking was issued. 
13 (e) (c) Except as otherwise provided in this subsection, 
14the liability of an issuer, nominated person, or adviser is 
15governed by any rules of custom or practice, such as the 
16Uniform Customs and Practice for Documentary Credits, to which 
17the letter of credit, confirmation, or other undertaking is 
18expressly made subject. If (i) this Article would govern the 
19liability of an issuer, nominated person, or adviser under 
20subsection (a) or (b), (ii) the relevant undertaking 
21incorporates rules of custom or practice, and (iii) there is 
22conflict between this Article and those rules as applied to 
23that undertaking, those rules govern except to the extent of 
24any conflict with the nonvariable provisions specified in 
25Section 5-103(c).
26 (f) (d) If there is conflict between this Article and 
 
 
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1Article 3, 4, 4A, or 9, this Article governs.
2 (g) (e) The forum for settling disputes arising out of an 
3undertaking within this Article may be chosen in the manner 
4and with the binding effect that governing law may be chosen in 
5accordance with subsection (a).
6(Source: P.A. 89-534, eff. 1-1-97.)

7 (810 ILCS 5/7-102) (from Ch. 26, par. 7-102)
8 Sec. 7-102. Definitions and index of definitions. 
9 (a) In this Article, unless the context otherwise 
10requires:
11  (1) "Bailee" means a person that by a warehouse 
12 receipt, bill of lading, or other document of title 
13 acknowledges possession of goods and contracts to deliver 
14 them.
15  (2) "Carrier" means a person that issues a bill of 
16 lading.
17  (3) "Consignee" means a person named in a bill of 
18 lading to which or to whose order the bill promises 
19 delivery.
20  (4) "Consignor" means a person named in a bill of 
21 lading as the person from which the goods have been 
22 received for shipment.
23  (5) "Delivery order" means a record that contains an 
24 order to deliver goods directed to a warehouse, carrier, 
25 or other person that in the ordinary course of business 
 
 
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1 issues warehouse receipts or bills of lading.
2  (6) "Good faith" means honesty in fact and the 
3 observance of reasonable commercial standards of fair 
4 dealing.
5  (7) "Goods" means all things that are treated as 
6 movable for the purposes of a contract for storage or 
7 transportation.
8  (8) "Issuer" means a bailee that issues a document of 
9 title or, in the case of an unaccepted delivery order, the 
10 person that orders the possessor of goods to deliver. The 
11 term includes a person for which an agent or employee 
12 purports to act in issuing a document if the agent or 
13 employee has real or apparent authority to issue 
14 documents, even if the issuer did not receive any goods, 
15 the goods were misdescribed, or in any other respect the 
16 agent or employee violated the issuer's instructions.
17  (9) "Person entitled under the document" means the 
18 holder, in the case of a negotiable document of title, or 
19 the person to which delivery of the goods is to be made by 
20 the terms of, or pursuant to instructions in a record 
21 under, a nonnegotiable document of title.
22  (10) (Reserved). "Record" means information that is 
23 inscribed on a tangible medium or that is stored in an 
24 electronic or other medium and is retrievable in 
25 perceivable form.
26  (11) (Reserved). "Sign" means, with present intent to 
 
 
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1 authenticate or adopt a record:
2   (A) to execute or adopt a tangible symbol; or
3   (B) to attach to or logically associate with the 
4 record an electronic sound, symbol, or process.
5  (12) "Shipper" means a person that enters into a 
6 contract of transportation with a carrier.
7  (13) "Warehouse" means a person engaged in the 
8 business of storing goods for hire. The owner of a 
9 self-service storage facility as defined in the 
10 Self-Service Storage Facility Act is not a warehouse for 
11 the purposes of this Article.
12 (b) Definitions in other Articles applying to this Article 
13and the Sections in which they appear are:
14  (1) "Contract for sale", Section 2-106.
15  (2) "Lessee in the ordinary course of business", 
16 Section 2A-103.
17  (3) "Receipt" of goods, Section 2-103.
18 (c) In addition, Article 1 contains general definitions 
19and principles of construction and interpretation applicable 
20throughout this Article. 
21(Source: P.A. 95-895, eff. 1-1-09.)

22 (810 ILCS 5/7-106)
23 Sec. 7-106. Control of electronic document of title.
24 (a) A person has control of an electronic document of 
25title if a system employed for evidencing the transfer of 
 
 
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1interests in the electronic document reliably establishes that 
2person as the person to which the electronic document was 
3issued or transferred.
4 (b) A system satisfies subsection (a), and a person has is 
5deemed to have control of an electronic document of title, if 
6the document is created, stored, and transferred assigned in 
7such a manner that:
8  (1) a single authoritative copy of the document exists 
9 which is unique, identifiable, and, except as otherwise 
10 provided in paragraphs (4), (5), and (6), unalterable;
11  (2) the authoritative copy identifies the person 
12 asserting control as:
13   (A) the person to which the document was issued; 
14 or
15   (B) if the authoritative copy indicates that the 
16 document has been transferred, the person to which the 
17 document was most recently transferred;
18  (3) the authoritative copy is communicated to and 
19 maintained by the person asserting control or its 
20 designated custodian;
21  (4) copies or amendments that add or change an 
22 identified transferee assignee of the authoritative copy 
23 can be made only with the consent of the person asserting 
24 control;
25  (5) each copy of the authoritative copy and any copy 
26 of a copy is readily identifiable as a copy that is not the 
 
 
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1 authoritative copy; and
2  (6) any amendment of the authoritative copy is readily 
3 identifiable as authorized or unauthorized. 
4 (c) A system satisfies subsection (a), and a person has 
5control of an electronic document of title, if an 
6authoritative electronic copy of the document, a record 
7attached to or logically associated with the electronic copy, 
8or a system in which the electronic copy is recorded:
9  (1) enables the person readily to identify each 
10 electronic copy as either an authoritative copy or a 
11 nonauthoritative copy;
12  (2) enables the person readily to identify itself in 
13 any way, including by name, identifying number, 
14 cryptographic key, office, or account number, as the 
15 person to which each authoritative electronic copy was 
16 issued or transferred; and
17  (3) gives the person exclusive power, subject to 
18 subsection (d), to:
19   (A) prevent others from adding or changing the 
20 person to which each authoritative electronic copy has 
21 been issued or transferred; and
22   (B) transfer control of each authoritative 
23 electronic copy.
24 (d) Subject to subsection (e), a power is exclusive under 
25subsection (c)(3)(A) and (B) even if:
26  (1) the authoritative electronic copy, a record 
 
 
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1 attached to or logically associated with the authoritative 
2 electronic copy, or a system in which the authoritative 
3 electronic copy is recorded limits the use of the document 
4 of title or has a protocol that is programmed to cause a 
5 change, including a transfer or loss of control; or
6  (2) the power is shared with another person.
7 (e) A power of a person is not shared with another person 
8under subsection (d)(2) and the person's power is not 
9exclusive if:
10  (1) the person can exercise the power only if the 
11 power also is exercised by the other person; and
12  (2) the other person:
13   (A) can exercise the power without exercise of the 
14 power by the person; or
15   (B) is the transferor to the person of an interest 
16 in the document of title.
17 (f) If a person has the powers specified in subsection 
18(c)(3)(A) and (B), the powers are presumed to be exclusive.
19 (g) A person has control of an electronic document of 
20title if another person, other than the transferor to the 
21person of an interest in the document:
22  (1) has control of the document and acknowledges that 
23 it has control on behalf of the person; or
24  (2) obtains control of the document after having 
25 acknowledged that it will obtain control of the document 
26 on behalf of the person.
 
 
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1 (h) A person that has control under this Section is not 
2required to acknowledge that it has control on behalf of 
3another person.
4 (i) If a person acknowledges that it has or will obtain 
5control on behalf of another person, unless the person 
6otherwise agrees or law other than this Article or Article 9 
7otherwise provides, the person does not owe any duty to the 
8other person and is not required to confirm the acknowledgment 
9to any other person. 
10(Source: P.A. 95-895, eff. 1-1-09.)

11 (810 ILCS 5/8-102) (from Ch. 26, par. 8-102)
12 Sec. 8-102. Definitions. 
13 (a) In this Article:
14  (1) "Adverse claim" means a claim that a claimant has 
15 a property interest in a financial asset and that it is a 
16 violation of the rights of the claimant for another person 
17 to hold, transfer, or deal with the financial asset.
18  (2) "Bearer form," as applied to a certificated 
19 security, means a form in which the security is payable to 
20 the bearer of the security certificate according to its 
21 terms but not by reason of an indorsement.
22  (3) "Broker" means a person defined as a broker or 
23 dealer under the federal securities laws, but without 
24 excluding a bank acting in that capacity.
25  (4) "Certificated security" means a security that is 
 
 
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1 represented by a certificate.
2  (5) "Clearing corporation" means:
3   (i) a person that is registered as a "clearing 
4 agency" under the federal securities laws;
5   (ii) a federal reserve bank; or
6   (iii) any other person that provides clearance or 
7 settlement services with respect to financial assets 
8 that would require it to register as a clearing agency 
9 under the federal securities laws but for an exclusion 
10 or exemption from the registration requirement, if its 
11 activities as a clearing corporation, including 
12 promulgation of rules, are subject to regulation by a 
13 federal or state governmental authority.
14  (6) "Communicate" means to:
15   (i) send a signed record writing; or
16   (ii) transmit information by any mechanism agreed 
17 upon by the persons transmitting and receiving the 
18 information.
19  (7) "Entitlement holder" means a person identified in 
20 the records of a securities intermediary as the person 
21 having a security entitlement against the securities 
22 intermediary. If a person acquires a security entitlement 
23 by virtue of Section 8-501(b)(2) or (3), that person is 
24 the entitlement holder.
25  (8) "Entitlement order" means a notification 
26 communicated to a securities intermediary directing 
 
 
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1 transfer or redemption of a financial asset to which the 
2 entitlement holder has a security entitlement.
3  (9) "Financial asset," except as otherwise provided in 
4 Section 8-103, means:
5   (i) a security;
6   (ii) an obligation of a person or a share, 
7 participation, or other interest in a person or in 
8 property or an enterprise of a person, which is, or is 
9 of a type, dealt in or traded on financial markets, or 
10 which is recognized in any area in which it is issued 
11 or dealt in as a medium for investment; or
12   (iii) any property that is held by a securities 
13 intermediary for another person in a securities 
14 account if the securities intermediary has expressly 
15 agreed with the other person that the property is to be 
16 treated as a financial asset under this Article. As 
17 context requires, the term means either the interest 
18 itself or the means by which a person's claim to it is 
19 evidenced, including a certificated or uncertificated 
20 security, a security certificate, or a security 
21 entitlement.
22  (10) "Good faith," for purposes of the obligation of 
23 good faith in the performance or enforcement of contracts 
24 or duties within this Article, means honesty in fact and 
25 the observance of reasonable commercial standards of fair 
26 dealing.
 
 
SB3696- 68 -LRB103 37687 SPS 67814 b


1  (11) "Indorsement" means a signature that alone or 
2 accompanied by other words is made on a security 
3 certificate in registered form or on a separate document 
4 for the purpose of assigning, transferring, or redeeming 
5 the security or granting a power to assign, transfer, or 
6 redeem it.
7  (12) "Instruction" means a notification communicated 
8 to the issuer of an uncertificated security which directs 
9 that the transfer of the security be registered or that 
10 the security be redeemed.
11  (13) "Registered form," as applied to a certificated 
12 security, means a form in which:
13   (i) the security certificate specifies a person 
14 entitled to the security; and
15   (ii) a transfer of the security may be registered 
16 upon books maintained for that purpose by or on behalf 
17 of the issuer, or the security certificate so states.
18  (14) "Securities intermediary" means:
19   (i) a clearing corporation; or
20   (ii) a person, including a bank or broker, that in 
21 the ordinary course of its business maintains 
22 securities accounts for others and is acting in that 
23 capacity.
24  (15) "Security," except as otherwise provided in 
25 Section 8-103, means an obligation of an issuer or a 
26 share, participation, or other interest in an issuer or in 
 
 
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1 property or an enterprise of an issuer:
2   (i) which is represented by a security certificate 
3 in bearer or registered form, or the transfer of which 
4 may be registered upon books maintained for that 
5 purpose by or on behalf of the issuer;
6   (ii) which is one of a class or series or by its 
7 terms is divisible into a class or series of shares, 
8 participations, interests, or obligations; and
9   (iii) which:
10    (A) is, or is of a type, dealt in or traded on 
11 securities exchanges or securities markets; or
12    (B) is a medium for investment and by its 
13 terms expressly provides that it is a security 
14 governed by this Article.
15  (16) "Security certificate" means a certificate 
16 representing a security.
17  (17) "Security entitlement" means the rights and 
18 property interest of an entitlement holder with respect to 
19 a financial asset specified in Part 5.
20  (18) "Uncertificated security" means a security that 
21 is not represented by a certificate.
22 (b) The following Other definitions in applying to this 
23Article and other Articles apply to this Article the Sections 
24in which they appear are:

25 Appropriate person Section 8-107

 
 
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1 Control Section 8-106

2 Controllable account Section 9-102

3 Controllable electronic

4  record Section 12-102

5 Controllable payment

6  intangible Section 9-102

7 Delivery Section 8-301

8 Investment company security Section 8-103

9 Issuer Section 8-201

10 Overissue Section 8-210

11 Protected purchaser Section 8-303

12 Securities account Section 8-501

13 (c) In addition, Article 1 contains general definitions 
14and principles of construction and interpretation applicable 
15throughout this Article.
16 (d) The characterization of a person, business, or 
17transaction for purposes of this Article does not determine 
18the characterization of the person, business, or transaction 
19for purposes of any other law, regulation, or rule.
20(Source: P.A. 89-364, eff. 1-1-96.)

21 (810 ILCS 5/8-103) (from Ch. 26, par. 8-103)
22 Sec. 8-103. Rules for determining whether certain 
23obligations and interests are securities or financial assets.
24 (a) A share or similar equity interest issued by a 
 
 
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1corporation, business trust, joint stock company, or similar 
2entity is a security.
3 (b) An "investment company security" is a security. 
4"Investment company security" means a share or similar equity 
5interest issued by an entity that is registered as an 
6investment company under the federal investment company laws, 
7an interest in a unit investment trust that is so registered, 
8or a face-amount certificate issued by a face-amount 
9certificate company that is so registered. Investment company 
10security does not include an insurance policy or endowment 
11policy or annuity contract issued by an insurance company.
12 (c) An interest in a partnership or limited liability 
13company is not a security unless it is dealt in or traded on 
14securities exchanges or in securities markets, its terms 
15expressly provide that it is a security governed by this 
16Article, or it is an investment company security. However, an 
17interest in a partnership or limited liability company is a 
18financial asset if it is held in a securities account.
19 (d) A writing that is a security certificate is governed 
20by this Article and not by Article 3, even though it also meets 
21the requirements of that Article. However, a negotiable 
22instrument governed by Article 3 is a financial asset if it is 
23held in a securities account.
24 (e) An option or similar obligation issued by a clearing 
25corporation to its participants is not a security, but is a 
26financial asset.
 
 
SB3696- 72 -LRB103 37687 SPS 67814 b


1 (f) A commodity contract, as defined in Section 
29-102(a)(15), is not a security or a financial asset.
3 (g) A document of title is not a financial asset unless 
4Section 8-102(a)(9)(iii) applies. 
5 (h) A controllable account, controllable electronic 
6record, or controllable payment intangible is not a financial 
7asset unless Section 8-102(a)(9)(iii) applies. 
8(Source: P.A. 95-895, eff. 1-1-09.)

9 (810 ILCS 5/8-106) (from Ch. 26, par. 8-106)
10 Sec. 8-106. Control. 
11 (a) A purchaser has "control" of a certificated security 
12in bearer form if the certificated security is delivered to 
13the purchaser.
14 (b) A purchaser has "control" of a certificated security 
15in registered form if the certificated security is delivered 
16to the purchaser, and: 
17  (1) the certificate is indorsed to the purchaser or in 
18 blank by an effective indorsement; or 
19  (2) the certificate is registered in the name of the 
20 purchaser, upon original issue or registration of transfer 
21 by the issuer.
22 (c) A purchaser has "control" of an uncertificated 
23security if: 
24  (1) the uncertificated security is delivered to the 
25 purchaser; or 
 
 
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1  (2) the issuer has agreed that it will comply with 
2 instructions originated by the purchaser without further 
3 consent by the registered owner.
4 (d) A purchaser has "control" of a security entitlement 
5if: 
6  (1) the purchaser becomes the entitlement holder; 
7  (2) the securities intermediary has agreed that it 
8 will comply with entitlement orders originated by the 
9 purchaser without further consent by the entitlement 
10 holder; or 
11  (3) another person, other than the transferor to the 
12 purchaser of an interest in the security entitlement: has 
13 control of the security entitlement on behalf of the 
14 purchaser or, having previously acquired control of the 
15 security entitlement, acknowledges that it has control on 
16 behalf of the purchaser.
17   (A) has control of the security entitlement and 
18 acknowledges that it has control on behalf of the 
19 purchaser; or
20   (B) obtains control of the security entitlement 
21 after having acknowledged that it will obtain control 
22 of the security entitlement on behalf of the 
23 purchaser. 
24 (e) If an interest in a security entitlement is granted by 
25the entitlement holder to the entitlement holder's own 
26securities intermediary, the securities intermediary has 
 
 
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1control.
2 (f) A purchaser who has satisfied the requirements of 
3subsection (c) or (d) has control even if the registered owner 
4in the case of subsection (c) or the entitlement holder in the 
5case of subsection (d) retains the right to make substitutions 
6for the uncertificated security or security entitlement, to 
7originate instructions or entitlement orders to the issuer or 
8securities intermediary, or otherwise to deal with the 
9uncertificated security or security entitlement.
10 (g) An issuer or a securities intermediary may not enter 
11into an agreement of the kind described in subsection (c)(2) 
12or (d)(2) without the consent of the registered owner or 
13entitlement holder, but an issuer or a securities intermediary 
14is not required to enter into such an agreement even though the 
15registered owner or entitlement holder so directs. An issuer 
16or securities intermediary that has entered into such an 
17agreement is not required to confirm the existence of the 
18agreement to another party unless requested to do so by the 
19registered owner or entitlement holder.
20 (h) A person that has control under this Section is not 
21required to acknowledge that it has control on behalf of a 
22purchaser.
23 (i) If a person acknowledges that it has or will obtain 
24control on behalf of a purchaser, unless the person otherwise 
25agrees or law other than this Article or Article 9 otherwise 
26provides, the person does not owe any duty to the purchaser and 
 
 
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1is not required to confirm the acknowledgment to any other 
2person. 
3(Source: P.A. 95-331, eff. 8-21-07.)

4 (810 ILCS 5/8-110)
5 Sec. 8-110. Applicability; choice of law. 
6 (a) The local law of the issuer's jurisdiction, as 
7specified in subsection (d), governs: 
8  (1) the validity of a security; 
9  (2) the rights and duties of the issuer with respect 
10 to registration of transfer; 
11  (3) the effectiveness of registration of transfer by 
12 the issuer;  
13  (4) whether the issuer owes any duties to an adverse 
14 claimant to a security; and 
15  (5) whether an adverse claim can be asserted against a 
16 person to whom transfer of a certificated or 
17 uncertificated security is registered or a person who 
18 obtains control of an uncertificated security.
19 (b) The local law of the securities intermediary's 
20jurisdiction, as specified in subsection (e), governs: 
21  (1) acquisition of a security entitlement from the 
22 securities intermediary; 
23  (2) the rights and duties of the securities 
24 intermediary and entitlement holder arising out of a 
25 security entitlement; 
 
 
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1  (3) whether the securities intermediary owes any 
2 duties to an adverse claimant to a security entitlement; 
3 and 
4  (4) whether an adverse claim can be asserted against a 
5 person who acquires a security entitlement from the 
6 securities intermediary or a person who purchases a 
7 security entitlement or interest therein from an 
8 entitlement holder.
9 (c) The local law of the jurisdiction in which a security 
10certificate is located at the time of delivery governs whether 
11an adverse claim can be asserted against a person to whom the 
12security certificate is delivered.
13 (d) "Issuer's jurisdiction" means the jurisdiction under 
14which the issuer of the security is organized or, if permitted 
15by the law of that jurisdiction, the law of another 
16jurisdiction specified by the issuer. An issuer organized 
17under the law of this State may specify the law of another 
18jurisdiction as the law governing the matters specified in 
19subsection (a)(2) through (5).
20 (e) The following rules determine a "securities 
21intermediary's jurisdiction" for purposes of this Section: 
22  (1) If an agreement between the securities 
23 intermediary and its entitlement holder governing the 
24 securities account expressly provides that a particular 
25 jurisdiction is the securities intermediary's jurisdiction 
26 for purposes of this Part, this Article, or this Act, that 
 
 
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1 jurisdiction is the securities intermediary's 
2 jurisdiction. 
3  (2) If paragraph (1) does not apply and an agreement 
4 between the securities intermediary and its entitlement 
5 holder governing the securities account expressly provides 
6 that the agreement is governed by the law of a particular 
7 jurisdiction, that jurisdiction is the securities 
8 intermediary's jurisdiction. 
9  (3) If neither paragraph (1) nor paragraph (2) applies 
10 and an agreement between the securities intermediary and 
11 its entitlement holder governing the securities account 
12 expressly provides that the securities account is 
13 maintained at an office in a particular jurisdiction, that 
14 jurisdiction is the securities intermediary's 
15 jurisdiction. 
16  (4) If none of the preceding paragraphs applies, the 
17 securities intermediary's jurisdiction is the jurisdiction 
18 in which the office identified in an account statement as 
19 the office serving the entitlement holder's account is 
20 located. 
21  (5) If none of the preceding paragraphs applies, the 
22 securities intermediary's jurisdiction is the jurisdiction 
23 in which the chief executive office of the securities 
24 intermediary is located.
25 (f) A securities intermediary's jurisdiction is not 
26determined by the physical location of certificates 
 
 
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1representing financial assets, or by the jurisdiction in which 
2is organized the issuer of the financial asset with respect to 
3which an entitlement holder has a security entitlement, or by 
4the location of facilities for data processing or other record 
5keeping concerning the account.
6 (g) The local law of the issuer's jurisdiction or the 
7securities intermediary's jurisdiction governs a matter or 
8transaction specified in subsection (a) or (b) even if the 
9matter or transaction does not bear any relation to the 
10jurisdiction. 
11(Source: P.A. 91-893, eff. 7-1-01.)

12 (810 ILCS 5/8-303) (from Ch. 26, par. 8-303)
13 Sec. 8-303. Protected purchaser. 
14 (a) "Protected purchaser" means a purchaser of a 
15certificated or uncertificated security, or of an interest 
16therein, who: 
17  (1) gives value; 
18  (2) does not have notice of any adverse claim to the 
19 security; and 
20  (3) obtains control of the certificated or 
21 uncertificated security.
22 (b) A In addition to acquiring the rights of a purchaser, a 
23protected purchaser also acquires its interest in the security 
24free of any adverse claim.
25(Source: P.A. 89-364, eff. 1-1-96.)

 
 
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1 (810 ILCS 5/9-102) (from Ch. 26, par. 9-102)
2 Sec. 9-102. Definitions and index of definitions. 
3 (a) Article 9 definitions. In this Article: 
4  (1) "Accession" means goods that are physically united 
5 with other goods in such a manner that the identity of the 
6 original goods is not lost. 
7  (2) "Account", except as used in "account for", 
8 "account statement", "account to", "commodity account" in 
9 paragraph (14), "customer's account", "deposit account" in 
10 paragraph (29), "on account of", and "statement of 
11 account", means a right to payment of a monetary 
12 obligation, whether or not earned by performance, (i) for 
13 property that has been or is to be sold, leased, licensed, 
14 assigned, or otherwise disposed of, (ii) for services 
15 rendered or to be rendered, (iii) for a policy of 
16 insurance issued or to be issued, (iv) for a secondary 
17 obligation incurred or to be incurred, (v) for energy 
18 provided or to be provided, (vi) for the use or hire of a 
19 vessel under a charter or other contract, (vii) arising 
20 out of the use of a credit or charge card or information 
21 contained on or for use with the card, or (viii) as 
22 winnings in a lottery or other game of chance operated or 
23 sponsored by a State, governmental unit of a State, or 
24 person licensed or authorized to operate the game by a 
25 State or governmental unit of a State. The term includes 
 
 
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1 controllable accounts and health-care-insurance 
2 receivables. The term does not include (i) rights to 
3 payment evidenced by chattel paper or an instrument, (ii) 
4 commercial tort claims, (iii) deposit accounts, (iv) 
5 investment property, (v) letter-of-credit rights or 
6 letters of credit, or (vi) rights to payment for money or 
7 funds advanced or sold, other than rights arising out of 
8 the use of a credit or charge card or information 
9 contained on or for use with the card, or (vii) rights to 
10 payment evidenced by an instrument. 
11  (3) "Account debtor" means a person obligated on an 
12 account, chattel paper, or general intangible. The term 
13 does not include persons obligated to pay a negotiable 
14 instrument, even if the negotiable instrument evidences 
15 constitutes part of chattel paper. 
16  (4) "Accounting", except as used in "accounting for", 
17 means a record: 
18   (A) signed authenticated by a secured party; 
19   (B) indicating the aggregate unpaid secured 
20 obligations as of a date not more than 35 days earlier 
21 or 35 days later than the date of the record; and 
22   (C) identifying the components of the obligations 
23 in reasonable detail. 
24  (5) "Agricultural lien" means an interest, other than 
25 a security interest, in farm products: 
26   (A) which secures payment or performance of an 
 
 
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1 obligation for goods or services furnished in 
2 connection with a debtor's farming operation; 
3   (B) which is created by statute in favor of a 
4 person that in the ordinary course of its business 
5 furnished goods or services to a debtor in connection 
6 with a debtor's farming operation; and 
7   (C) whose effectiveness does not depend on the 
8 person's possession of the personal property. 
9  (6) "As-extracted collateral" means: 
10   (A) oil, gas, or other minerals that are subject 
11 to a security interest that: 
12    (i) is created by a debtor having an interest 
13 in the minerals before extraction; and 
14    (ii) attaches to the minerals as extracted; or 
15   (B) accounts arising out of the sale at the 
16 wellhead or minehead of oil, gas, or other minerals in 
17 which the debtor had an interest before extraction. 
18  (7) (Reserved). "Authenticate" means: 
19   (A) to sign; or 
20   (B) with present intent to adopt or accept a 
21 record, to attach to or logically associate with the 
22 record an electronic sound, symbol, or process.
23  (7A) "Assignee", except as used in "assignee for 
24 benefit of creditors", means a person (i) in whose favor a 
25 security interest that secures an obligation is created or 
26 provided for under a security agreement, whether or not 
 
 
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1 the obligation is outstanding or (ii) to which an account, 
2 chattel paper, payment intangible, or promissory note has 
3 been sold. The term includes a person to which a security 
4 interest has been transferred by a secured party.
5  (7B) "Assignor" means a person that (i) under a 
6 security agreement creates or provides for a security 
7 interest that secures an obligation or (ii) sells an 
8 account, chattel paper, payment intangible, or promissory 
9 note. The term includes a secured party that has 
10 transferred a security interest to another person.  
11  (8) "Bank" means an organization that is engaged in 
12 the business of banking. The term includes savings banks, 
13 savings and loan associations, credit unions, and trust 
14 companies. 
15  (9) "Cash proceeds" means proceeds that are money, 
16 checks, deposit accounts, or the like. 
17  (10) "Certificate of title" means a certificate of 
18 title with respect to which a statute provides for the 
19 security interest in question to be indicated on the 
20 certificate as a condition or result of the security 
21 interest's obtaining priority over the rights of a lien 
22 creditor with respect to the collateral. The term includes 
23 another record maintained as an alternative to a 
24 certificate of title by the governmental unit that issues 
25 certificates of title if a statute permits the security 
26 interest in question to be indicated on the record as a 
 
 
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1 condition or result of the security interest's obtaining 
2 priority over the rights of a lien creditor with respect 
3 to the collateral.  
4  (11) "Chattel paper" means: 
5   (A) a right to payment of a monetary obligation 
6 secured by specific goods, if the right to payment and 
7 security agreement are evidenced by a record; or
8   (B) a right to payment of a monetary obligation 
9 owed by a lessee under a lease agreement with respect 
10 to specific goods and a monetary obligation owed by 
11 the lessee in connection with the transaction giving 
12 rise to the lease, if:
13    (i) the right to payment and lease agreement 
14 are evidenced by a record; and
15    (ii) the predominant purpose of the 
16 transaction giving rise to the lease was to give 
17 the lessee the right to possession and use of the 
18 goods.
19 The term does not include a right to payment arising out of a 
20 charter or other contract involving the use or hire of a 
21 vessel or a right to payment arising out of the use of a 
22 credit or charge card or information contained on or for 
23 use with the card. 
24 a record or records that evidence both a monetary obligation 
25 and a security interest in specific goods, a security 
26 interest in specific goods and software used in the goods, 
 
 
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1 a security interest in specific goods and license of 
2 software used in the goods, a lease of specific goods, or a 
3 lease of specified goods and a license of software used in 
4 the goods. In this paragraph, "monetary obligation" means 
5 a monetary obligation secured by the goods or owed under a 
6 lease of the goods and includes a monetary obligation with 
7 respect to software used in the goods. The term does not 
8 include (i) charters or other contracts involving the use 
9 or hire of a vessel or (ii) records that evidence a right 
10 to payment arising out of the use of a credit or charge 
11 card or information contained on or for use with the card. 
12 If a transaction is evidenced by records that include an 
13 instrument or series of instruments, the group of records 
14 taken together constitutes chattel paper. 
15  (12) "Collateral" means the property subject to a 
16 security interest or agricultural lien. The term includes: 
17   (A) proceeds to which a security interest 
18 attaches; 
19   (B) accounts, chattel paper, payment intangibles, 
20 and promissory notes that have been sold; and 
21   (C) goods that are the subject of a consignment. 
22  (13) "Commercial tort claim" means a claim arising in 
23 tort with respect to which: 
24   (A) the claimant is an organization; or 
25   (B) the claimant is an individual and the claim: 
26    (i) arose in the course of the claimant's 
 
 
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1 business or profession; and 
2    (ii) does not include damages arising out of 
3 personal injury to or the death of an individual. 
4  (14) "Commodity account" means an account maintained 
5 by a commodity intermediary in which a commodity contract 
6 is carried for a commodity customer. 
7  (15) "Commodity contract" means a commodity futures 
8 contract, an option on a commodity futures contract, a 
9 commodity option, or another contract if the contract or 
10 option is: 
11   (A) traded on or subject to the rules of a board of 
12 trade that has been designated as a contract market 
13 for such a contract pursuant to federal commodities 
14 laws; or 
15   (B) traded on a foreign commodity board of trade, 
16 exchange, or market, and is carried on the books of a 
17 commodity intermediary for a commodity customer. 
18  (16) "Commodity customer" means a person for which a 
19 commodity intermediary carries a commodity contract on its 
20 books. 
21  (17) "Commodity intermediary" means a person that: 
22   (A) is registered as a futures commission merchant 
23 under federal commodities law; or 
24   (B) in the ordinary course of its business 
25 provides clearance or settlement services for a board 
26 of trade that has been designated as a contract market 
 
 
SB3696- 86 -LRB103 37687 SPS 67814 b


1 pursuant to federal commodities law. 
2  (18) "Communicate" means: 
3   (A) to send a written or other tangible record; 
4   (B) to transmit a record by any means agreed upon 
5 by the persons sending and receiving the record; or 
6   (C) in the case of transmission of a record to or 
7 by a filing office, to transmit a record by any means 
8 prescribed by filing-office rule. 
9  (19) "Consignee" means a merchant to which goods are 
10 delivered in a consignment. 
11  (20) "Consignment" means a transaction, regardless of 
12 its form, in which a person delivers goods to a merchant 
13 for the purpose of sale and: 
14   (A) the merchant: 
15    (i) deals in goods of that kind under a name 
16 other than the name of the person making delivery; 
17    (ii) is not an auctioneer; and 
18    (iii) is not generally known by its creditors 
19 to be substantially engaged in selling the goods 
20 of others; 
21   (B) with respect to each delivery, the aggregate 
22 value of the goods is $1,000 or more at the time of 
23 delivery; 
24   (C) the goods are not consumer goods immediately 
25 before delivery; and 
26   (D) the transaction does not create a security 
 
 
SB3696- 87 -LRB103 37687 SPS 67814 b


1 interest that secures an obligation. 
2  (21) "Consignor" means a person that delivers goods to 
3 a consignee in a consignment. 
4  (22) "Consumer debtor" means a debtor in a consumer 
5 transaction. 
6  (23) "Consumer goods" means goods that are used or 
7 bought for use primarily for personal, family, or 
8 household purposes. 
9  (24) "Consumer-goods transaction" means a consumer 
10 transaction in which: 
11   (A) an individual incurs an obligation primarily 
12 for personal, family, or household purposes; and 
13   (B) a security interest in consumer goods secures 
14 the obligation. 
15  (25) "Consumer obligor" means an obligor who is an 
16 individual and who incurred the obligation as part of a 
17 transaction entered into primarily for personal, family, 
18 or household purposes. 
19  (26) "Consumer transaction" means a transaction in 
20 which (i) an individual incurs an obligation primarily for 
21 personal, family, or household purposes, (ii) a security 
22 interest secures the obligation, and (iii) the collateral 
23 is held or acquired primarily for personal, family, or 
24 household purposes. The term includes consumer-goods 
25 transactions. 
26  (27) "Continuation statement" means an amendment of a 
 
 
SB3696- 88 -LRB103 37687 SPS 67814 b


1 financing statement which: 
2   (A) identifies, by its file number, the initial 
3 financing statement to which it relates; and 
4   (B) indicates that it is a continuation statement 
5 for, or that it is filed to continue the effectiveness 
6 of, the identified financing statement.
7  (27A) "Controllable account" means an account 
8 evidenced by a controllable electronic record that 
9 provides that the account debtor undertakes to pay the 
10 person that has control under Section 12-105 of the 
11 controllable electronic record.
12  (27B) "Controllable payment intangible" means a 
13 payment intangible evidenced by a controllable electronic 
14 record that provides that the account debtor undertakes to 
15 pay the person that has control under Section 12-105 of 
16 the controllable electronic record.  
17  (28) "Debtor" means: 
18   (A) a person having an interest, other than a 
19 security interest or other lien, in the collateral, 
20 whether or not the person is an obligor; 
21   (B) a seller of accounts, chattel paper, payment 
22 intangibles, or promissory notes; or 
23   (C) a consignee. 
24  (29) "Deposit account" means a demand, time, savings, 
25 passbook, nonnegotiable certificates of deposit, 
26 uncertificated certificates of deposit, nontransferable 
 
 
SB3696- 89 -LRB103 37687 SPS 67814 b


1 nontransferrable certificates of deposit, or similar 
2 account maintained with a bank. The term does not include 
3 investment property or accounts evidenced by an 
4 instrument. 
5  (30) "Document" means a document of title or a receipt 
6 of the type described in Section 7-201(b). 
7  (31) (Reserved). "Electronic chattel paper" means 
8 chattel paper evidenced by a record or records consisting 
9 of information stored in an electronic medium.
10  (31A) "Electronic money" means money in an electronic 
11 form.  
12  (32) "Encumbrance" means a right, other than an 
13 ownership interest, in real property. The term includes 
14 mortgages and other liens on real property. 
15  (33) "Equipment" means goods other than inventory, 
16 farm products, or consumer goods. 
17  (34) "Farm products" means goods, other than standing 
18 timber, with respect to which the debtor is engaged in a 
19 farming operation and which are: 
20   (A) crops grown, growing, or to be grown, 
21 including: 
22    (i) crops produced on trees, vines, and 
23 bushes; and 
24    (ii) aquatic goods produced in aquacultural 
25 operations; 
26   (B) livestock, born or unborn, including aquatic 
 
 
SB3696- 90 -LRB103 37687 SPS 67814 b


1 goods produced in aquacultural operations; 
2   (C) supplies used or produced in a farming 
3 operation; or 
4   (D) products of crops or livestock in their 
5 unmanufactured states. 
6  (35) "Farming operation" means raising, cultivating, 
7 propagating, fattening, grazing, or any other farming, 
8 livestock, or aquacultural operation. 
9  (36) "File number" means the number assigned to an 
10 initial financing statement pursuant to Section 9-519(a). 
11  (37) "Filing office" means an office designated in 
12 Section 9-501 as the place to file a financing statement. 
13  (38) "Filing-office rule" means a rule adopted 
14 pursuant to Section 9-526. 
15  (39) "Financing statement" means a record or records 
16 composed of an initial financing statement and any filed 
17 record relating to the initial financing statement. 
18  (40) "Fixture filing" means the filing of a financing 
19 statement covering goods that are or are to become 
20 fixtures and satisfying Section 9-502(a) and (b). The term 
21 includes the filing of a financing statement covering 
22 goods of a transmitting utility which are or are to become 
23 fixtures. 
24  (41) "Fixtures" means goods that have become so 
25 related to particular real property that an interest in 
26 them arises under real property law. 
 
 
SB3696- 91 -LRB103 37687 SPS 67814 b


1  (42) "General intangible" means any personal property, 
2 including things in action, other than accounts, chattel 
3 paper, commercial tort claims, deposit accounts, 
4 documents, goods, instruments, investment property, 
5 letter-of-credit rights, letters of credit, money, and 
6 oil, gas, or other minerals before extraction. The term 
7 includes controllable electronic records, payment 
8 intangibles, and software. 
9  (43) "Good faith" means honesty in fact and the 
10 observance of reasonable commercial standards of fair 
11 dealing. 
12  (44) "Goods" means all things that are movable when a 
13 security interest attaches. The term includes (i) 
14 fixtures, (ii) standing timber that is to be cut and 
15 removed under a conveyance or contract for sale, (iii) the 
16 unborn young of animals, (iv) crops grown, growing, or to 
17 be grown, even if the crops are produced on trees, vines, 
18 or bushes, and (v) manufactured homes. The term also 
19 includes a computer program embedded in goods and any 
20 supporting information provided in connection with a 
21 transaction relating to the program if (i) the program is 
22 associated with the goods in such a manner that it 
23 customarily is considered part of the goods, or (ii) by 
24 becoming the owner of the goods, a person acquires a right 
25 to use the program in connection with the goods. The term 
26 does not include a computer program embedded in goods that 
 
 
SB3696- 92 -LRB103 37687 SPS 67814 b


1 consist solely of the medium in which the program is 
2 embedded. The term also does not include accounts, chattel 
3 paper, commercial tort claims, deposit accounts, 
4 documents, general intangibles, instruments, investment 
5 property, letter-of-credit rights, letters of credit, 
6 money, or oil, gas, or other minerals before extraction. 
7  (45) "Governmental unit" means a subdivision, agency, 
8 department, county, parish, municipality, or other unit of 
9 the government of the United States, a State, or a foreign 
10 country. The term includes an organization having a 
11 separate corporate existence if the organization is 
12 eligible to issue debt on which interest is exempt from 
13 income taxation under the laws of the United States. 
14  (46) "Health-care-insurance receivable" means an 
15 interest in or claim under a policy of insurance which is a 
16 right to payment of a monetary obligation for health-care 
17 goods or services provided. 
18  (47) "Instrument" means a negotiable instrument or any 
19 other writing that evidences a right to the payment of a 
20 monetary obligation, is not itself a security agreement or 
21 lease, and is of a type that in ordinary course of business 
22 is transferred by delivery with any necessary indorsement 
23 or assignment. The term does not include (i) investment 
24 property, (ii) letters of credit, (iii) nonnegotiable 
25 certificates of deposit, (iv) uncertificated certificates 
26 of deposit, (v) nontransferable nontransferrable 
 
 
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1 certificates of deposit, or (vi) writings that evidence a 
2 right to payment arising out of the use of a credit or 
3 charge card or information contained on or for use with 
4 the card, or (vii) writings that evidence chattel paper. 
5  (48) "Inventory" means goods, other than farm 
6 products, which: 
7   (A) are leased by a person as lessor; 
8   (B) are held by a person for sale or lease or to be 
9 furnished under a contract of service; 
10   (C) are furnished by a person under a contract of 
11 service; or 
12   (D) consist of raw materials, work in process, or 
13 materials used or consumed in a business. 
14  (49) "Investment property" means a security, whether 
15 certificated or uncertificated, security entitlement, 
16 securities account, commodity contract, or commodity 
17 account. 
18  (50) "Jurisdiction of organization", with respect to a 
19 registered organization, means the jurisdiction under 
20 whose law the organization is formed or organized. 
21  (51) "Letter-of-credit right" means a right to payment 
22 or performance under a letter of credit, whether or not 
23 the beneficiary has demanded or is at the time entitled to 
24 demand payment or performance. The term does not include 
25 the right of a beneficiary to demand payment or 
26 performance under a letter of credit. 
 
 
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1  (52) "Lien creditor" means: 
2   (A) a creditor that has acquired a lien on the 
3 property involved by attachment, levy, or the like; 
4   (B) an assignee for benefit of creditors from the 
5 time of assignment; 
6   (C) a trustee in bankruptcy from the date of the 
7 filing of the petition; or 
8   (D) a receiver in equity from the time of 
9 appointment. 
10  (53) "Manufactured home" means a structure, 
11 transportable in one or more sections, which, in the 
12 traveling mode, is eight body feet or more in width or 40 
13 body feet or more in length, or, when erected on site, is 
14 320 or more square feet, and which is built on a permanent 
15 chassis and designed to be used as a dwelling with or 
16 without a permanent foundation when connected to the 
17 required utilities, and includes the plumbing, heating, 
18 air-conditioning, and electrical systems contained 
19 therein. The term includes any structure that meets all of 
20 the requirements of this paragraph except the size 
21 requirements and with respect to which the manufacturer 
22 voluntarily files a certification required by the United 
23 States Secretary of Housing and Urban Development and 
24 complies with the standards established under Title 42 of 
25 the United States Code. The term "manufactured home" does 
26 not include campers and recreational vehicles. 
 
 
SB3696- 95 -LRB103 37687 SPS 67814 b


1  (54) "Manufactured-home transaction" means a secured 
2 transaction: 
3   (A) that creates a purchase-money security 
4 interest in a manufactured home, other than a 
5 manufactured home held as inventory; or 
6   (B) in which a manufactured home, other than a 
7 manufactured home held as inventory, is the primary 
8 collateral.
9  (54A) "Money" has the meaning in Section 1-201(b)(24), 
10 but does not include (i) a deposit account or (ii) money in 
11 an electronic form that cannot be subjected to control 
12 under Section 9-105A.  
13  (55) "Mortgage" means a consensual interest in real 
14 property, including fixtures, which secures payment or 
15 performance of an obligation. 
16  (56) "New debtor" means a person that becomes bound as 
17 debtor under Section 9-203(d) by a security agreement 
18 previously entered into by another person. 
19  (57) "New value" means (i) money, (ii) money's worth 
20 in property, services, or new credit, or (iii) release by 
21 a transferee of an interest in property previously 
22 transferred to the transferee. The term does not include 
23 an obligation substituted for another obligation. 
24  (58) "Noncash proceeds" means proceeds other than cash 
25 proceeds. 
26  (59) "Obligor" means a person that, with respect to an 
 
 
SB3696- 96 -LRB103 37687 SPS 67814 b


1 obligation secured by a security interest in or an 
2 agricultural lien on the collateral, (i) owes payment or 
3 other performance of the obligation, (ii) has provided 
4 property other than the collateral to secure payment or 
5 other performance of the obligation, or (iii) is otherwise 
6 accountable in whole or in part for payment or other 
7 performance of the obligation. The term does not include 
8 issuers or nominated persons under a letter of credit. 
9  (60) "Original debtor", except as used in Section 
10 9-310(c), means a person that, as debtor, entered into a 
11 security agreement to which a new debtor has become bound 
12 under Section 9-203(d). 
13  (61) "Payment intangible" means a general intangible 
14 under which the account debtor's principal obligation is a 
15 monetary obligation. The term includes a controllable 
16 payment intangible.  
17  (62) "Person related to", with respect to an 
18 individual, means: 
19   (A) the spouse of the individual; 
20   (B) a brother, brother-in-law, sister, or 
21 sister-in-law of the individual; 
22   (C) an ancestor or lineal descendant of the 
23 individual or the individual's spouse; or 
24   (D) any other relative, by blood or marriage, of 
25 the individual or the individual's spouse who shares 
26 the same home with the individual. 
 
 
SB3696- 97 -LRB103 37687 SPS 67814 b


1  (63) "Person related to", with respect to an 
2 organization, means: 
3   (A) a person directly or indirectly controlling, 
4 controlled by, or under common control with the 
5 organization; 
6   (B) an officer or director of, or a person 
7 performing similar functions with respect to, the 
8 organization; 
9   (C) an officer or director of, or a person 
10 performing similar functions with respect to, a person 
11 described in subparagraph (A); 
12   (D) the spouse of an individual described in 
13 subparagraph (A), (B), or (C); or 
14   (E) an individual who is related by blood or 
15 marriage to an individual described in subparagraph 
16 (A), (B), (C), or (D) and shares the same home with the 
17 individual. 
18  (64) "Proceeds", except as used in Section 9-609(b), 
19 means the following property: 
20   (A) whatever is acquired upon the sale, lease, 
21 license, exchange, or other disposition of collateral; 
22   (B) whatever is collected on, or distributed on 
23 account of, collateral; 
24   (C) rights arising out of collateral; 
25   (D) to the extent of the value of collateral, 
26 claims arising out of the loss, nonconformity, or 
 
 
SB3696- 98 -LRB103 37687 SPS 67814 b


1 interference with the use of, defects or infringement 
2 of rights in, or damage to, the collateral; or 
3   (E) to the extent of the value of collateral and to 
4 the extent payable to the debtor or the secured party, 
5 insurance payable by reason of the loss or 
6 nonconformity of, defects or infringement of rights 
7 in, or damage to, the collateral. 
8  (65) "Promissory note" means an instrument that 
9 evidences a promise to pay a monetary obligation, does not 
10 evidence an order to pay, and does not contain an 
11 acknowledgment by a bank that the bank has received for 
12 deposit a sum of money or funds. 
13  (66) "Proposal" means a record signed authenticated by 
14 a secured party which includes the terms on which the 
15 secured party is willing to accept collateral in full or 
16 partial satisfaction of the obligation it secures pursuant 
17 to Sections 9-620, 9-621, and 9-622. 
18  (67) "Public-finance transaction" means a secured 
19 transaction in connection with which: 
20   (A) debt securities are issued; 
21   (B) all or a portion of the securities issued have 
22 an initial stated maturity of at least 20 years; and 
23   (C) the debtor, obligor, secured party, account 
24 debtor or other person obligated on collateral, 
25 assignor or assignee of a secured obligation, or 
26 assignor or assignee of a security interest is a State 
 
 
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1 or a governmental unit of a State.
2  (68) "Public organic record" means a record that is 
3 available to the public for inspection and is: 
4   (A) a record consisting of the record initially 
5 filed with or issued by a State or the United States to 
6 form or organize an organization and any record filed 
7 with or issued by the State or the United States which 
8 amends or restates the initial record; 
9   (B) an organic record of a business trust 
10 consisting of the record initially filed with a State 
11 and any record filed with the State which amends or 
12 restates the initial record, if a statute of the State 
13 governing business trusts requires that the record be 
14 filed with the State; or 
15   (C) a record consisting of legislation enacted by 
16 the legislature of a State or the Congress of the 
17 United States which forms or organizes an 
18 organization, any record amending the legislation, and 
19 any record filed with or issued by the State or the 
20 United States which amends or restates the name of the 
21 organization.  
22  (69) "Pursuant to commitment", with respect to an 
23 advance made or other value given by a secured party, 
24 means pursuant to the secured party's obligation, whether 
25 or not a subsequent event of default or other event not 
26 within the secured party's control has relieved or may 
 
 
SB3696- 100 -LRB103 37687 SPS 67814 b


1 relieve the secured party from its obligation. 
2  (70) "Record", except as used in "for record", "of 
3 record", "record or legal title", and "record owner", 
4 means information that is inscribed on a tangible medium 
5 or which is stored in an electronic or other medium and is 
6 retrievable in perceivable form. 
7  (71) "Registered organization" means an organization 
8 formed or organized solely under the law of a single State 
9 or the United States by the filing of a public organic 
10 record with, the issuance of a public organic record by, 
11 or the enactment of legislation by the State or the United 
12 States. The term includes a business trust that is formed 
13 or organized under the law of a single State if a statute 
14 of the State governing business trusts requires that the 
15 business trust's organic record be filed with the State. 
16  (72) "Secondary obligor" means an obligor to the 
17 extent that: 
18   (A) the obligor's obligation is secondary; or 
19   (B) the obligor has a right of recourse with 
20 respect to an obligation secured by collateral against 
21 the debtor, another obligor, or property of either. 
22  (73) "Secured party" means: 
23   (A) a person in whose favor a security interest is 
24 created or provided for under a security agreement, 
25 whether or not any obligation to be secured is 
26 outstanding; 
 
 
SB3696- 101 -LRB103 37687 SPS 67814 b


1   (B) a person that holds an agricultural lien; 
2   (C) a consignor; 
3   (D) a person to which accounts, chattel paper, 
4 payment intangibles, or promissory notes have been 
5 sold; 
6   (E) a trustee, indenture trustee, agent, 
7 collateral agent, or other representative in whose 
8 favor a security interest or agricultural lien is 
9 created or provided for; or 
10   (F) a person that holds a security interest 
11 arising under Section 2-401, 2-505, 2-711(3), 
12 2A-508(5), 4-210, or 5-118. 
13  (74) "Security agreement" means an agreement that 
14 creates or provides for a security interest. 
15  (75) (Reserved). "Send", in connection with a record 
16 or notification, means: 
17   (A) to deposit in the mail, deliver for 
18 transmission, or transmit by any other usual means of 
19 communication, with postage or cost of transmission 
20 provided for, addressed to any address reasonable 
21 under the circumstances; or 
22   (B) to cause the record or notification to be 
23 received within the time that it would have been 
24 received if properly sent under subparagraph (A). 
25  (76) "Software" means a computer program and any 
26 supporting information provided in connection with a 
 
 
SB3696- 102 -LRB103 37687 SPS 67814 b


1 transaction relating to the program. The term does not 
2 include a computer program that is included in the 
3 definition of goods. 
4  (77) "State" means a State of the United States, the 
5 District of Columbia, Puerto Rico, the United States 
6 Virgin Islands, or any territory or insular possession 
7 subject to the jurisdiction of the United States. 
8  (78) "Supporting obligation" means a letter-of-credit 
9 right or secondary obligation that supports the payment or 
10 performance of an account, chattel paper, a document, a 
11 general intangible, an instrument, or investment property. 
12  (79) (Reserved). "Tangible chattel paper" means 
13 chattel paper evidenced by a record or records consisting 
14 of information that is inscribed on a tangible medium.
15  (79A) "Tangible money" means money in a tangible form.  
16  (80) "Termination statement" means an amendment of a 
17 financing statement which: 
18   (A) identifies, by its file number, the initial 
19 financing statement to which it relates; and 
20   (B) indicates either that it is a termination 
21 statement or that the identified financing statement 
22 is no longer effective. 
23  (81) "Transmitting utility" means a person primarily 
24 engaged in the business of: 
25   (A) operating a railroad, subway, street railway, 
26 or trolley bus; 
 
 
SB3696- 103 -LRB103 37687 SPS 67814 b


1   (B) transmitting communications electrically, 
2 electromagnetically, or by light; 
3   (C) transmitting goods by pipeline or sewer; or 
4   (D) transmitting or producing and transmitting 
5 electricity, steam, gas, or water.
6 (b) Definitions in other Articles. "Control" as provided 
7in Section 7-106 and the following definitions in other 
8Articles apply to this Article:
9 "Applicant". Section 5-102.
10 "Beneficiary". Section 5-102.
11 "Broker". Section 8-102.
12 "Certificated security". Section 8-102.
13 "Check". Section 3-104.
14 "Clearing corporation". Section 8-102.
15 "Contract for sale". Section 2-106.
16 "Controllable electronic record". Section 12-102. 
17 "Customer". Section 4-104.
18 "Entitlement holder". Section 8-102.
19 "Financial asset". Section 8-102.
20 "Holder in due course". Section 3-302.
21 "Issuer" (with respect to a letter of credit or 
22letter-of-credit right). Section 5-102.
23 "Issuer" (with respect to a security). Section 8-201.
24 "Issuer" (with respect to documents of title). Section 
257-102. 
26 "Lease". Section 2A-103.
 
 
SB3696- 104 -LRB103 37687 SPS 67814 b


1 "Lease agreement". Section 2A-103.
2 "Lease contract". Section 2A-103.
3 "Leasehold interest". Section 2A-103.
4 "Lessee". Section 2A-103.
5 "Lessee in ordinary course of business". Section 2A-103.
6 "Lessor". Section 2A-103.
7 "Lessor's residual interest". Section 2A-103.
8 "Letter of credit". Section 5-102.
9 "Merchant". Section 2-104.
10 "Negotiable instrument". Section 3-104.
11 "Nominated person". Section 5-102.
12 "Note". Section 3-104.
13 "Proceeds of a letter of credit". Section 5-114.
14 "Protected purchaser". Section 8-303. 
15 "Prove". Section 3-103.
16 "Qualifying purchaser". Section 12-102. 
17 "Sale". Section 2-106.
18 "Securities account". Section 8-501.
19 "Securities intermediary". Section 8-102.
20 "Security". Section 8-102.
21 "Security certificate". Section 8-102.
22 "Security entitlement". Section 8-102.
23 "Uncertificated security". Section 8-102.
24 (c) Article 1 definitions and principles. Article 1 
25contains general definitions and principles of construction 
26and interpretation applicable throughout this Article.
 
 
SB3696- 105 -LRB103 37687 SPS 67814 b


1(Source: P.A. 97-1034, eff. 7-1-13; 98-749, eff. 7-16-14.)

2 (810 ILCS 5/9-104) (from Ch. 26, par. 9-104)
3 Sec. 9-104. Control of deposit account. 
4 (a) Requirements for control. A secured party has control 
5of a deposit account if: 
6  (1) the secured party is the bank with which the 
7 deposit account is maintained; 
8  (2) the debtor, secured party, and bank have agreed in 
9 a signed an authenticated record that the bank will comply 
10 with instructions originated by the secured party 
11 directing disposition of the funds in the deposit account 
12 without further consent by the debtor; or 
13  (3) the secured party becomes the bank's customer with 
14 respect to the deposit account; or .
15  (4) another person, other than the debtor:
16   (A) has control of the deposit account and 
17 acknowledges that it has control on behalf of the 
18 secured party; or
19   (B) obtains control of the deposit account after 
20 having acknowledged that it will obtain control of the 
21 deposit account on behalf of the secured party. 
22 (b) Debtor's right to direct disposition. A secured party 
23that has satisfied subsection (a) has control, even if the 
24debtor retains the right to direct the disposition of funds 
25from the deposit account.
 
 
SB3696- 106 -LRB103 37687 SPS 67814 b


1(Source: P.A. 91-893, eff. 7-1-01.)

2 (810 ILCS 5/9-105) (from Ch. 26, par. 9-105)
3 Sec. 9-105. Control of electronic copy of record 
4evidencing chattel paper. 
5 (a) General rule: control of electronic copy of record 
6evidencing chattel paper. A purchaser has control of an 
7authoritative electronic copy of a record evidencing chattel 
8paper if a system employed for evidencing the assignment of 
9interests in the chattel paper reliably establishes the 
10purchaser as the person to which the authoritative electronic 
11copy was assigned.
12 (b) Single authoritative copy. A system satisfies 
13subsection (a) if the record or records evidencing the chattel 
14paper are created, stored, and assigned in a manner that:
15  (1) a single authoritative copy of the record or 
16 records exists which is unique, identifiable, and, except 
17 as otherwise provided in paragraphs (4), (5), and (6), 
18 unalterable;
19  (2) the authoritative copy identifies the purchaser as 
20 the assignee of the record or records;
21  (3) the authoritative copy is communicated to and 
22 maintained by the purchaser or its designated custodian;
23  (4) copies or amendments that add or change an 
24 identified assignee of the authoritative copy can be made 
25 only with the consent of the purchaser;
 
 
SB3696- 107 -LRB103 37687 SPS 67814 b


1  (5) each copy of the authoritative copy and any copy 
2 of a copy is readily identifiable as a copy that is not the 
3 authoritative copy; and
4  (6) any amendment of the authoritative copy is readily 
5 identifiable as authorized or unauthorized.
6 (c) One or more authoritative copies. A system satisfies 
7subsection (a), and a purchaser has control of an 
8authoritative electronic copy of a record evidencing chattel 
9paper, if the electronic copy, a record attached to or 
10logically associated with the electronic copy, or a system in 
11which the electronic copy is recorded:
12  (1) enables the purchaser readily to identify each 
13 electronic copy as either an authoritative copy or a 
14 nonauthoritative copy;
15  (2) enables the purchaser readily to identify itself 
16 in any way, including by name, identifying number, 
17 cryptographic key, office, or account number, as the 
18 assignee of the authoritative electronic copy; and
19  (3) gives the purchaser exclusive power, subject to 
20 subsection (d), to:
21   (A) prevent others from adding or changing an 
22 identified assignee of the authoritative electronic 
23 copy; and
24   (B) transfer control of the authoritative 
25 electronic copy.
26 (d) Meaning of exclusive. Subject to subsection (e), a 
 
 
SB3696- 108 -LRB103 37687 SPS 67814 b


1power is exclusive under subsection (c)(3)(A) and (B) even if:
2  (1) the authoritative electronic copy, a record 
3 attached to or logically associated with the authoritative 
4 electronic copy, or a system in which the authoritative 
5 electronic copy is recorded limits the use of the 
6 authoritative electronic copy or has a protocol programmed 
7 to cause a change, including a transfer or loss of 
8 control; or
9  (2) the power is shared with another person.
10 (e) When power not shared with another person. A power of a 
11purchaser is not shared with another person under subsection 
12(d)(2) and the purchaser's power is not exclusive if:
13  (1) the purchaser can exercise the power only if the 
14 power also is exercised by the other person; and
15  (2) the other person:
16   (A) can exercise the power without exercise of the 
17 power by the purchaser; or
18   (B) is the transferor to the purchaser of an 
19 interest in the chattel paper.
20 (f) Presumption of exclusivity of certain powers. If a 
21purchaser has the powers specified in subsection (c)(3)(A) and 
22(B), the powers are presumed to be exclusive.
23 (g) Obtaining control through another person. A purchaser 
24has control of an authoritative electronic copy of a record 
25evidencing chattel paper if another person, other than the 
26transferor to the purchaser of an interest in the chattel 
 
 
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1paper:
2  (1) has control of the authoritative electronic copy 
3 and acknowledges that it has control on behalf of the 
4 purchaser; or
5  (2) obtains control of the authoritative electronic 
6 copy after having acknowledged that it will obtain control 
7 of the electronic copy on behalf of the purchaser. 
8 (a) General rule: Control of electronic chattel paper. A 
9secured party has control of electronic chattel paper if a 
10system employed for evidencing the transfer of interests in 
11the chattel paper reliably establishes the secured party as 
12the person to which the chattel paper was assigned. 
13 (b) Specific facts giving control. A system satisfies 
14subsection (a) if the record or records comprising the chattel 
15paper are created, stored, and assigned in such a manner that: 
16  (1) a single authoritative copy of the record or 
17 records exists which is unique, identifiable and, except 
18 as otherwise provided in paragraphs (4), (5), and (6), 
19 unalterable; 
20  (2) the authoritative copy identifies the secured 
21 party as the assignee of the record or records; 
22  (3) the authoritative copy is communicated to and 
23 maintained by the secured party or its designated 
24 custodian; 
25  (4) copies or amendments that add or change an 
26 identified assignee of the authoritative copy can be made 
 
 
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1 only with the consent of the secured party; 
2  (5) each copy of the authoritative copy and any copy 
3 of a copy is readily identifiable as a copy that is not the 
4 authoritative copy; and 
5  (6) any amendment of the authoritative copy is readily 
6 identifiable as authorized or unauthorized.
7(Source: P.A. 97-1034, eff. 7-1-13.)

8 (810 ILCS 5/9-105A new)
9 Sec. 9-105A. Control of electronic money.
10 (a) General rule: control of electronic money. A person 
11has control of electronic money if:
12  (1) the electronic money, a record attached to or 
13 logically associated with the electronic money, or a 
14 system in which the electronic money is recorded gives the 
15 person:
16   (A) power to avail itself of substantially all the 
17 benefit from the electronic money; and
18   (B) exclusive power, subject to subsection (b), 
19 to:
20    (i) prevent others from availing themselves of 
21 substantially all the benefit from the electronic 
22 money; and
23    (ii) transfer control of the electronic money 
24 to another person or cause another person to 
25 obtain control of other electronic money as a 
 
 
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1 result of the transfer of the electronic money; 
2 and
3  (2) the electronic money, a record attached to or 
4 logically associated with the electronic money, or a 
5 system in which the electronic money is recorded enables 
6 the person readily to identify itself in any way, 
7 including by name, identifying number, cryptographic key, 
8 office, or account number, as having the powers under 
9 paragraph (1).
10 (b) Meaning of exclusive. Subject to subsection (c), a 
11power is exclusive under subsection (a)(1)(B)(i) and (ii) even 
12if:
13  (1) the electronic money, a record attached to or 
14 logically associated with the electronic money, or a 
15 system in which the electronic money is recorded limits 
16 the use of the electronic money or has a protocol 
17 programmed to cause a change, including a transfer or loss 
18 of control; or
19  (2) the power is shared with another person.
20 (c) When power not shared with another person. A power of a 
21person is not shared with another person under subsection 
22(b)(2) and the person's power is not exclusive if:
23  (1) the person can exercise the power only if the 
24 power also is exercised by the other person; and
25  (2) the other person:
26   (A) can exercise the power without exercise of the 
 
 
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1 power by the person; or
2   (B) is the transferor to the person of an interest 
3 in the electronic money.
4 (d) Presumption of exclusivity of certain powers. If a 
5person has the powers specified in subsection (a)(1)(B)(i) and 
6(ii), the powers are presumed to be exclusive.
7 (e) Control through another person. A person has control 
8of electronic money if another person, other than the 
9transferor to the person of an interest in the electronic 
10money:
11  (1) has control of the electronic money and 
12 acknowledges that it has control on behalf of the person; 
13 or
14  (2) obtains control of the electronic money after 
15 having acknowledged that it will obtain control of the 
16 electronic money on behalf of the person.

17 (810 ILCS 5/9-107A new)
18 Sec. 9-107A. Control of controllable electronic record, 
19controllable account, or controllable payment intangible.
20 (a) Control under Section 12-105. A secured party has 
21control of a controllable electronic record as provided in 
22Section 12-105.
23 (b) Control of controllable account and controllable 
24payment intangible. A secured party has control of a 
25controllable account or controllable payment intangible if the 
 
 
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1secured party has control of the controllable electronic 
2record that evidences the controllable account or controllable 
3payment intangible.

4 (810 ILCS 5/9-107B new)
5 Sec. 9-107B. No requirement to acknowledge or confirm; no 
6duties.
7 (a) No requirement to acknowledge. A person that has 
8control under Section 9-104, 9-105, or 9-105A is not required 
9to acknowledge that it has control on behalf of another 
10person.
11 (b) No duties or confirmation. If a person acknowledges 
12that it has or will obtain control on behalf of another person, 
13unless the person otherwise agrees or law other than this 
14Article otherwise provides, the person does not owe any duty 
15to the other person and is not required to confirm the 
16acknowledgment to any other person.

17 (810 ILCS 5/9-203) (from Ch. 26, par. 9-203)
18 Sec. 9-203. Attachment and enforceability of security 
19interest; proceeds; supporting obligations; formal requisites.
20 (a) Attachment. A security interest attaches to collateral 
21when it becomes enforceable against the debtor with respect to 
22the collateral, unless an agreement expressly postpones the 
23time of attachment.
24 (b) Enforceability. Except as otherwise provided in 
 
 
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1subsections (c) through (i), a security interest is 
2enforceable against the debtor and third parties with respect 
3to the collateral only if: 
4  (1) value has been given; 
5  (2) the debtor has rights in the collateral or the 
6 power to transfer rights in the collateral to a secured 
7 party; and 
8  (3) one of the following conditions is met: 
9   (A) the debtor has signed authenticated a security 
10 agreement that provides a description of the 
11 collateral and, if the security interest covers timber 
12 to be cut, a description of the land concerned; 
13   (B) the collateral is not a certificated security 
14 and is in the possession of the secured party under 
15 Section 9-313 pursuant to the debtor's security 
16 agreement; 
17   (C) the collateral is a certificated security in 
18 registered form and the security certificate has been 
19 delivered to the secured party under Section 8-301 
20 pursuant to the debtor's security agreement; or 
21   (D) the collateral is controllable accounts, 
22 controllable electronic records, controllable payment 
23 intangibles, deposit accounts, electronic documents, 
24 electronic money, electronic chattel paper, investment 
25 property, or letter-of-credit rights, or electronic 
26 documents, and the secured party has control under 
 
 
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1 Section 7-106, 9-104, 9-105A, 9-105, 9-106, or 9-107, 
2 or 9-107A pursuant to the debtor's security agreement; 
3 or .
4   (E) the collateral is chattel paper and the 
5 secured party has possession and control under Section 
6 9-314A pursuant to the debtor's security agreement. 
7 (c) Other UCC provisions. Subsection (b) is subject to 
8Section 4-210 on the security interest of a collecting bank, 
9Section 5-118 on the security interest of a letter-of-credit 
10issuer or nominated person, Section 9-110 on a security 
11interest arising under Article 2 or 2A, and Section 9-206 on 
12security interests in investment property.
13 (d) When person becomes bound by another person's security 
14agreement. A person becomes bound as debtor by a security 
15agreement entered into by another person if, by operation of 
16law other than this Article or by contract: 
17  (1) the security agreement becomes effective to create 
18 a security interest in the person's property; or 
19  (2) the person becomes generally obligated for the 
20 obligations of the other person, including the obligation 
21 secured under the security agreement, and acquires or 
22 succeeds to all or substantially all of the assets of the 
23 other person.
24 (e) Effect of new debtor becoming bound. If a new debtor 
25becomes bound as debtor by a security agreement entered into 
26by another person: 
 
 
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1  (1) the agreement satisfies subsection (b)(3) with 
2 respect to existing or after-acquired property of the new 
3 debtor to the extent the property is described in the 
4 agreement; and 
5  (2) another agreement is not necessary to make a 
6 security interest in the property enforceable.
7 (f) Proceeds and supporting obligations. The attachment of 
8a security interest in collateral gives the secured party the 
9rights to proceeds provided by Section 9-315 and is also 
10attachment of a security interest in a supporting obligation 
11for the collateral.
12 (g) Lien securing right to payment. The attachment of a 
13security interest in a right to payment or performance secured 
14by a security interest or other lien on personal or real 
15property is also attachment of a security interest in the 
16security interest, mortgage, or other lien.
17 (h) Security entitlement carried in securities account. 
18The attachment of a security interest in a securities account 
19is also attachment of a security interest in the security 
20entitlements carried in the securities account.
21 (i) Commodity contracts carried in commodity account. The 
22attachment of a security interest in a commodity account is 
23also attachment of a security interest in the commodity 
24contracts carried in the commodity account.
25(Source: P.A. 95-895, eff. 1-1-09.)

 
 
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1 (810 ILCS 5/9-204) (from Ch. 26, par. 9-204)
2 Sec. 9-204. After-acquired property; future advances. 
3 (a) After-acquired collateral. Except as otherwise 
4provided in subsection (b), a security agreement may create or 
5provide for a security interest in after-acquired collateral.
6 (b) When after-acquired property clause not effective. 
7Subject to subsection (b.1), a A security interest does not 
8attach under a term constituting an after-acquired property 
9clause to: 
10  (1) consumer goods, other than an accession when given 
11 as additional security, unless the debtor acquires rights 
12 in them within 10 days after the secured party gives 
13 value; or 
14  (2) a commercial tort claim.
15 (b.1) Limitation on subsection (b). Subsection (b) does 
16not prevent a security interest from attaching:
17  (1) to consumer goods as proceeds under Section 
18 9-315(a) or commingled goods under Section 9-336(c);
19  (2) to a commercial tort claim as proceeds under 
20 Section 9-315(a); or
21  (3) under an after-acquired property clause to 
22 property that is proceeds of consumer goods or a 
23 commercial tort claim. 
24 (c) Future advances and other value. A security agreement 
25may provide that collateral secures, or that accounts, chattel 
26paper, payment intangibles, or promissory notes are sold in 
 
 
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1connection with, future advances or other value, whether or 
2not the advances or value are given pursuant to commitment.
3(Source: P.A. 91-893, eff. 7-1-01.)

4 (810 ILCS 5/9-207) (from Ch. 26, par. 9-207)
5 Sec. 9-207. Rights and duties of secured party having 
6possession or control of collateral.
7 (a) Duty of care when secured party in possession. Except 
8as otherwise provided in subsection (d), a secured party shall 
9use reasonable care in the custody and preservation of 
10collateral in the secured party's possession. In the case of 
11chattel paper or an instrument, reasonable care includes 
12taking necessary steps to preserve rights against prior 
13parties unless otherwise agreed.
14 (b) Expenses, risks, duties, and rights when secured party 
15in possession. Except as otherwise provided in subsection (d), 
16if a secured party has possession of collateral: 
17  (1) reasonable expenses, including the cost of 
18 insurance and payment of taxes or other charges, incurred 
19 in the custody, preservation, use, or operation of the 
20 collateral are chargeable to the debtor and are secured by 
21 the collateral; 
22  (2) the risk of accidental loss or damage is on the 
23 debtor to the extent of a deficiency in any effective 
24 insurance coverage; 
25  (3) the secured party shall keep the collateral 
 
 
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1 identifiable, but fungible collateral may be commingled; 
2 and 
3  (4) the secured party may use or operate the 
4 collateral: 
5   (A) for the purpose of preserving the collateral 
6 or its value; 
7   (B) as permitted by an order of a court having 
8 competent jurisdiction; or 
9   (C) except in the case of consumer goods, in the 
10 manner and to the extent agreed by the debtor.
11 (c) Duties and rights when secured party in possession or 
12control. Except as otherwise provided in subsection (d), a 
13secured party having possession of collateral or control of 
14collateral under Section 7-106, 9-104, 9-105, 9-105A, 9-106, 
15or 9-107, or 9-107A: 
16  (1) may hold as additional security any proceeds, 
17 except money or funds, received from the collateral; 
18  (2) shall apply money or funds received from the 
19 collateral to reduce the secured obligation, unless 
20 remitted to the debtor; and 
21  (3) may create a security interest in the collateral.
22 (d) Buyer of certain rights to payment. If the secured 
23party is a buyer of accounts, chattel paper, payment 
24intangibles, or promissory notes or a consignor: 
25  (1) subsection (a) does not apply unless the secured 
26 party is entitled under an agreement: 
 
 
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1   (A) to charge back uncollected collateral; or 
2   (B) otherwise to full or limited recourse against 
3 the debtor or a secondary obligor based on the 
4 nonpayment or other default of an account debtor or 
5 other obligor on the collateral; and 
6  (2) subsections (b) and (c) do not apply.
7(Source: P.A. 95-895, eff. 1-1-09.)

8 (810 ILCS 5/9-208) (from Ch. 26, par. 9-208)
9 Sec. 9-208. Additional duties of secured party having 
10control of collateral.
11 (a) Applicability of Section. This Section applies to 
12cases in which there is no outstanding secured obligation and 
13the secured party is not committed to make advances, incur 
14obligations, or otherwise give value.
15 (b) Duties of secured party after receiving demand from 
16debtor. Within 10 days after receiving a signed an 
17authenticated demand by the debtor: 
18  (1) a secured party having control of a deposit 
19 account under Section 9-104(a)(2) shall send to the bank 
20 with which the deposit account is maintained a signed 
21 record an authenticated statement that releases the bank 
22 from any further obligation to comply with instructions 
23 originated by the secured party; 
24  (2) a secured party having control of a deposit 
25 account under Section 9-104(a)(3) shall: 
 
 
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1   (A) pay the debtor the balance on deposit in the 
2 deposit account; or 
3   (B) transfer the balance on deposit into a deposit 
4 account in the debtor's name; 
5  (3) a secured party, other than a buyer, having 
6 control under Section 9-105 of an authoritative electronic 
7 copy of a record evidencing chattel paper shall transfer 
8 control of the electronic copy to the debtor or a person 
9 designated by the debtor; a secured party, other than a 
10 buyer, having control of electronic chattel paper under 
11 Section 9-105 shall: 
12   (A) communicate the authoritative copy of the 
13 electronic chattel paper to the debtor or its 
14 designated custodian; 
15   (B) if the debtor designates a custodian that is 
16 the designated custodian with which the authoritative 
17 copy of the electronic chattel paper is maintained for 
18 the secured party, communicate to the custodian an 
19 authenticated record releasing the designated 
20 custodian from any further obligation to comply with 
21 instructions originated by the secured party and 
22 instructing the custodian to comply with instructions 
23 originated by the debtor; and 
24   (C) take appropriate action to enable the debtor 
25 or its designated custodian to make copies of or 
26 revisions to the authoritative copy which add or 
 
 
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1 change an identified assignee of the authoritative 
2 copy without the consent of the secured party; 
3  (4) a secured party having control of investment 
4 property under Section 8-106(d)(2) or 9-106(b) shall send 
5 to the securities intermediary or commodity intermediary 
6 with which the security entitlement or commodity contract 
7 is maintained a signed an authenticated record that 
8 releases the securities intermediary or commodity 
9 intermediary from any further obligation to comply with 
10 entitlement orders or directions originated by the secured 
11 party; 
12  (5) a secured party having control of a 
13 letter-of-credit right under Section 9-107 shall send to 
14 each person having an unfulfilled obligation to pay or 
15 deliver proceeds of the letter of credit to the secured 
16 party a signed an authenticated release from any further 
17 obligation to pay or deliver proceeds of the letter of 
18 credit to the secured party; and
19  (6) a secured party having control under Section 7-106 
20 of an authoritative electronic copy of an electronic 
21 document of title shall transfer control of the electronic 
22 copy to the debtor or a person designated by the debtor; a 
23 secured party having control of an electronic document 
24 shall:
25  (7) a secured party having control under Section 
26 9-105A of electronic money shall transfer control of the 
 
 
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1 electronic money to the debtor or a person designated by 
2 the debtor; and
3  (8) a secured party having control under Section 
4 12-105 of a controllable electronic record, other than a 
5 buyer of a controllable account or controllable payment 
6 intangible evidenced by the controllable electronic 
7 record, shall transfer control of the controllable 
8 electronic record to the debtor or a person designated by 
9 the debtor. 
10   (A) give control of the electronic document to the 
11 debtor or its designated custodian;
12   (B) if the debtor designates a custodian that is 
13 the designated custodian with which the authoritative 
14 copy of the electronic document is maintained for the 
15 secured party, communicate to the custodian an 
16 authenticated record releasing the designated 
17 custodian from any further obligation to comply with 
18 instructions originated by the secured party and 
19 instructing the custodian to comply with instructions 
20 originated by the debtor; and
21   (C) take appropriate action to enable the debtor 
22 or its designated custodian to make copies of or 
23 revisions to the authoritative copy which add or 
24 change an identified assignee of the authoritative 
25 copy without the consent of the secured party. 
26(Source: P.A. 95-895, eff. 1-1-09.)

 
 
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1 (810 ILCS 5/9-209)
2 Sec. 9-209. Duties of secured party if account debtor has 
3been notified of assignment.
4 (a) Applicability of Section. Except as otherwise provided 
5in subsection (c), this Section applies if: 
6  (1) there is no outstanding secured obligation; and 
7  (2) the secured party is not committed to make 
8 advances, incur obligations, or otherwise give value.
9 (b) Duties of secured party after receiving demand from 
10debtor. Within 10 days after receiving a signed an 
11authenticated demand by the debtor, a secured party shall send 
12to an account debtor that has received notification under 
13Section 9-406(a) or 12-106(b) of an assignment to the secured 
14party as assignee a signed under Section 9-406(a) an 
15authenticated record that releases the account debtor from any 
16further obligation to the secured party.
17 (c) Inapplicability to sales. This Section does not apply 
18to an assignment constituting the sale of an account, chattel 
19paper, or payment intangible.
20(Source: P.A. 91-893, eff. 7-1-01.)

21 (810 ILCS 5/9-210)
22 Sec. 9-210. Request for accounting; request regarding list 
23of collateral or statement of account.
24 (a) Definitions. In this Section: 
 
 
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1  (1) "Request" means a record of a type described in 
2 paragraph (2), (3), or (4). 
3  (2) "Request for an accounting" means a record signed 
4 authenticated by a debtor requesting that the recipient 
5 provide an accounting of the unpaid obligations secured by 
6 collateral and reasonably identifying the transaction or 
7 relationship that is the subject of the request. 
8  (3) "Request regarding a list of collateral" means a 
9 record signed authenticated by a debtor requesting that 
10 the recipient approve or correct a list of what the debtor 
11 believes to be the collateral securing an obligation and 
12 reasonably identifying the transaction or relationship 
13 that is the subject of the request. 
14  (4) "Request regarding a statement of account" means a 
15 record signed authenticated by a debtor requesting that 
16 the recipient approve or correct a statement indicating 
17 what the debtor believes to be the aggregate amount of 
18 unpaid obligations secured by collateral as of a specified 
19 date and reasonably identifying the transaction or 
20 relationship that is the subject of the request.
21 (b) Duty to respond to requests. Subject to subsections 
22(c), (d), (e), and (f), a secured party, other than a buyer of 
23accounts, chattel paper, payment intangibles, or promissory 
24notes or a consignor, shall comply with a request within 14 
25days after receipt: 
26  (1) in the case of a request for an accounting, by 
 
 
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1 signing authenticating and sending to the debtor an 
2 accounting; and 
3  (2) in the case of a request regarding a list of 
4 collateral or a request regarding a statement of account, 
5 by signing authenticating and sending to the debtor an 
6 approval or correction.
7 (c) Request regarding list of collateral; statement 
8concerning type of collateral. A secured party that claims a 
9security interest in all of a particular type of collateral 
10owned by the debtor may comply with a request regarding a list 
11of collateral by sending to the debtor a signed an 
12authenticated record including a statement to that effect 
13within 14 days after receipt.
14 (d) Request regarding list of collateral; no interest 
15claimed. A person that receives a request regarding a list of 
16collateral, claims no interest in the collateral when it 
17receives the request, and claimed an interest in the 
18collateral at an earlier time shall comply with the request 
19within 14 days after receipt by sending to the debtor a signed 
20an authenticated record: 
21  (1) disclaiming any interest in the collateral; and 
22  (2) if known to the recipient, providing the name and 
23 mailing address of any assignee of or successor to the 
24 recipient's interest in the collateral.
25 (e) Request for accounting or regarding statement of 
26account; no interest in obligation claimed. A person that 
 
 
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1receives a request for an accounting or a request regarding a 
2statement of account, claims no interest in the obligations 
3when it receives the request, and claimed an interest in the 
4obligations at an earlier time shall comply with the request 
5within 14 days after receipt by sending to the debtor a signed 
6an authenticated record: 
7  (1) disclaiming any interest in the obligations; and 
8  (2) if known to the recipient, providing the name and 
9 mailing address of any assignee of or successor to the 
10 recipient's interest in the obligations.
11 (f) Charges for responses. A debtor is entitled without 
12charge to one response to a request under this Section during 
13any six-month period. The secured party may require payment of 
14a charge not exceeding $25 for each additional response.
15(Source: P.A. 91-893, eff. 7-1-01.)

16 (810 ILCS 5/9-301) (from Ch. 26, par. 9-301)
17 Sec. 9-301. Law governing perfection and priority of 
18security interests. Except as otherwise provided in Sections 
199-303 through 9-306B 9-306.1, the following rules determine 
20the law governing perfection, the effect of perfection or 
21nonperfection, and the priority of a security interest in 
22collateral: 
23  (1) Except as otherwise provided in this Section, 
24 while a debtor is located in a jurisdiction, the local law 
25 of that jurisdiction governs perfection, the effect of 
 
 
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1 perfection or nonperfection, and the priority of a 
2 security interest in collateral. 
3  (2) While collateral is located in a jurisdiction, the 
4 local law of that jurisdiction governs perfection, the 
5 effect of perfection or nonperfection, and the priority of 
6 a possessory security interest in that collateral. 
7  (3) Except as otherwise provided in paragraph (4), 
8 while tangible negotiable documents, goods, instruments, 
9 or tangible money, or tangible chattel paper is located in 
10 a jurisdiction, the local law of that jurisdiction 
11 governs: 
12   (A) perfection of a security interest in the goods 
13 by filing a fixture filing; 
14   (B) perfection of a security interest in timber to 
15 be cut; and 
16   (C) the effect of perfection or nonperfection and 
17 the priority of a nonpossessory security interest in 
18 the collateral. 
19  (4) The local law of the jurisdiction in which the 
20 wellhead or minehead is located governs perfection, the 
21 effect of perfection or nonperfection, and the priority of 
22 a security interest in as-extracted collateral.
23(Source: P.A. 95-895, eff. 1-1-09.)

24 (810 ILCS 5/9-304) (from Ch. 26, par. 9-304)
25 Sec. 9-304. Law governing perfection and priority of 
 
 
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1security interests in deposit accounts.
2 (a) Law of bank's jurisdiction governs. The local law of a 
3bank's jurisdiction governs perfection, the effect of 
4perfection or nonperfection, and the priority of a security 
5interest in a deposit account maintained with that bank even 
6if the transaction does not bear any relation to the bank's 
7jurisdiction.
8 (b) Bank's jurisdiction. The following rules determine a 
9bank's jurisdiction for purposes of this Part: 
10  (1) If an agreement between the bank and the debtor 
11 governing the deposit account expressly provides that a 
12 particular jurisdiction is the bank's jurisdiction for 
13 purposes of this Part, this Article, or the Uniform 
14 Commercial Code, that jurisdiction is the bank's 
15 jurisdiction. 
16  (2) If paragraph (1) does not apply and an agreement 
17 between the bank and its customer governing the deposit 
18 account expressly provides that the agreement is governed 
19 by the law of a particular jurisdiction, that jurisdiction 
20 is the bank's jurisdiction. 
21  (3) If neither paragraph (1) nor paragraph (2) applies 
22 and an agreement between the bank and its customer 
23 governing the deposit account expressly provides that the 
24 deposit account is maintained at an office in a particular 
25 jurisdiction, that jurisdiction is the bank's 
26 jurisdiction. 
 
 
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1  (4) If none of the preceding paragraphs applies, the 
2 bank's jurisdiction is the jurisdiction in which the 
3 office identified in an account statement as the office 
4 serving the customer's account is located. 
5  (5) If none of the preceding paragraphs applies, the 
6 bank's jurisdiction is the jurisdiction in which the chief 
7 executive office of the bank is located.
8(Source: P.A. 91-893, eff. 7-1-01.)

9 (810 ILCS 5/9-305) (from Ch. 26, par. 9-305)
10 Sec. 9-305. Law governing perfection and priority of 
11security interests in investment property.
12 (a) Governing law: general rules. Except as otherwise 
13provided in subsection (c), the following rules apply: 
14  (1) While a security certificate is located in a 
15 jurisdiction, the local law of that jurisdiction governs 
16 perfection, the effect of perfection or nonperfection, and 
17 the priority of a security interest in the certificated 
18 security represented thereby. 
19  (2) The local law of the issuer's jurisdiction as 
20 specified in Section 8-110(d) governs perfection, the 
21 effect of perfection or nonperfection, and the priority of 
22 a security interest in an uncertificated security. 
23  (3) The local law of the securities intermediary's 
24 jurisdiction as specified in Section 8-110(e) governs 
25 perfection, the effect of perfection or nonperfection, and 
 
 
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1 the priority of a security interest in a security 
2 entitlement or securities account. 
3  (4) The local law of the commodity intermediary's 
4 jurisdiction governs perfection, the effect of perfection 
5 or nonperfection, and the priority of a security interest 
6 in a commodity contract or commodity account.
7  (5) Paragraphs (2), (3), and (4) apply even if the 
8 transaction does not bear any relation to the 
9 jurisdiction. 
10 (b) Commodity intermediary's jurisdiction. The following 
11rules determine a commodity intermediary's jurisdiction for 
12purposes of this Part: 
13  (1) If an agreement between the commodity intermediary 
14 and commodity customer governing the commodity account 
15 expressly provides that a particular jurisdiction is the 
16 commodity intermediary's jurisdiction for purposes of this 
17 Part, this Article, or the Uniform Commercial Code, that 
18 jurisdiction is the commodity intermediary's jurisdiction. 
19  (2) If paragraph (1) does not apply and an agreement 
20 between the commodity intermediary and commodity customer 
21 governing the commodity account expressly provides that 
22 the agreement is governed by the law of a particular 
23 jurisdiction, that jurisdiction is the commodity 
24 intermediary's jurisdiction. 
25  (3) If neither paragraph (1) nor paragraph (2) applies 
26 and an agreement between the commodity intermediary and 
 
 
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1 commodity customer governing the commodity account 
2 expressly provides that the commodity account is 
3 maintained at an office in a particular jurisdiction, that 
4 jurisdiction is the commodity intermediary's jurisdiction. 
5  (4) If none of the preceding paragraphs applies, the 
6 commodity intermediary's jurisdiction is the jurisdiction 
7 in which the office identified in an account statement as 
8 the office serving the commodity customer's account is 
9 located. 
10  (5) If none of the preceding paragraphs applies, the 
11 commodity intermediary's jurisdiction is the jurisdiction 
12 in which the chief executive office of the commodity 
13 intermediary is located.
14 (c) When perfection governed by law of jurisdiction where 
15debtor located. The local law of the jurisdiction in which the 
16debtor is located governs: 
17  (1) perfection of a security interest in investment 
18 property by filing; 
19  (2) automatic perfection of a security interest in 
20 investment property created by a broker or securities 
21 intermediary; and 
22  (3) automatic perfection of a security interest in a 
23 commodity contract or commodity account created by a 
24 commodity intermediary.
25(Source: P.A. 91-893, eff. 7-1-01.)

 
 
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1 (810 ILCS 5/9-306A new)
2 Sec. 9-306A. Law governing perfection and priority of 
3security interests in chattel paper. 
4 (a) Chattel paper evidenced by authoritative electronic 
5copy. Except as provided in subsection (d), if chattel paper 
6is evidenced only by an authoritative electronic copy of the 
7chattel paper or is evidenced by an authoritative electronic 
8copy and an authoritative tangible copy, the local law of the 
9chattel paper's jurisdiction governs perfection, the effect of 
10perfection or nonperfection, and the priority of a security 
11interest in the chattel paper, even if the transaction does 
12not bear any relation to the chattel paper's jurisdiction.
13 (b) Chattel paper's jurisdiction. The following rules 
14determine the chattel paper's jurisdiction under this Section:
15  (1) If the authoritative electronic copy of the record 
16 evidencing chattel paper, or a record attached to or 
17 logically associated with the electronic copy and readily 
18 available for review, expressly provides that a particular 
19 jurisdiction is the chattel paper's jurisdiction for 
20 purposes of this part, this Article, or the Uniform 
21 Commercial Code, that jurisdiction is the chattel paper's 
22 jurisdiction.
23  (2) If paragraph (1) does not apply and the rules of 
24 the system in which the authoritative electronic copy is 
25 recorded are readily available for review and expressly 
26 provide that a particular jurisdiction is the chattel 
 
 
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1 paper's jurisdiction for purposes of this part, this 
2 Article, or the Uniform Commercial Code, that jurisdiction 
3 is the chattel paper's jurisdiction.
4  (3) If paragraphs (1) and (2) do not apply and the 
5 authoritative electronic copy, or a record attached to or 
6 logically associated with the electronic copy and readily 
7 available for review, expressly provides that the chattel 
8 paper is governed by the law of a particular jurisdiction, 
9 that jurisdiction is the chattel paper's jurisdiction.
10  (4) If paragraphs (1), (2), and (3) do not apply and 
11 the rules of the system in which the authoritative 
12 electronic copy is recorded are readily available for 
13 review and expressly provide that the chattel paper or the 
14 system is governed by the law of a particular 
15 jurisdiction, that jurisdiction is the chattel paper's 
16 jurisdiction.
17  (5) If paragraphs (1) through (4) do not apply, the 
18 chattel paper's jurisdiction is the jurisdiction in which 
19 the debtor is located.
20 (c) Chattel paper evidenced by authoritative tangible 
21copy. If an authoritative tangible copy of a record evidences 
22chattel paper and the chattel paper is not evidenced by an 
23authoritative electronic copy, while the authoritative 
24tangible copy of the record evidencing chattel paper is 
25located in a jurisdiction, the local law of that jurisdiction 
26governs:
 
 
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1  (1) perfection of a security interest in the chattel 
2 paper by possession under Section 9-314A; and
3  (2) the effect of perfection or nonperfection and the 
4 priority of a security interest in the chattel paper.
5 (d) When perfection governed by law of jurisdiction where 
6debtor located. The local law of the jurisdiction in which the 
7debtor is located governs perfection of a security interest in 
8chattel paper by filing.

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

5 (810 ILCS 5/9-310) (from Ch. 26, par. 9-310)
6 Sec. 9-310. When filing required to perfect security 
7interest or agricultural lien; security interests and 
8agricultural liens to which filing provisions do not apply.
9 (a) General rule: perfection by filing. Except as 
10otherwise provided in subsection (b) and Section 9-312(b), a 
11financing statement must be filed to perfect all security 
12interests and agricultural liens.
13 (b) Exceptions: filing not necessary. The filing of a 
14financing statement is not necessary to perfect a security 
15interest: 
16  (1) that is perfected under Section 9-308(d), (e), 
17 (f), or (g); 
18  (2) that is perfected under Section 9-309 when it 
19 attaches; 
20  (3) in property subject to a statute, regulation, or 
21 treaty described in Section 9-311(a); 
22  (4) in goods in possession of a bailee which is 
23 perfected under Section 9-312(d)(1) or (2); 
24  (5) in certificated securities, documents, goods, or 
25 instruments which is perfected without filing, control, or 
 
 
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1 possession under Section 9-312(e), (f), or (g); 
2  (6) in collateral in the secured party's possession 
3 under Section 9-313; 
4  (7) in a certificated security which is perfected by 
5 delivery of the security certificate to the secured party 
6 under Section 9-313; 
7  (8) in controllable accounts, controllable electronic 
8 records, controllable payment intangibles, deposit 
9 accounts, electronic chattel paper, electronic documents, 
10 investment property, letter-of-credit rights, or 
11 beneficial interests in Illinois land trusts which is 
12 perfected by control under Section 9-314;
13  (8.1) in chattel paper that is perfected by possession 
14 and control under Section 9-314A;  
15  (9) in proceeds which is perfected under Section 
16 9-315; or 
17  (10) that is perfected under Section 9-316.
18 (c) Assignment of perfected security interest. If a 
19secured party assigns a perfected security interest or 
20agricultural lien, a filing under this Article is not required 
21to continue the perfected status of the security interest 
22against creditors of and transferees from the original debtor.
23(Source: P.A. 95-895, eff. 1-1-09.)

24 (810 ILCS 5/9-312) (from Ch. 26, par. 9-312)
25 Sec. 9-312. Perfection of security interests in chattel 
 
 
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1paper, controllable accounts, controllable electronic records, 
2controllable payment intangibles, deposit accounts, negotiable 
3documents, goods covered by documents, instruments, investment 
4property, letter-of-credit rights, and money; perfection by 
5permissive filing; temporary perfection without filing or 
6transfer of possession.
7 (a) Perfection by filing permitted. A security interest in 
8chattel paper, controllable accounts, controllable electronic 
9records, controllable payment intangibles, negotiable 
10documents, instruments, beneficial interests in Illinois land 
11trusts, or investment property, or negotiable documents may be 
12perfected by filing.
13 (b) Control or possession of certain collateral. Except as 
14otherwise provided in Section 9-315(c) and (d) for proceeds: 
15  (1) a security interest in a deposit account may be 
16 perfected only by control under Section 9-314; 
17  (2) and except as otherwise provided in Section 
18 9-308(d), a security interest in a letter-of-credit right 
19 may be perfected only by control under Section 9-314; and 
20  (3) a security interest in tangible money may be 
21 perfected only by the secured party's taking possession 
22 under Section 9-313; and .
23  (4) a security interest in electronic money may be 
24 perfected only by control under Section 9-314. 
25 (c) Goods covered by negotiable document. While goods are 
26in the possession of a bailee that has issued a negotiable 
 
 
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1document covering the goods: 
2  (1) a security interest in the goods may be perfected 
3 by perfecting a security interest in the document; and 
4  (2) a security interest perfected in the document has 
5 priority over any security interest that becomes perfected 
6 in the goods by another method during that time.
7 (d) Goods covered by nonnegotiable document. While goods 
8are in the possession of a bailee that has issued a 
9nonnegotiable document covering the goods, a security interest 
10in the goods may be perfected by: 
11  (1) issuance of a document in the name of the secured 
12 party; 
13  (2) the bailee's receipt of notification of the 
14 secured party's interest; or 
15  (3) filing as to the goods.
16 (e) Temporary perfection: new value. A security interest 
17in certificated securities, negotiable documents, or 
18instruments is perfected without filing or the taking of 
19possession or control for a period of 20 days from the time it 
20attaches to the extent that it arises for new value given under 
21a signed an authenticated security agreement.
22 (f) Temporary perfection: goods or documents made 
23available to debtor. A perfected security interest in a 
24negotiable document or goods in possession of a bailee, other 
25than one that has issued a negotiable document for the goods, 
26remains perfected for 20 days without filing if the secured 
 
 
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1party makes available to the debtor the goods or documents 
2representing the goods for the purpose of: 
3  (1) ultimate sale or exchange; or 
4  (2) loading, unloading, storing, shipping, 
5 transshipping, manufacturing, processing, or otherwise 
6 dealing with them in a manner preliminary to their sale or 
7 exchange.
8 (g) Temporary perfection: delivery of security certificate 
9or instrument to debtor. A perfected security interest in a 
10certificated security or instrument remains perfected for 20 
11days without filing if the secured party delivers the security 
12certificate or instrument to the debtor for the purpose of: 
13  (1) ultimate sale or exchange; or 
14  (2) presentation, collection, enforcement, renewal, or 
15 registration of transfer.
16 (h) Expiration of temporary perfection. After the 20-day 
17period specified in subsection (e), (f), or (g) expires, 
18perfection depends upon compliance with this Article.
19(Source: P.A. 95-895, eff. 1-1-09.)

20 (810 ILCS 5/9-313) (from Ch. 26, par. 9-313)
21 Sec. 9-313. When possession by or delivery to secured 
22party perfects security interest without filing.
23 (a) Perfection by possession or delivery. Except as 
24otherwise provided in subsection (b), a secured party may 
25perfect a security interest in tangible negotiable documents, 
 
 
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1goods, instruments, negotiable tangible documents, or tangible 
2money, or tangible chattel paper by taking possession of the 
3collateral. A secured party may perfect a security interest in 
4certificated securities by taking delivery of the certificated 
5securities under Section 8-301.
6 (b) Goods covered by certificate of title. With respect to 
7goods covered by a certificate of title issued by this State, a 
8secured party may perfect a security interest in the goods by 
9taking possession of the goods only in the circumstances 
10described in Section 9-316(d).
11 (c) Collateral in possession of person other than debtor. 
12With respect to collateral other than certificated securities 
13and goods covered by a document, a secured party takes 
14possession of collateral in the possession of a person other 
15than the debtor, the secured party, or a lessee of the 
16collateral from the debtor in the ordinary course of the 
17debtor's business, when: 
18  (1) the person in possession signs authenticates a 
19 record acknowledging that it holds possession of the 
20 collateral for the secured party's benefit; or 
21  (2) the person takes possession of the collateral 
22 after having signed authenticated a record acknowledging 
23 that it will hold possession of the collateral for the 
24 secured party's benefit.
25 (d) Time of perfection by possession; continuation of 
26perfection. If perfection of a security interest depends upon 
 
 
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1possession of the collateral by a secured party, perfection 
2occurs not no earlier than the time the secured party takes 
3possession and continues only while the secured party retains 
4possession.
5 (e) Time of perfection by delivery; continuation of 
6perfection. A security interest in a certificated security in 
7registered form is perfected by delivery when delivery of the 
8certificated security occurs under Section 8-301 and remains 
9perfected by delivery until the debtor obtains possession of 
10the security certificate.
11 (f) Acknowledgment not required. A person in possession of 
12collateral is not required to acknowledge that it holds 
13possession for a secured party's benefit.
14 (g) Effectiveness of acknowledgment; no duties or 
15confirmation. If a person acknowledges that it holds 
16possession for the secured party's benefit: 
17  (1) the acknowledgment is effective under subsection 
18 (c) or Section 8-301(a), even if the acknowledgment 
19 violates the rights of a debtor; and 
20  (2) unless the person otherwise agrees or law other 
21 than this Article otherwise provides, the person does not 
22 owe any duty to the secured party and is not required to 
23 confirm the acknowledgment to another person.
24 (h) Secured party's delivery to person other than debtor. 
25A secured party having possession of collateral does not 
26relinquish possession by delivering the collateral to a person 
 
 
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1other than the debtor or a lessee of the collateral from the 
2debtor in the ordinary course of the debtor's business if the 
3person was instructed before the delivery or is instructed 
4contemporaneously with the delivery: 
5  (1) to hold possession of the collateral for the 
6 secured party's benefit; or 
7  (2) to redeliver the collateral to the secured party.
8 (i) Effect of delivery under subsection (h); no duties or 
9confirmation. A secured party does not relinquish possession, 
10even if a delivery under subsection (h) violates the rights of 
11a debtor. A person to which collateral is delivered under 
12subsection (h) does not owe any duty to the secured party and 
13is not required to confirm the delivery to another person 
14unless the person otherwise agrees or law other than this 
15Article otherwise provides.
16(Source: P.A. 95-895, eff. 1-1-09.)

17 (810 ILCS 5/9-314) (from Ch. 26, par. 9-314)
18 Sec. 9-314. Perfection by control. 
19 (a) Perfection by control. A security interest in 
20controllable accounts, controllable electronic records, 
21controllable payment intangibles, deposit accounts, electronic 
22documents, electronic money, investment property, or 
23letter-of-credit rights investment property, deposit accounts, 
24electronic chattel paper, letter-of-credit rights, electronic 
25documents, or beneficial interests in Illinois land trusts may 
 
 
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1be perfected by control of the collateral under Section 7-106, 
29-104, 9-105A 9-105, 9-106, 9-107, or 9-107.1, or 9-107A.
3 (b) Specified collateral: time of perfection by control; 
4continuation of perfection. A security interest in 
5controllable accounts, controllable electronic records, 
6controllable payment intangibles, deposit accounts, electronic 
7documents, electronic money, or letter-of-credit rights 
8deposit accounts, electronic chattel paper, letter-of-credit 
9rights, electronic documents, or beneficial interests in 
10Illinois land trusts is perfected by control under Section 
117-106, 9-104, 9-105A, 9-105, 9-107, or 9-107.1, or 9-107A not 
12earlier than the time when the secured party obtains control 
13and remains perfected by control only while the secured party 
14retains control.
15 (c) Investment property: time of perfection by control; 
16continuation of perfection. A security interest in investment 
17property is perfected by control under Section 9-106 not 
18earlier than from the time the secured party obtains control 
19and remains perfected by control until: 
20  (1) the secured party does not have control; and 
21  (2) one of the following occurs: 
22   (A) if the collateral is a certificated security, 
23 the debtor has or acquires possession of the security 
24 certificate; 
25   (B) if the collateral is an uncertificated 
26 security, the issuer has registered or registers the 
 
 
SB3696- 145 -LRB103 37687 SPS 67814 b


1 debtor as the registered owner; or 
2   (C) if the collateral is a security entitlement, 
3 the debtor is or becomes the entitlement holder.
4(Source: P.A. 95-895, eff. 1-1-09.)

5 (810 ILCS 5/9-314A new)
6 Sec. 9-314A. Perfection by possession and control of 
7chattel paper.
8 (a) Perfection by possession and control. A secured party 
9may perfect a security interest in chattel paper by taking 
10possession of each authoritative tangible copy of the record 
11evidencing the chattel paper and obtaining control of each 
12authoritative electronic copy of the electronic record 
13evidencing the chattel paper.
14 (b) Time of perfection; continuation of perfection. A 
15security interest is perfected under subsection (a) not 
16earlier than the time the secured party takes possession and 
17obtains control and remains perfected under subsection (a) 
18only while the secured party retains possession and control.
19 (c) Application of Section 9-313 to perfection by 
20possession of chattel paper. Section 9-313(c) and (f) through 
21(i) applies to perfection by possession of an authoritative 
22tangible copy of a record evidencing chattel paper.

23 (810 ILCS 5/9-316) (from Ch. 26, par. 9-316)
24 Sec. 9-316. Effect of change in governing law.
 
 
SB3696- 146 -LRB103 37687 SPS 67814 b


1 (a) General rule: effect on perfection of change in 
2governing law. A security interest perfected pursuant to the 
3law of the jurisdiction designated in Section 9-301(1), or 
49-305(c), 9-306A(d), or 9-306B(b) remains perfected until the 
5earliest of: 
6  (1) the time perfection would have ceased under the 
7 law of that jurisdiction; 
8  (2) the expiration of four months after a change of 
9 the debtor's location to another jurisdiction; or 
10  (3) the expiration of one year after a transfer of 
11 collateral to a person that thereby becomes a debtor and 
12 is located in another jurisdiction.
13 (b) Security interest perfected or unperfected under law 
14of new jurisdiction. If a security interest described in 
15subsection (a) becomes perfected under the law of the other 
16jurisdiction before the earliest time or event described in 
17that subsection, it remains perfected thereafter. If the 
18security interest does not become perfected under the law of 
19the other jurisdiction before the earliest time or event, it 
20becomes unperfected and is deemed never to have been perfected 
21as against a purchaser of the collateral for value.
22 (c) Possessory security interest in collateral moved to 
23new jurisdiction. A possessory security interest in 
24collateral, other than goods covered by a certificate of title 
25and as-extracted collateral consisting of goods, remains 
26continuously perfected if: 
 
 
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1  (1) the collateral is located in one jurisdiction and 
2 subject to a security interest perfected under the law of 
3 that jurisdiction; 
4  (2) thereafter the collateral is brought into another 
5 jurisdiction; and 
6  (3) upon entry into the other jurisdiction, the 
7 security interest is perfected under the law of the other 
8 jurisdiction.
9 (d) Goods covered by certificate of title from this State. 
10Except as otherwise provided in subsection (e), a security 
11interest in goods covered by a certificate of title which is 
12perfected by any method under the law of another jurisdiction 
13when the goods become covered by a certificate of title from 
14this State remains perfected until the security interest would 
15have become unperfected under the law of the other 
16jurisdiction had the goods not become so covered.
17 (e) When subsection (d) security interest becomes 
18unperfected against purchasers. A security interest described 
19in subsection (d) becomes unperfected as against a purchaser 
20of the goods for value and is deemed never to have been 
21perfected as against a purchaser of the goods for value if the 
22applicable requirements for perfection under Section 9-311(b) 
23or 9-313 are not satisfied before the earlier of: 
24  (1) the time the security interest would have become 
25 unperfected under the law of the other jurisdiction had 
26 the goods not become covered by a certificate of title 
 
 
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1 from this State; or 
2  (2) the expiration of four months after the goods had 
3 become so covered.
4 (f) Change in jurisdiction of chattel paper, controllable 
5electronic record, bank, issuer, nominated person, securities 
6intermediary, or commodity intermediary. A security interest 
7in chattel paper, controllable accounts, controllable 
8electronic records, controllable payment intangibles, deposit 
9accounts, letter-of-credit rights, or investment property 
10which is perfected under the law of the chattel paper's 
11jurisdiction, the controllable electronic record's 
12jurisdiction, the bank's jurisdiction, the issuer's 
13jurisdiction, a nominated person's jurisdiction, the 
14securities intermediary's jurisdiction, or the commodity 
15intermediary's jurisdiction, as applicable, remains perfected 
16until the earlier of: 
17  (1) the time the security interest would have become 
18 unperfected under the law of that jurisdiction; or 
19  (2) the expiration of four months after a change of 
20 the applicable jurisdiction to another jurisdiction.
21 (g) Subsection (f) security interest perfected or 
22unperfected under law of new jurisdiction. If a security 
23interest described in subsection (f) becomes perfected under 
24the law of the other jurisdiction before the earlier of the 
25time or the end of the period described in that subsection, it 
26remains perfected thereafter. If the security interest does 
 
 
SB3696- 149 -LRB103 37687 SPS 67814 b


1not become perfected under the law of the other jurisdiction 
2before the earlier of that time or the end of that period, it 
3becomes unperfected and is deemed never to have been perfected 
4as against a purchaser of the collateral for value.
5 (h) Effect on filed financing statement of change in 
6governing law. The following rules apply to collateral to 
7which a security interest attaches within four months after 
8the debtor changes its location to another jurisdiction: 
9  (1) A financing statement filed before the change 
10 pursuant to the law of the jurisdiction designated in 
11 Section 9-301(1) or 9-305(c) is effective to perfect a 
12 security interest in the collateral if the financing 
13 statement would have been effective to perfect a security 
14 interest in the collateral had the debtor not changed its 
15 location.
16  (2) If a security interest perfected by a financing 
17 statement that is effective under paragraph (1) becomes 
18 perfected under the law of the other jurisdiction before 
19 the earlier of the time the financing statement would have 
20 become ineffective under the law of the jurisdiction 
21 designated in Section 9-301(1) or 9-305(c) or the 
22 expiration of the four-month period, it remains perfected 
23 thereafter. If the security interest does not become 
24 perfected under the law of the other jurisdiction before 
25 the earlier time or event, it becomes unperfected and is 
26 deemed never to have been perfected as against a purchaser 
 
 
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1 of the collateral for value. 
2 (i) Effect of change in governing law on financing 
3statement filed against original debtor. If a financing 
4statement naming an original debtor is filed pursuant to the 
5law of the jurisdiction designated in Section 9-301(1) or 
69-305(c) and the new debtor is located in another 
7jurisdiction, the following rules apply: 
8  (1) The financing statement is effective to perfect a 
9 security interest in collateral acquired by the new debtor 
10 before, and within four months after, the new debtor 
11 becomes bound under Section 9-203(d), if the financing 
12 statement would have been effective to perfect a security 
13 interest in the collateral had the collateral been 
14 acquired by the original debtor.
15  (2) A security interest perfected by the financing 
16 statement and which becomes perfected under the law of the 
17 other jurisdiction before the earlier of the time the 
18 financing statement would have become ineffective under 
19 the law of the jurisdiction designated in Section 9-301(1) 
20 or 9-305(c) or the expiration of the four-month period 
21 remains perfected thereafter. A security interest that is 
22 perfected by the financing statement but which does not 
23 become perfected under the law of the other jurisdiction 
24 before the earlier time or event becomes unperfected and 
25 is deemed never to have been perfected as against a 
26 purchaser of the collateral for value. 
 
 
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1(Source: P.A. 97-1034, eff. 7-1-13.)

2 (810 ILCS 5/9-317) (from Ch. 26, par. 9-317)
3 Sec. 9-317. Interests that take priority over or take free 
4of security interest or agricultural lien.
5 (a) Conflicting security interests and rights of lien 
6creditors. A security interest or agricultural lien is 
7subordinate to the rights of: 
8  (1) a person entitled to priority under Section 9-322; 
9 and 
10  (2) except as otherwise provided in subsection (e) or 
11 (f), a person that becomes a lien creditor before the 
12 earlier of the time: 
13   (A) the security interest or agricultural lien is 
14 perfected; or 
15   (B) one of the conditions specified in Section 
16 9-203(b)(3) is met and a financing statement covering 
17 the collateral is filed.
18 (b) Buyers that receive delivery. Except as otherwise 
19provided in subsection (e), a buyer, other than a secured 
20party, of tangible chattel paper, tangible documents, goods, 
21instruments, tangible documents, or a certificated security 
22takes free of a security interest or agricultural lien if the 
23buyer gives value and receives delivery of the collateral 
24without knowledge of the security interest or agricultural 
25lien and before it is perfected.
 
 
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1 (c) Lessees that receive delivery. Except as otherwise 
2provided in subsection (e), a lessee of goods takes free of a 
3security interest or agricultural lien if the lessee gives 
4value and receives delivery of the collateral without 
5knowledge of the security interest or agricultural lien and 
6before it is perfected.
7 (d) Licensees and buyers of certain collateral. Subject to 
8subsections (g) through (j), a A licensee of a general 
9intangible or a buyer, other than a secured party, of 
10collateral other than electronic money tangible chattel paper, 
11tangible documents, goods, instruments, tangible documents, or 
12a certificated security takes free of a security interest if 
13the licensee or buyer gives value without knowledge of the 
14security interest and before it is perfected.
15 (e) Purchase-money security interest. Except as otherwise 
16provided in Sections 9-320 and 9-321, if a person files a 
17financing statement with respect to a purchase-money security 
18interest before or within 20 days after the debtor receives 
19delivery of the collateral, the security interest takes 
20priority over the rights of a buyer, lessee, or lien creditor 
21which arise between the time the security interest attaches 
22and the time of filing.
23 (f) Public deposits. An unperfected security interest 
24shall take priority over the rights of a lien creditor if (i) 
25the lien creditor is a trustee or receiver of a bank or acting 
26in furtherance of its supervisory authority over such bank and 
 
 
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1(ii) a security interest is granted by the bank to secure a 
2deposit of public funds with the bank or a repurchase 
3agreement with the bank pursuant to the Government Securities 
4Act of 1986, as amended.
5 (g) Buyers of chattel paper. A buyer, other than a secured 
6party, of chattel paper takes free of a security interest if, 
7without knowledge of the security interest and before it is 
8perfected, the buyer gives value and:
9  (1) receives delivery of each authoritative tangible 
10 copy of the record evidencing the chattel paper; and
11  (2) if each authoritative electronic copy of the 
12 record evidencing the chattel paper can be subjected to 
13 control under Section 9-105, obtains control of each 
14 authoritative electronic copy.
15 (h) Buyers of electronic documents. A buyer of an 
16electronic document takes free of a security interest if, 
17without knowledge of the security interest and before it is 
18perfected, the buyer gives value and, if each authoritative 
19electronic copy of the document can be subjected to control 
20under Section 7-106, obtains control of each authoritative 
21electronic copy.
22 (i) Buyers of controllable electronic records. A buyer of 
23a controllable electronic record takes free of a security 
24interest if, without knowledge of the security interest and 
25before it is perfected, the buyer gives value and obtains 
26control of the controllable electronic record.
 
 
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1 (j) Buyers of controllable accounts and controllable 
2payment intangibles. A buyer, other than a secured party, of a 
3controllable account or a controllable payment intangible 
4takes free of a security interest if, without knowledge of the 
5security interest and before it is perfected, the buyer gives 
6value and obtains control of the controllable account or 
7controllable payment intangible. 
8(Source: P.A. 97-1034, eff. 7-1-13.)

9 (810 ILCS 5/9-323)
10 Sec. 9-323. Future advances. 
11 (a) When priority based on time of advance. Except as 
12otherwise provided in subsection (c), for purposes of 
13determining the priority of a perfected security interest 
14under Section 9-322(a)(1), perfection of the security interest 
15dates from the time an advance is made to the extent that the 
16security interest secures an advance that: 
17  (1) is made while the security interest is perfected 
18 only: 
19   (A) under Section 9-309 when it attaches; or 
20   (B) temporarily under Section 9-312(e), (f), or 
21 (g); and 
22  (2) is not made pursuant to a commitment entered into 
23 before or while the security interest is perfected by a 
24 method other than under Section 9-309 or 9-312(e), (f), or 
25 (g).
 
 
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1 (b) Lien creditor. Except as otherwise provided in 
2subsection (c), a security interest is subordinate to the 
3rights of a person that becomes a lien creditor to the extent 
4that the security interest secures an advance made more than 
545 days after the person becomes a lien creditor unless the 
6advance is made: 
7  (1) without knowledge of the lien; or 
8  (2) pursuant to a commitment entered into without 
9 knowledge of the lien.
10 (c) Buyer of receivables. Subsections (a) and (b) do not 
11apply to a security interest held by a secured party that is a 
12buyer of accounts, chattel paper, payment intangibles, or 
13promissory notes or a consignor.
14 (d) Buyer of goods. Except as otherwise provided in 
15subsection (e), a buyer of goods other than a buyer in ordinary 
16course of business takes free of a security interest to the 
17extent that it secures advances made after the earlier of: 
18  (1) the time the secured party acquires knowledge of 
19 the buyer's purchase; or 
20  (2) 45 days after the purchase.
21 (e) Advances made pursuant to commitment: priority of 
22buyer of goods. Subsection (d) does not apply if the advance is 
23made pursuant to a commitment entered into without knowledge 
24of the buyer's purchase and before the expiration of the 
2545-day period.
26 (f) Lessee of goods. Except as otherwise provided in 
 
 
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1subsection (g), a lessee of goods, other than a lessee in 
2ordinary course of business, takes the leasehold interest free 
3of a security interest to the extent that it secures advances 
4made after the earlier of: 
5  (1) the time the secured party acquires knowledge of 
6 the lease; or 
7  (2) 45 days after the lease contract becomes 
8 enforceable.
9 (g) Advances made pursuant to commitment: priority of 
10lessee of goods. Subsection (f) does not apply if the advance 
11is made pursuant to a commitment entered into without 
12knowledge of the lease and before the expiration of the 45-day 
13period.
14(Source: P.A. 91-893, eff. 7-1-01.)

15 (810 ILCS 5/9-324)
16 Sec. 9-324. Priority of purchase-money security interests. 
17 (a) General rule: purchase-money priority. Except as 
18otherwise provided in subsection (g), a perfected 
19purchase-money security interest in goods other than inventory 
20or livestock has priority over a conflicting security interest 
21in the same goods, and, except as otherwise provided in 
22Section 9-327, a perfected security interest in its 
23identifiable proceeds also has priority, if the purchase-money 
24security interest is perfected when the debtor receives 
25possession of the collateral or within 20 days thereafter.
 
 
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1 (b) Inventory purchase-money priority. Subject to 
2subsection (c) and except as otherwise provided in subsection 
3(g), a perfected purchase-money security interest in inventory 
4has priority over a conflicting security interest in the same 
5inventory, has priority over a conflicting security interest 
6in chattel paper or an instrument constituting proceeds of the 
7inventory and in proceeds of the chattel paper, if so provided 
8in Section 9-330, and, except as otherwise provided in Section 
99-327, also has priority in identifiable cash proceeds of the 
10inventory to the extent the identifiable cash proceeds are 
11received on or before the delivery of the inventory to a buyer, 
12if: 
13  (1) the purchase-money security interest is perfected 
14 when the debtor receives possession of the inventory; 
15  (2) the purchase-money secured party sends a signed an 
16 authenticated notification to the holder of the 
17 conflicting security interest; 
18  (3) the holder of the conflicting security interest 
19 receives the notification within five years before the 
20 debtor receives possession of the inventory; and 
21  (4) the notification states that the person sending 
22 the notification has or expects to acquire a 
23 purchase-money security interest in inventory of the 
24 debtor and describes the inventory.
25 (c) Holders of conflicting inventory security interests to 
26be notified. Subsections (b)(2) through (4) apply only if the 
 
 
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1holder of the conflicting security interest had filed a 
2financing statement covering the same types of inventory: 
3  (1) if the purchase-money security interest is 
4 perfected by filing, before the date of the filing; or 
5  (2) if the purchase-money security interest is 
6 temporarily perfected without filing or possession under 
7 Section 9-312(f), before the beginning of the 20-day 
8 period thereunder.
9 (d) Livestock purchase-money priority. Subject to 
10subsection (e) and except as otherwise provided in subsection 
11(g), a perfected purchase-money security interest in livestock 
12that are farm products has priority over a conflicting 
13security interest in the same livestock, and, except as 
14otherwise provided in Section 9-327, a perfected security 
15interest in their identifiable proceeds and identifiable 
16products in their unmanufactured states also has priority, if: 
17  (1) the purchase-money security interest is perfected 
18 when the debtor receives possession of the livestock; 
19  (2) the purchase-money secured party sends a signed an 
20 authenticated notification to the holder of the 
21 conflicting security interest; 
22  (3) the holder of the conflicting security interest 
23 receives the notification within six months before the 
24 debtor receives possession of the livestock; and 
25  (4) the notification states that the person sending 
26 the notification has or expects to acquire a 
 
 
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1 purchase-money security interest in livestock of the 
2 debtor and describes the livestock.
3 (e) Holders of conflicting livestock security interests to 
4be notified. Subsections (d)(2) through (4) apply only if the 
5holder of the conflicting security interest had filed a 
6financing statement covering the same types of livestock: 
7  (1) if the purchase-money security interest is 
8 perfected by filing, before the date of the filing; or 
9  (2) if the purchase-money security interest is 
10 temporarily perfected without filing or possession under 
11 Section 9-312(f), before the beginning of the 20-day 
12 period thereunder.
13 (f) Software purchase-money priority. Except as otherwise 
14provided in subsection (g), a perfected purchase-money 
15security interest in software has priority over a conflicting 
16security interest in the same collateral, and, except as 
17otherwise provided in Section 9-327, a perfected security 
18interest in its identifiable proceeds also has priority, to 
19the extent that the purchase-money security interest in the 
20goods in which the software was acquired for use has priority 
21in the goods and proceeds of the goods under this Section.
22 (g) Conflicting purchase-money security interests. If more 
23than one security interest qualifies for priority in the same 
24collateral under subsection (a), (b), (d), or (f): 
25  (1) a security interest securing an obligation 
26 incurred as all or part of the price of the collateral has 
 
 
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1 priority over a security interest securing an obligation 
2 incurred for value given to enable the debtor to acquire 
3 rights in or the use of collateral; and 
4  (2) in all other cases, Section 9-322(a) applies to 
5 the qualifying security interests.
6(Source: P.A. 91-893, eff. 7-1-01.)

7 (810 ILCS 5/9-326A new)
8 Sec. 9-326A. Priority of security interest in controllable 
9account, controllable electronic record, and controllable 
10payment intangible. A security interest in a controllable 
11account, controllable electronic record, or controllable 
12payment intangible held by a secured party having control of 
13the account, electronic record, or payment intangible has 
14priority over a conflicting security interest held by a 
15secured party that does not have control.

16 (810 ILCS 5/9-330)
17 Sec. 9-330. Priority of purchaser of chattel paper or 
18instrument. 
19 (a) Purchaser's priority: security interest claimed merely 
20as proceeds. A purchaser of chattel paper has priority over a 
21security interest in the chattel paper which is claimed merely 
22as proceeds of inventory subject to a security interest if: 
23  (1) in good faith and in the ordinary course of the 
24 purchaser's business, the purchaser gives new value, and 
 
 
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1 takes possession of each authoritative tangible copy of 
2 the record evidencing the chattel paper, and or obtains 
3 control under Section 9-105 of each authoritative 
4 electronic copy of the record evidencing of the chattel 
5 paper under Section 9-105; and 
6  (2) the authoritative copies of the record evidencing 
7 the chattel paper do chattel paper does not indicate that 
8 the chattel paper it has been assigned to an identified 
9 assignee other than the purchaser.
10 (b) Purchaser's priority: other security interests. A 
11purchaser of chattel paper has priority over a security 
12interest in the chattel paper which is claimed other than 
13merely as proceeds of inventory subject to a security interest 
14if the purchaser gives new value, and takes possession of each 
15authoritative tangible copy of the record evidencing the 
16chattel paper, and or obtains control under Section 9-105 of 
17each authoritative electronic copy of the record evidencing of 
18the chattel paper under Section 9-105 in good faith, in the 
19ordinary course of the purchaser's business, and without 
20knowledge that the purchase violates the rights of the secured 
21party.
22 (c) Chattel paper purchaser's priority in proceeds. Except 
23as otherwise provided in Section 9-327, a purchaser having 
24priority in chattel paper under subsection (a) or (b) also has 
25priority in proceeds of the chattel paper to the extent that: 
26  (1) Section 9-322 provides for priority in the 
 
 
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1 proceeds; or 
2  (2) the proceeds consist of the specific goods covered 
3 by the chattel paper or cash proceeds of the specific 
4 goods, even if the purchaser's security interest in the 
5 proceeds is unperfected.
6 (d) Instrument purchaser's priority. Except as otherwise 
7provided in Section 9-331(a), a purchaser of an instrument has 
8priority over a security interest in the instrument perfected 
9by a method other than possession if the purchaser gives value 
10and takes possession of the instrument in good faith and 
11without knowledge that the purchase violates the rights of the 
12secured party.
13 (e) Holder of purchase-money security interest gives new 
14value. For purposes of subsections (a) and (b), the holder of a 
15purchase-money security interest in inventory gives new value 
16for chattel paper constituting proceeds of the inventory.
17 (f) Indication of assignment gives knowledge. For purposes 
18of subsections (b) and (d), if the authoritative copies of the 
19record evidencing chattel paper or an instrument indicate 
20indicates that the chattel paper or instrument it has been 
21assigned to an identified secured party other than the 
22purchaser, a purchaser of the chattel paper or instrument has 
23knowledge that the purchase violates the rights of the secured 
24party.
25(Source: P.A. 91-893, eff. 7-1-01.)

 
 
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1 (810 ILCS 5/9-331)
2 Sec. 9-331. Priority of rights of purchasers of 
3controllable accounts, controllable electronic records, 
4controllable payment intangibles, instruments, documents, 
5instruments, and securities under other Articles; priority of 
6interests in financial assets and security entitlements and 
7protection against assertion of claim under Articles Article 8 
8and 12.
9 (a) Rights under Articles 3, 7, and 8, and 12 not limited. 
10This Article does not limit the rights of a holder in due 
11course of a negotiable instrument, a holder to which a 
12negotiable document of title has been duly negotiated, or a 
13protected purchaser of a security, or a qualifying purchaser 
14of a controllable account, controllable electronic record, or 
15controllable payment intangible. These holders or purchasers 
16take priority over an earlier security interest, even if 
17perfected, to the extent provided in Articles 3, 7, and 8, and 
1812.
19 (b) Protection under Articles Article 8 and 12. This 
20Article does not limit the rights of or impose liability on a 
21person to the extent that the person is protected against the 
22assertion of a claim under Article 8 or 12.
23 (c) Filing not notice. Filing under this Article does not 
24constitute notice of a claim or defense to the holders, or 
25purchasers, or persons described in subsections (a) and (b).
26(Source: P.A. 91-893, eff. 7-1-01.)

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

21 (810 ILCS 5/9-334)
22 Sec. 9-334. Priority of security interests in fixtures and 
23crops. 
24 (a) Security interest in fixtures under this Article. A 
 
 
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1security interest under this Article may be created in goods 
2that are fixtures or may continue in goods that become 
3fixtures. A security interest does not exist under this 
4Article in ordinary building materials incorporated into an 
5improvement on land.
6 (b) Security interest in fixtures under real-property law. 
7This Article does not prevent creation of an encumbrance upon 
8fixtures under real property law.
9 (c) General rule: subordination of security interest in 
10fixtures. In cases not governed by subsections (d) through 
11(h), a security interest in fixtures is subordinate to a 
12conflicting interest of an encumbrancer or owner of the 
13related real property other than the debtor.
14 (d) Fixtures purchase-money priority. Except as otherwise 
15provided in subsection (h), a perfected security interest in 
16fixtures has priority over a conflicting interest of an 
17encumbrancer or owner of the real property if the debtor has an 
18interest of record in or is in possession of the real property 
19and: 
20  (1) the security interest is a purchase-money security 
21 interest; 
22  (2) the interest of the encumbrancer or owner arises 
23 before the goods become fixtures; and 
24  (3) the security interest is perfected by a fixture 
25 filing before the goods become fixtures or within 20 days 
26 thereafter.
 
 
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1 (e) Priority of security interest in fixtures over 
2interests in real property. A perfected security interest in 
3fixtures has priority over a conflicting interest of an 
4encumbrancer or owner of the real property if: 
5  (1) the debtor has an interest of record in the real 
6 property or is in possession of the real property and the 
7 security interest: 
8   (A) is perfected by a fixture filing before the 
9 interest of the encumbrancer or owner is of record; 
10 and 
11   (B) has priority over any conflicting interest of 
12 a predecessor in title of the encumbrancer or owner; 
13  (2) before the goods become fixtures, the security 
14 interest is perfected by any method permitted by this 
15 Article and the fixtures are readily removable: 
16   (A) factory or office machines; 
17   (B) equipment that is not primarily used or leased 
18 for use in the operation of the real property; or 
19   (C) replacements of domestic appliances that are 
20 consumer goods; 
21  (3) the conflicting interest is a lien on the real 
22 property obtained by legal or equitable proceedings after 
23 the security interest was perfected by any method 
24 permitted by this Article; or 
25  (4) the security interest is: 
26   (A) created in a manufactured home in a 
 
 
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1 manufactured-home transaction; and 
2   (B) perfected pursuant to a statute described in 
3 Section 9-311(a)(2).
4 (f) Priority based on consent, disclaimer, or right to 
5remove. A security interest in fixtures, whether or not 
6perfected, has priority over a conflicting interest of an 
7encumbrancer or owner of the real property if: 
8  (1) the encumbrancer or owner has, in a signed an 
9 authenticated record, consented to the security interest 
10 or disclaimed an interest in the goods as fixtures; or 
11  (2) the debtor has a right to remove the goods as 
12 against the encumbrancer or owner.
13 (g) Continuation of subsection (f)(2) priority. The 
14priority of the security interest under subsection (f)(2) 
15continues for a reasonable time if the debtor's right to 
16remove the goods as against the encumbrancer or owner 
17terminates.
18 (h) Priority of construction mortgage. A mortgage is a 
19construction mortgage to the extent that it secures an 
20obligation incurred for the construction of an improvement on 
21land, including the acquisition cost of the land, if a 
22recorded record of the mortgage so indicates. Except as 
23otherwise provided in subsections (e) and (f), a security 
24interest in fixtures is subordinate to a construction mortgage 
25if a record of the mortgage is recorded before the goods become 
26fixtures and the goods become fixtures before the completion 
 
 
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1of the construction. A mortgage has this priority to the same 
2extent as a construction mortgage to the extent that it is 
3given to refinance a construction mortgage.
4 (i) Priority of security interest in crops. 
5  (1) Subject to Section 9-322(g), a perfected security 
6 interest in crops growing on real property has priority 
7 over: 
8   (A) a conflicting interest of an encumbrancer or 
9 owner of the real property; and 
10   (B) the rights of a holder of an obligation 
11 secured by a collateral assignment of beneficial 
12 interest in a land trust, including rights by virtue 
13 of an equitable lien. 
14  (2) For purposes of this subsection: 
15   (A) "Collateral assignment of beneficial interest" 
16 means any pledge or assignment of the beneficial 
17 interest in a land trust to a person to secure a debt 
18 to other obligation. 
19   (B) "Land trust" means any trust arrangement under 
20 which the legal and equitable title to real estate is 
21 held by a trustee, the interest of the beneficiary of 
22 the trust is personal property, and the beneficiary or 
23 any person designated in writing by the beneficiary 
24 has (i) the exclusive power to direct or control the 
25 trustee in dealing with the title to the trust 
26 property, (ii) the exclusive control of the 
 
 
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1 management, operation, renting, and selling of the 
2 trust property, and (iii) the exclusive right to the 
3 earnings, avails, and proceeds of trust property.
4(Source: P.A. 91-893, eff. 7-1-01.)

5 (810 ILCS 5/9-341)
6 Sec. 9-341. Bank's rights and duties with respect to 
7deposit account. Except as otherwise provided in Section 
89-340(c), and unless the bank otherwise agrees in a signed an 
9authenticated record, a bank's rights and duties with respect 
10to a deposit account maintained with the bank are not 
11terminated, suspended, or modified by: 
12  (1) the creation, attachment, or perfection of a 
13 security interest in the deposit account; 
14  (2) the bank's knowledge of the security interest; or 
15  (3) the bank's receipt of instructions from the 
16 secured party.
17(Source: P.A. 91-893, eff. 7-1-01.)

18 (810 ILCS 5/9-404) (from Ch. 26, par. 9-404)
19 Sec. 9-404. Rights acquired by assignee; claims and 
20defenses against assignee.
21 (a) Assignee's rights subject to terms, claims, and 
22defenses; exceptions. Unless an account debtor has made an 
23enforceable agreement not to assert defenses or claims, and 
24subject to subsections (b) through (e), the rights of an 
 
 
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1assignee are subject to: 
2  (1) all terms of the agreement between the account 
3 debtor and assignor and any defense or claim in recoupment 
4 arising from the transaction that gave rise to the 
5 contract; and 
6  (2) any other defense or claim of the account debtor 
7 against the assignor which accrues before the account 
8 debtor receives a notification of the assignment signed 
9 authenticated by the assignor or the assignee.
10 (b) Account debtor's claim reduces amount owed to 
11assignee. Subject to subsection (c) and except as otherwise 
12provided in subsection (d), the claim of an account debtor 
13against an assignor may be asserted against an assignee under 
14subsection (a) only to reduce the amount the account debtor 
15owes.
16 (c) Rule for individual under other law. This Section is 
17subject to law other than this Article which establishes a 
18different rule for an account debtor who is an individual and 
19who incurred the obligation primarily for personal, family, or 
20household purposes.
21 (d) Omission of required statement in consumer 
22transaction. In a consumer transaction, if a record evidences 
23the account debtor's obligation, law other than this Article 
24requires that the record include a statement to the effect 
25that the account debtor's recovery against an assignee with 
26respect to claims and defenses against the assignor may not 
 
 
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1exceed amounts paid by the account debtor under the record, 
2and the record does not include such a statement, the extent to 
3which a claim of an account debtor against the assignor may be 
4asserted against an assignee is determined as if the record 
5included such a statement.
6 (e) Inapplicability to health-care-insurance receivable. 
7This Section does not apply to an assignment of a 
8health-care-insurance receivable.
9(Source: P.A. 91-893, eff. 7-1-01.)

10 (810 ILCS 5/9-406) (from Ch. 26, par. 9-406)
11 Sec. 9-406. Discharge of account debtor; notification of 
12assignment; identification and proof of assignment; 
13restrictions on assignment of accounts, chattel paper, payment 
14intangibles, and promissory notes ineffective.
15 (a) Discharge of account debtor; effect of notification. 
16Subject to subsections (b) through (i) and (l), an account 
17debtor on an account, chattel paper, or a payment intangible 
18may discharge its obligation by paying the assignor until, but 
19not after, the account debtor receives a notification, signed 
20authenticated by the assignor or the assignee, that the amount 
21due or to become due has been assigned and that payment is to 
22be made to the assignee. After receipt of the notification, 
23the account debtor may discharge its obligation by paying the 
24assignee and may not discharge the obligation by paying the 
25assignor.
 
 
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1 (b) When notification ineffective. Subject to subsections 
2subsection (h) and (l), notification is ineffective under 
3subsection (a): 
4  (1) if it does not reasonably identify the rights 
5 assigned; 
6  (2) to the extent that an agreement between an account 
7 debtor and a seller of a payment intangible limits the 
8 account debtor's duty to pay a person other than the 
9 seller and the limitation is effective under law other 
10 than this Article; or 
11  (3) at the option of an account debtor, if the 
12 notification notifies the account debtor to make less than 
13 the full amount of any installment or other periodic 
14 payment to the assignee, even if: 
15   (A) only a portion of the account, chattel paper, 
16 or payment intangible has been assigned to that 
17 assignee; 
18   (B) a portion has been assigned to another 
19 assignee; or 
20   (C) the account debtor knows that the assignment 
21 to that assignee is limited.
22 (c) Proof of assignment. Subject to subsections subsection 
23(h) and (l), if requested by the account debtor, an assignee 
24shall seasonably furnish reasonable proof that the assignment 
25has been made. Unless the assignee complies, the account 
26debtor may discharge its obligation by paying the assignor, 
 
 
SB3696- 173 -LRB103 37687 SPS 67814 b


1even if the account debtor has received a notification under 
2subsection (a).
3 (d) Term restricting assignment generally ineffective. In 
4this subsection, "promissory note" includes a negotiable 
5instrument that evidences chattel paper. Except as otherwise 
6provided in subsection (e) and Sections 2A-303 and 9-407, and 
7subject to subsection (h), a term in an agreement between an 
8account debtor and an assignor or in a promissory note is 
9ineffective to the extent that it: 
10  (1) prohibits, restricts, or requires the consent of 
11 the account debtor or person obligated on the promissory 
12 note to the assignment or transfer of, or the creation, 
13 attachment, perfection, or enforcement of a security 
14 interest in, the account, chattel paper, payment 
15 intangible, or promissory note; or 
16  (2) provides that the assignment or transfer or the 
17 creation, attachment, perfection, or enforcement of the 
18 security interest may give rise to a default, breach, 
19 right of recoupment, claim, defense, termination, right of 
20 termination, or remedy under the account, chattel paper, 
21 payment intangible, or promissory note.
22 (e) Inapplicability of subsection (d) to certain sales. 
23Subsection (d) does not apply to the sale of a payment 
24intangible or promissory note, other than a sale pursuant to a 
25disposition under Section 9-610 or an acceptance of collateral 
26under Section 9-620.
 
 
SB3696- 174 -LRB103 37687 SPS 67814 b


1 (f) Legal restrictions on assignment generally 
2ineffective. Except as otherwise provided in Sections 2A-303 
3and 9-407 and subject to subsections (h) and (i), a rule of 
4law, statute, or regulation that prohibits, restricts, or 
5requires the consent of a government, governmental body or 
6official, or account debtor to the assignment or transfer of, 
7or creation of a security interest in, an account or chattel 
8paper is ineffective to the extent that the rule of law, 
9statute, or regulation: 
10  (1) prohibits, restricts, or requires the consent of 
11 the government, governmental body or official, or account 
12 debtor to the assignment or transfer of, or the creation, 
13 attachment, perfection, or enforcement of a security 
14 interest in the account or chattel paper; or 
15  (2) provides that the assignment or transfer or the 
16 creation, attachment, perfection, or enforcement of the 
17 security interest may give rise to a default, breach, 
18 right of recoupment, claim, defense, termination, right of 
19 termination, or remedy under the account or chattel paper.
20 (g) Subsection (b)(3) not waivable. Subject to subsections 
21subsection (h) and (l), an account debtor may not waive or vary 
22its option under subsection (b)(3).
23 (h) Rule for individual under other law. This Section is 
24subject to law other than this Article which establishes a 
25different rule for an account debtor who is an individual and 
26who incurred the obligation primarily for personal, family, or 
 
 
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1household purposes.
2 (i) Inapplicability to health-care-insurance receivable. 
3This Section does not apply to an assignment of a 
4health-care-insurance receivable.
5 (j) (Reserved). 
6 (k) (Reserved). 
7 (l) Inapplicability of certain subsections. Subsections 
8(a), (b), (c), and (g) do not apply to a controllable account 
9or controllable payment intangible. 
10(Source: P.A. 97-1034, eff. 7-1-13.)

11 (810 ILCS 5/9-408) (from Ch. 26, par. 9-408)
12 Sec. 9-408. Restrictions on assignment of promissory 
13notes, health-care-insurance receivables, and certain general 
14intangibles ineffective.
15 (a) Term restricting assignment generally ineffective. 
16Except as otherwise provided in subsection (b), a term in a 
17promissory note or in an agreement between an account debtor 
18and a debtor which relates to a health-care-insurance 
19receivable or a general intangible, including a contract, 
20permit, license, or franchise, and which term prohibits, 
21restricts, or requires the consent of the person obligated on 
22the promissory note or the account debtor to, the assignment 
23or transfer of, or creation, attachment, or perfection of a 
24security interest in, the promissory note, 
25health-care-insurance receivable, or general intangible, is 
 
 
SB3696- 176 -LRB103 37687 SPS 67814 b


1ineffective to the extent that the term: 
2  (1) would impair the creation, attachment, or 
3 perfection of a security interest; or 
4  (2) provides that the assignment or transfer or the 
5 creation, attachment, or perfection of the security 
6 interest may give rise to a default, breach, right of 
7 recoupment, claim, defense, termination, right of 
8 termination, or remedy under the promissory note, 
9 health-care-insurance receivable, or general intangible.
10 (b) Applicability of subsection (a) to sales of certain 
11rights to payment. Subsection (a) applies to a security 
12interest in a payment intangible or promissory note only if 
13the security interest arises out of a sale of the payment 
14intangible or promissory note, other than a sale pursuant to a 
15disposition under Section 9-610 or an acceptance of collateral 
16under Section 9-620.
17 (c) Legal restrictions on assignment generally 
18ineffective. A rule of law, statute, or regulation that 
19prohibits, restricts, or requires the consent of a government, 
20governmental body or official, person obligated on a 
21promissory note, or account debtor to the assignment or 
22transfer of, or creation of a security interest in, a 
23promissory note, health-care-insurance receivable, or general 
24intangible, including a contract, permit, license, or 
25franchise between an account debtor and a debtor, is 
26ineffective to the extent that the rule of law, statute, or 
 
 
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1regulation: 
2  (1) would impair the creation, attachment, or 
3 perfection of a security interest; or 
4  (2) provides that the assignment or transfer or the 
5 creation, attachment, or perfection of the security 
6 interest may give rise to a default, breach, right of 
7 recoupment, claim, defense, termination, right of 
8 termination, or remedy under the promissory note, 
9 health-care-insurance receivable, or general intangible.
10 (d) Limitation on ineffectiveness under subsections (a) 
11and (c). To the extent that a term in a promissory note or in 
12an agreement between an account debtor and a debtor which 
13relates to a health-care-insurance receivable or general 
14intangible or a rule of law, statute, or regulation described 
15in subsection (c) would be effective under law other than this 
16Article but is ineffective under subsection (a) or (c), the 
17creation, attachment, or perfection of a security interest in 
18the promissory note, health-care-insurance receivable, or 
19general intangible: 
20  (1) is not enforceable against the person obligated on 
21 the promissory note or the account debtor; 
22  (2) does not impose a duty or obligation on the person 
23 obligated on the promissory note or the account debtor; 
24  (3) does not require the person obligated on the 
25 promissory note or the account debtor to recognize the 
26 security interest, pay or render performance to the 
 
 
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1 secured party, or accept payment or performance from the 
2 secured party; 
3  (4) does not entitle the secured party to use or 
4 assign the debtor's rights under the promissory note, 
5 health-care-insurance receivable, or general intangible, 
6 including any related information or materials furnished 
7 to the debtor in the transaction giving rise to the 
8 promissory note, health-care-insurance receivable, or 
9 general intangible; 
10  (5) does not entitle the secured party to use, assign, 
11 possess, or have access to any trade secrets or 
12 confidential information of the person obligated on the 
13 promissory note or the account debtor; and 
14  (6) does not entitle the secured party to enforce the 
15 security interest in the promissory note, 
16 health-care-insurance receivable, or general intangible.
17 (e) "Promissory note". In this Section, "promissory note" 
18includes a negotiable instrument that evidences chattel paper. 
19(Source: P.A. 97-1034, eff. 7-1-13.)

20 (810 ILCS 5/9-509)
21 Sec. 9-509. Persons entitled to file a record. 
22 (a) Person entitled to file record. A person may file an 
23initial financing statement, amendment that adds collateral 
24covered by a financing statement, or amendment that adds a 
25debtor to a financing statement only if: 
 
 
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1  (1) the debtor authorizes the filing in a signed an 
2 authenticated record or pursuant to subsection (b) or (c); 
3 or 
4  (2) the person holds an agricultural lien that has 
5 become effective at the time of filing and the financing 
6 statement covers only collateral in which the person holds 
7 an agricultural lien.
8 (b) Security agreement as authorization. By signing 
9authenticating or becoming bound as debtor by a security 
10agreement, a debtor or new debtor authorizes the filing of an 
11initial financing statement, and an amendment, covering: 
12  (1) the collateral described in the security 
13 agreement; and 
14  (2) property that becomes collateral under Section 
15 9-315(a)(2), whether or not the security agreement 
16 expressly covers proceeds.
17 (c) Acquisition of collateral as authorization. By 
18acquiring collateral in which a security interest or 
19agricultural lien continues under Section 9-315(a)(1), a 
20debtor authorizes the filing of an initial financing 
21statement, and an amendment, covering the collateral and 
22property that becomes collateral under Section 9-315(a)(2).
23 (d) Person entitled to file certain amendments. A person 
24may file an amendment other than an amendment that adds 
25collateral covered by a financing statement or an amendment 
26that adds a debtor to a financing statement only if: 
 
 
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1  (1) the secured party of record authorizes the filing; 
2 or 
3  (2) the amendment is a termination statement for a 
4 financing statement as to which the secured party of 
5 record has failed to file or send a termination statement 
6 as required by Section 9-513(a) or (c), the debtor 
7 authorizes the filing, and the termination statement 
8 indicates that the debtor authorized it to be filed.
9 (e) Multiple secured parties of record. If there is more 
10than one secured party of record for a financing statement, 
11each secured party of record may authorize the filing of an 
12amendment under subsection (d).
13(Source: P.A. 91-893, eff. 7-1-01.)

14 (810 ILCS 5/9-513)
15 Sec. 9-513. Termination statement. 
16 (a) Consumer goods. A secured party shall cause the 
17secured party of record for a financing statement to file a 
18termination statement for the financing statement if the 
19financing statement covers consumer goods and: 
20  (1) there is no obligation secured by the collateral 
21 covered by the financing statement and no commitment to 
22 make an advance, incur an obligation, or otherwise give 
23 value; or 
24  (2) the debtor did not authorize the filing of the 
25 initial financing statement.
 
 
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1 (b) Time for compliance with subsection (a). To comply 
2with subsection (a), a secured party shall cause the secured 
3party of record to file the termination statement: 
4  (1) within one month after there is no obligation 
5 secured by the collateral covered by the financing 
6 statement and no commitment to make an advance, incur an 
7 obligation, or otherwise give value; or 
8  (2) if earlier, within 20 days after the secured party 
9 receives a signed an authenticated demand from a debtor.
10 (c) Other collateral. In cases not governed by subsection 
11(a), within 20 days after a secured party receives a signed an 
12authenticated demand from a debtor, the secured party shall 
13cause the secured party of record for a financing statement to 
14send to the debtor a termination statement for the financing 
15statement or file the termination statement in the filing 
16office if: 
17  (1) except in the case of a financing statement 
18 covering accounts or chattel paper that has been sold or 
19 goods that are the subject of a consignment, there is no 
20 obligation secured by the collateral covered by the 
21 financing statement and no commitment to make an advance, 
22 incur an obligation, or otherwise give value; 
23  (2) the financing statement covers accounts or chattel 
24 paper that has been sold but as to which the account debtor 
25 or other person obligated has discharged its obligation; 
26  (3) the financing statement covers goods that were the 
 
 
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1 subject of a consignment to the debtor but are not in the 
2 debtor's possession; or 
3  (4) the debtor did not authorize the filing of the 
4 initial financing statement.
5 (d) Effect of filing termination statement. Except as 
6otherwise provided in Section 9-510, upon the filing of a 
7termination statement with the filing office, the financing 
8statement to which the termination statement relates ceases to 
9be effective. Except as otherwise provided in Section 9-510, 
10for purposes of Sections 9-519(g), 9-522(a), and 9-523(c) the 
11filing with the filing office of a termination statement 
12relating to a financing statement that indicates that the 
13debtor is a transmitting utility also causes the effectiveness 
14of the financing statement to lapse.
15(Source: P.A. 91-893, eff. 7-1-01.)

16 (810 ILCS 5/9-601)
17 Sec. 9-601. Rights after default; judicial enforcement; 
18consignor or buyer of accounts, chattel paper, payment 
19intangibles, or promissory notes.
20 (a) Rights of secured party after default. After default, 
21a secured party has the rights provided in this Part and, 
22except as otherwise provided in Section 9-602, those provided 
23by agreement of the parties. A secured party: 
24  (1) may reduce a claim to judgment, foreclose, or 
25 otherwise enforce the claim, security interest, or 
 
 
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1 agricultural lien by any available judicial procedure; and 
2  (2) if the collateral is documents, may proceed either 
3 as to the documents or as to the goods they cover.
4 (b) Rights and duties of secured party in possession or 
5control. A secured party in possession of collateral or 
6control of collateral under Section 7-106, 9-104, 9-105, 
79-105A, 9-106, or 9-107, or 9-107A has the rights and duties 
8provided in Section 9-207.
9 (c) Rights cumulative; simultaneous exercise. The rights 
10under subsections (a) and (b) are cumulative and may be 
11exercised simultaneously.
12 (d) Rights of debtor and obligor. Except as otherwise 
13provided in subsection (g) and Section 9-605, after default, a 
14debtor and an obligor have the rights provided in this Part and 
15by agreement of the parties.
16 (e) Lien of levy after judgment. If a secured party has 
17reduced its claim to judgment, the lien of any levy that may be 
18made upon the collateral by virtue of a judgment relates back 
19to the earliest of: 
20  (1) the date of perfection of the security interest or 
21 agricultural lien in the collateral; 
22  (2) the date of filing a financing statement covering 
23 the collateral; or 
24  (3) any date specified in a statute under which the 
25 agricultural lien was created.
26 (f) Execution sale. A sale pursuant to a judgment is a 
 
 
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1foreclosure of the security interest or agricultural lien by 
2judicial procedure within the meaning of this Section. A 
3secured party may purchase at the sale and thereafter hold the 
4collateral free of any other requirements of this Article.
5 (g) Consignor or buyer of certain rights to payment. 
6Except as otherwise provided in Section 9-607(c), this Part 
7imposes no duties upon a secured party that is a consignor or 
8is a buyer of accounts, chattel paper, payment intangibles, or 
9promissory notes.
10(Source: P.A. 95-895, eff. 1-1-09.)

11 (810 ILCS 5/9-605)
12 Sec. 9-605. Unknown debtor or secondary obligor. 
13 (a) In general: No duty owed by secured party. Except as 
14provided in subsection (b), a A secured party does not owe a 
15duty based on its status as secured party: 
16  (1) to a person that is a debtor or obligor, unless the 
17 secured party knows: 
18   (A) that the person is a debtor or obligor; 
19   (B) the identity of the person; and 
20   (C) how to communicate with the person; or 
21  (2) to a secured party or lienholder that has filed a 
22 financing statement against a person, unless the secured 
23 party knows: 
24   (A) that the person is a debtor; and 
25   (B) the identity of the person.
 
 
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1 (b) Exception: Secured party owes duty to debtor or 
2obligor. A secured party owes a duty based on its status as a 
3secured party to a person if, at the time the secured party 
4obtains control of collateral that is a controllable account, 
5controllable electronic record, or controllable payment 
6intangible or at the time the security interest attaches to 
7the collateral, whichever is later:
8  (1) the person is a debtor or obligor; and
9  (2) the secured party knows that the information in 
10 subsection (a)(1)(A), (B), or (C) relating to the person 
11 is not provided by the collateral, a record attached to or 
12 logically associated with the collateral, or the system in 
13 which the collateral is recorded. 
14(Source: P.A. 91-893, eff. 7-1-01.)

15 (810 ILCS 5/9-608)
16 Sec. 9-608. Application of proceeds of collection or 
17enforcement; liability for deficiency and right to surplus.
18 (a) Application of proceeds, surplus, and deficiency if 
19obligation secured. If a security interest or agricultural 
20lien secures payment or performance of an obligation, the 
21following rules apply: 
22  (1) A secured party shall apply or pay over for 
23 application the cash proceeds of collection or enforcement 
24 under Section 9-607 in the following order to: 
25   (A) the reasonable expenses of collection and 
 
 
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1 enforcement and, to the extent provided for by 
2 agreement and not prohibited by law, reasonable 
3 attorney's fees and legal expenses incurred by the 
4 secured party; 
5   (B) the satisfaction of obligations secured by the 
6 security interest or agricultural lien under which the 
7 collection or enforcement is made; and 
8   (C) the satisfaction of obligations secured by any 
9 subordinate security interest in or other lien on the 
10 collateral subject to the security interest or 
11 agricultural lien under which the collection or 
12 enforcement is made if the secured party receives a 
13 signed an authenticated demand for proceeds before 
14 distribution of the proceeds is completed. 
15  (2) If requested by a secured party, a holder of a 
16 subordinate security interest or other lien shall furnish 
17 reasonable proof of the interest or lien within a 
18 reasonable time. Unless the holder complies, the secured 
19 party need not comply with the holder's demand under 
20 paragraph (1)(C). 
21  (3) A secured party need not apply or pay over for 
22 application noncash proceeds of collection and enforcement 
23 under Section 9-607 unless the failure to do so would be 
24 commercially unreasonable. A secured party that applies or 
25 pays over for application noncash proceeds shall do so in 
26 a commercially reasonable manner. 
 
 
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1  (4) A secured party shall account to and pay a debtor 
2 for any surplus, and the obligor is liable for any 
3 deficiency.
4 (b) No surplus or deficiency in sales of certain rights to 
5payment. If the underlying transaction is a sale of accounts, 
6chattel paper, payment intangibles, or promissory notes, the 
7debtor is not entitled to any surplus, and the obligor is not 
8liable for any deficiency.
9(Source: P.A. 91-893, eff. 7-1-01.)

10 (810 ILCS 5/9-611)
11 Sec. 9-611. Notification before disposition of collateral. 
12 (a) "Notification date"." In this Section, "notification 
13date" means the earlier of the date on which: 
14  (1) a secured party sends to the debtor and any 
15 secondary obligor a signed an authenticated notification 
16 of disposition; or 
17  (2) the debtor and any secondary obligor waive the 
18 right to notification.
19 (b) Notification of disposition required. Except as 
20otherwise provided in subsection (d), a secured party that 
21disposes of collateral under Section 9-610 shall send to the 
22persons specified in subsection (c) a reasonable signed 
23authenticated notification of disposition.
24 (c) Persons to be notified. To comply with subsection (b), 
25the secured party shall send a signed an authenticated 
 
 
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1notification of disposition to: 
2  (1) the debtor; 
3  (2) any secondary obligor; and 
4  (3) if the collateral is other than consumer goods: 
5   (A) any other person from which the secured party 
6 has received, before the notification date, a signed 
7 an authenticated notification of a claim of an 
8 interest in the collateral; 
9   (B) any other secured party or lienholder that, 10 
10 days before the notification date, held a security 
11 interest in or other lien on the collateral perfected 
12 by the filing of a financing statement that: 
13    (i) identified the collateral; 
14    (ii) was indexed under the debtor's name as of 
15 that date; and 
16    (iii) was filed in the office in which to file 
17 a financing statement against the debtor covering 
18 the collateral as of that date; and 
19   (C) any other secured party that, 10 days before 
20 the notification date, held a security interest in the 
21 collateral perfected by compliance with a statute, 
22 regulation, or treaty described in Section 9-311(a).
23 (d) Subsection (b) inapplicable: perishable collateral; 
24recognized market. Subsection (b) does not apply if the 
25collateral is perishable or threatens to decline speedily in 
26value or is of a type customarily sold on a recognized market.
 
 
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1 (e) Compliance with subsection (c)(3)(B). A secured party 
2complies with the requirement for notification prescribed by 
3subsection (c)(3)(B) if: 
4  (1) not later than 20 days or earlier than 30 days 
5 before the notification date, the secured party requests, 
6 in a commercially reasonable manner, information 
7 concerning financing statements indexed under the debtor's 
8 name in the office indicated in subsection (c)(3)(B); and 
9  (2) before the notification date, the secured party: 
10   (A) did not receive a response to the request for 
11 information; or 
12   (B) received a response to the request for 
13 information and sent a signed an authenticated 
14 notification of disposition to each secured party or 
15 other lienholder named in that response whose 
16 financing statement covered the collateral.
17(Source: P.A. 91-893, eff. 7-1-01.)

18 (810 ILCS 5/9-613)
19 Sec. 9-613. Contents and form of notification before 
20disposition of collateral: general. 
21 (a) Contents and form of notification. Except in a 
22consumer-goods transaction, the following rules apply: 
23  (1) The contents of a notification of disposition are 
24 sufficient if the notification: 
25   (A) describes the debtor and the secured party; 
 
 
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1   (B) describes the collateral that is the subject 
2 of the intended disposition; 
3   (C) states the method of intended disposition; 
4   (D) states that the debtor is entitled to an 
5 accounting of the unpaid indebtedness and states the 
6 charge, if any, for an accounting; and 
7   (E) states the time and place of a public 
8 disposition or the time after which any other 
9 disposition is to be made. 
10  (2) Whether the contents of a notification that lacks 
11 any of the information specified in paragraph (1) are 
12 nevertheless sufficient is a question of fact. 
13  (3) The contents of a notification providing 
14 substantially the information specified in paragraph (1) 
15 are sufficient, even if the notification is accompanied by 
16 or combined other notification or includes: 
17   (A) information not specified by that paragraph; 
18 or 
19   (B) minor errors that are not seriously 
20 misleading. 
21  (4) A particular phrasing of the notification is not 
22 required. 
23  (5) The following form of notification and the form 
24 appearing in Section 9-614(a)(4) 9-614(4), when completed 
25 in accordance with the instructions in subsection (b) and 
26 Section 9-614(b), each provides sufficient information:
 
 
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1
NOTIFICATION OF DISPOSITION OF COLLATERAL  
2To: (Name of debtor, obligor, or other person to which the 
3notification is sent)
4From: (Name, address, and telephone number of secured party)
5 {1} Name of any debtor that is not an addressee: (Name of 
6each debtor)
7 {2} We will sell (describe collateral) (to the highest 
8qualified bidder) at public sale. A sale could include a lease 
9or license. The sale will be held as follows:
10 (Date)
11 (Time)
12 (Place)
13 {3} We will sell (describe collateral) at private sale 
14sometime after (date). A sale could include a lease or 
15license.
16 {4} You are entitled to an accounting of the unpaid 
17indebtedness secured by the property that we intend to sell 
18or, as applicable, lease or license.
19 {5} If you request an accounting you must pay a charge of $ 
20(amount).
21 {6} You may request an accounting by calling us at 
22(telephone number).
23
[End of Form]  
24 (b) Instructions for form of notification. The following 
25instructions apply to the form of notification in subsection 
26(a)(5):
 
 
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1  (1) The instructions in this subsection refer to the 
2 numbers in braces before items in the form of notification 
3 in subsection (a)(5). Do not include the numbers or braces 
4 in the notification. The numbers and braces are used only 
5 for the purpose of these instructions.
6  (2) Include and complete item {1} only if there is a 
7 debtor that is not an addressee of the notification and 
8 list the name or names.
9  (3) Include and complete either item {2}, if the 
10 notification relates to a public disposition of the 
11 collateral, or item {3}, if the notification relates to a 
12 private disposition of the collateral. If item {2} is 
13 included, include the words "to the highest qualified 
14 bidder" only if applicable.
15  (4) Include and complete items {4} and {6}.
16  (5) Include and complete item {5} only if the sender 
17 will charge the recipient for an accounting.
18
NOTIFICATION OF DISPOSITION OF COLLATERAL
 
19  To: ..................................... (Name of 
20 debtor, obligor, or other person to which the notification 
21 is sent) 
22  From: ................................... (Name, 
23 address, and telephone number of secured party) 
24  Name of Debtor(s): ..................... (Include only 
25 if debtor(s) are not an addressee)
 
 
 
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1  For a public disposition: 
2  We will sell or lease or license, as applicable, the 
3 ............................ (describe collateral) to the 
4 highest qualified bidder in public as follows: 
5  Day and Date: ................................... 
6  Time: ........................................... 
7  Place: ..........................................
 
8  For a private disposition: 
9  We will sell (or lease or license, as applicable) the 
10 ........................... (describe collateral) 
11 privately sometime after ................ (day and date). 
12  You are entitled to an accounting of the unpaid 
13 indebtedness secured by the property that we intend to 
14 sell or lease or license, as applicable for a charge of 
15 $................. You may request an accounting by 
16 calling us at .................. (telephone number).
17(Source: P.A. 91-893, eff. 7-1-01.)

18 (810 ILCS 5/9-614)
19 Sec. 9-614. Contents and form of notification before 
20disposition of collateral: consumer-goods transaction. 
21 (a) Contents and form of notification. In a consumer-goods 
22transaction, the following rules apply: 
23  (1) A notification of disposition must provide the 
24 following information: 
 
 
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1   (A) the information specified in Section 
2 9-613(a)(1) 9-613(1); 
3   (B) a description of any liability for a 
4 deficiency of the person to which the notification is 
5 sent; 
6   (C) a telephone number from which the amount that 
7 must be paid to the secured party to redeem the 
8 collateral under Section 9-623 is available; and 
9   (D) a telephone number or mailing address from 
10 which additional information concerning the 
11 disposition and the obligation secured is available. 
12  (2) A particular phrasing of the notification is not 
13 required. 
14  (3) The contents of a notification providing 
15 substantially the information specified in paragraph (1) 
16 are sufficient, even if the notification: 
17   (A) is accompanied by or combined with other 
18 notifications; 
19   (B) includes information not specified by that 
20 paragraph; or 
21   (C) includes minor errors that are not seriously 
22 misleading. 
23  (4) The following form of notification, when completed 
24 in accordance with the instructions in subsection (b), 
25 provides sufficient information:
26
NOTICE OF OUR PLAN TO SELL PROPERTY  
 
 
SB3696- 195 -LRB103 37687 SPS 67814 b


1(Name and address of any obligor who is also a debtor)
2Subject: (Identify transaction)
3 We have your (describe collateral), because you broke 
4promises in our agreement.
5 {1} We will sell (describe collateral) at public sale. A 
6sale could include a lease or license. The sale will be held as 
7follows:
8 (Date)
9 (Time)
10 (Place)
11 You may attend the sale and bring bidders if you want.
12 {2} We will sell (describe collateral) at private sale 
13sometime after (date). A sale could include a lease or 
14license.
15 {3} The money that we get from the sale, after paying our 
16costs, will reduce the amount you owe. If we get less money 
17than you owe, you (will or will not, as applicable) still owe 
18us the difference. If we get more money than you owe, you will 
19get the extra money, unless we must pay it to someone else.
20 {4} You can get the property back at any time before we 
21sell it by paying us the full amount you owe, not just the past 
22due payments, including our expenses. To learn the exact 
23amount you must pay, call us at (telephone number).
24 {5} If you want us to explain to you in (writing) (writing 
25or in (description of electronic record)) (description of 
26electronic record) how we have figured the amount that you owe 
 
 
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1us, {6} call us at (telephone number) (or) (write us at 
2(secured party's address)) (or contact us by (description of 
3electronic communication method)) {7} and request (a written 
4explanation) (a written explanation or an explanation in 
5(description of electronic record)) (an explanation in 
6(description of electronic record)).
7 {8} We will charge you $ (amount) for the explanation if we 
8sent you another written explanation of the amount you owe us 
9within the last six months.
10 {9} If you need more information about the sale (call us at 
11(telephone number)) (or) (write us at (secured party's 
12address)) (or contact us by (description of electronic 
13communication method)).
14 {10} We are sending this notice to the following other 
15people who have an interest in (describe collateral) or who 
16owe money under your agreement:
17(Names of all other debtors and obligors, if any)
18
[End of Form]  
19 (b) Instructions for form of notification. The following 
20instructions apply to the form of notification in subsection 
21(a)(3):
22  (1) The instructions in this subsection refer to the 
23 numbers in braces before items in the form of notification 
24 in subsection (a)(3). Do not include the numbers or braces 
25 in the notification. The numbers and braces are used only 
26 for the purpose of these instructions.
 
 
SB3696- 197 -LRB103 37687 SPS 67814 b


1  (2) Include and complete either item {1}, if the 
2 notification relates to a public disposition of the 
3 collateral, or item {2}, if the notification relates to a 
4 private disposition of the collateral.
5  (3) Include and complete items {3}, {4}, {5}, {6}, and 
6 {7}.
7  (4) In item {5}, include and complete any one of the 
8 three alternative methods for the explanation—writing, 
9 writing or electronic record, or electronic record.
10  (5) In item {6}, include the telephone number. In 
11 addition, the sender may include and complete either or 
12 both of the two additional alternative methods of 
13 communication—writing or electronic communication—for the 
14 recipient of the notification to communicate with the 
15 sender. Neither of the two additional methods of 
16 communication is required to be included.
17  (6) In item {7}, include and complete the method or 
18 methods for the explanation—writing, writing or electronic 
19 record, or electronic record—included in item {5}.
20  (7) Include and complete item {8} only if a written 
21 explanation is included in item {5} as a method for 
22 communicating the explanation and the sender will charge 
23 the recipient for another written explanation.
24  (8) In item {9}, include either the telephone number 
25 or the address or both the telephone number and the 
26 address. In addition, the sender may include and complete 
 
 
SB3696- 198 -LRB103 37687 SPS 67814 b


1 the additional method of communication—electronic 
2 communication—for the recipient of the notification to 
3 communicate with the sender. The additional method of 
4 electronic communication is not required to be included.
5  (9) If item {10} does not apply, insert "None" after 
6 "agreement:".
7 ............. (Name and address of secured party)

8 ............. (Date)
9
NOTICE OF OUR PLAN TO SELL PROPERTY
10 ......................................................
 (Name an
11d address of any obligor who is also a debtor)
 Subject: ..................................
 (Identification of Tra
13nsaction)   We have
14  your ..................... (describe collateral), because you br
15 oke promises in our agreement.
   For a public disposition:   We will sell ....................... (describe collater
18 al) at public sale. A sale could include a lease or license. The sale will be held as follows: Date: ................................
 Time: ................................
 Place: ...............................
22.   You may attend the sale and bring bidders
24  if you want.
   For a private disposition:
2   We will sel
3 l ........................... (describe collateral) at p
4 rivate sale sometime after .................... (date). A sa
5 le could include a lease or license.   The money that we get from the sale (after p
7 aying our costs) will reduce the amount you owe. If we get 
8 less money than you owe, you ............ (will or will n
9 ot, as applicable) still owe us the difference. If we g
10 et more money than you owe, you will get the extra money, unles
11 s we must pay it to someone else.   You can get the property back at a
13 ny time before we sell it by paying us the full amoun
14 t you owe (not just the past due payments), including 
15 our expenses. To learn the exact amount you must pay, call 
16 us at ................ (telephone number).   If
18  you want us to explain to you in writing how we have figured the amoun
19 t that you owe us, you may call us at .................. (telephone numbe
20 r) or write us at ...................................
21 . (secured party's address) and request a written explanation. We will charge you $ ........... 
22 for the explanation if we sent you another written explanation of th
23 e amount you owe us within the last six months.   If you need more information about the sale
26  call us at .................. (telephone number) or write us at ......................... (secured party's addre
 
 
SB3696- 200 -LRB103 37687 SPS 67814 b


1 ss).   We 
2 are sending this notice to the following other people who 
3 have an interest ...................... (describe collateral) or who o
4 we money under your agreement: .........................................
6........
 (Names of a
7ll other debtors and obligors, if any)   (5) A notification in the form of paragraph (4) is suf
9 ficient, even if it includes errors in information not required by paragraph (1).   (6) If a notification under 
11 this Section is not in the form of paragraph (4), law other than this Article dete
12 rmines the effect of including information not required b
13 y paragraph (1).(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-6
16 15) Sec. 9-615. Applicat
18ion of proceeds of disposition; liability for deficien
19cy and right to surplus. (
20a) Application of proceeds. A secured party shall apply o
21r pay over for application the cash proceeds of disposi
22tion in the following order to:   (1) the reasonable expenses of retaking,
24 holding, preparing for disposition, processing, and dispos
25 ing, and, to the extent provided for by agreement an
 
 
SB3696- 201 -LRB103 37687 SPS 67814 b


1 d not prohibited by law, reasonable attorney's fees and legal 
2 expenses incurred by the secured party;   (2) the satisfaction of obligations secured by the security interest 
4or agricultural lien under which the disposition is made;   (3) the satisfaction of obligations secured by
6 any subordinate security interest in or other subord
7 inate lien on the collateral if:    (A) the secured p
9arty receives from the holder of the subordinate secu
10 rity interest or other lien a signed an authenticated demand for proceeds before distribution of the proce
12 eds is completed; and    (B) 
13in a case in which a consignor has an interest in the
14  collateral, the subordinate security interest or other lien i
15 s senior to the interest of the consignor; and   (4) a secured party that is a consignor 
17of the collateral if the secured party receives from the cons
18 ignor a signed an authenticated demand for proceeds
20  before distribution of the proceeds is completed. (b) Proof of subordinate interest. If requested 
22by a secured party, a holder of a subordinate security in
23terest or other lien shall furnish reasonable proof of the inte
24rest or lien within a reasonable time. Unless the holder d
25oes so, the secured party need not comply with the holde
26r's demand under subsection (a)(3). (c) Ap
 
 
SB3696- 202 -LRB103 37687 SPS 67814 b


1plication of noncash proceeds. A secured party need not ap
2ply or pay over for application noncash proceeds of dispo
3sition under this Section unless the failure to do so would
4 be commercially unreasonable. A secured party that appl
5ies or pays over for application noncash proceeds shall d
6o so in a commercially reasonable manner.
7 (d) Surplus or deficiency if obligation sec
8ured. If the security interest under which a disposition is made secur
9es payment or performance of an obligation, after making th
10e payments and applications required by subsection (a) and per
11mitted by subsection (c):   (1) unless subsection (a)
12(4) requires the secured party to apply or pay over cash proceeds to a consignor, the s
13 ecured party shall account to and pay a debtor for any surplus; and
14   (2) the obligor is liable for
15 any deficiency. (e) No surplus or defici
16ency in sales of certain rights to payment. If the underlying
17 transaction is a sale of accounts, chattel paper, payme
18nt intangibles, or promissory notes:   (1) the debtor is not entitled to any surplus; and   (2) the obligor is not l
21iable for any deficiency. (f) Calculation of surplus or deficiency in dispo
23sition to person related to secured party. The surp
24lus or deficiency following a disposition is calculat
25ed based on the amount of proceeds that would have been
26 realized in a disposition complying with this Part and de
 
 
SB3696- 203 -LRB103 37687 SPS 67814 b


1scribed in subsection (f)(2) of this Section to a trans
2feree other than the secured party, a person related to
3 the secured party, or a secondary obligor if:   (1) the trans
5feree in the disposition is the secured party, a perso
6 n related to the secured party, or a secondary obligor; and   (2) the amount of proceeds of
8 the disposition is significantly below the range of proceeds t
9 hat would have been received from a complying disposition by
10  a forced sale without reserve to a willing buyer other than the secured
11  party, a person related to the secured party, or a sec
12 ondary obligor. (g) Cash proceeds re
13ceived by junior secured party. A secured party that rec
14eives cash proceeds of a disposition in good faith and wit
15hout knowledge that the receipt violates the rights of the holder of a 
16security interest or other lien that is not subordinate to the
17 security interest or agricultural lien under which the disposition
18 is made:   (1) takes the cash proceeds free of the security interest or ot
19her lien;   (2) is not obligated to apply the proc
20eeds of the disposition to the satisfaction of obligations secured by the security inter
21 est or other lien; and   (3) is not obligated to account to or pay the holder 
23of the security interest or other lien for any surplus.(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5
25 /9-616) Sec
 
 
SB3696- 204 -LRB103 37687 SPS 67814 b


1. 9-616. Explanation of 
2calculation of surplus or deficiency.  (a) Definitions. In this Section:   (1) "Explanation" means a 
5 record writing that:    (A) states whether
7 a surplus or deficiency is owed and the amount of the
8  surplus, if applicable;    (B) states, if applicable, that future 
10debits, credits, charges, including additional credi
11 t service charges or interest, reb
12 ates, and expenses may affect the amount of the surplus or d
13 eficiency;    (C
14) provides a telephone number or mailing address from which the de
15 btor or consumer obligor may obtain additional information concerning the transaction and from which such
16  person may request the amount of the d
17 eficiency and further information regarding how the se
18 cured party calculated the surplus or deficiency
19 ; and    (D) at the sender's option, the information set forth in subs
21ection (c).   (2) "Request" means a record:    (A) signed authenticated by a debtor or consumer obli
25gor;    (B) requesting that t
26he recipient provide information of how it calculated th
 
 
SB3696- 205 -LRB103 37687 SPS 67814 b


1 e surplus or deficiency; and    (C) sent a
2fter disposition of the collateral under Section 9-610.
3 (b) Explanation of calculation. In a consumer-goods tra
4nsaction in which the debtor is entitled to a surplus or a consumer obli
5gor is liable for a deficiency under Section 9-6
615, the secured party shall:   (1) send an explanation to the debtor or
8 consumer obligor, as applicable, after the disposition and:
9    (A) before or when t
10he secured party accounts to the debtor and pays a
11 ny surplus or first makes written demand in a record on the c
13 onsumer obligor after the disposition for payment of the deficiency, other than in i
14 nstances in which such demand is made by a third-party d
15 ebt collector covered by the Fair Debt Collection Practic
16 es Act; and    (B) 
17within 14 days after receipt of a request made by
18  the debtor or consumer obligor within one year after the secured party has gi
19 ven an explanation under this Section or notice to such debtor or consumer obligor under Section 9-614 of this Article; or   (2) in the case of a consumer obligor who is liable f
21or a deficiency, within 14 days after receipt of a request, send to the consumer obligor a record waiving the secured par
22 ty's right to a deficiency. (c) Required in
23formation for response to request. To comply with subsection (a)(1)(B)
25 a request, an expla
26nation the secured party must 
 
 
SB3696- 206 -LRB103 37687 SPS 67814 b


1provide a response in writing which include
2s the following information in 
3the following order:   (1) the aggregate amount of obliga
5tions secured by the security interest under which the 
6 disposition was made, and, if the amount reflects a 
7 rebate of unearned interest or credit service charge,
8  an indication of that fact, calculated as of a specified date
9 :    (A) if the secured party takes or recei
10ves possession of the collateral after default, not more
11  than 35 days before the secured party takes or receives possess
12 ion; or    (B) if the 
13secured party takes or receives possession of the coll
14 ateral before default or does not take possession of the
15  collateral, not more than 35 days before the dispo
16 sition;   (2) the amount 
17of proceeds of the disposition;   (3) the aggregate amount of the obligations after d
19educting the amount of proceeds;   (4) the amount, in the aggregate or 
21by type, and types of expenses, including expenses of 
22 retaking, holding, preparing for disposition, pro
23 cessing, and disposing of the collateral, and attorney's fees secured
24  by the collateral which are known to the secured party a
25 nd relate to the current disposition;   (5) the amount, in the aggregate or by type, a
 
 
SB3696- 207 -LRB103 37687 SPS 67814 b


1nd types of credits, including rebates of interest or credit se
2 rvice charges, to which the obligo
3 r is known to be entitled and which are not refl
4 ected in the amount in paragraph (1); and   (6) the amount of th
6e surplus or deficiency. (d) Substantial compliance. A particular phrasing o
8f the explanation or response to a request is
9 not required. An explanation or a response to a request 
10complying substantially with the
11 requirements of this Section is sufficient even if it is:   (1) accompanied by or c
13ombined with other notifications;   (2) includes information not specified by this Section
15;   (3) includes minor erro
16rs that are not seriously misleading; or   (4) includes erro
18rs in information not required by this Section. (e) Charges for responses. A debtor or cons
19umer obligor is entitled without charge to one response to a request under this Sect
20ion during any six-month period in which the secured party did not send to the debtor or consumer obligor an exp
21lanation pursuant to subsection (b)(1). The secured party may require payment of a charge not exce
22eding $25 for each additional response.(Source: P.A. 91-893, eff. 7-1-0
231.)
(810 ILCS 5/9-619) Sec. 9-619. Transfer of record or legal title.  (a) "Transfer statement"." In this Section, "transfer statement" means a reco
4rd signed authenticated by a secured party 
5stating:   (1) that the deb
6tor has defaulted in connection with an ob
7 ligation secured by specified collateral;   (2) that the secured party has exe
9rcised its post-default remedies with respect to t
10 he collateral;   (3) that, b
11y reason of the exercise, a transferee has acquired the rights of the 
12 debtor in the collateral; and 
13  (4) the name and mailing address of the secured p
14 arty, debtor, and transferee. (b) Effect of transfer statement. A 
15transfer statement entitles the transferee to the transfer of record of
16 all rights of the debtor in the collateral specifie
17d in the statement in any official filing, r
18ecording, registration, or certificate-of-title s
19ystem covering the collateral. If a transfer statement is 
20presented with the applicable fee and request form to
21 the official or office responsible for maintaining the sys
22tem, the official or office shall:   (1) accept the transfer statement;   (2) promptly amend its records to r
25eflect the transfer; and
26   (3) if applicable, issue a new appropriate certificate of title in the name of the transferee. (c) Transfer not a disposition; no relief of secured party's duties
2. A transfer of the record or legal title to collateral to a secured party under subsection
3 (b) or otherwise is not of itself a disposition of co
4llateral under this Article and does not of its
5elf relieve the secured party of its duties under this A
6rticle.(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-620) Sec. 9-62
100. Acceptance of 
11collateral in full or partial satisfaction of obligation;
12 compulsory disposition of collateral. (a) Conditions to acceptance in satisfaction. Except as otherwise provided in subsection (g), a secured
14 party may accept collateral in full or partial satisfac
15tion of the obligation it secures only if:   (1) the d
16ebtor consents to the acceptance under subsection (c);   (2) the secured par
18ty does not receive, within the time set forth in
19  subsection (d), a notification of objec
20 tion to the proposal signed authenticated by:    (A) a person to which the secured party was req
23uired to send a proposal under Section 9-621; or    (B) any other per
25son, other than the debtor, holding an interest in the collater
 
 
SB3696- 210 -LRB103 37687 SPS 67814 b


1 al subordinate to the security interest that is the s
2 ubject of the proposal;   (3) if the collateral is consumer goods, the c
4ollateral is not in the possession of the debtor when the debtor cons
5 ents to the acceptance; and   (4) subsection (e) does not r
6equire the secured party to dispose of the
7  collateral or the debtor waives the requirement pursuant to Section 9
8 -624. (b) Purported acceptance ineffective. A purported or
9 apparent acceptance of collateral under this Section is in
10effective unless:   (1) 
11the secured party consents to the acceptance in 
12 a signed an authenticated record or sends a proposal to the debtor; and   (2) the conditions of subsection (a) 
14are met. (c) Debtor's consent. For purpo
15ses of this Section:   (1) a debtor consents to an acceptance of collateral in partial satisfaction of the obligation it 
17secures only if the debtor agrees to 
18 the terms of the acceptance in a record signed authenticated after def
20 ault; and   (2) a d
21ebtor consents to an acceptance of collateral in full satisfacti
22 on of the obligation it secures only if the debtor agrees to th
23 e terms of the acceptance in a record signed authentic
24 ated after default or the secured party:    (A) sends to the debtor after default a proposal that is un
26conditional or subject only to a condition tha
 
 
SB3696- 211 -LRB103 37687 SPS 67814 b


1 t collateral not in the possession of the secured party b
2 e preserved or maintained;    (B) in the proposal, proposes to accept collate
4ral in full satisfaction of the obligation it secures; and    (C) does not recei
6ve a notification of objection signed aut
7 henticated by the debtor within 20 days aft
8 er the proposal is sent. (d) Effectiveness of
9 notification. To be effective under subsection (a)(2), a notification 
10of objection must be received by the secured party:   (1) in the case of a p
12erson to which the prop
13 osal was sent pursuant to Section 9-621, within 2
14 0 days after notification was sent to that person; and   (2) in other cases:    (A) within 20 days after the last n
17otification was sent pursuant to Section 9-621; or    (B) if a notification 
19was not sent, before the debtor consents
20  to the acceptance under subsection (c). (e) Mandatory disposition of consumer goods
22. A secured party that has taken possession of collateral shall dispose of the collate
23ral pursuant to Section 9-610 within the time specif
24ied in subsection (f) if:   (
251) 60 percent of the cash price has been paid 
26 in the case of a purchase-money security interest in consumer goods; or   (2) 60 percent of the princi
2pal amount of the obligation secured has been paid in the c
3 ase of a non-purchase-money security interest in consumer goods.
4 (f) Compliance with mandato
5ry disposition requirement. To comply with subsection (e),
6 the secured party shall dispose of the collateral:   (1) within 90 days af
8ter taking possession; 
9 or   (2) within any longer period to which the debtor and all secondary obl
10igors have agreed in an agreement to that effect entered into and signed authenticated after default. (g) No partial satisfaction in consumer transactio
12n. In a consumer transaction, a secured party may not acce
13pt collateral in partial satisfaction of the obligati
14on it secures.(Source: P.A. 91-893, 
15eff. 7-1-01.)
(810 ILCS 5/9-621)
18 Sec. 9-621. Notification of proposal to accept collate
19ral.  (a) Persons to wh
20ich proposal to be sent. A secured party that desires to 
21accept collateral in full or partial satisfaction of the ob
22ligation it secures shall send its proposal to:   (1) any person from which the secured party has receiv
24ed, before the debtor consented to the acceptance, a signed an authenticated notification of
 
 
SB3696- 213 -LRB103 37687 SPS 67814 b


1  a claim of an interest in the collatera
2 l;   (2) any other secured pa
3rty or lienholder that, 10 days before the debtor conse
4 nted to the acceptance, held a security interest in or other lien 
5 on the collateral perfected by the filing of a financing st
6 atement that:    (A) identified the collateral;
8    (B) was indexed under the debtor'
9 s name as of that date; and
10    (C) was filed in the
11 office or offices in which to file a financing state
12 ment against the debtor covering the collateral as of th
13 at date; and   (3) any oth
14er secured party that, 10 days before the debtor consented to the a
15 cceptance, held a security interest in the collateral perfected by compliance with a statute, regulation, or 
16 treaty described in Section 9-311(a). (b) Proposal to be sen
17t to secondary obligor in partial satisfaction. A secured party that desires to accept coll
18ateral in partial satisfaction of the obligation it 
19secures shall send its proposal to any secondary obligor 
20in addition to the persons described in subsection (a).(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-624)
23  Sec. 9-624. Waiver.  (a) Waiver of disposition notification. A d
 
 
SB3696- 214 -LRB103 37687 SPS 67814 b


1ebtor or secondary obligor may waive the right to notification of disposition of collater
2al under Section 9-611 only by an agreement to t
3hat effect entered into and signed authenticated after default. (b) Waiver 
5of mandatory disposition. A debtor may waive the right to require disposition of coll
6ateral under Section 9-620(e) only by an agreement to that effect entered into and signed authenticated after default. (c) Wa
8iver of redemption right. A debtor or secondary obligor may waive the right to redeem colla
9teral under Section 9-623 only by an agreement to that effect entered into a
10nd signed authenticated
11 after default.(Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/9-628) Sec. 9-62
148. Nonliability and limitation 
15on liability of secured party; liability of second
16ary obligor. (a) Lim
17itation of liability to debtor or obligor. Subject 
18to subsection (f), unless Unless a secured party knows that a person is a debtor 
20or obligor, knows the identity
21 of the person, and knows how to communicate with the pe
22rson:   (1) the secured party is not liable to the person, or to a secu
23red party or lienholder that has filed a financing statement 
24 against the person, for failure to co
25 mply with this Article; and   (2) the secured party's failure to comply with th
2is Article does not affect the liability of the person for a deficiency. (b) Limitation of liability to debtor, obligor, another secured party, or
4 lienholder. Subject to subsection (f), a A secured party is not liable because of its status as secu
6red party:   (1) to a p
7erson that is a debtor or obligor, unless t
8 he secured party knows:    (A) that the 
9person is a debtor or obligor;    (B) the identity of the person; and    (C) how to communicate with 
12the person; or   (2) to a secu
13red party or lienholder that has filed a financing statement 
14 against a person, unless the secured party knows:    (A) that the person is a debtor; 
16and    (B) the identi
17ty of the person. (c) Limitation of liabilit
18y if reasonable belief that transaction not a consumer
19-goods transaction or consumer transaction. A secured
20 party is not liable to any person, and a person's liability for a deficiency is not affe
21cted, because of any act or omission arising out of the secur
22ed party's reasonable belief that a transaction is not a consum
23er-goods transaction or a consumer transaction 
24or that goods are not consumer goods, if the secured par
25ty's belief is based on its reasonable reliance on:  
26 (1) a debtor's representation concerning the purpos
 
 
SB3696- 216 -LRB103 37687 SPS 67814 b


1 e for which collateral was to be used, acquired, or h
2 eld; or   (2) an obligor's repr
3esentation concerning the purp
4 ose for which a secured obligation was incurred. (d) Limitation of liability for statutory damages. A secur
6ed party is not liable to any person under Section 9-625(c
7)(2) for its failure to comply with Section 9-616. (e) Limitation of multiple liability for 
9statutory damages. A secured party is not liable under Section
10 9-625(c)(2) more than once with respect to any one s
11ecured obligation. 
12 (f) Exception: Limitation of liability under subsections (a) and (b) does not apply. Subsections 
13(a) and (b) do not apply to limit the liability of a secured party 
14to a person if, at the time the secured party obtains con
15trol of collateral that is a controllable account, controll
16able electronic record, or controllable payment intangible 
17or at the time the security interest attaches to the collat
18eral, whichever is later:  (1) the person is a debtor or obligor
19 ; and  (2) the secured party k
20 nows that the information in subsection (b)(1)(A), (B), or (C) relating to the person is not prov
21 ided by the collateral, a record attached to or logica
22 lly associated with the collateral, or the system in which the collateral is recorded. (Source: P.A. 91-893, eff. 7-1-01.)
(810 ILCS 5/Art. 11A heading) ARTICLE  11A   12   EFFECTIVE DATE AND TRANSITION AMENDATORY ACT OF 1987
3
(810 ILCS 5/11A-101) Sec. 11A-101 12-101. Effect
5ive Date. This amendatory Act of 1
6987 shall take effect on January 1, 1988.(
7Source: P.A. 85-997.)
(810 ILCS 5/11A-102) Sec. 11A-102 12-102. Transition to Amendatory 
12Act of 1987.  (1) Tran
13sactions validly entered into after July 1, 1962 and before Jan
14uary 1, 1988 and which were subject to the provisions of the "U
15niform Commercial Code", approved July 31, 1961, as amend
16ed, and which would be subject to this amendatory Act 
17of 1987 if they had been entered into after December 31, 1987
18 and the rights, duties and interest flowing fr
19om such transactions remain valid after the latter date,
20 and may be terminated, completed, consummated or enforced 
21as required or permitted by this amendatory Act of 1987. Securi
22ty interests arising out of such transactions which are per
23fected when this amendatory Act of 1987 becomes effective sh
24all remain perfected until they lapse as provided in this ame
25ndatory Act of 1987, and may be continued as permitted by 
 
 
SB3696- 218 -LRB103 37687 SPS 67814 b


1this amendatory Act of 1987. (
22) The persons shown on the books of the issuer as the hold
3ers of uncertificated securities outst
4anding when this amendatory Act of 1987 becomes effec
5tive shall be deemed to be the regis
6tered owners thereof. Prior to the 90th day after this ame
7ndatory Act of 1987 takes effect, the issuer of any uncertificated securit
8y outstanding when this amendatory Act of 1987 takes effec
9t shall send to the registered owner a written statement contain
10ing: (a) A description of the issue of which the uncertificated secu
11rity is a part; (b) The number of shares or o
12ther units owned by the registered owner; (c) The name and address and (if k
14nown to the issuer) any taxpayer identification number of t
15he registered owner; (d) A notation
16 of any liens or restrictions of the issuer and any adverse c
17laims (as to which the issuer has a duty under Section 8-403(4)) to which the uncertificated se
19curity is or may be subject at the time when the statement is
20 prepared or a statement that there are no such liens, re
21strictions or adverse claims; and (e) Th
22e date the statement was prepared. Statement
23s sent pursuant to this subsection shall be signed by or on be
24half of the issuer; shall be identified as "initial transact
25ion statement"; and shall be deemed to be initial transa
26ction statements for the purposes of Article 8 as amended by
 
 
SB3696- 219 -LRB103 37687 SPS 67814 b


1 this amendatory Act of 1987. (3) If a 
2security interest in an uncertificated security outstanding p
3rior to January 1, 1988, is perfected or has priority as to a
4ll persons or as to certain persons when this amendatory Act of 
51987 takes effect by virtue of the previous filing of a financ
6ing statement, and if other acts would be required for 
7the perfection or priority of the security interest against tho
8se persons under this amendatory Act of 1987,
9 the perfection and priority rights of the security interest s
10hall continue and shall lapse on the date provided by the "Unifo
11rm Commercial Code", approved July 31, 1961, as amended prior t
12o this amendatory Act of 1987, (whether or not a cont
13inuation statement is filed with respect to such security inte
14rest) unless the security interest is perfected in accordanc
15e with this amendatory Act of 1987.
16 (4) If an issuer's lien or restriction on an uncertificated sec
17urity outstanding prior to January 1, 1988, or a term of such 
18a security is valid and effective against all persons or agains
19t certain persons when this amendatory Act of 1987 takes eff
20ect, and if the notation of such lien, restriction or term on
21 an initial transaction statement would be required for its va
22lidity or effectiveness against those persons und
23er this amendatory Act of 1987, such lien, restriction or ter
24m shall remain valid and effective until the earlier of (i) the 
25time when an initial transaction statement is sent by the 
26issuer to the registered owner (after which the validity and e
 
 
SB3696- 220 -LRB103 37687 SPS 67814 b


1ffectiveness of the lien, restriction or term shall be govern
2ed by this amendatory Act of 1987), or (ii) 3 years from th
3e effective date of this amendatory Act of 1987. If an initial 
4transaction statement regarding an uncertificated securit
5y outstanding on the effective date of this amendatory Act of 1987 is not sent to the regist
6ered owner thereof within 3 years after that date, any issuer's lien required to be noted there
7on shall cease to be valid, and any restriction or term required to
8 be noted thereon shall cease to be effective except as to those persons against whom an unnoted restriction 
9or term would be effective under Article 8 as amended by this amendatory Act of 1987.(Source: P.A. 85-997.)
(810 ILCS 5/Art. 12 heading new) ARTICLE 12 CONTROLLABLE ELECTRONI
12
C RECORDS

(8
13 10 ILCS 5/12-101 new) Sec. 12-101. Title. 
15This Article may be cited as Uniform Commercial Code--Controllable Electronic Records.
(810 ILCS 5/12-102 new) Sec. 12-102. Definitions. (a) In this Article:
22  (1) "Controllable electronic record" means a
23  record stored in an electronic medium that can be 
 
 
SB3696- 221 -LRB103 37687 SPS 67814 b


1 subjected to control under Section 12-105. The term d
2 oes not include a controllable account, a controllable pa
3 yment intangible, a deposit account, an electronic copy o
4 f a record evidencing chattel paper, an electronic document of title, e
5 lectronic money, investment property, or a transferable record.  (2) "
7 Qualifying purchaser" means a purchaser of a controllable electronic rec
8 ord or an interest in a controllable electronic record 
9 that obtains control of the controllable electronic record for val
10 ue, in good faith, and without notice of a claim of a property ri
11 ght in the controllable electronic record.  (3) "Transferable recor
13 d" has the meaning provided for that term in:   (A) Sect
15 ion 201(a)(1) of the Electronic Signatures in Global and
16  National Commerce Act, 15 U.S.C. Sectio
17 n 7021(a)(1), as amended; or
18   (B) Section 16(a) of the Uniform Elect
19 ronic Transactions Act.
20  (4) "Value" has the meaning provided in
21  Section 3-303(a), as if refere
22 nces in that subsection to an "instrument" were references to
23  a controllable account, controllable electronic record, or 
24 controllable payment intangible. (b) Definitions in Article 9. The definitions in
25 Article 9 of "account debtor", "controllable account", "controllable payment intangible"
 
 
SB3696- 222 -LRB103 37687 SPS 67814 b


1, "chattel paper", "deposit account", "electronic money", and "investment property" apply to this Article. (c) Article 1 defi
2nitions and principles. Article 1 contains general definitions a
3nd principles of construction and interpretation applic
4able throughout this Article.
(810 ILCS 5
6 /12-103 new) Sec. 12-103. Relation to Article 9 and co
9nsumer laws. (a) Article 9 governs in case of conflict. If there is conflic
11t between this Article and Article 9, Article 9 governs. (b) Applicable consumer law and other laws. A transaction subject to this Article is subject to any applicable rule 
13of law that establishes a different rule for consumers and the Consumer Installment Loan Act, the Pre
14datory Loan Prevention Act, and the Consumer Fraud and Deceptive B
15usiness Practices Act.
(810 ILCS 5/12-104 new) Sec. 12-104. Rights in controllable account, controllable electro
20nic record, and controllable payment intangible. (a) Applicability of Section to controll
22able account and controllable payment intangible. This Sec
23tion applies to the acquisition and purchase of rights in a con
24trollable account or controllable payment intangible, inclu
25ding the rights and benefits under subsections (c), (d), (e
 
 
SB3696- 223 -LRB103 37687 SPS 67814 b


1), (g), and (h) of a purchaser and qualifying purchaser, in t
2he same manner this Section applies to a control
3lable electronic record. (b) 
4Control of controllable account and controllable payment
5 intangible. To determine whether a purchaser of a control
6lable account or a controllable payment intangible is a 
7qualifying purchaser, the purchaser ob
8tains control of the account or payment intangible if it obtains co
9ntrol of the controllable electronic record that evidences 
10the account or payment intangible. (c) Applicability of other law to acq
12uisition of rights. Except as provided in this Section, law o
13ther than this Article determines whether a person acquire
14s a right in a controllable electronic 
15record and the right the person acquires. (d) Shelter principle and purchase of limited intere
17st. A purchaser of a controllable electronic record acquires a
18ll rights in the controllable electr
19onic record that the transferor had or had power to transfer, excep
20t that a purchaser of a limited interest in a controllable ele
21ctronic record acquires rights only to the extent of the inter
22est purchased. (e) Righ
23ts of qualifying purchaser. A qualifying purchaser acquires i
24ts rights in the controllable electronic record free of a
25 claim of a property right in the controllable electronic record
26. (f) Limitation of rights of qualifying pur
 
 
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1chaser in other property. Except as provided in subsections (a) and (
2e) for a controllable account and a controllable payment i
3ntangible or law other than this Article, a qualifying pur
4chaser takes a right to payment, right to performance, or other
5 interest in property evidenced by the controllable electronic
6 record subject to a claim of a property right in the r
7ight to payment, right to performance, or other interest in p
8roperty. (g) No-actio
9n protection for qualifying purchaser. An action may not be asse
10rted against a qualifying purchaser based on both a purchase by the qualifying purchaser of a con
11trollable electronic record and a claim of a property right in another controllable elect
12ronic record, whether the action is framed in conversion, replevin, constructive trust, equitable lien, or other theory. (h) Fi
13ling not notice. Filing of a financing statement under Article
14 9 is not notice of a claim of a property right in a contr
15ollable electronic record.
(810 ILCS 5/12-105 new
17 ) Sec. 12-105. Control of controllabl
19e electronic record. (a) General rule: control of controllable electronic record. A person has co
21ntrol of a controllable electronic record if the electronic record, a
22 record attached to or logically associated
23 with the electronic record, or a system in which the electronic record is
24 recorded:
25  (1) gives the person:   (A) power to avail itself of
2  substantially all the benefit from the elect
3 ronic record; and   (B) exclusive 
5 power, subject to subsection (b), to:    (i) prevent others from av
7 ailing themselves of substantially all the benef
8 it from the electronic record; and    (ii) transfer control 
10 of the electronic record to another person or cause another pers
11 on to obtain control of another controllable electronic record 
12 as a result of the transfer of the electron
13 ic record; and  (2) enables the person readily to identify itself i
15 n any way, including by name, identifying number, cryp
16 tographic key, office, or account number, as having the po
17 wers specified in paragraph (1). (b) Meaning of exclusive. Subject to su
19bsection (c), a power is exclusive under subsection (a)(1)(B)(i) and (ii) eve
20n if:  (1) the controllable electro
21 nic record, a record attached to or logically associated with the ele
22 ctronic record, or a system in which the electronic record
23  is recorded limits the use of the electronic record or has a protocol programmed to cause
24  a change, including a transfer or loss of control or a modificat
25 ion of benefits afforded by the electronic record; or  (2) the power is shared with another person. (c) When power not shared with another person.
2 A power of a person is not shared with another person under su
3bsection (b)(2) and the person's power is not exclusive if:  (
5 1) the person can exercise the power only if 
6 the power also is exercised by the other person; and
7  (2) the other person:   (A) can exercise the power
10  without exercise of the power by the person; or   (B) is the transferor to the per
12 son of an interest in the controllable electronic record or a
13  controllable account or controllable payment intangible
14  evidenced by the controllable electronic record. (d) Presumption of exclusivity of c
16ertain powers. If a person has the powers specified in sub
17section (a)(1)(B)(i) and (ii), the powers are presumed to be
18 exclusive. (e) Contr
19ol through another person. A person has co
20ntrol of a controllable electronic record if another person, other
21 than the transferor to the person of an interest in th
22e controllable electronic record or a controllable account or controlla
23ble payment intangible evidenced by the controllable electroni
24c record:  (1) has control of the electronic record and acknowledges that it has c
26 ontrol on behalf of the person; or  (2) obtains control of the electronic re
2 cord after having acknowledged that it will obtain control
3  of the electronic record on behalf of the person. (f) No requirement to acknowledge. A 
5person that has control under this Section is not required to acknowledge that it has control on behalf
6 of another person. (g) No duties or confirmation. I
7f a person acknowledges that it has or will obtain control on behalf of another person, unless the person otherwise agre
8es or law other than this Article or Article 9 otherwise provides, the person does not ow
9e any duty to the other person and is not required to confirm the
10 acknowledgment to any other person.
(810 ILCS 5/12-106 new) Se
13c. 12-106. Discharge of account debtor on controllable account or controllable pay
15ment intangible. (a) Discharge of account debtor. An account debtor o
17n a controllable account or controll
18able payment intangible may discharge its obligation by payi
19ng:  (1) the person having control of the controllable electronic r
21 ecord that evidences the controllable account or controllable 
22 payment intangible; or  (2) except as provided in subsection (b), a person th
24 at formerly had control of the controllable electronic record. (b) Content and effect of notification. Subject to su
 
 
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1bsection (d), the account debtor may not discharge its obligation by pay
2ing a person that formerly had control of the controllable electron
3ic record if the account debtor receives a notific
4ation that:  (1) is signed by a person that formerly had co
6 ntrol or the person to which control was transferred;  (2) reasonably iden
8 tifies the controllable account or controllable payment intangible;  (3) notifies the a
10 ccount debtor that control of the controllable electronic record that evi
11 dences the controllable account or controllable payment intangi
12 ble was transferred;  (4) identifies the transferee, in any reasonabl
14 e way, including by name, identifying number, cryptographic
15  key, office, or account number; and  (5) provides a commercially reasonable method by which the a
17 ccount debtor is to pay the transferee. (c) Discharge fol
18lowing effective notification. After receipt of a notification t
19hat complies with subsection (b), the account debtor m
20ay discharge its obligation by paying in accordance
21 with the notification and may not discharge the obligation
22 by paying a person that formerly had control. (d) When notification ineffec
24tive. Subject to subsection (h), notification is ineffective under subsection (b
25):  (1) unles
26 s, before the notification is sent, the account debto
 
 
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1 r and the person that, at that time, had control of t
2 he controllable electronic record that evidences the co
3 ntrollable account or controllable payment intangible agree i
4 n a signed record to a commercially reasonable method by which 
5 a person may furnish reasonable proof that control has been transferred;  (2) to the extent an agreement between 
7 the account debtor and seller of a payment intangible limits t
8 he account debtor's duty to pay a person other than the seller and the limitation
9  is effective under law other than this Article; or
10  (3) at the option of the 
11 account debtor, if the notification notifies the account debtor t
12 o:   
13  (A) divide a payment;   (B) make less than the full amount of 
15 an installment or other periodic payment; or   (C) pay any
17  part of a payment by more than one method or to more than o
18 ne person. (e) Proof of 
19transfer of control. Subject to subsection (h), if requested 
20by the account debtor, the person giving the
21 notification under subsection (b) seasonably shall furnish reasona
22ble proof, using the method in the agreement referred to in 
23subsection (d)(1), that control of the controllable electron
24ic record has been transferred. Unless the person complie
25s with the request, the account debtor may discharge its obligation 
26by paying a person that formerly had control, even if the account debt
 
 
SB3696- 230 -LRB103 37687 SPS 67814 b


1or has received a notification under subsection (b).
2 (f) What constitutes reasonable proof. A person
3 furnishes reasonable proof under subsection (e) tha
4t control has been transferred if the person demonstrates, usi
5ng the method in the agreement referred to in subsection (d)(1), th
6at the transferee has the power to:  (1) avail itself of substanti
8 ally all the benefit from the controllable electronic 
9 record;  (2) prevent others from availing
11  themselves of substantially all the benefit from the controllable
12  electronic record; and  (3) transfer the powers specified in parag
14 raphs (1) and (2) to another person. (g) Rights not waivable. Subject to subsection (h), an account debtor ma
16y not waive or vary its rights under subsections (d)(1) and (e) or its option under subse
17ction (d)(3). (h) Rule for individual under other law. This Section is subject to law other than th
18is Article that establishes a different rule for an account debt
19or who is an individual and who incurred the obligation pri
20marily for personal, family, or household purposes.
(810 ILCS 5/12-107 new) Sec. 12
24-107. Governing law. (a) Governing law: general rule. Except as provide
2d in subsection (b), the local law of a controllable electronic record's jurisdiction gover
3ns a matter covered by this Article. (b) Governing law: Section 12-106. For a cont
5rollable electronic record that evidences a controllable account or cont
6rollable payment intangible, the local law of the controllable electro
7nic record's jurisdiction governs a matter covered by Sect
8ion 12-106 unless an effective agreement deter
9mines that the local law of another jurisdiction governs.
10 (c) Controllable elec
11tronic record's jurisdiction. The following rules det
12ermine a controllable electronic record's jurisdictio
13n under this Section:  (1) If the controllable electronic record, or
15  a record attached to or logically associated with the con
16 trollable electronic record and readily available for re
17 view, expressly provides that a particular jurisdiction is 
18 the controllable electronic record's jurisdiction for 
19 purposes of this Article or the Uniform Commercial Code, t
20 hat jurisdiction is the controllable electronic record's jurisdiction.  (2) If paragraph (1) does not appl
22 y and the rules of the system in which the controllable ele
23 ctronic record is recorded are readily available for r
24 eview and expressly provide that a particular juris
25 diction is the controllable electronic record's juri
26 sdiction for purposes of this Article or the Uniform Co
 
 
SB3696- 232 -LRB103 37687 SPS 67814 b


1 mmercial Code, that jurisdiction is the controllable 
2 electronic record's jurisdiction.  (3) If paragraphs (1) and (2) do 
4 not apply and the controllable electronic record, 
5 or a record attached to or logically associated with the
6  controllable electronic record and readily availab
7 le for review, expressly provides that the controllable elec
8 tronic record is governed by the law of a particul
9 ar jurisdiction, that jurisdiction is the controllable electronic record's jurisdictio
10 n.  (4) If par
11 agraphs (1), (2), and (3) do not apply and the rules 
12 of the system in which the controllable electronic
13  record is recorded are readily available for review and expres
14 sly provide that the controllable electronic record or the 
15 system is governed by the law of a particular jurisdiction, th
16 at jurisdiction is the controllable electronic record's jurisdi
17 ction.  (5)
18  If paragraphs (1) through (4) do not apply, the controllabl
19 e electronic record's jurisdiction is the District of Col
20 umbia. (d) Applicability of A
21rticle 12. If subsection (c)(5) applies and Article 12 is not i
22n effect in the District of Columbia without material modifica
23tion, the governing law for a matter covered by this Artic
24le is the law of the District of Columbia as though Article 12 
25were in effect in the District of Columbia without material modi
26fication. In this subsection, "Article 12" means Article 12 
 
 
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1of Uniform Commercial Code Amendments (2022)
. (e) Relation of matter or transaction to controllable e
3lectronic record's jurisdiction not necessary. To the extent subs
4ections (a) and (b) provide that the local law of the controll
5able electronic record's jurisdiction governs a matter covered by this Article, that law governs even if the 
6matter or a transaction to which the matter relates does not bear any relation to the controllab
7le electronic record's jurisdiction. (f) Rights of purchasers determined at time of purchase. The rights acquired under Se
9ction 12-104 by a purchaser or qualifying purchaser are governed by the law applicable under this Section at the time of purc
10hase.
(810 ILCS 5/Art. 12A head
11 ing new) ARTICLE 12A TRANSITIONAL PROVISIONS FOR UNIFORM 
13
COMMERCIAL
  CODE AMENDMENTS OF THE 103RD GENERA
14
L ASSEMBLY

(810 ILCS 5/Art. 12A Pt. 1 heading new) PART 1 GENERAL PROVISIONS AND DEFINITIONS
(810 ILCS 5/12A-101 new
18 ) Sec. 12A-101. Title. This Article may 
20be cited as Transitional Provisions for Uniform Commercial Code Amend
21ments of the 103rd General Assembly.
(810 ILCS
 
 
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1  5/12A-102 new) Sec. 12A-102. 
3Definiti
4ons. (a)
5 In this Article:
6  (1) "Adjustment date" means July 
7 1, 2025, or the date that is one year after the effective 
8 date of this amendatory Act of the 103rd General Assembly, wh
9 ichever is later.
10  (2) "Article 12" means Article 12 of the Uniform Commercial C
11 ode.  (3) "Article 12 property" means a 
12 controllable account, controllable electronic record, or controllable payment intangible. (b) Definitions in other Articles. The follo
14wing definitions in other Articles of the Uniform Commercial Code apply to this A
15rticle. "Controllable ac
16count". Section 9-102. "Controllable electronic record". Section 12-102. "Controllable payment intan
18gible". Section 9-102. "Electronic money". Section 9-
19102. "Financing statement"
20. Section 9-102. (c) Article 1 definitions and principles. Articl
21e 1 contains general definitions and principles of construction and interpretation applica
22ble throughout this Article.
(810 ILCS 5/Art. 12A Pt. 2 heading new) PART 2 GENERAL TRANSITIONAL 
 
 
SB3696- 235 -LRB103 37687 SPS 67814 b


1
PROVISION


2(810 ILCS 5/12A-201 new)
3  Sec. 12A-201. Saving clause. Except as provided in Part 3, a transaction validly entered into before the effective date of this amen
7datory Act of the 103rd General Assembly and the rights, duties, and interests flowing from the transa
8ction remain valid thereafter and may be terminated, completed,
9 consummated, or enforced as required or permitted by law other than the Uniform Commercial Code or, if applicable, the Uni
10form Commercial Code, as though this amendatory Act of the 103rd General Assembly had not 
11taken effect.
(810 ILCS 5/Art. 12A Pt. 3 heading new) PART 3 TRANSITIONAL PROVISIONS F
14
OR ARTICLES 9 AND 12

(810 ILCS 5/12A-3
16 01 new)
17 Sec. 12A-301. Saving clause. (a) Pre-effective-date transacti
20on, lien, or interest. Except as provided in this Part, Article 9 as amended by this amendato
21ry Act of the 103rd General Assembly and Article 12 apply to a transa
22ction, lien, or other interest in property, even if the t
23ransaction, lien, or interest was entered into, created
24, or acquired before the effective date of this amend
 
 
SB3696- 236 -LRB103 37687 SPS 67814 b


1atory Act of the 103rd General Assembly. (b) Continuing validity. Exc
3ept as provided in subsection (c) and Sections 12A-302 through 12A-306:  (1) a transaction, lien
6 , or interest in property that was validly entered into, 
7 created, or transferred before the effective date of this
8  amendatory Act of the 103rd General Assembly and was n
9 ot governed by the Uniform Commercial Code, but would be subject to
10  Article 9 as amended by this amendatory Act of the 103rd Gen
11 eral Assembly or Article 12 if it had been entered i
12 nto, created, or transferred on or after the effective dat
13 e of this amendatory Act of the 103rd General Assembly, 
14 including the rights, duties, and interests flowing from th
15 e transaction, lien, or interest, re
16 mains valid on and after the effective date of this amendatory Act of the 103rd
17  General Assembly; and  (2) the transaction, lien, or interest ma
19 y be terminated, completed, consummated, and enforced as required or permitted by this amendatory Act of the 
20 103rd General Assembly or by the law that would apply if this amendatory Act of the 103rd 
21 General Assembly had not taken effect. (c) Pre-effective-date proceeding.
22 This amendatory Act of the 103rd General Assembly 
23does not affect an action, case, or proceeding commenced bef
24ore the effective date of this amendatory Act of the 10
253rd General Assembly.
(810 ILCS 5/12A-302 new) Sec. 12A-302. Security interest perfected before effe
5ctive date. (a) Continuing perfection: perfection requirements satisfied. A security interest that
7 is enforceable and perfected immediately before the effective da
8te of this amendatory Act of the 103rd General Assembl
9y is a perfected security interest under this amendatory Ac
10t of the 103rd General Assembly if, on the effective date of th
11is amendatory Act of the 103rd General Assembly, the requirem
12ents for enforceability and perfection under this amendatory Ac
13t of the 103rd General Assembly are satisfied without furt
14her action. (b) Continuing perfection: enfo
15rceability or perfection requirements not satisfied. If a security int
16erest is enforceable and perfected immediately before the 
17effective date of this amendatory Act of the 103rd Ge
18neral Assembly, but the requirements for enforceabil
19ity or perfection under this amendatory Act of the 103rd
20 General Assembly are not satisfied on the effective date of t
21his amendatory Act of the 103rd General Assembly,
22 the security interest:  (1) is a perfected security interest unt
24 il the earlier of the time perfection would have ceased unde
25 r the law in effect immediately before the effective date of
26  this amendatory Act of the 103rd General Assembly or the
 
 
SB3696- 238 -LRB103 37687 SPS 67814 b


1  adjustment date;
2  (2) remains enforceable thereafter only if the security interest satisfies t
3 he requirements for enforceability under Section 9-203, as amended by this amendator
4 y Act of the 103rd General Assembly, before the adjustment date; and 
5 (3) remains perfected thereafter only if the requirements for perfection under this amend
6 atory Act of the 103rd General Assembly are satisfied before 
7 the time specified in paragraph (1).
(8
8 10 ILCS 5/12A-303 new)
9 Sec. 12A-303. Security interest unperfect
11ed before effective date. 
12A security interest that is enforceable imm
13ediately before the effective date of this amendatory Act 
14of the 103rd General Assembly but is unperfected at that t
15ime:  (1) remains an enforceable security interest until the adjust
17 ment date;  (2) re
18 mains enforceable thereafter if the security interest
19  becomes enforceable under Section 9-203
20 , as amended by this amendatory Act of the 103rd 
21 General Assembly, on the effective date of this amendatory Act of the 103rd 
22 General Assembly or before the adjustment date; and  (3) becomes per
24 fected:   (
 
 
SB3696- 239 -LRB103 37687 SPS 67814 b


1 A) without further action, on the effective date of this amendatory Act of the 103rd Gener
2 al Assembly if the requirements for perfection under this amendatory Act of the 103rd General Assembly are satisfie
3 d before or at that time; or   (B) when the requirements for perfection are satis
5 fied if the requirements are satisfied after that time.
(8
7 10 ILCS 5/12A-304 new) Sec. 12A-304
9. Effectivene
10ss of actions taken before effective date. (a) Pre-effectiv
12e-date action; attachment and perfection before adjustme
13nt date. If action, other than the filing of a financing 
14statement, is taken before the effective date of this amendat
15ory Act of the 103rd General Assembly and the action would
16 have resulted in perfection of the security interest ha
17d the security interest become enforceable before the effective d
18ate of this amendatory Act of the 103rd General Assembly, the action is effect
19ive to perfect a security interest that attaches under this am
20endatory Act of the 103rd General Assembly before the adjustme
21nt date. An attached security interest becomes unperfected on
22 the adjustment date unless the security interest becomes a pe
23rfected security interest under this amendatory Act of the 10
243rd General Assembly before the adjustment date. (b) Pre-effective-date filing. The f
26iling of a financing statement before the effective date of th
 
 
SB3696- 240 -LRB103 37687 SPS 67814 b


1is amendatory Act of the 103rd General Assembly is e
2ffective to perfect a security interest on the effective date o
3f this amendatory Act of the 103rd General Assembly to th
4e extent the filing would satisfy the requirements for perfecti
5on under this amendatory Act of the 103rd General Assembly. (c) Pre-eff
6ective-date enforceability action. The taking of an action before the effective date
7 of this amendatory Act of the 103rd General Assembly is sufficient for the enforceability of a security interest on the effective d
8ate of this amendatory Act of the 103rd General Assembly if the act
9ion would satisfy the requirements for enforceability under
10 this amendatory Act of the 103rd General Assembly.
(810 ILCS 5/12A-305 new)
12 Sec. 
1312A-305. 
14Priority. (a) Determination of priority. Subject to subsections (b) a
16nd (c), this amendatory Act of the 103
17rd General Assembly determines the priority of conflicting clai
18ms to collateral. (b) 
19Established priorities. Subject to subsection (c), if the pri
20orities of claims to collateral were established before the e
21ffective date of this amendatory Act of the 103rd General Asse
22mbly, Article 9 as in effect before the effective date of
23 this amendatory Act of the 103rd General Assembly determines p
24riority. (c) Determin
25ation of certain priorities on adjustment date. On the adjustment date, to the 
 
 
SB3696- 241 -LRB103 37687 SPS 67814 b


1extent the priorities determined by Article 9 as amended by this amendatory Act of the 103
2rd General Assembly modify the priorities established before the effective date of this amendatory Act of the 103rd Gen
3eral Assembly, the priorities of claims to Article 12 property and el
4ectronic money established before the effective date of this amenda
5tory Act of the 103rd General Assembly cease to apply.
(810 ILCS 5/12A-306 new) Sec. 12A-
9306. Priority of
10 claims when priority rules of Article 9 do not apply. (a) Deter
12mination of priority. Subject to subsections (b) and 
13(c), Article 12 determines the priority of conflicting claims
14 to Article 12 property when the priority rules of Articl
15e 9 as amended by this amendatory Act of the 103r
16d General Assembly do not apply. (b) Established priorities. Subject to subsection (c), 
18when the priority rules of Article 9 as amended by this amenda
19tory Act of the 103rd General Assembly do not apply and the pri
20orities of claims to Article 12 property were established bef
21ore the effective date of this amendatory Act of the 103rd Gen
22eral Assembly, law other than Article 12 determines prior
23ity. (c) Determina
24tion of certain priorities on adjustment date. When the priorit
25y rules of Article 9 as amended by this amendatory Act of the 103rd General Assembly do not apply, to the extent the pr
 
 
SB3696- 242 -LRB103 37687 SPS 67814 b


1iorities determined by this amendatory Act of the 103rd General Assembly modify the priorities established bef
2ore the effective date of this amendatory Act of the 1
 
 
SB3696- 243 -LRB103 37687 SPS 67814 b


1
203rd General Assemb
3ly, the priorities of claims to Article 12 property established b
4efore the effective date of this amendatory Act of the 103rd General Assembly cease to apply on the adjustment d
5ate.
 Section 9
69. Effective date. Th
7is Act takes effect January 1, 2025.
205 ILCS 657/5
810 ILCS 5/1-
9 201from Ch. 26, par. 1-201
810 ILCS 5/1-
10 204from Ch. 26, par. 1-204
810 ILCS 5/1-
11 301
810 ILCS 5/1-306
810 ILCS 5/2-102from Ch. 26, par. 2-102
810 ILCS 5/2-106from Ch. 26, par. 2-106
810 ILCS 5/2-201from Ch. 26, par. 2-201
810 ILCS 5/2-202from Ch. 26, par. 2-202
810 ILCS 5/2-203from Ch. 26, par. 2-203
810 ILCS 5/2-205from Ch. 26, par. 2-205
810 ILCS 5/2-209from Ch. 26, par. 2-209
810 ILCS 5/2A-102from Ch. 26, par. 2A-102
810 ILCS 5/2A-103from Ch. 26, par. 2A-103
810 ILCS 5/2A-107from Ch. 26, par. 2A-107
810 ILCS 5/2A-201from Ch. 26, par. 2A-201
810 ILCS 5/2A-202from Ch. 26, par. 2A-202
810 ILCS 5/2A-203from Ch. 26, par. 2A-203
810 ILCS 5/2A-205from Ch. 26, par. 2A-205
810 ILCS 5/2A-208from Ch. 26, par. 2A-208
810 ILCS 5/3-104from Ch. 26, par. 3-104
810 ILCS 5/3-105from Ch. 26, par. 3-105
810 ILCS 5/3-401from Ch. 26, par. 3-401
810 ILCS 5/3-604from Ch. 26, par. 3-604
810 ILCS 5/4A-103from Ch. 26, par. 4A-103
810 ILCS 5/4A-201from Ch. 26, par. 4A-201
810 ILCS 5/4A-202from Ch. 26, par. 4A-202
810 ILCS 5/4A-203from Ch. 26, par. 4A-203
810 ILCS 5/4A-207from Ch. 26, par. 4A-207
810 ILCS 5/4A-208from Ch. 26, par. 4A-208
810 ILCS 5/4A-210from Ch. 26, par. 4A-210
810 ILCS 5/4A-211from Ch. 26, par. 4A-211
810 ILCS 5/4A-305from Ch. 26, par
15 . 4A-305
810 ILCS 5/5-104from Ch. 26, pa
16 r. 5-104
810 ILCS 5/5-116from Ch. 26, pa
17 r. 5-116
810 ILCS 5/7-102from Ch. 26, pa
18 r. 7-102
810 ILCS 5/7-
19 106
810 ILCS 5/8-102from Ch. 26, pa
20 r. 8-102
810 ILCS 5/8-103from Ch. 26, pa
21 r. 8-103
810 ILCS 5/8-106from Ch. 26, pa
22 r. 8-106
810 ILCS 5/8-110
810 ILCS 5/8-303from Ch. 26, par. 8-303
810 ILCS 5/9-102from Ch. 26, par. 9-102
810 ILCS 5/9-104from Ch. 26, par. 9-104
810 ILCS 5/9-105from Ch. 26, par. 9-105
810 ILCS 5/9-105A new
810 ILCS 5/9-107A new
810 ILCS 5/9-107B new
810 ILCS 5/9-203from Ch. 26, pa
5 r. 9-203
810 ILCS 5/9-
6 204from Ch. 26, par. 9-204
810 ILCS 5/9-
7 207from Ch. 26, par. 9-207
810 ILCS 5/9-
8 208from Ch. 26, par. 9-208
810 ILCS 5/9-
9 209
810 ILCS 5/9-210
810 ILCS 5/9-301from Ch. 26, par. 9-301
810 ILCS 5/9-304from Ch. 26, par. 9-304
810 ILCS 5/9-305from Ch. 26, par. 9-305
810 ILCS 5/9-306A new
810 ILCS 5/9-306B new
810 ILCS 5/9-310from Ch. 26, par. 9-310
810 ILCS 5/9-312from Ch. 26, par. 9-312
810 ILCS 5/9-313from Ch. 26, par. 9-313
810 ILCS 5/9-314from Ch. 26, par. 9-314
810 ILCS 5/9-314A new
810 ILCS 5/9-316from Ch. 26, pa
22 r. 9-316
810 ILCS 5/9-
23 317from Ch. 26, par. 9-317
810 ILCS 5/9-323
810 ILCS 5/9-324
810 ILCS 5/9-326A new
810 ILCS 5/9-330
810 ILCS 5/9-331
810 ILCS 5/9-332
810 ILCS 5/9-
3 334
810 ILCS 5/9-
4 341
810 ILCS 5/9-
5 404from Ch. 26, par. 9-404
810 ILCS 5/9-406from Ch. 2
7 6, par. 9-406
810 ILCS 5/9-408from Ch. 26, par. 9-408
810 ILCS 5/9-509
810 ILCS 5/9-513
810 ILCS 5/9-601
810 ILCS 5/9-605
810 ILCS 5/9-608
810 ILCS 5/9-611
810 ILCS 5/9-613
810 ILCS 5/9-614
810 ILCS 5/9-615
810 ILCS 5/9-616
810 ILCS 5/9-619
810 ILCS 5/9-620
810 ILCS 5/
23 9-621
810 ILCS 5/9-624
810 ILCS 5/9-628
81
26 0 ILCS 5/Art. 11A heading
81
 
 
SB3696- 247 -LRB103 37687 SPS 67814 b