H-3603              _______________________________________________


                                                   HOUSE BILL NO. 2633



                                                                            C 228 L 90



State of Washington                               51st Legislature                              1990 Regular Session


By Representatives Appelwick, P. King and Valle



Read first time 1/17/90 and referred to Committee on Judiciary.



AN ACT Relating to the uniform commercial code; and amending RCW 62A.1-201.




        Sec. 1.  Section 1-201, chapter 157, Laws of 1965 ex. sess. as last amended by section 53, chapter 35, Laws of 1986 and RCW 62A.1-201 are each amended to read as follows:

          Subject to additional definitions contained in the subsequent Articles of this Title which are applicable to specific Articles or Parts thereof, and unless the context otherwise requires, in this Title:

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

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

          (3) "Agreement" means the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this Title (RCW  62A.1-205 and RCW  62A.2-208).    Whether an agreement has legal consequences is determined by the provisions of this Title, if applicable; otherwise by the law of contracts (RCW  62A.1-103).    (Compare "Contract".)

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

          (5) "Bearer" means the person in possession of an instrument, document of title, or certificated security payable to bearer or indorsed in blank.

          (6) "Bill of lading" means a document evidencing the receipt of goods for shipment issued by a person engaged in the business of transporting or forwarding goods, and includes an airbill.  "Airbill" means a document serving for air transportation as a bill of lading does for marine or rail transportation, and includes an air consignment note or air waybill.

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

          (8) "Burden of establishing" a fact means the burden of persuading the triers of fact that the existence of the fact is more probable than its non-existence.

          (9) "Buyer in ordinary course of business" means a person who in good faith and without knowledge that the sale to him is in violation of the ownership rights or security interest of a third party in the goods buys in ordinary course from a person in the business of selling goods of that kind but does not include a pawnbroker.  All persons who sell minerals or the like (including oil and gas) at wellhead or minehead shall be deemed to be persons in the business of selling goods of that kind.  "Buying" may be for cash or by exchange of other property or on secured or unsecured credit and includes receiving goods or documents of title under a pre-existing contract for sale but does not include a transfer in bulk or as security for or in total or partial satisfaction of a money debt.

          (10) "Conspicuous":  A term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it.  A printed heading in capitals (as:  NON-NEGOTIABLE BILL OF LADING) is conspicuous.  Language in the body of a form is "conspicuous" if it is in larger or other contrasting type or color.  But in a telegram any stated term is "conspicuous".  Whether a term or clause is "conspicuous" or not is for decision by the court.

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

          (12) "Creditor" includes a general creditor, a secured creditor, a lien creditor and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity and an executor or administrator of an insolvent debtor's or assignor's estate.

          (13) "Defendant" includes a person in the position of defendant in a cross-action or counterclaim.

          (14) "Delivery" with respect to instruments, documents of title, chattel paper, or certificated securities means voluntary transfer of possession.

          (15) "Document of title" includes bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers.  To be a document of title a document must purport to be issued by or addressed to a bailee and purport to cover goods in the bailee's possession which are either identified or are fungible portions of an identified mass.

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

          (17) "Fungible" with respect to goods or securities means goods or securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit.  Goods which are not fungible shall be deemed fungible for the purposes of this Title to the extent that under a particular agreement or document unlike units are treated as equivalents.

          (18) "Genuine" means free of forgery or counterfeiting.

          (19) "Good faith" means honesty in fact in the conduct or transaction concerned.

          (20) "Holder" ((means a person who is in possession of a document of title or an instrument or a certificated investment security drawn, issued, or indorsed to him or to his order or to bearer or in blank)) with respect to an instrument, certificated security, or document of title means the person in possession if (a) in the case of an instrument, it is payable to bearer or to the order of the person in possession, (b) in the case of a security, the person in possession is the registered owner, or the security has been indorsed to the person in possession by the registered owner, or the security is in bearer form, or (c) in the case of a document of title, the goods are deliverable to bearer or to the order of the person in possession.

          (21) To "honor" is to pay or to accept and pay, or where a credit so engages to purchase or discount a draft complying with the terms of the credit.

          (22) "Insolvency proceedings" includes any assignment for the benefit of creditors or other proceedings intended to liquidate or rehabilitate the estate of the person involved.

          (23) A person is "insolvent" who either has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due or is insolvent within the meaning of the federal bankruptcy law.

          (24) "Money" means a medium of exchange authorized or adopted by a domestic or foreign government ((as a part of its currency)) or intergovernmental organization.

          (25) A person has "notice" of a fact when (a) he has actual knowledge of it; or

          (b) he has received a notice or notification of it; or

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

A person "knows" or has "knowledge" of a fact when he has actual knowledge of it.  "Discover" or "learn" or a word or phrase of similar import refers to knowledge rather than to reason to know.  The time and circumstances under which a notice or notification may cease to be effective are not determined by this Title.

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

          (a) it comes to his attention; or

          (b) it is duly delivered at the place of business through which the contract was made or at any other place held out by him as the place for receipt of such communications.

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

          (28) "Organization" includes a corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership or association, two or more persons having a joint or common interest, or any other legal or commercial entity.

          (29) "Party", as distinct from "third party", means a person who has engaged in a transaction or made an agreement within this Title.

          (30) "Person" includes an individual or an organization (See RCW  62A.1-102). 

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

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

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

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

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

          (36) "Rights" includes remedies.

          (37) "Security interest" means an interest in personal property or fixtures which secures payment or performance of an obligation.  The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer (RCW  62A.2-401) is limited in effect to a reservation of a "security interest".  The term also includes any interest of a buyer of accounts or chattel paper which is subject to !br[Article 62A.9 RCW]!er Article 9.  The special property interest of a buyer of goods on identification of such goods to a contract for sale under RCW  62A.2-401 is not a "security interest", but a buyer may also acquire a "security interest" by complying with !br[Article 62A.9 RCW]!er Article 9.  Unless a lease or consignment is intended as security, reservation of title thereunder is not a "security interest" but a consignment is in any event subject to the provisions on consignment sales (RCW  62A.2-326).    Whether a lease is intended as security is to be determined by the facts of each case; however, (a) the inclusion of an option to purchase does not of itself make the lease one intended for security, and (b) an agreement that upon compliance with the terms of the lease the lessee shall become or has the option to become the owner of the property for no additional consideration or for a nominal consideration does make the lease one intended for security.

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

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

          (40) "Surety" includes guarantor.

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

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

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

          (44) "Value".  Except as otherwise provided with respect to negotiable instruments and bank collections (RCW  62A.3-303, RCW  62A.4-208 and RCW  62A.4-209) a person gives "value" for rights if he acquires them

          (a) in return for a binding commitment to extend credit or for the extension of immediately available credit whether or not drawn upon and whether or not a charge-back is provided for in the event of difficulties in collection; or

          (b) as security for or in total or partial satisfaction of a preexisting claim; or

          (c) by accepting delivery pursuant to a pre-existing contract for purchase; or

          (d) generally, in return for any consideration sufficient to support a simple contract.

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

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

                                                                                                                      Passed the House February 12, 1990.


                                                                                                                                         Speaker of the House.


                                                                                                                      Passed the Senate February 28, 1990.


                                                                                                                                       President of the Senate.