SENATE BILL REPORT

SB 5079

BYSenators Pullen and Talmadge

Discussing variable interest rates in relation to the uniform commercial code.

Senate Committee on Law & Justice

Senate Hearing Date(s):January 26, 1989; January 30, 1989

Majority Report:  Do pass.

      Signed by Senators Pullen, Chairman; McCaslin, Vice Chairman; Hayner, Madsen, Nelson, Newhouse, Rasmussen, Rinehart, Talmadge, Thorsness.

Senate Staff:Richard Rodger (786-7461)

                  March 3, 1989

AS PASSED SENATE, MARCH 3, 1989

BACKGROUND:

Under current law, promissory notes and other instruments are required to have stated interest or stated installments to be negotiable instruments under the Uniform Commercial Code (UCC).  At the present time most mortgages, commercial loans, and personal loans have variable interest rates or variable installment payments.  It is suggested that the UCC should be amended to ensure that instruments with variable rates or variable payments are negotiable instruments. 

SUMMARY:

Language defining negotiable instruments under the UCC is amended to include instruments which have variable interest rates or variable installment payments.

A variable rate of interest is a "stated interest" if the rate is readily ascertainable.

Graduated, variable, annuity or price-level adjusted payments are "stated installments."

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Don Brazier, Washington Mutual Savings Bank (pro)