HB 257: "An Act relating to the Uniform Commercial Code; amending Alaska Rules of Civil Procedure 8 and 82, and Alaska Rule of Evidence 402; and providing for an effective date."
00HOUSE BILL NO. 257 01 "An Act relating to the Uniform Commercial Code; amending Alaska Rules of 02 Civil Procedure 8 and 82, and Alaska Rule of Evidence 402; and providing for 03 an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 45.01.101 is amended to read: 06 Sec. 45.01.101. SHORT TITLE. AS 45.01 - AS 45.09 and AS 45.12 07 [AS 45.01.101 - AS 45.09.507 SHALL BE KNOWN AND] may be cited as the 08 Uniform Commercial Code. 09 * Sec. 2. AS 45.01.102 is amended to read: 10 Sec. 45.01.102. PURPOSES; RULES OF CONSTRUCTION; VARIATION 11 BY AGREEMENT. (a) The code [AS 45.01 - AS 45.09] shall be liberally construed 12 and applied to promote the underlying purposes and policies. 13 (b) Underlying purposes and policies of the code [AS 45.01 - AS 45.09] are: 14 (1) to simplify, clarify, and modernize the law governing commercial
01 transactions; 02 (2) to permit the continued expansion of commercial practices through 03 custom, usage, and agreement of the parties; 04 (3) to make uniform the law among the various jurisdictions. 05 (c) The effect of provisions of the code [AS 45.01 - AS 45.09] may be varied 06 by agreement, except as otherwise provided in the code [AS 45.01 - AS 45.09] and 07 except that the obligations of good faith, diligence, reasonableness, and care prescribed 08 by the code [AS 45.01 - AS 45.09] may not be disclaimed by agreement, but the 09 parties may by agreement determine the standards by which the performance of the 10 obligations is to be measured if such standards are not manifestly unreasonable. 11 (d) The presence in certain provisions of the code [AS 45.01 - AS 45.09] of 12 the words "unless otherwise agreed" or words of similar import does not imply that the 13 effect of other provisions may not be varied by agreement under (c) of this section. 14 (e) In the code the rules of construction in AS 01.10.050(b) - (c) apply 15 [AS 45.01 - AS 45.09], unless the context otherwise requires [, 16 (1) WORDS IN THE SINGULAR NUMBER INCLUDE THE 17 PLURAL, AND IN THE PLURAL INCLUDE THE SINGULAR; 18 (2) WORDS OF THE MASCULINE GENDER INCLUDE THE 19 FEMININE AND THE NEUTER, AND WHEN THE SENSE SO INDICATES 20 WORDS OF THE NEUTER GENDER MAY REFER TO ANY GENDER]. 21 * Sec. 3. AS 45.01.103 is amended to read: 22 Sec. 45.01.103. SUPPLEMENTARY GENERAL PRINCIPLES OF LAW 23 APPLICABLE. Unless displaced by the particular provisions of the code [AS 45.01 - 24 AS 45.09], the principles of law and equity, including the law merchant and the law 25 relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, 26 duress, coercion, mistake, bankruptcy, or other validating or invalidating cause, 27 supplement the provisions of the code [AS 45.01 - AS 45.09]. 28 * Sec. 4. AS 45.01.105 is amended to read: 29 Sec. 45.01.105. TERRITORIAL APPLICATION OF THE ACT; PARTIES' 30 POWER TO CHOOSE APPLICABLE LAW. (a) Except as provided in this section, 31 when a transaction bears a reasonable relation to this state and also to another state or
01 nation, the parties may agree that the law either of this state or of the other state or 02 nation shall govern their rights and duties. Failing this agreement, the code applies 03 [AS 45.01 - AS 45.09 APPLY] to transactions bearing an appropriate relation to this 04 state. 05 (b) Where one of the following provisions of the code [AS 45.01 - AS 45.09] 06 specifies the applicable law, that provision governs and a contrary agreement is 07 effective only to the extent permitted by the law, including the conflict of laws rules, 08 so specified: 09 (1) AS 45.02.402 (rights [RIGHTS] of creditors against sold goods); 10 (2) AS 45.04.102 (applicability [(AS 45.02.402) APPLICABILITY] 11 of the chapter [ARTICLE] on bank deposits and collections); 12 (3) AS 45.08.106 (applicability [(AS 45.04.102) BULK TRANSFERS 13 SUBJECT TO THE ARTICLE ON BULK TRANSFERS (AS 45.06.102) 14 APPLICABILITY] of the chapter [ARTICLE] on investment securities); 15 (4) AS 45.09.103 (perfection [(AS 45.08.106) PERFECTION] 16 provisions of the chapter [ARTICLE] on secured transactions); 17 (5) AS 45.12.105 and 45.12.106 (applicability of the chapter on 18 leases) [(AS 45.09.103)]. 19 * Sec. 5. AS 45.01.106 is amended to read: 20 Sec. 45.01.106. REMEDIES TO BE LIBERALLY ADMINISTERED. (a) 21 The remedies provided by the code [AS 45.01 - AS 45.09] shall be liberally 22 administered to the end that the aggrieved party may be put in as good a position as 23 if the other party had fully performed, but neither consequential or special nor penal 24 damages may be had except as specifically provided in the code [AS 45.01 - 25 AS 45.09] or by other rule of law. 26 (b) A right or obligation declared by the code [AS 45.01 - AS 45.09] is 27 enforceable by action unless the provision declaring it specifies a different and limited 28 effect. 29 * Sec. 6. AS 45.01.108 is amended to read: 30 Sec. 45.01.108. SEVERABILITY. If a provision or clause of the code 31 [AS 45.01 - AS 45.09] or application of the clause or provision to a person or
01 circumstances is held invalid, the invalidity does not affect other provisions or 02 applications of the code [AS 45.01 - AS 45.09] that can be given effect without the 03 invalid provision or application, and to this end the provisions of the code [AS 45.01 - 04 AS 45.09] are severable. 05 * Sec. 7. AS 45.01.109 is amended to read: 06 Sec. 45.01.109. SECTION HEADINGS [CAPTIONS]. Notwithstanding 07 AS 01.05.006 and 01.05.031(b)(2), section headings [SECTION CAPTIONS] are 08 parts of the code [AS 45.01 - AS 45.09]. 09 * Sec. 8. AS 45.01.201 is amended to read: 10 Sec. 45.01.201. GENERAL DEFINITIONS. Subject to additional definitions 11 contained in the subsequent chapters [ARTICLES] of the code [AS 45.01 - AS 45.09] 12 that are applicable to specific chapters [ARTICLES] or sections, and unless the 13 context otherwise requires, in the code [AS 45.01 - AS 45.09], 14 (1) "action" in the sense of a judicial proceeding includes recoupment, 15 counterclaim, setoff, suit in equity, and any other proceedings in which rights are 16 determined; 17 (2) "aggrieved party" means a party entitled to resort to a remedy; 18 (3) "agreement" means the bargain of the parties in fact as found in 19 their language or by implication from other circumstances including course of dealing 20 or usage of trade or course of performance as provided in AS 45.01 - AS 45.09 21 [AS 45.01 - AS 45.09] (AS 45.01.205 and AS 45.02.208); whether or not an 22 agreement has legal consequences is determined by the provisions of AS 45.01 - 23 AS 45.12 [AS 45.01 - AS 45.09], if applicable; otherwise by the law of contracts 24 (AS 45.01.103) (compare "contract") [(COMPARE "CONTRACT")]; 25 (4) "bank" means a person engaged in the business of banking; 26 (5) "bearer" means the person in possession of an instrument, document 27 of title, or certificated security payable to bearer or endorsed in blank; 28 (6) "bill of lading" means a document evidencing the receipt of goods 29 for shipment issued by a person engaged in the business of transporting or forwarding 30 goods, and includes an airbill; "airbill" means a document serving for air transportation 31 as a bill of lading does for marine or rail transportation, and includes an air
01 consignment note or air waybill; 02 (7) "branch" includes a separately incorporated foreign branch of a 03 bank; 04 (8) "burden of establishing" a fact means the burden of persuading the 05 triers of fact that the existence of the fact is more probable than its nonexistence; 06 (9) "buyer in ordinary course of business" means a person who, in good 07 faith and without knowledge that the sale to that person is in violation of the 08 ownership rights or security interest of a third party in the goods, buys in ordinary 09 course from a person in the business of selling goods of that kind but does not include 10 a pawnbroker; all persons who sell minerals or the like, [(] including oil and gas, [)] 11 at wellhead or minehead are considered to be persons in the business of selling goods 12 of that kind; "buying" may be for cash or by exchange of other property or on secured 13 or unsecured credit and includes receiving goods or documents of title under a 14 pre-existing contract for sale but does not include a transfer in bulk or as security for 15 or in total or partial satisfaction of a money debt; 16 (10) "code" means AS 45.01 - AS 45.09 and AS 45.12; 17 (11) "conspicuous": a term or clause is conspicuous when it is so 18 written that a reasonable person against whom it is to operate ought to have noticed 19 it; a printed heading in capitals (as: NONNEGOTIABLE BILL OF LADING) is 20 conspicuous; language in the body of a form is "conspicuous" if it is in larger or other 21 contrasting type or color; but in a telegram any stated term is "conspicuous"; whether 22 a term or clause is "conspicuous" or not is for decision by the court; 23 (12) [(11)] "contract" means the total legal obligation that results from 24 the parties' agreement as affected by the code [AS 45.01 - AS 45.09] and any other 25 applicable rules of law (compare "agreement") [(COMPARE "AGREEMENT")]; 26 (13) [(12)] "creditor" includes a general creditor, a secured creditor, a 27 lien creditor, and any representative of creditors, including an assignee for the benefit 28 of creditors, a trustee in bankruptcy, a receiver in equity, and an executor or 29 administrator of an insolvent debtor's or assignor's estate; 30 (14) [(13)] "defendant" includes a person in the position of defendant 31 in a cross action or counterclaim;
01 (15) [(14)] "delivery" with respect to instruments, documents of title, 02 chattel paper, or certificated securities means voluntary transfer of possession; 03 (16) [(15)] "document of title" includes bill of lading, dock warrant, 04 dock receipt, warehouse receipt or order for the delivery of goods, and also any other 05 document which in the regular course of business or financing is treated as adequately 06 evidencing that the person in possession of it is entitled to receive, hold, and dispose 07 of the document and the goods it covers; to be a document of title a document must 08 purport to be issued by or addressed to a bailee and purport to cover goods in the 09 bailee's possession which are either identified or are fungible portions of an identified 10 mass; 11 (17) [(16)] "fault" means wrongful act, omission, or breach; 12 (18) [(17)] "fungible" with respect to goods or securities means goods 13 or securities of which any unit is, by nature or usage of trade, the equivalent of any 14 other like unit; goods that are not fungible shall be deemed fungible for the purposes 15 of the code [AS 45.01 - AS 45.09] to the extent that under a particular agreement or 16 document unlike units are treated as equivalents; 17 (19) [(18)] "genuine" means free of forgery or counterfeiting; 18 (20) [(19)] "good faith" means honesty in fact in the conduct or 19 transaction concerned; 20 (21) [(20)] "holder," with respect to a negotiable instrument, means 21 the [A] person [WHO IS] in possession if the instrument is payable to bearer or, 22 in the case of an instrument payable to an identified person, if the identified 23 person is in possession; "holder," with respect to [OF] a document of title, means 24 the person in possession if the goods are deliverable to bearer or to the order of 25 the person in possession [OR AN INSTRUMENT OR A CERTIFICATED 26 INVESTMENT SECURITY DRAWN, ISSUED, OR ENDORSED TO THE PERSON 27 OR TO THE ORDER OF THE PERSON OR TO BEARER OR IN BLANK]; 28 (22) [(21)] to "honor" is to pay or to accept and pay or, where a credit 29 so engages, to purchase or discount a draft complying with the terms of the credit; 30 (23) [(22)] "insolvency proceedings" includes any assignment for the 31 benefit of creditors or other proceedings intended to liquidate or rehabilitate the estate
01 of the person involved; 02 (24) [(23)] a person is "insolvent" who either has ceased to pay the 03 person's debts in the ordinary course of business or cannot pay the person's debts as 04 they become due or is insolvent within the meaning of the federal bankruptcy law; 05 (25) [(24)] "money" means a medium of exchange authorized or 06 adopted by a domestic or foreign government, including a monetary unit of account 07 established by an intergovernmental organization or by agreement between two 08 or more nations [AS A PART OF ITS CURRENCY]; 09 (26) [(25)] a person has "notice" of a fact when (A) the person has 10 actual knowledge of it; (B) the person has received a notice or notification of it; or (C) 11 from all the facts and circumstances known to the person at the time in question the 12 person has reason to know that it exists; a person "knows" or has "knowledge" of a 13 fact when the person has actual knowledge of it; "discover" or "learn" or a word or 14 phrase of similar import refers to knowledge rather than to reason to know; the time 15 and circumstances under which a notice or notification may cease to be effective are 16 not determined by the code [AS 45.01 - AS 45.09]; 17 (27) [(26)] a person "notifies" or "gives" a notice or notification to 18 another by taking such steps as may be reasonably required to inform the other in 19 ordinary course whether or not such other actually comes to know of it; a person 20 "receives" a notice or notification when 21 (A) it comes to the person's attention; or 22 (B) it is duly delivered at the place of business through which 23 the contract was made or at any other place held out by the person as the place 24 for receipt of the communications; 25 (28) [(27)] notice, knowledge, or a notice or notification received by 26 an organization is effective for a particular transaction from the time when it is brought 27 to the attention of the individual conducting that transaction, and in any event from the 28 time when it would have been brought to that person's attention if the organization had 29 exercised due diligence; 30 (29) [(28)] "organization" includes a corporation, government or 31 governmental subdivision or agency, business trust, estate, trust, partnership or
01 association, two or more persons having a joint or common interest, or any other legal 02 or commercial entity; 03 (30) [(29)] "party," as distinct from "third party," means a person who 04 has engaged in a transaction or made an agreement within this chapter; 05 (31) [(30)] "person" includes an individual or an organization (See 06 AS 45.01.102); 07 (32) [(31)] "presumption" or "presumed" means that the trier of fact 08 must find the existence of the fact presumed unless evidence is introduced which 09 would support a finding of its nonexistence; 10 (33) [(32)] "purchase" includes taking by sale, discount, negotiation, 11 mortgage, pledge, lien, issue or re-issue, gift, or any other voluntary transaction 12 creating an interest in property; 13 (34) [(33)] "purchaser" means a person who takes by purchase; 14 (35) [(34)] "remedy" means any remedial right to which an aggrieved 15 party is entitled with or without resort to a tribunal; 16 (36) [(35)] "representative" includes an agent, an officer of a 17 corporation or association, and a trustee, executor, or administrator of an estate, or any 18 other person empowered to act for another; 19 (37) [(36)] "rights" includes remedies; 20 (38) [(37)] "security interest" means an interest in personal property or 21 fixtures that [WHICH] secures payment or performance of an obligation; the retention 22 or reservation of title by a seller of goods notwithstanding shipment or delivery to the 23 buyer (AS 45.02.401) is limited in effect to a reservation of a "security interest"; the 24 term also includes an interest of a buyer of accounts or chattel paper that [WHICH] 25 is subject to AS 45.09; the special property interest of a buyer of goods on 26 identification of the goods to a contract for sale under AS 45.02.401 is not a "security 27 interest," but a buyer may also acquire a "security interest" by complying with 28 AS 45.09; unless a [LEASE OR] consignment is intended as security, reservation of 29 title under the [LEASE OR] consignment is not a "security interest," but a consignment 30 is in any event subject to the provisions on consignment sales (AS 45.02.326); whether 31 a transaction creates a lease or [IS INTENDED AS] security interest is [TO BE]
01 determined by the facts of each case; however, 02 (A) a transaction creates a security interest if the 03 consideration the lessee is to pay the lessor for the right to possession and 04 use of the goods is an obligation for the term of the lease not subject to 05 termination by the lessee; and 06 (i) the original term of the lease is equal to or greater 07 than the remaining economic life of the goods; 08 (ii) the lessee is bound to renew the lease for the 09 remaining economic life of the goods or is bound to become the 10 owner of the goods; 11 (iii) the lessee has an option to renew the lease for 12 the remaining economic life of the goods for no additional 13 consideration or nominal additional consideration upon compliance 14 with the lease agreement; or 15 (iv) the lessee has an option to become the owner of 16 the goods for no additional consideration or nominal additional 17 consideration upon compliance with the lease agreement; [THE 18 INCLUSION OF AN OPTION TO PURCHASE DOES NOT OF 19 ITSELF MAKE THE LEASE ONE INTENDED FOR SECURITY, 20 AND] 21 (B) a transaction does not create a security interest merely 22 because it provides that 23 (i) the present value of the consideration the lessee is 24 obligated to pay the lessor for the right to possession and use of the 25 goods is substantially equal to or is greater than the fair market 26 value of the goods at the time the lease is entered into; 27 (ii) the lessee assumes risk of loss of the goods, or 28 agrees to pay taxes, insurance, filing, recording, or registration fees, 29 or service or maintenance costs with respect to the goods; 30 (iii) the lessee has an option to renew the lease or to 31 become the owner of the goods;
01 (iv) the lessee has an option to renew the lease for a 02 fixed rent that is equal to or greater than the reasonably 03 predictable fair market rent for the use of the goods for the term 04 of the renewal at the time the option is to be performed; or 05 (v) the lessee has an option to become the owner of 06 the goods for a fixed price that is equal to or greater than the 07 reasonably predictable fair market value of the goods at the time 08 the option is to be performed; 09 (C) in of this paragraph, additional consideration is nominal 10 if it is less than the lessee's reasonably predictable cost of performing 11 under the lease agreement if the option is not exercised; additional consid- 12 eration is not nominal if 13 (i) when the option to renew the lease is granted to 14 the lessee the rent is stated to be the fair market rent for the use of 15 the goods for the term of the renewal determined at the time the 16 option is to be performed; or 17 (ii) when the option to become the owner of the goods 18 is granted to the lessee the price is stated to be the fair market 19 value of the goods determined at the time the option is to be 20 performed; 21 (D) in this paragraph, 22 (i) "present value" means the amount as of a date 23 certain of one or more sums payable in the future, discounted to the 24 date certain; the discount is determined by the interest rate 25 specified by the parties if the rate is not manifestly unreasonable at 26 the time the transaction is entered into; otherwise, the discount is 27 determined by a commercially reasonable rate that takes into 28 account the facts and circumstances of each case at the time the 29 transaction was entered into; and 30 (ii) "reasonably predictable" and "remaining 31 economic life of the goods" are to be determined with reference to
01 the facts and circumstances at the time the transaction is entered 02 into [AN AGREEMENT THAT UPON COMPLIANCE WITH THE 03 TERMS OF THE LEASE THE LESSEE SHALL BECOME OR 04 HAS THE OPTION TO BECOME THE OWNER OF THE 05 PROPERTY FOR NO ADDITIONAL CONSIDERATION OR FOR A 06 NOMINAL CONSIDERATION DOES MAKE THE LEASE ONE 07 INTENDED FOR SECURITY]; 08 (39) [(38)] "send" in connection with writing or notice means to deposit 09 in the mail, or deliver for transmission by another usual means of communication, with 10 postage or cost of transmission provided for and properly addressed and, in the case 11 of an instrument, to an address specified on it or otherwise agreed, or if there is none 12 to an address reasonable under the circumstances; the receipt of a writing or notice 13 within the time at which it would have arrived if properly sent has the effect of a 14 proper sending; 15 (40) [(39)] "signed" includes a symbol executed or adopted by a party 16 with present intention to authenticate a writing; 17 (41) [(40)] "surety" includes guarantor; 18 (42) [(41)] "telegram" includes a message transmitted by radio, teletype, 19 cable, a mechanical method of transmission, or the like; 20 (43) [(42)] "term" means that portion of an agreement which relates to 21 a particular matter; 22 (44) [(43)] "unauthorized" signature [OR ENDORSEMENT] means one 23 made without actual, implied, or apparent authority, and includes a forgery; 24 (45) [(44)] "value": except as otherwise provided in AS 45.03.303 with 25 respect to negotiable instruments and in AS 45.04.210 and 45.04.211 with respect to 26 bank collections [(AS 45.03.303, AS 45.04.208, AND AS 45.04.209)], a person gives 27 "value" for rights if the person acquires them 28 (A) in return for a binding commitment to extend credit or for 29 the extension of immediately available credit whether or not drawn upon and 30 whether or not a charge-back is provided for in the event of difficulties in 31 collection;
01 (B) as security for or in total or partial satisfaction of a 02 pre-existing claim; 03 (C) by accepting delivery under a pre-existing contract for 04 purchase; or 05 (D) generally, in return for a consideration sufficient to support 06 a simple contract; 07 (46) [(45)] "warehouse receipt" means a receipt issued by a person 08 engaged in the business of storing goods for hire; 09 (47) [(46)] "written" or "writing" includes printing, typewriting, or any 10 other intentional reduction to tangible form. 11 * Sec. 9. AS 45.01.204(a) is amended to read: 12 (a) Where the code [AS 45.01 - AS 45.09] requires an action to be taken 13 within a reasonable time, a time which is not manifestly unreasonable may be fixed 14 by agreement. 15 * Sec. 10. AS 45.01.207 is amended to read: 16 Sec. 45.01.207. PERFORMANCE OR ACCEPTANCE UNDER 17 RESERVATION OF RIGHTS. A party who, with explicit reservation of rights, 18 performs or promises performance or assents to performance in a manner demanded 19 or offered by the other party does not thereby prejudice the rights reserved. Such 20 words as "without prejudice," "under protest," or the like are sufficient. This section 21 does not apply to an accord and satisfaction. 22 * Sec. 11. AS 45.02.103(c)(5) is amended to read: 23 (5) "dishonor" (AS 45.03.502) [(AS 45.03.507)] 24 * Sec. 12. AS 45.02.403(d) is amended to read: 25 (d) The rights of other purchasers of goods and of lien creditors are governed 26 by [AS 45.06,] AS 45.07 [,] and AS 45.09. 27 * Sec. 13. AS 45.02.511(c) is amended to read: 28 (c) Subject to the provisions of the code [AS 45.01 - AS 45.09] on the effect 29 of an instrument on an obligation (AS 45.03.310) [(AS 45.03.802)], payment by check 30 is conditional and is defeated as between the parties by dishonor of the check on due 31 presentment.
01 * Sec. 14. AS 45.03.101 is repealed and reenacted to read: 02 Sec. 45.03.101. SHORT TITLE. This chapter may be cited as the Uniform 03 Commercial Code - Negotiable Instruments. 04 * Sec. 15. AS 45.03.102 is repealed and reenacted to read: 05 Sec. 45.03.102. SUBJECT MATTER. (a) This chapter applies to negotiable 06 instruments. It does not apply to money or to securities governed by AS 45.08. 07 (b) If there is conflict between this chapter and AS 45.04 or AS 45.09, 08 AS 45.04 and AS 45.09 govern. 09 (c) Regulations of the Board of Governors of the Federal Reserve System and 10 operating circulars of the Federal Reserve Banks supersede any inconsistent provision 11 of this chapter to the extent of the inconsistency. 12 * Sec. 16. AS 45.03.103 is repealed and reenacted to read: 13 Sec. 45.03.103. DEFINITIONS. (a) In this chapter, 14 (1) "acceptor" means a drawee who has accepted a draft; 15 (2) "drawee" means a person ordered in a draft to make payment; 16 (3) "drawer" means a person who signs or is identified in a draft as a 17 person ordering payment; 18 (4) "good faith" means honesty in fact and the observance of reasonable 19 commercial standards of fair dealing; 20 (5) "maker" means a person who signs or is identified in a note as a 21 person undertaking to pay; 22 (6) "order" means a written instruction to pay money signed by the 23 person giving the instruction; the instruction may be addressed to any person, including 24 the person giving the instruction, or to one or more persons jointly or in the alternative 25 but not in succession; an authorization to pay is not an order unless the person 26 authorized to pay is also instructed to pay; 27 (7) "ordinary care" in the case of a person engaged in business means 28 observance of reasonable commercial standards, prevailing in the area in which the 29 person is located, with respect to the business in which the person is engaged; in the 30 case of a bank that takes an instrument for processing for collection or payment by 31 automated means, reasonable commercial standards do not require the bank to examine
01 the instrument if the failure to examine does not violate the bank's prescribed 02 procedures and the bank's procedures do not vary unreasonably from general banking 03 usage not disapproved by this chapter or AS 45.04; 04 (8) "party" means a party to an instrument; 05 (9) "promise" means a written undertaking to pay money signed by the 06 person undertaking to pay; an acknowledgment of an obligation by the obligor is not 07 a promise unless the obligor also undertakes to pay the obligation; 08 (10) "prove" with respect to a fact means to meet the burden of 09 establishing the fact (AS 45.01.201); 10 (11) "remitter" means a person who purchases an instrument from the 11 issuer of the instrument if the instrument is payable to an identified person other than 12 the purchaser. 13 (b) Other definitions applying to this chapter, and the sections in which they 14 appear, are 15 (1) "acceptance" in AS 45.03.409; 16 (2) "accommodated party" in AS 45.03.419; 17 (3) "accommodation party" in AS 45.03.419; 18 (4) "alteration" in AS 45.03.407; 19 (5) "anomalous endorsement" in AS 45.03.205; 20 (6) "blank endorsement" in AS 45.03.205; 21 (7) "cashier's check" in AS 45.03.104; 22 (8) "certificate of deposit" in AS 45.03.104; 23 (9) "certified check" in AS 45.03.409; 24 (10) "check" in AS 45.03.104; 25 (11) "consideration" in AS 45.03.303; 26 (12) "draft" in AS 45.03.104; 27 (13) "endorsement" in AS 45.03.204; 28 (14) "endorser" in AS 45.03.204; 29 (15) "holder in due course" in AS 45.03.302; 30 (16) "incomplete instrument" in AS 45.03.115; 31 (17) "instrument" in AS 45.03.104;
01 (18) "issue" in AS 45.03.105; 02 (19) "issuer" in AS 45.03.105; 03 (20) "negotiable instrument" in AS 45.03.104; 04 (21) "negotiation" in AS 45.03.201; 05 (22) "note" in AS 45.03.104; 06 (23) "payable at a definite time" in AS 45.03.108; 07 (24) "payable on demand" in AS 45.03.108; 08 (25) "payable to bearer" in AS 45.03.109; 09 (26) "payable to order" in AS 45.03.109; 10 (27) "payment" in AS 45.03.602; 11 (28) "person entitled to enforce" in AS 45.03.301; 12 (29) "presentment" in AS 45.03.501; 13 (30) "reacquisition" in AS 45.03.207; 14 (31) "special endorsement" in AS 45.03.205; 15 (32) "teller's check" in AS 45.03.104; 16 (33) "transfer of instrument" in AS 45.03.203; 17 (34) "traveler's check" in AS 45.03.104; 18 (35) "value" in AS 45.03.303. 19 (c) The following definitions in AS 45.04 apply to this chapter: 20 (1) "bank" (AS 45.04.105); 21 (2) "banking day" (AS 45.04.104); 22 (3) "clearing house" (AS 45.04.104); 23 (4) "collecting bank" (AS 45.04.105); 24 (5) "depositary bank" (AS 45.04.105); 25 (6) "documentary draft" (AS 45.04.104); 26 (7) "intermediary bank" (AS 45.04.105); 27 (8) "item" (AS 45.04.104); 28 (9) "payor bank" (AS 45.04.105); 29 (10) "suspends payments" (AS 45.04.104). 30 (d) In addition, AS 45.01 contains general definitions and principles of 31 construction and interpretation applicable throughout this chapter.
01 * Sec. 17. AS 45.03.104 is repealed and reenacted to read: 02 Sec. 45.03.104. NEGOTIABLE INSTRUMENT. (a) Except as provided in 03 (c) - (d) of this section, "negotiable instrument" means an unconditional promise or 04 order to pay a fixed amount of money, with or without interest or other charges 05 described in the promise or order, if the unconditional promise or order 06 (1) is payable to bearer or to order at the time it is issued or first comes 07 into possession of a holder; 08 (2) is payable on demand or at a definite time; and 09 (3) does not state any other undertaking or instruction by the person 10 promising or ordering payment to do an act in addition to the payment of money, but 11 the promise or order may contain an undertaking or power to give, maintain, or protect 12 collateral to secure payment, an authorization or power to the holder to confess 13 judgment or realize on or dispose of collateral, or a waiver of the benefit of a law 14 intended for the advantage or protection of an obligor. 15 (b) "Instrument" means a negotiable instrument. 16 (c) An order that meets all of the requirements of (a)(2) - (3) of this section, 17 and otherwise falls within the definition of "check" in (f) of this section, is a 18 negotiable instrument and a check. 19 (d) A promise or order other than a check is not an instrument if, at the time 20 the promise or order is issued or first comes into possession of a holder, the promise 21 or order contains a conspicuous statement, however expressed, to the effect that the 22 promise or order is not negotiable or is not an instrument governed by this chapter. 23 (e) An instrument is a "note" if the instrument is a promise and a "draft" if the 24 instrument is an order. If an instrument falls within the definition of both "note" and 25 "draft," a person entitled to enforce the instrument may treat the instrument as either. 26 (f) "Check" means a draft, other than a documentary draft, payable on demand 27 and drawn on a bank, or a cashier's check or teller's check. An instrument may be 28 a check even though the instrument is described on its face by another term, such as 29 "money order." 30 (g) "Cashier's check" means a draft with respect to which the drawer and 31 drawee are the same bank or branches of the same bank.
01 (h) "Teller's check" means a draft drawn by a bank 02 (1) on another bank; or 03 (2) payable at or through a bank. 04 (i) "Traveler's check" means an instrument that 05 (1) is payable on demand; 06 (2) is drawn on or payable at or through a bank; 07 (3) is designated by the term "traveler's check" or by a substantially 08 similar term; and 09 (4) requires, as a condition to payment, a countersignature by a person 10 whose specimen signature appears on the instrument. 11 (j) "Certificate of deposit" means an instrument containing an acknowledgment 12 by a bank that a sum of money has been received by the bank and a promise by the 13 bank to repay the sum of money. A certificate of deposit is a note of the bank. 14 * Sec. 18. AS 45.03.105 is repealed and reenacted to read: 15 Sec. 45.03.105. ISSUE OF INSTRUMENT. (a) "Issue" means the first 16 delivery of an instrument by the maker or drawer, whether to a holder or nonholder, 17 for the purpose of giving rights on the instrument to any person. 18 (b) An unissued instrument, or an unissued incomplete instrument that is 19 completed, is binding on the maker or drawer, but nonissuance is a defense. An 20 instrument that is conditionally issued or is issued for a special purpose is binding on 21 the maker or drawer, but failure of the condition or special purpose to be fulfilled is 22 a defense. 23 (c) "Issuer" applies to issued and unissued instruments and means a maker or 24 drawer of an instrument. 25 * Sec. 19. AS 45.03.106 is repealed and reenacted to read: 26 Sec. 45.03.106. UNCONDITIONAL PROMISE OR ORDER. (a) Except as 27 provided in this section, for the purposes of AS 45.03.104(a), a promise or order is 28 unconditional unless it states an express condition to payment, that the promise or 29 order is subject to or governed by another writing, or that rights or obligations with 30 respect to the promise or order are stated in another writing. A reference to another 31 writing does not of itself make a promise or order conditional.
01 (b) A promise or order is not made conditional 02 (1) by a reference to another writing for a statement of rights with 03 respect to collateral, prepayment, or acceleration; or 04 (2) because payment is limited to resort to a particular fund or source. 05 (c) If a promise or order requires, as a condition to payment, a 06 countersignature by a person whose specimen signature appears on the promise or 07 order, the condition does not make the promise or order conditional for the purposes 08 of AS 45.03.104(a). If the person whose specimen signature appears on an instrument 09 fails to countersign the instrument, the failure to countersign is a defense to the 10 obligation of the issuer, but the failure does not prevent a transferee of the instrument 11 from becoming a holder of the instrument. 12 (d) If a promise or order at the time it is issued or first comes into possession 13 of a holder contains a statement, required by applicable statutory or administrative law, 14 to the effect that the rights of a holder or transferee are subject to claims or defenses 15 that the issuer could assert against the original payee, the promise or order is not 16 thereby made conditional for the purposes of AS 45.03.104(a), but if the promise or 17 order is an instrument, there cannot be a holder in due course of the instrument. 18 * Sec. 20. AS 45.03.107 is repealed and reenacted to read: 19 Sec. 45.03.107. INSTRUMENT PAYABLE IN FOREIGN MONEY. Unless 20 the instrument otherwise provides, an instrument that states the amount payable in 21 foreign money may be paid in the foreign money or in an equivalent amount in dollars 22 calculated by using the current bank-offered spot rate at the place of payment for the 23 purchase of dollars on the day on which the instrument is paid. 24 * Sec. 21. AS 45.03.108 is repealed and reenacted to read: 25 Sec. 45.03.108. PAYABLE ON DEMAND OR AT DEFINITE TIME. (a) A 26 promise or order is payable on demand if it 27 (1) states that it is payable on demand or at sight, or otherwise 28 indicates that it is payable at the will of the holder; or 29 (2) does not state a time of payment. 30 (b) A promise or order is payable at a definite time if it is payable on elapse 31 of a definite period of time after sight or acceptance or at a fixed date or dates or at
01 a time or times readily ascertainable at the time the promise or order is issued, subject 02 to rights of 03 (1) prepayment; 04 (2) acceleration; 05 (3) extension at the option of the holder; or 06 (4) extension to a further definite time at the option of the maker or 07 acceptor, or automatically on or after a specified act or event. 08 (c) If an instrument, payable at a fixed date, is also payable upon demand 09 made before the fixed date, the instrument is payable on demand until the fixed date 10 and, if demand for payment is not made before that date, becomes payable at a definite 11 time on the fixed date. 12 * Sec. 22. AS 45.03.109 is repealed and reenacted to read: 13 Sec. 45.03.109. PAYABLE TO BEARER OR TO ORDER. (a) A promise 14 or order is payable to bearer if it 15 (1) states that it is payable to bearer or to the order of bearer or 16 otherwise indicates that the person in possession of the promise or order is entitled to 17 payment; 18 (2) does not state a payee; or 19 (3) states that it is payable to or to the order of cash, or otherwise 20 indicates that it is not payable to an identified person. 21 (b) A promise or order that is not payable to bearer is payable to order if it 22 is payable to the order of an identified person, or to an identified person or order. A 23 promise or order that is payable to order is payable to the identified person. 24 (c) An instrument payable to bearer may become payable to an identified 25 person if it is specially endorsed under AS 45.03.205(a). An instrument payable to an 26 identified person may become payable to bearer if it is endorsed in blank under 27 AS 45.03.205(b). 28 * Sec. 23. AS 45.03.110 is repealed and reenacted to read: 29 Sec. 45.03.110. IDENTIFICATION OF PERSON TO WHOM INSTRUMENT 30 IS PAYABLE. (a) The person to whom an instrument is initially payable is 31 determined by the intent of the person, whether or not authorized, signing as, or in the
01 name or on the behalf of, the issuer of the instrument. The instrument is payable to 02 the person intended by the signer even if that person is identified in the instrument by 03 a name or other identification that is not that of the intended person. If more than one 04 person signs in the name or on the behalf of the issuer of an instrument and all the 05 signers do not intend the same person as payee, the instrument is payable to any 06 person intended by one or more of the signers. 07 (b) If the signature of the issuer of an instrument is made by automated means, 08 such as a check-writing machine, the payee of the instrument is determined by the 09 intent of the person who supplied the name or identification of the payee, whether or 10 not authorized to do so. 11 (c) A person to whom an instrument is payable may be identified in any way, 12 including by name, identifying number, office, or account number. For the purpose 13 of determining the holder of an instrument, the following rules apply: 14 (1) if an instrument is payable to an account and the account is 15 identified only by number, the instrument is payable to the person to whom the 16 account is payable. If an instrument is payable to an account identified by number and 17 by the name of a person, the instrument is payable to the named person, whether or 18 not that person is the owner of the account identified by number; 19 (2) if an instrument is payable to 20 (A) a trust, an estate, or a person described as trustee or 21 representative of a trust or estate, the instrument is payable to the trustee, the 22 representative, or a successor of either, whether or not the beneficiary or estate 23 is also named; 24 (B) a person described as agent or similar representative of a 25 named or identified person, the instrument is payable to the represented person, 26 the representative, or a successor of the representative; 27 (C) a fund or organization that is not a legal entity, the 28 instrument is payable to a representative of the members of the fund or 29 organization; or 30 (D) an office or a person described as holding an office, the 31 instrument is payable to the named person, the incumbent of the office, or a
01 successor to the incumbent. 02 (d) If an instrument is payable to two or more persons alternatively, it is 03 payable to any of them and may be negotiated, discharged, or enforced by any or all 04 of them in possession of the instrument. If an instrument is payable to two or more 05 persons not alternatively, it is payable to all of them and may be negotiated, 06 discharged, or enforced only by all of them. If an instrument payable to two or more 07 persons is ambiguous as to whether it is payable to the persons alternatively, the 08 instrument is payable to the persons alternatively. 09 * Sec. 24. AS 45.03.111 is repealed and reenacted to read: 10 Sec. 45.03.111. PLACE OF PAYMENT. Except as otherwise provided for 11 items in AS 45.04, an instrument is payable at the place of payment stated in the 12 instrument. If no place of payment is stated, an instrument is payable at the address 13 of the drawee or maker stated in the instrument. If no address is stated, the place of 14 payment is the place of business of the drawee or maker. If a drawee or maker has 15 more than one place of business, the place of payment is any place of business of the 16 drawee or maker chosen by the person entitled to enforce the instrument. If the 17 drawee or maker has no place of business, the place of payment is the residence of the 18 drawee or maker. 19 * Sec. 25. AS 45.03.112 is repealed and reenacted to read: 20 Sec. 45.03.112. INTEREST. (a) Unless otherwise provided in the instrument, 21 an instrument is not payable with interest, and interest on an interest-bearing 22 instrument is payable from the date of the instrument. 23 (b) Interest may be stated in an instrument as a fixed or variable amount of 24 money or it may be expressed as a fixed or variable rate or rates. The amount or rate 25 of interest may be stated or described in the instrument in any manner and may require 26 reference to information not contained in the instrument. If an instrument provides for 27 interest but the amount of interest payable cannot be ascertained from the description, 28 interest is payable at the judgment rate in effect at the place of payment of the 29 instrument and at the time interest first accrues. 30 * Sec. 26. AS 45.03.113 is repealed and reenacted to read: 31 Sec. 45.03.113. DATE OF INSTRUMENT. (a) An instrument may be
01 antedated or postdated. The date stated determines the time of payment if the 02 instrument is payable at a fixed period after the date. Except as provided in 03 AS 45.04.401(c), an instrument payable on demand is not payable before the date of 04 the instrument. 05 (b) If an instrument is undated, the date of the instrument is the date of the 06 instrument's issue or, in the case of an unissued instrument, the date the instrument 07 first comes into possession of a holder. 08 * Sec. 27. AS 45.03.114 is repealed and reenacted to read: 09 Sec. 45.03.114. CONTRADICTORY TERMS OF INSTRUMENT. If an 10 instrument contains contradictory terms, typewritten terms prevail over printed terms, 11 handwritten terms prevail over both, and words prevail over numbers. 12 * Sec. 28. AS 45.03.115 is repealed and reenacted to read: 13 Sec. 45.03.115. INCOMPLETE INSTRUMENT. (a) "Incomplete instrument" 14 means a signed writing, whether or not issued by the signer, the contents of which 15 show at the time of signing that it is incomplete but that the signer intended it to be 16 completed by the addition of words or numbers. 17 (b) Subject to (c) of this section, if an incomplete instrument is an instrument 18 under AS 45.03.104, it may be enforced according to its terms if it is not completed, 19 or according to its terms as augmented by completion. If an incomplete instrument is 20 not an instrument under AS 45.03.104 but, after completion, the requirements of 21 AS 45.03.104 are met, the instrument may be enforced according to its terms as 22 augmented by completion. 23 (c) If words or numbers are added to an incomplete instrument without 24 authority of the signer, there is an alteration of the incomplete instrument under 25 AS 45.03.407. 26 (d) The burden of establishing that words or numbers were added to an 27 incomplete instrument without authority of the signer is on the person asserting the 28 lack of authority. 29 * Sec. 29. AS 45.03.116 is repealed and reenacted to read: 30 Sec. 45.03.116. JOINT AND SEVERAL LIABILITY; CONTRIBUTION. (a) 31 Except as otherwise provided in the instrument, two or more persons who have the
01 same liability on an instrument as makers, drawers, acceptors, endorsers who endorse 02 as joint payees, or anomalous endorsers are jointly and severally liable in the capacity 03 in which they sign. 04 (b) Except as provided in AS 45.03.419(e), or by agreement of the affected 05 parties, a party having joint and several liability who pays the instrument is entitled 06 to receive from any party having the same joint and several liability contribution in 07 accordance with applicable law. 08 (c) Discharge of one party having joint and several liability by a person 09 entitled to enforce the instrument does not affect the right under (b) of this section of 10 a party having the same joint and several liability to receive contribution from the 11 party discharged. 12 * Sec. 30. AS 45.03.117 is repealed and reenacted to read: 13 Sec. 45.03.117. OTHER AGREEMENTS AFFECTING INSTRUMENT. 14 Subject to applicable law regarding exclusion of proof of contemporaneous or previous 15 agreements, the obligation of a party to an instrument to pay the instrument may be 16 modified, supplemented, or nullified by a separate agreement of the obligor and a 17 person entitled to enforce the instrument, if the instrument is issued or the obligation 18 is incurred in reliance on the agreement or a part of the same transaction giving rise 19 to the agreement. To the extent an obligation is modified, supplemented, or nullified 20 by an agreement under this section, the agreement is a defense to the obligation. 21 * Sec. 31. AS 45.03.118 is repealed and reenacted to read: 22 Sec. 45.03.118. STATUTE OF LIMITATIONS. (a) Except as provided in (e) 23 of this section, an action to enforce the obligation of a party to pay a note payable at 24 a definite time must be commenced within six years after the due date or dates stated 25 in the note or, if a due date is accelerated, within six years after the accelerated due 26 date. 27 (b) Except as provided in (d) or (e) of this section, if demand for payment is 28 made to the maker of a note payable on demand, an action to enforce the obligation 29 of a party to pay the note must be commenced within six years after the demand. If 30 no demand for payment is made to the maker, an action to enforce the note is barred 31 if neither principal nor interest on the note has been paid for a continuous period of
01 10 years. 02 (c) Except as provided in (d) of this section, an action to enforce the obligation 03 of a party to an unaccepted draft to pay the draft must be commenced within three 04 years after dishonor of the draft or 10 years after the date of the draft, whichever 05 period expires first. 06 (d) An action to enforce the obligation of the acceptor of a certified check, or 07 the issuer of a teller's check, cashier's check, or traveler's check, must be commenced 08 within three years after demand for payment is made to the acceptor or issuer. 09 (e) An action to enforce the obligation of a party to a certificate of deposit to 10 pay the instrument must be commenced within six years after demand for payment is 11 made to the maker, but if the instrument states a due date and the maker is not 12 required to pay before that date, the six-year period begins when a demand for 13 payment is in effect and the due date has passed. 14 (f) An action to enforce the obligation of a party to pay an accepted draft, 15 other than a certified check, must be commenced 16 (1) within six years after the due date stated in the draft or acceptance, 17 if the obligation of the acceptor is payable at a definite time; or 18 (2) within six years after the date of the acceptance, if the obligation 19 of the acceptor is payable on demand. 20 (g) Unless governed by other law regarding claims for indemnity or 21 contribution, an action for conversion of an instrument, for money had and received, 22 or like action based on conversion, for breach of warranty, or to enforce an obligation, 23 duty, or right arising under this chapter and not governed by this section, must be 24 commenced within three years after the cause of action accrues. 25 * Sec. 32. AS 45.03.119 is repealed and reenacted to read: 26 Sec. 45.03.119. NOTICE OF RIGHT TO DEFEND ACTION. In an action for 27 breach of an obligation for which a third person is answerable over under this chapter 28 or AS 45.04, the defendant may give the third person written notice of the litigation, 29 and the person notified may then give similar notice to any other person who is 30 answerable over. If the notice states that the person notified may come in and defend 31 and that failure to do so will bind the person notified in an action later brought by the
01 person giving the notice as to any determination of fact common to the two litigations, 02 the person notified is so bound unless after seasonable receipt of the notice the person 03 notified does come in and defend. 04 * Sec. 33. AS 45.03.201 is repealed and reenacted to read: 05 Sec. 45.03.201. NEGOTIATION. (a) "Negotiation" means a transfer of 06 possession, whether voluntary or involuntary, of an instrument by a person other than 07 the issuer to a person who thereby becomes the holder of the instrument. 08 (b) Except for negotiation by a remitter, if an instrument is payable to an 09 identified person, negotiation requires transfer of possession of the instrument and its 10 endorsement by the holder. If an instrument is payable to bearer, the instrument may 11 be negotiated by transfer of possession alone. 12 * Sec. 34. AS 45.03.202 is repealed and reenacted to read: 13 Sec. 45.03.202. NEGOTIATION SUBJECT TO RESCISSION. (a) 14 Negotiation is effective even if obtained 15 (1) from an infant, a corporation exceeding its powers, or a person 16 without capacity; 17 (2) by fraud, duress, or mistake; or 18 (3) in breach of duty or as part of an illegal transaction. 19 (b) To the extent permitted by other law, negotiation may be rescinded or may 20 be subject to other remedies, but those remedies may not be asserted against a 21 subsequent holder in due course or a person paying the instrument in good faith and 22 without knowledge of facts that are a basis for rescission or other remedy. 23 * Sec. 35. AS 45.03.203 is repealed and reenacted to read: 24 Sec. 45.03.203. TRANSFER OF INSTRUMENT; RIGHTS ACQUIRED BY 25 TRANSFER. (a) An instrument is transferred when the instrument is delivered by a 26 person other than its issuer for the purpose of giving to the person receiving delivery 27 the right to enforce the instrument. 28 (b) Transfer of an instrument, whether or not the transfer is a negotiation, vests 29 in the transferee any right of the transferor to enforce the instrument, including any 30 right as a holder in due course, but the transferee cannot acquire rights of a holder in 31 due course by a transfer, directly or indirectly, from a holder in due course if the
01 transferee engaged in fraud or illegality affecting the instrument. 02 (c) Unless otherwise agreed, if an instrument is transferred for value and the 03 transferee does not become a holder because of lack of endorsement by the transferor, 04 the transferee has a specifically enforceable right to the unqualified endorsement of the 05 transferor, but negotiation of the instrument does not occur until the endorsement is 06 made. 07 (d) If a transferor purports to transfer less than the entire instrument, 08 negotiation of the instrument does not occur, and the transferee obtains no rights under 09 this chapter and has only the rights of a partial assignee. 10 * Sec. 36. AS 45.03.204 is repealed and reenacted to read: 11 Sec. 45.03.204. ENDORSEMENT. (a) "Endorsement" means a signature, 12 other than that of a signer as maker, drawer, or acceptor, that alone or accompanied 13 by other words is made on an instrument for the purpose of negotiating the instrument, 14 restricting payment of the instrument, or incurring endorser's liability on the 15 instrument, but regardless of the intent of the signer, a signature and its accompanying 16 words are an endorsement unless the accompanying words, terms of the instrument, 17 place of the signature, or other circumstances unambiguously indicate that the signature 18 was made for a purpose other than endorsement. For the purpose of determining 19 whether a signature is made on an instrument, a paper affixed to the instrument is a 20 part of the instrument. 21 (b) "Endorser" means a person who makes an endorsement. 22 (c) For the purpose of determining whether the transferee of an instrument is 23 a holder, an endorsement that transfers a security interest in the instrument is effective 24 as an unqualified endorsement of the instrument. 25 (d) If an instrument is payable to a holder under a name that is not the name 26 of the holder, endorsement may be made by the holder in the name stated in the 27 instrument or in the holder's name or both, but signature in both names may be 28 required by a person paying or taking the instrument for value or collection. 29 * Sec. 37. AS 45.03.205 is repealed and reenacted to read: 30 Sec. 45.03.205. SPECIAL ENDORSEMENT; BLANK ENDORSEMENT; 31 ANOMALOUS ENDORSEMENT. (a) If an endorsement is made by the holder of
01 an instrument, whether payable to an identified person or payable to bearer, and the 02 endorsement identifies a person to whom it makes the instrument payable, it is a 03 "special endorsement." When specially endorsed, an instrument becomes payable to 04 the identified person and may be negotiated only by the endorsement of that person. 05 The principles stated in AS 45.03.110 apply to special endorsements. 06 (b) If an endorsement is made by the holder of an instrument and it is not a 07 special endorsement, it is a "blank endorsement." When endorsed in blank, an 08 instrument becomes payable to bearer and may be negotiated by transfer of possession 09 alone until specially endorsed. 10 (c) The holder may convert a blank endorsement that consists only of a 11 signature into a special endorsement by writing, above the signature of the endorser, 12 words identifying the person to whom the instrument is made payable. 13 (d) "Anomalous endorsement" means an endorsement made by a person who 14 is not the holder of the instrument. An anomalous endorsement does not affect the 15 manner in which the instrument may be negotiated. 16 * Sec. 38. AS 45.03.206 is repealed and reenacted to read: 17 Sec. 45.03.206. RESTRICTIVE ENDORSEMENT. (a) An endorsement 18 limiting payment to a particular person or otherwise prohibiting further transfer or 19 negotiation of the instrument is not effective to prevent further transfer or negotiation 20 of the instrument. 21 (b) An endorsement stating a condition to the right of the endorsee to receive 22 payment does not affect the right of the endorsee to enforce the instrument. A person 23 paying the instrument or taking it for value or collection may disregard the condition, 24 and the rights and liabilities of that person are not affected by whether the condition 25 has been fulfilled. 26 (c) If an instrument bears an endorsement described in AS 45.04.201(b), or an 27 endorsement in blank or to a particular bank using the words "for deposit," "for 28 collection," or other words indicating a purpose of having the instrument collected by 29 a bank for the endorser or for a particular account, the following rules apply: 30 (1) a person, other than a bank, who purchases the instrument when so 31 endorsed converts the instrument unless the amount paid for the instrument is received
01 by the endorser or applied consistently with the endorsement; 02 (2) a depositary bank that purchases the instrument or takes it for 03 collection when so endorsed converts the instrument unless the amount paid by the 04 bank with respect to the instrument is received by the endorser or applied consistently 05 with the endorsement; 06 (3) a payor bank that is also the depositary bank or that takes the 07 instrument for immediate payment over the counter from a person other than a 08 collecting bank converts the instrument unless the proceeds of the instrument are 09 received by the endorser or applied consistently with the endorsement; and 10 (4) except as otherwise provided in (3) of this subsection, a payor bank 11 or intermediary bank may disregard the endorsement and is not liable if the proceeds 12 of the instrument are not received by the endorser or applied consistently with the 13 endorsement. 14 (d) Except for an endorsement covered by (c) of this section, if an instrument 15 bears an endorsement using words to the effect that payment is to be made to the 16 endorsee as agent, trustee, or other fiduciary for the benefit of the endorser or another 17 person, the following rules apply: 18 (1) unless there is notice of breach of fiduciary duty as provided in 19 AS 45.03.307, a person who purchases the instrument from the endorsee or takes the 20 instrument from the endorsee for collection or payment may pay the proceeds of 21 payment or the value given for the instrument to the endorsee without regard to 22 whether the endorsee violates a fiduciary duty to the endorser; and 23 (2) a subsequent transferee of the instrument or person who pays the 24 instrument is neither given notice nor otherwise affected by the restriction in the 25 endorsement unless the transferee or payor knows that the fiduciary dealt with the 26 instrument or its proceeds in breach of a fiduciary duty. 27 (e) The presence on an instrument of an endorsement to which this section 28 applies does not prevent a purchaser of the instrument from becoming a holder in due 29 course of the instrument unless the purchaser is a converter under (c) of this section 30 or has notice or knowledge of breach of fiduciary duty as stated in (d) of this section. 31 (f) In an action to enforce the obligation of a party to pay the instrument, the
01 obligor has a defense if payment would violate an endorsement to which this section 02 applies and the payment is not permitted by this section. 03 * Sec. 39. AS 45.03.207 is repealed and reenacted to read: 04 Sec. 45.03.207. REACQUISITION. Reacquisition of an instrument occurs if 05 it is transferred to a former holder, by negotiation or otherwise. A former holder who 06 reacquires the instrument may cancel endorsements made after the reacquirer first 07 became a holder of the instrument. If the cancellation causes the instrument to be 08 payable to the reacquirer or to bearer, the reacquirer may negotiate the instrument. An 09 endorser whose endorsement is canceled is discharged, and the discharge is effective 10 against a subsequent holder. 11 * Sec. 40. AS 45.03.301 is repealed and reenacted to read: 12 Sec. 45.03.301. PERSON ENTITLED TO ENFORCE INSTRUMENT. A 13 person entitled to enforce an instrument is the holder of the instrument, a nonholder 14 in possession of the instrument who has the rights of a holder, or a person not in 15 possession of the instrument who is entitled to enforce the instrument under 16 AS 45.03.309 or 45.03.418(d). A person may be a person entitled to enforce the 17 instrument even though the person is not the owner of the instrument or is in wrongful 18 possession of the instrument. 19 * Sec. 41. AS 45.03.302 is repealed and reenacted to read: 20 Sec. 45.03.302. HOLDER IN DUE COURSE. (a) Subject to (c) of this 21 section and AS 45.03.106(d), "holder in due course" means the holder of an 22 instrument, if 23 (1) the instrument when issued or negotiated to the holder does not bear 24 such apparent evidence of forgery or alteration or is not otherwise so irregular or 25 incomplete as to call into question its authenticity; and 26 (2) the holder took the instrument 27 (A) for value; 28 (B) in good faith; 29 (C) without notice that the instrument is overdue or has been 30 dishonored or that there is an uncured default with respect to payment of 31 another instrument issued as part of the same series;
01 (D) without notice that the instrument contains an unauthorized 02 signature or has been altered; 03 (E) without notice of any claim to the instrument described in 04 AS 45.03.306; and 05 (F) without notice that any party has a defense or claim in 06 recoupment described in AS 45.03.305(a). 07 (b) Notice of discharge of a party, other than discharge in an insolvency 08 proceeding, is not notice of a defense under (a) of this section, but discharge is 09 effective against a person who became a holder in due course with notice of the 10 discharge. Public filing or recording of a document does not of itself constitute notice 11 of a defense, claim in recoupment, or claim to the instrument. 12 (c) Except to the extent a transferor or predecessor in interest has rights as a 13 holder in due course, a person does not acquire rights of a holder in due course of an 14 instrument taken by legal process or by purchase in an execution, bankruptcy, or 15 creditor's sale or similar proceeding, by purchase as part of a bulk transaction not in 16 the ordinary course of business of the transferor, or as the successor in interest to an 17 estate or other organization. 18 (d) If, under AS 45.03.303(a)(1), the promise of performance that is the 19 consideration for an instrument has been partially performed, the holder may assert 20 rights as a holder in due course of the instrument only to the fraction of the amount 21 payable under the instrument equal to the value of the partial performance divided by 22 the value of the promised performance. 23 (e) If the person entitled to enforce an instrument has only a security interest 24 in the instrument and the person obliged to pay the instrument has a defense, claim in 25 recoupment, or claim to the instrument that may be asserted against the person who 26 granted the security interest, the person entitled to enforce the instrument may assert 27 rights as a holder in due course only to an amount payable under the instrument that, 28 at the time of enforcement of the instrument, does not exceed the amount of the unpaid 29 obligation secured. 30 (f) To be effective, notice must be received at a time and in a manner that 31 gives a reasonable opportunity to act on it.
01 (g) This section is subject to any law limiting status as a holder in due course 02 in particular classes of transactions. 03 * Sec. 42. AS 45.03.303 is repealed and reenacted to read: 04 Sec. 45.03.303. VALUE AND CONSIDERATION. (a) An instrument is 05 issued or transferred for value if 06 (1) the instrument is issued or transferred for a promise of performance, 07 to the extent the promise has been performed; 08 (2) the transferee acquires a security interest or other lien in the 09 instrument other than a lien obtained by judicial proceeding; 10 (3) the instrument is issued or transferred as payment of, or as security 11 for, an antecedent claim against a person, whether or not the claim is due; 12 (4) the instrument is issued or transferred in exchange for a negotiable 13 instrument; or 14 (5) the instrument is issued or transferred in exchange for the incurring 15 of an irrevocable obligation to a third party by the person taking the instrument. 16 (b) "Consideration" means any consideration sufficient to support a simple 17 contract. The drawer or maker of an instrument has a defense if the instrument is 18 issued without consideration. If an instrument is issued for a promise of performance, 19 the issuer has a defense to the extent performance of the promise is due and the 20 promise has not been performed. If an instrument is issued for value as stated in (a) 21 of this section, the instrument is also issued for consideration. 22 * Sec. 43. AS 45.03.304 is repealed and reenacted to read: 23 Sec. 45.03.304. OVERDUE INSTRUMENT. (a) An instrument payable on 24 demand becomes overdue at the earliest of the following times: 25 (1) on the day after the day demand for payment is duly made; 26 (2) if the instrument is a check, 90 days after its date; or 27 (3) if the instrument is not a check, when the instrument has been 28 outstanding for a period of time after the instrument's date that is unreasonably long 29 under the circumstances of the particular case in light of the nature of the instrument 30 and usage of the trade. 31 (b) With respect to an instrument payable at a definite time, the following
01 rules apply: 02 (1) if the principal is payable in installments and a due date has not 03 been accelerated, the instrument becomes overdue upon default under the instrument 04 for nonpayment of an installment, and the instrument remains overdue until the default 05 is cured; 06 (2) if the principal is not payable in installments and the due date has 07 not been accelerated, the instrument becomes overdue on the day after the due date; 08 and 09 (3) if a due date with respect to principal has been accelerated, the 10 instrument becomes overdue on the day after the accelerated due date. 11 (c) Unless the due date of principal has been accelerated, an instrument does 12 not become overdue if there is default in payment of interest but no default in payment 13 of principal. 14 * Sec. 44. AS 45.03.305 is repealed and reenacted to read: 15 Sec. 45.03.305. DEFENSES AND CLAIMS IN RECOUPMENT. (a) Except 16 as stated in (b) of this section, the right to enforce the obligation of a party to pay an 17 instrument is subject to the following: 18 (1) a defense of the obligor based on 19 (A) infancy of the obligor, to the extent it is a defense to a 20 simple contract; 21 (B) duress, lack of legal capacity, or illegality of the transaction 22 that, under other law, nullifies the obligation of the obligor; 23 (C) fraud that induced the obligor to sign the instrument with 24 neither knowledge nor reasonable opportunity to learn of its character or its 25 essential terms; or 26 (D) discharge of the obligor in insolvency proceedings; 27 (2) a defense of the obligor stated in another section of this chapter or 28 a defense of the obligor that would be available if the person entitled to enforce the 29 instrument were enforcing a right to payment under a simple contract; and 30 (3) a claim in recoupment of the obligor against the original payee of 31 the instrument if the claim arose from the transaction that gave rise to the instrument,
01 but the claim of the obligor may be asserted against a transferee of the instrument only 02 to reduce the amount owing in the instrument at the time the action is brought. 03 (b) The right of a holder in due course to enforce the obligation of a party to 04 pay the instrument is subject to defenses of the obligor stated in (a)(1) of this section, 05 but is not subject to defenses of the obligor stated in (a)(2) of this section or claims 06 in recoupment stated in (a)(3) of this section against a person other than the holder. 07 (c) Except as stated in (d) of this section, in an action to enforce the obligation 08 of a party to pay the instrument, the obligor may not assert against the person entitled 09 to enforce the instrument a defense, claim in recoupment, or claim to the instrument 10 under AS 45.03.306 of another person, but the other person's claim to the instrument 11 may be asserted by the obligor if the other person is joined in the action and 12 personally asserts the claim against the person entitled to enforce the instrument. An 13 obligor is not obliged to pay the instrument if the person seeking enforcement of the 14 instrument does not have rights of a holder in due course and the obligor proves that 15 the instrument is a lost or stolen instrument. 16 (d) In an action to enforce the obligation of an accommodation party to pay 17 an instrument, the accommodation party may assert against the person entitled to 18 enforce the instrument any defense or claim in recoupment under (a) of this section 19 that the accommodated party could assert against the person entitled to enforce the 20 instrument, except the defenses of discharge in insolvency proceedings, infancy, and 21 lack of legal capacity. 22 * Sec. 45. AS 45.03.306 is repealed and reenacted to read: 23 Sec. 45.03.306. CLAIMS TO AN INSTRUMENT. A person taking an 24 instrument, other than a person having rights of a holder in due course, is subject to 25 a claim of a property or possessory right in the instrument or its proceeds, including 26 a claim to rescind a negotiation and to recover the instrument or its proceeds. A 27 person having rights of a holder in due course takes free of the claim to the 28 instrument. 29 * Sec. 46. AS 45.03.307 is repealed and reenacted to read: 30 Sec. 45.03.307. NOTICE OF BREACH OF FIDUCIARY DUTY. (a) If an 31 instrument is taken from a fiduciary for payment or collection or for value, the taker
01 has knowledge of the fiduciary status of the fiduciary, and the represented person 02 makes a claim to the instrument or its proceeds on the basis that the transaction of the 03 fiduciary is a breach of fiduciary duty, the following rules apply: 04 (1) notice of breach of fiduciary duty by the fiduciary is notice of the 05 claim of the represented person; 06 (2) in the case of an instrument payable to the represented person or 07 the fiduciary as such, the taker has notice of the breach of fiduciary duty if the 08 instrument is 09 (A) taken in payment of or as security for a debt known by the 10 taker to be the personal debt of the fiduciary; 11 (B) taken in a transaction known by the taker to be for the 12 personal benefit of the fiduciary; or 13 (C) deposited to an account other than an account of the 14 fiduciary, as such, or an account of the represented person; 15 (3) if an instrument is issued by the represented person or the fiduciary 16 as such, and made payable to the fiduciary personally, the taker does not have notice 17 of the breach of fiduciary duty unless the taker knows of the breach of fiduciary duty; 18 and 19 (4) if an instrument is issued by the represented person or the fiduciary 20 as such, to the taker as payee, the taker has notice of the breach of fiduciary duty if 21 the instrument is 22 (A) taken in payment of or as security for a debt known by the 23 taker to be the personal debt of the fiduciary; 24 (B) taken in a transaction known by the taker to be for the 25 personal benefit of the fiduciary; or 26 (C) deposited to an account other than an account of the 27 fiduciary, as such, or an account of the represented person. 28 (b) In this section, 29 (1) "fiduciary" means an agent, trustee, partner, corporate officer or 30 director, or other representative owing a fiduciary duty with respect to an instrument; 31 (2) "represented person" means the principal, beneficiary, partnership,
01 corporation, or other person to whom a fiduciary duty with respect to an instrument 02 is owed. 03 * Sec. 47. AS 45.03 is amended by adding new sections to read: 04 Sec. 45.03.308. PROOF OF SIGNATURES AND STATUS AS HOLDER IN 05 DUE COURSE. (a) In an action with respect to an instrument, the authenticity of, 06 and authority to make, each signature on the instrument is admitted unless specifically 07 denied in the pleadings to which a responsive pleading is required. If the validity of 08 a signature is denied in the pleadings, the burden of establishing validity is on the 09 person claiming validity, but the signature is presumed to be authentic and authorized, 10 unless the action is to enforce the liability of the purported signer and the signer is 11 dead or incompetent at the time of trial of the issue of validity of the signature. If an 12 action to enforce the instrument is brought against a person as the undisclosed 13 principal of a person who signed the instrument as a party to the instrument, the 14 plaintiff has the burden of establishing that the defendant is liable on the instrument 15 as a represented person under AS 45.03.402(a). 16 (b) If the validity of signatures is admitted or proved and there is compliance 17 with (a) of this section, a plaintiff producing the instrument is entitled to payment if 18 the plaintiff proves entitlement to enforce the instrument under AS 45.03.301, unless 19 the defendant proves a defense or claim in recoupment. If a defense or claim in 20 recoupment is proved, the right to payment of the plaintiff is subject to the defense or 21 claim, except to the extent the plaintiff proves that the plaintiff has rights of a holder 22 in due course which are not subject to the defense or claim. 23 Sec. 45.03.309. ENFORCEMENT OF LOST, DESTROYED, OR STOLEN 24 INSTRUMENT. (a) A person not in possession of an instrument is entitled to enforce 25 the instrument if 26 (1) the person was in possession of the instrument and entitled to 27 enforce it when loss of possession occurred; 28 (2) the loss of possession was not the result of a transfer by the person 29 or a lawful seizure; and 30 (3) the person cannot reasonably obtain possession of the instrument 31 because the instrument was destroyed, its whereabouts cannot be determined, or it is
01 in the wrongful possession of an unknown person or a person who cannot be found or 02 is not amenable to service of process. 03 (b) A person seeking enforcement of an instrument under (a) of this section 04 must prove the terms of the instrument and the person's right to enforce the 05 instrument. If that proof is made, AS 45.03.308 applies to the case as if the person 06 seeking enforcement had produced the instrument. The court may not enter judgment 07 in favor of the person seeking enforcement unless it finds that the person required to 08 pay the instrument is adequately protected against loss that might occur by reason of 09 a claim by another person to enforce the instrument. Adequate protection may be 10 provided by any reasonable means. 11 Sec. 45.03.310. EFFECT OF INSTRUMENT ON OBLIGATION FOR 12 WHICH TAKEN. (a) Unless otherwise agreed, if a certified check, cashier's check, 13 or teller's check is taken for an obligation, the obligation is discharged to the same 14 extent discharge would result if an amount of money equal to the amount of the 15 instrument were taken in payment of the obligation. Discharge of the obligation does 16 not affect any liability that the obligor may have as an endorser of the instrument. 17 (b) Unless otherwise agreed and except as provided in (a) of this section, if 18 a note or an uncertified check is taken for an obligation, the obligation is suspended 19 to the same extent the obligation would be discharged if an amount of money equal 20 to the amount of the instrument were taken, and the following rules apply: 21 (1) in the case of an uncertified check, suspension of the obligation 22 continues until dishonor of the check or until it is paid or certified; payment or 23 certification of the check results in discharge of the obligation to the extent of the 24 amount of the check; 25 (2) in the case of a note, suspension of the obligation continues until 26 dishonor of the note or until it is paid; payment of the note results in discharge of the 27 obligation to the extent of the payment; 28 (3) except as provided in (4) of this subsection, if the check or note is 29 dishonored and the obligee of the obligation for which the instrument was taken is the 30 person entitled to enforce the instrument, the obligee may enforce either the instrument 31 or the obligation; in the case of an instrument of a third person that is negotiated to
01 the obligee by the obligor, discharge of the obligor on the instrument also discharges 02 the obligation; and 03 (4) if the person entitled to enforce the instrument taken for an 04 obligation is a person other than the obligee, the obligee may not enforce the 05 obligation to the extent the obligation is suspended; if the obligee is the person entitled 06 to enforce the instrument but no longer has possession of it because it was lost, stolen, 07 or destroyed, the obligation may not be enforced to the extent of the amount payable 08 on the instrument, and to that extent the obligee's rights against the obligor are limited 09 to enforcement of the instrument. 10 (c) If an instrument other than one described in (a) or (b) of this section is 11 taken for an obligation, the effect is that stated in (a) if the instrument is one on which 12 a bank is liable as maker or acceptor, or that stated in (b) in any other case. 13 Sec. 45.03.311. ACCORD AND SATISFACTION BY USE OF 14 INSTRUMENT. (a) The provisions of this section apply if a person against whom 15 a claim is asserted proves that 16 (1) the person in good faith tendered an instrument to the claimant as 17 full satisfaction on the claim; 18 (2) the amount of the claim was unliquidated or subject to a bona fide 19 dispute; and 20 (3) the claimant obtained payment of the instrument. 21 (b) Unless (c) of this section applies, the claim is discharged if the person 22 against whom the claim is asserted proves that the instrument or an accompanying 23 written communication contained a conspicuous statement to the effect that the 24 instrument was tendered as full satisfaction of the claim. 25 (c) Subject to (d) of this section, a claim is not discharged under (b) of this 26 section if either of the following applies: 27 (1) the claimant, if an organization, proves that 28 (A) within a reasonable time before the tender, the claimant sent 29 a conspicuous statement to the person against whom the claim is asserted that 30 communications concerning disputed debts, including an instrument tendered 31 as full satisfaction of a debt, are to be sent to a designated person, office, or
01 place; and 02 (B) the instrument or accompanying communication was not 03 received by that designated person, office, or place; or 04 (2) the claimant, whether or not an organization, proves that within 90 05 days after payment of the instrument, the claimant tendered repayment of the amount 06 of the instrument to the person against whom the claim is asserted, unless the claimant 07 is an organization that sent a statement complying with (1)(A) of this subsection. 08 (d) A claim is discharged if the person against whom the claim is asserted 09 proves that within a reasonable time before collection of the instrument was initiated, 10 the claimant, or an agent of the claimant having direct responsibility with respect to 11 the disputed obligation, knew that the instrument was tendered in full satisfaction of 12 the claim. 13 Sec. 45.03.312. LOST, DESTROYED, OR STOLEN CASHIER'S CHECK, 14 TELLER'S CHECK, OR CERTIFIED CHECK. (a) A claimant may assert a claim 15 to the amount of a check by a communication to the obligated bank describing the 16 check with reasonable certainty and requesting payment of the amount of the check, 17 if 18 (1) the claimant is the drawer or payee of a certified check or the 19 remitter or payee of a cashier's check or teller's check; 20 (2) the communication contains or is accompanied by a declaration of 21 loss of the claimant with respect to the check; 22 (3) the communication is received at a time and in a manner affording 23 the bank a reasonable time to act on it before the check is paid; and 24 (4) the claimant provides reasonable identification if requested by the 25 obligated bank. 26 (b) Delivery of a declaration of loss under (a)(2) of this section is a warranty 27 of the truth of the statements made in the declaration. 28 (c) If a claim is asserted in compliance with (a) of this section, the following 29 rules apply: 30 (1) the claim becomes enforceable at the later of 31 (A) the time the claim is asserted; or
01 (B) the 90th day following the date of the check, in the case of 02 a cashier's check or teller's check, or the 90th day following the date of the 03 acceptance, in the case of a certified check; 04 (2) until the claim becomes enforceable, it does not have legal effect 05 and the obligated bank may pay the check or, in the case of a teller's check, may 06 permit the drawee to pay the check; payment to a person entitled to enforce the check 07 discharges all liability of the obligated bank with respect to the check; 08 (3) if the claim becomes enforceable before the check is presented for 09 payment, the obligated bank is not obliged to pay the check; 10 (4) when the claim becomes enforceable, the obligated bank becomes 11 obliged to pay the amount of the check to the claimant if payment of the check has 12 not been made to a person entitled to enforce the check; subject to AS 45.04.302(a)(1), 13 payment to the claimant discharges all liability of the obligated bank with respect to 14 the check. 15 (d) If the obligated bank pays the amount of a check to a claimant under (c)(4) 16 of this section and the check is presented for payment by a person having rights of a 17 holder in due course, the claimant is obliged to 18 (1) refund the payment to the obligated bank if the check is paid; or 19 (2) pay the amount of the check to the person having rights of a holder 20 in due course if the check is dishonored. 21 (e) If a claimant has the right to assert a claim under (a) - (c) of this section 22 and is also a person entitled to enforce a cashier's check, teller's check, or certified 23 check that is lost, destroyed, or stolen, the claimant may assert rights with respect to 24 the check either under this section or AS 45.03.309. 25 (f) In this section, 26 (1) "check" means a cashier's check, teller's check, or certified check; 27 (2) "claimant" means a person who claims the right to receive the 28 amount of a cashier's check, teller's check, or certified check that was lost, destroyed, 29 or stolen; 30 (3) "declaration of loss" means a written statement, made under penalty 31 of perjury, to the effect that
01 (A) the declarer lost possession of a check; 02 (B) the declarer is the drawer or payee of the check, in the case 03 of a certified check, or the remitter or payee of the check, in the case of a 04 cashier's check or teller's check; 05 (C) the loss of possession was not the result of a transfer by the 06 declarer or a lawful seizure; and 07 (D) the declarer cannot reasonably obtain possession of the 08 check because the check was destroyed, the check's whereabouts cannot be 09 determined, or the check is in the wrongful possession of an unknown person 10 or a person who cannot be found or is not amenable to service of process; 11 (4) "obligated bank" means the issuer of a cashier's check or teller's 12 check or the acceptor of a certified check. 13 * Sec. 48. AS 45.03.401 is repealed and reenacted to read: 14 Sec. 45.03.401. SIGNATURE. (a) A person is not liable on an instrument 15 unless 16 (1) the person signed the instrument; or 17 (2) the person is represented by an agent or representative who signed 18 the instrument and the signature is binding on the represented person under 19 AS 45.03.402. 20 (b) A signature may be made manually or by means of a device or machine, 21 and by the use of any name, including a trade or assumed name, or by a word, mark, 22 or symbol executed or adopted by a person with present intention to authenticate a 23 writing. 24 * Sec. 49. AS 45.03.402 is repealed and reenacted to read: 25 Sec. 45.03.402. SIGNATURE BY REPRESENTATIVE. (a) If a person 26 acting, or purporting to act, as a representative signs an instrument by signing either 27 the name of the represented person or the name of the signer, the represented person 28 is bound by the signature to the same extent the represented person would be bound 29 if the signature were on a simple contract. If the represented person is bound, the 30 signature of the representative is the authorized signature of the represented person and 31 the represented person is liable on the instrument, whether or not identified in the
01 instrument. 02 (b) If a representative signs the name of the representative to an instrument 03 and the signature is an authorized signature of the represented person, the following 04 rules apply: 05 (1) if the form of the signature shows unambiguously that the signature 06 is made on behalf of the represented person who is identified in the instrument, the 07 representative is not liable on the instrument; and 08 (2) subject to (c) of this section, if the form of the signature does not 09 show unambiguously that the signature is made in a representative capacity or the 10 represented person is not identified in the instrument, the representative is liable on the 11 instrument to a holder in due course that took the instrument without notice that the 12 representative was not intended to be liable on the instrument; with respect to another 13 person, the representative is liable on the instrument unless the representative proves 14 that the original parties did not intend the representative to be liable on the instrument. 15 (c) If a representative signs the name of the representative as drawer of a 16 check without indication of the representative status and the check is payable from an 17 account of the represented person who is identified on the check, the signer is not 18 liable on the check if the signature is an authorized signature of the represented person. 19 * Sec. 50. AS 45.03.403 is repealed and reenacted to read: 20 Sec. 45.03.403. UNAUTHORIZED SIGNATURE. (a) Unless otherwise 21 provided in this chapter or AS 45.04, an unauthorized signature is ineffective except 22 as the signature of the unauthorized signer in favor of a person who in good faith pays 23 the instrument or takes it for value. An unauthorized signature may be ratified for all 24 purposes of this chapter. 25 (b) If the signature of more than one person is required to constitute the 26 authorized signature of an organization, the signature of the organization is 27 unauthorized if one of the required signatures is lacking. 28 (c) The civil or criminal liability of a person who makes an unauthorized 29 signature is not affected by any provision of this chapter that makes the unauthorized 30 signature effective for the purposes of this chapter. 31 * Sec. 51. AS 45.03.404 is repealed and reenacted to read:
01 Sec. 45.03.404. IMPOSTORS; FICTITIOUS PAYEES. (a) If an impostor, 02 by use of the mails or otherwise, induces the issuer of an instrument to issue the 03 instrument to the impostor or a person acting in concert with the impostor, by 04 impersonating the payee of the instrument or a person authorized to act for the payee, 05 an endorsement of the instrument by any person in the name of the payee is effective 06 as the endorsement of the payee in favor of a person who, in good faith, pays the 07 instrument or takes it for value or for collection. 08 (b) If a person whose intent determines to whom an instrument is payable 09 (AS 45.03.110(a) or (b)) does not intend the person identified as payee to have an 10 interest in the instrument, or if the person identified as payee of an instrument is a 11 fictitious person, the following rules apply until the instrument is negotiated by special 12 endorsement: 13 (1) any person in possession of the instrument is the holder of the 14 instrument; and 15 (2) an endorsement by any person in the name of the payee stated in 16 the instrument is effective as the endorsement of the payee in favor of a person who, 17 in good faith, pays the instrument or takes it for value or for collection. 18 (c) Under (a) or (b) of this section, an endorsement is made in the name of a 19 payee if 20 (1) it is made in a name substantially similar to that of the payee; or 21 (2) the instrument, whether or not endorsed, is deposited in a depositary 22 bank to an account in a name substantially similar to that of the payee. 23 (d) With respect to an instrument to which (a) or (b) of this section applies, 24 if a person paying the instrument or taking it for value or for collection fails to 25 exercise ordinary care in paying or taking the instrument and that failure substantially 26 contributes to loss resulting from payment of the instrument, the person bearing the 27 loss may recover from the person failing to exercise ordinary care to the extent the 28 failure to exercise ordinary care contributed to the loss. 29 * Sec. 52. AS 45.03.405 is repealed and reenacted to read: 30 Sec. 45.03.405. EMPLOYER'S RESPONSIBILITY FOR FRAUDULENT 31 ENDORSEMENT BY EMPLOYEE. (a) For the purpose of determining the rights
01 and liabilities of a person who, in good faith, pays an instrument or takes it for value 02 or for collection, if an employer entrusted an employee with responsibility with respect 03 to the instrument and the employee or a person acting in concert with the employee 04 makes a fraudulent endorsement of the instrument, the endorsement is effective as the 05 endorsement of the person to whom the instrument is payable if it is made in the name 06 of that person. If the person paying the instrument or taking it for value or for 07 collection fails to exercise ordinary care in paying or taking the instrument and that 08 failure substantially contributes to loss resulting from the fraud, the person bearing the 09 loss may recover from the person failing to exercise ordinary care to the extent the 10 failure to exercise ordinary care contributed to the loss. 11 (b) Under (a) of this section, an endorsement is made in the name of the 12 person to whom an instrument is payable if 13 (1) it is made in a name substantially similar to the name of that 14 person; or 15 (2) the instrument, whether or not endorsed, is deposited in a depositary 16 bank to an account in a name substantially similar to the name of that person. 17 (c) In this section, 18 (1) "employee" includes an independent contractor and an employee of 19 an independent contractor retained by the employer; 20 (2) "fraudulent endorsement" means 21 (A) in the case of an instrument payable to the employer, a 22 forged endorsement purporting to be that of the employer; or 23 (B) in the case of an instrument with respect to which the 24 employer is the issuer, a forged endorsement purporting to be that of the person 25 identified as payee; 26 (3) "responsibility" with respect to instruments means authority to sign 27 or endorse instruments on behalf of the employer; to process instruments received by 28 the employer for bookkeeping purposes, for deposit to an account, or for other 29 disposition; to prepare or process instruments for issue in the name of the employer; 30 to supply information determining the names or addresses of payees of instruments to 31 be issued in the name of the employer; to control the disposition of instruments to be
01 issued in the name of the employer; or to act otherwise with respect to instruments in 02 a responsible capacity; "responsibility" does not include authority that merely allows 03 an employee to have access to instruments or blank or incomplete instrument forms 04 that are being stored or transported or are part of incoming or outgoing mail, or similar 05 access. 06 * Sec. 53. AS 45.03.406 is repealed and reenacted to read: 07 Sec. 45.03.406. NEGLIGENCE CONTRIBUTING TO FORGED SIGNATURE 08 OR ALTERATION OF INSTRUMENT. (a) A person whose failure to exercise 09 ordinary care substantially contributes to an alteration of an instrument or to the 10 making of a forged signature on an instrument is precluded from asserting the 11 alteration or the forgery against a person who, in good faith, pays the instrument or 12 takes it for value or for collection. 13 (b) Under (a) of this section, if the person asserting the preclusion fails to 14 exercise ordinary care in paying or taking the instrument and that failure substantially 15 contributes to loss, the loss is allocated between the person precluded and the person 16 asserting the preclusion according to the extent to which the failure of each to exercise 17 ordinary care contributed to the loss. 18 (c) Under (a) of this section, the burden of proving failure to exercise ordinary 19 care is on the person asserting the preclusion. Under (b) of this section, the burden 20 of proving failure to exercise ordinary care is on the person precluded. 21 * Sec. 54. AS 45.03.407 is repealed and reenacted to read: 22 Sec. 45.03.407. ALTERATION. (a) Except as provided in (b) of this section, 23 an alteration fraudulently made discharges a party whose obligation is affected by the 24 alteration unless that party assents or is precluded from asserting the alteration. 25 Another alteration does not discharge a party, and the instrument may be enforced 26 according to its original terms. 27 (b) A payor bank or drawee paying a fraudulently altered instrument or a 28 person taking it for value, in good faith and without notice of the alteration, may 29 enforce rights with respect to the instrument according to its original terms or, in the 30 case of an incomplete instrument altered by unauthorized completion, according to its 31 terms as completed.
01 (c) "Alteration" means 02 (1) an unauthorized change in an instrument that purports to modify in 03 any respect the obligation of a party; or 04 (2) an unauthorized addition of words or numbers or other change to 05 an incomplete instrument relating to the obligation of a party. 06 * Sec. 55. AS 45.03.408 is repealed and reenacted to read: 07 Sec. 45.03.408. DRAWEE NOT LIABLE ON UNACCEPTED DRAFT. A 08 check or other draft does not of itself operate as an assignment of funds in the hands 09 of the drawee available for its payment, and the drawee is not liable on the instrument 10 until the drawee accepts the instrument. 11 * Sec. 56. AS 45.03.409 is repealed and reenacted to read: 12 Sec. 45.03.409. ACCEPTANCE OF DRAFT; CERTIFIED CHECK. (a) 13 "Acceptance" means the drawee's signed agreement to pay a draft as presented. 14 Acceptance must be written on the draft and may consist of the drawee's signature 15 alone. Acceptance may be made at any time and becomes effective when notification 16 in accordance with instructions is given or the accepted draft is delivered for the 17 purpose of giving rights on the acceptance to any person. 18 (b) A draft may be accepted although it has not been signed by the drawer, is 19 otherwise incomplete, is overdue, or has been dishonored. 20 (c) If a draft is payable at a fixed period after sight and the acceptor fails to 21 date the acceptance, the holder may complete the acceptance by supplying a date in 22 good faith. 23 (d) "Certified check" means a check accepted by the bank on which it is 24 drawn. Acceptance may be made as stated in (a) of this section or by a writing on the 25 check that indicates that the check is certified. The drawee of a check does not have 26 an obligation to certify the check, and refusal to certify is not dishonor of the check. 27 * Sec. 57. AS 45.03.410 is repealed and reenacted to read: 28 Sec. 45.03.410. ACCEPTANCE VARYING DRAFT. (a) If the terms of a 29 drawee's acceptance vary from the terms of the draft as presented, the holder may 30 refuse the acceptance and treat the draft as dishonored. In that case, the drawee may 31 cancel the acceptance.
01 (b) The terms of a draft are not varied by an acceptance to pay at a particular 02 bank or place in the United States, unless the acceptance states that the draft is to be 03 paid only at that bank or place. 04 (c) If the holder assents to an acceptance varying the terms of a draft, the 05 obligation of each drawer and endorser that does not expressly assent to the acceptance 06 is discharged. 07 * Sec. 58. AS 45.03.411 is repealed and reenacted to read: 08 Sec. 45.03.411. REFUSAL TO PAY CASHIER'S CHECKS, TELLER'S 09 CHECKS, AND CERTIFIED CHECKS. (a) If the obligated bank wrongfully refuses 10 to pay a cashier's check or certified check, stops payment of a teller's check, or 11 refuses to pay a dishonored teller's check, the person asserting the right to enforce the 12 check is entitled to compensation for expenses and loss of interest resulting from the 13 nonpayment and may recover consequential damages if the obligated bank refuses to 14 pay after receiving notice of particular circumstances giving rise to the damages. 15 (b) Expenses or consequential damages under (a) of this section are not 16 recoverable if 17 (1) the refusal of the obligated bank to pay occurs because the bank 18 suspends payments; 19 (2) the obligated bank asserts a claim or defense of the bank that it has 20 reasonable grounds to believe is available against the person entitled to enforce the 21 instrument; 22 (3) the obligated bank has a reasonable doubt whether the person 23 demanding payment is the person entitled to enforce the instrument; or 24 (4) payment is prohibited by law. 25 (c) In this section, "obligated bank" means the acceptor of a certified check 26 or the issuer of a cashier's check or teller's check bought from the issuer. 27 * Sec. 59. AS 45.03.412 is repealed and reenacted to read: 28 Sec. 45.03.412. OBLIGATION OF ISSUER OF NOTE OR CASHIER'S 29 CHECK. The issuer of a note, cashier's check, or other draft drawn on the drawer is 30 obliged to pay the instrument according to its terms at the time it was issued or, if not 31 issued, at the time it first came into possession of a holder; if the issuer signed an
01 incomplete instrument, the issuer is obligated to pay the instrument according to its 02 terms when completed, to the extent stated in AS 45.03.115 and 45.03.407. The 03 obligation is owed to a person entitled to enforce the instrument or to an endorser who 04 paid the instrument under AS 45.03.415. 05 * Sec. 60. AS 45.03.413 is repealed and reenacted to read: 06 Sec. 45.03.413. OBLIGATION OF ACCEPTOR. (a) The acceptor of a draft 07 is obliged to pay the draft according to its terms at the time it was accepted, even 08 though the acceptance states that the draft is payable "as originally drawn" or 09 equivalent terms; if the acceptance varies the terms of the draft, the acceptor is obliged 10 to pay the draft according to the terms of the draft as varied; if the acceptance is of 11 a draft that is an incomplete instrument, the acceptor is obliged to pay the draft 12 according to its terms when completed, to the extent stated in AS 45.03.115 and 13 45.03.407. The obligation is owed to a person entitled to enforce the draft or to the 14 drawer or an endorser who paid the draft under AS 45.03.414 - 45.03.415. 15 (b) If the certification of a check or other acceptance of a draft states the 16 amount certified or accepted, the obligation of the acceptor is that amount. If the 17 certification or acceptance does not state an amount, the amount of the instrument is 18 subsequently raised, and the instrument is then negotiated to a holder in due course, 19 the obligation of the acceptor is the amount of the instrument at the time it was taken 20 by the holder in due course. 21 * Sec. 61. AS 45.03.414 is repealed and reenacted to read: 22 Sec. 45.03.414. OBLIGATION OF DRAWER. (a) This section does not 23 apply to cashier's checks or other drafts drawn on the drawer. 24 (b) If an unaccepted draft is dishonored, the drawer is obliged to pay the draft 25 according to its terms at the time it was issued or, if not issued, at the time it first 26 came into possession of a holder. If the drawer signed an incomplete instrument, the 27 drawer is obliged to pay the draft according to its terms when completed, to the extent 28 stated in AS 45.03.115 and 45.03.407. The obligation is owed to a person entitled to 29 enforce the draft or to an endorser who paid the draft under AS 45.03.415. 30 (c) If a draft is accepted by a bank, the drawer is discharged, regardless of 31 when or by whom acceptance was obtained.
01 (d) If a draft is accepted and the acceptor is not a bank, the obligation of the 02 drawer to pay the draft, if the draft is dishonored by the acceptor, is the same as the 03 obligation of an endorser under AS 45.03.415(a) and (c). 04 (e) If a draft states that it is drawn "without recourse" or otherwise disclaims 05 liability of the drawer to pay the draft, the drawer is not liable under (b) of this section 06 to pay the draft if the draft is not a check. A disclaimer of the liability stated in (b) 07 of this section is not effective if the draft is a check. 08 (f) If a check is not presented for payment or given to a depositary bank for 09 collection within 30 days after its date and the drawee suspends payments after 10 expiration of the 30-day period without paying the check and, because of the 11 suspension of payments, the drawer is deprived of funds maintained with the drawee 12 to cover payment of the check, the drawer to the extent deprived of funds may 13 discharge its obligation to pay the check by assigning to the person entitled to enforce 14 the check the rights of the drawer against the drawee with respect to the funds. 15 * Sec. 62. AS 45.03.415 is repealed and reenacted to read: 16 Sec. 45.03.415. OBLIGATION OF ENDORSER. (a) Subject to (b) - (d) of 17 this section and AS 45.03.419(d), if an instrument is dishonored an endorser is obliged 18 to pay the amount due on the instrument according to the terms of the instrument at 19 the time it was endorsed or, if the endorser endorsed an incomplete instrument, 20 according to its terms when completed to the extent stated in AS 45.03.115 and 21 45.03.407. The obligation of the endorser is owed to a person entitled to enforce the 22 instrument or to a subsequent endorser who paid the instrument under this section. 23 (b) If an endorsement states that it is made "without recourse" or otherwise 24 disclaims liability of the endorser, the endorser is not liable under (a) of this section 25 to pay the instrument. 26 (c) If notice of dishonor of an instrument is required by AS 45.03.503 and 27 notice of dishonor complying with that section is not given to an endorser, the liability 28 of the endorser under (a) of this section is discharged. 29 (d) If a draft is accepted by a bank after an endorsement is made, the liability 30 of the endorser under (a) of this section is discharged. 31 (e) If an endorser of a check is liable under (a) of this section and the check
01 is not presented for payment or given to a depositary bank for collection within 30 02 days after the date the endorsement was made, the liability of the endorser under (a) 03 of this section is discharged. 04 * Sec. 63. AS 45.03.416 is repealed and reenacted to read: 05 Sec. 45.03.416. TRANSFER WARRANTIES. (a) A person who transfers an 06 instrument for consideration warrants to the transferee and, if the transfer is by 07 endorsement, to any subsequent transferee that 08 (1) the warrantor is a person entitled to enforce the instrument; 09 (2) all signatures on the instrument are authentic and authorized; 10 (3) the instrument has not been altered; 11 (4) the instrument is not subject to a defense or claim in recoupment 12 of any party that can be asserted against the warrantor; and 13 (5) the warrantor does not know of any insolvency proceeding 14 commenced with respect to the maker or acceptor or, in the case of an unaccepted 15 draft, the drawer. 16 (b) A person to whom the warranties under (a) of this section are made and 17 who took the instrument in good faith may recover from the warrantor as damages for 18 breach of warranty an amount equal to the loss suffered as a result of the breach, but 19 not more than the amount of the instrument plus expenses and loss of interest incurred 20 as a result of the breach. 21 (c) The warranties stated in (a) of this section cannot be disclaimed with 22 respect to checks. Unless notice of a claim for breach of warranty is given to the 23 warrantor within 30 days after the claimant has reason to know of the breach and the 24 identity of the warrantor, the liability of the warrantor under (b) of this section is 25 discharged to the extent of any loss caused by the delay in giving notice of the claim. 26 (d) A cause of action for breach of warranty under this section accrues when 27 the claimant has reason to know of the breach. 28 * Sec. 64. AS 45.03.417 is repealed and reenacted to read: 29 Sec. 45.03.417. PRESENTMENT WARRANTIES. (a) If an unaccepted draft 30 is presented to the drawee for payment or acceptance and the drawee pays or accepts 31 the draft, the person obtaining payment or acceptance, at the time of presentment, and
01 a previous transferor of the draft, at the time of transfer, warrant to the drawee making 02 payment or accepting the draft in good faith that 03 (1) the warrantor is, or was at the time the warrantor transferred the 04 draft, a person entitled to enforce the draft or authorized to obtain payment or 05 acceptance of the draft on behalf of a person entitled to enforce the draft; 06 (2) the draft has not been altered; and 07 (3) the warrantor does not know that the signature of the drawer of the 08 draft is unauthorized. 09 (b) A drawee making payment may recover from any warrantor damages for 10 breach of warranty equal to the amount paid by the drawee less the amount the drawee 11 received or is entitled to receive from the drawer because of the payment. In addition, 12 the drawee is entitled to compensation for expenses and loss of interest resulting from 13 the breach. The right of the drawee to recover damages under this subsection is not 14 affected by any failure of the drawee to exercise ordinary care in making payment. 15 If the drawee accepts the draft, breach of warranty is a defense to the obligation of the 16 acceptor. If the acceptor makes payment with respect to the draft, the acceptor is 17 entitled to recover from any warrantor for breach of warranty the amounts stated in 18 this subsection. 19 (c) If a drawee asserts a claim for breach of warranty under (a) of this section 20 based on an unauthorized endorsement of the draft or an alteration of the draft, the 21 warrantor may defend by proving that the endorsement is effective under AS 45.03.404 22 or 45.03.405, or that the drawer is precluded under AS 45.03.406 or AS 45.04.406 23 from asserting against the drawee the unauthorized endorsement or alteration. 24 (d) If a dishonored draft is presented for payment to the drawer or an endorser, 25 or if any other instrument is presented for payment to a party obliged to pay the 26 instrument, and payment is received, the following rules apply: 27 (1) the person obtaining payment and a prior transferor of the 28 instrument warrant to the person making payment in good faith that the warrantor is, 29 or was at the time the warrantor transferred the instrument, a person entitled to enforce 30 the instrument or authorized to obtain payment on behalf of a person entitled to 31 enforce the instrument;
01 (2) the person making payment may recover from any warrantor for 02 breach of warranty an amount equal to the amount paid plus expenses and loss of 03 interest resulting from the breach. 04 (e) The warranties stated in (a) and (d) of this section cannot be disclaimed 05 with respect to checks. Unless notice of a claim for breach of warranty is given to the 06 warrantor within 30 days after the claimant has reason to know of the breach and the 07 identity of the warrantor, the liability of the warrantor under (b) or (d) of this section 08 is discharged to the extent of any loss caused by the delay in giving notice of the 09 claim. 10 (f) A cause of action for breach of warranty under this section accrues when 11 the claimant has reason to know of the breach. 12 * Sec. 65. AS 45.03.418 is repealed and reenacted to read: 13 Sec. 45.03.418. PAYMENT OR ACCEPTANCE BY MISTAKE. (a) Except 14 as provided in (c) of this section, if the drawee of a draft pays or accepts the draft and 15 the drawee acted on the mistaken belief that payment of the draft had not been stopped 16 under AS 45.04.403 or that the signature of the drawer of the draft was authorized, the 17 drawee may recover the amount of the draft from the person to whom or for whose 18 benefit payment was made or, in the case of acceptance, may revoke the acceptance. 19 Rights of the drawee under this subsection are not affected by failure of the drawee 20 to exercise ordinary care in paying or accepting the draft. 21 (b) Except as provided in (c) of this section, if an instrument has been paid or 22 accepted by mistake and the case is not covered by (a) of this section, the person 23 paying or accepting may, to the extent permitted by the law governing mistake and 24 restitution, recover the payment from the person to whom or for whose benefit 25 payment was made or, in the case of acceptance, may revoke the acceptance. 26 (c) The remedies provided by (a) or (b) of this section may not be asserted 27 against a person who took the instrument in good faith and for value or who in good 28 faith changed position in reliance on the payment or acceptance. This subsection does 29 not limit remedies provided by AS 45.03.407 or AS 45.04.407. 30 (d) Notwithstanding AS 45.04.215, if an instrument is paid or accepted by 31 mistake and the payor or acceptor recovers payment or revokes acceptance under (a)
01 or (b) of this section, the instrument is considered not to have been paid or accepted 02 and is treated as dishonored, and the person from whom payment is recovered has 03 rights as a person entitled to enforce the dishonored instrument. 04 * Sec. 66. AS 45.03.419 is repealed and reenacted to read: 05 Sec. 45.03.419. INSTRUMENTS SIGNED FOR ACCOMMODATION. (a) 06 If an instrument is issued for value given for the benefit of a party to the instrument, 07 the "accommodated party," and another party to the instrument, the "accommodation 08 party," signs the instrument for the purpose of incurring liability on the instrument 09 without being a direct beneficiary of the value given for the instrument, the instrument 10 is signed by the accommodation party "for accommodation." 11 (b) An accommodation party may sign the instrument as maker, drawer, 12 acceptor, or endorser and, subject to (d) of this section, is obliged to pay the 13 instrument in the capacity in which the accommodation party signs. The obligation 14 of an accommodation party may be enforced notwithstanding a statute of frauds and 15 whether or not the accommodation party receives consideration for the accommodation. 16 (c) If the signature is an anomalous endorsement or is accompanied by words 17 indicating that the signer is acting as surety or guarantor with respect to the obligation 18 of another party to an instrument, a person signing an instrument is presumed to be an 19 accommodation party and there is notice that the instrument is signed for 20 accommodation. Except as provided in AS 45.03.605, the obligation of an 21 accommodation party to pay the instrument is not affected by the fact that the person 22 enforcing the obligation had notice when the instrument was taken by that person that 23 the accommodation party signed the instrument for accommodation. 24 (d) If the signature of a party to an instrument is accompanied by words 25 indicating unambiguously that the party is guaranteeing collection rather than payment 26 of the obligation of another party to the instrument, the signer is obliged to pay the 27 amount due on the instrument to a person entitled to enforce the instrument only if 28 (1) execution of judgment against the other party has been returned 29 unsatisfied; 30 (2) the other party is insolvent or in an insolvency proceeding; 31 (3) the other party cannot be served with process; or
01 (4) it is otherwise apparent that payment cannot be obtained from the 02 other party. 03 (e) An accommodation party who pays the instrument is entitled to 04 reimbursement from the accommodated party and is entitled to enforce the instrument 05 against the accommodated party. An accommodated party who pays the instrument 06 does not have a right of recourse against, and is not entitled to contribution from, an 07 accommodation party. 08 * Sec. 67. AS 45.03 is amended by adding a new section to article 4 to read: 09 Sec. 45.03.420. CONVERSION OF INSTRUMENT. (a) The law applicable 10 to conversion of personal property applies to instruments. An instrument is also 11 converted if it is taken by transfer, other than a negotiation, from a person not entitled 12 to enforce the instrument, or a bank makes or obtains payment with respect to the 13 instrument for a person not entitled to enforce the instrument or receive payment. An 14 action for conversion of an instrument may not be brought by the issuer or acceptor 15 of the instrument, or by a payee or endorsee who did not receive delivery of the 16 instrument either directly or through delivery to an agent or a co-payee. 17 (b) In an action under (a) of this section, the measure of liability is presumed 18 to be the amount payable on the instrument, but recovery may not exceed the amount 19 of the plaintiff's interest in the instrument. 20 (c) A representative, other than a depositary bank, who has in good faith dealt 21 with an instrument or its proceeds on behalf of one who was not the person entitled 22 to enforce the instrument is not liable in conversion to that person beyond the amount 23 of any proceeds that it has not paid out. 24 * Sec. 68. AS 45.03.501 is repealed and reenacted to read: 25 Sec. 45.03.501. PRESENTMENT. (a) "Presentment" means a demand made 26 by or on behalf of a person entitled to enforce an instrument 27 (1) to pay the instrument made to the drawee or a party obliged to pay 28 the instrument or, in the case of a note or accepted draft payable at a bank, to the 29 bank; or 30 (2) to accept a draft made to the drawee. 31 (b) The following rules are subject to AS 45.04, agreement of the parties, and
01 clearinghouse rules and the like: 02 (1) presentment may be made at the place of payment of the instrument 03 and must be made at the place of payment if the instrument is payable at a bank in the 04 United States; may be made by any commercially reasonable means, including an oral, 05 written, or electronic communication; is effective when the demand for payment or 06 acceptance is received by the person to whom presentment is made; and is effective 07 if made to any one of two or more makers, acceptors, drawees, or other payors; 08 (2) upon demand of the person to whom presentment is made, the 09 person making presentment must 10 (A) exhibit the instrument; 11 (B) give reasonable identification and, if presentment is made 12 on behalf of another person, reasonable evidence of authority to do so; and 13 (C) sign a receipt on the instrument for any payment made or 14 surrender the instrument if full payment is made; 15 (3) without dishonoring the instrument, the party to whom presentment 16 is made may 17 (A) return the instrument for lack of a necessary endorsement; 18 or 19 (B) refuse payment or acceptance for failure of the presentment 20 to comply with the terms of the instrument, an agreement of the parties, or 21 other applicable law or rule; and 22 (4) the party to whom presentment is made may treat presentment as 23 occurring on the next business day after the day of presentment, if the party to whom 24 presentment is made has established a cut-off hour not earlier than two o'clock in the 25 afternoon for the receipt and processing of instruments presented for payment or 26 acceptance and presentment is made after the cut-off hour. 27 * Sec. 69. AS 45.03.502 is repealed and reenacted to read: 28 Sec. 45.03.502. DISHONOR. (a) Dishonor of a note is governed by the 29 following rules: 30 (1) if the note is payable on demand, the note is dishonored if 31 presentment is duly made to the maker and the note is not paid on the day of
01 presentment; 02 (2) if the note is not payable on demand and is payable at or through 03 a bank or the terms of the note require presentment, the note is dishonored if 04 presentment is duly made and the note is not paid on the day it becomes payable or 05 the day of presentment, whichever is later; and 06 (3) if the note is not payable on demand and (2) of this subsection does 07 not apply, the note is dishonored if it is not paid on the day it becomes payable. 08 (b) Dishonor of an unaccepted draft, other than a documentary draft, is 09 governed by the following rules: 10 (1) if a check is duly presented for payment to the payor bank other 11 than for immediate payment over the counter, the check is dishonored if the payor 12 bank makes timely return of the check or sends timely notice of dishonor or 13 nonpayment under AS 45.04.301 - 45.04.302, or becomes accountable for the amount 14 of the check under AS 45.04.302; 15 (2) if a draft is payable on demand and (1) of this subsection does not 16 apply, the draft is dishonored if presentment for payment is duly made to the drawee 17 and the draft is not paid on the day of presentment; 18 (3) if a draft is payable on a date stated in the draft, the draft is 19 dishonored if presentment for 20 (A) payment is duly made to the drawee and payment is not 21 made on the day the draft becomes payable or the day of presentment, 22 whichever is later; or 23 (B) acceptance is duly made before the day the draft becomes 24 payable and the draft is not accepted on the day of presentment; and 25 (4) if a draft is payable on elapse of a period of time after sight or 26 acceptance, the draft is dishonored if presentment for acceptance is duly made and the 27 draft is not accepted on the day of presentment. 28 (c) Dishonor of an unaccepted documentary draft occurs according to the rules 29 stated in (b)(2) - (4) of this section, except that payment or acceptance may be delayed 30 without dishonor until no later than the close of the third business day of the drawee 31 following the day on which payment or acceptance is required by (b)(2) - (4) of this
01 section. 02 (d) Dishonor of an accepted draft is governed by the following rules: 03 (1) if the draft is payable on demand, the draft is dishonored if 04 presentment for payment is duly made to the acceptor and the draft is not paid on the 05 day of presentment; and 06 (2) if the draft is not payable on demand, the draft is dishonored if 07 presentment for payment is duly made to the acceptor and payment is not made on the 08 day it becomes payable or the day of presentment, whichever is later. 09 (e) In any case in which presentment is otherwise required for dishonor under 10 this section and presentment is excused under AS 45.03.504, dishonor occurs without 11 presentment if the instrument is not duly accepted or paid. 12 (f) If a draft is dishonored because timely acceptance of the draft was not 13 made and the person entitled to demand acceptance consents to a late acceptance, from 14 the time of acceptance the draft is treated as never having been dishonored. 15 * Sec. 70. AS 45.03.503 is repealed and reenacted to read: 16 Sec. 45.03.503. NOTICE OF DISHONOR. (a) The obligation of an endorser 17 stated in AS 45.03.415(a) and the obligation of a drawer stated in AS 45.03.414(d) 18 may not be enforced unless the endorser or drawer is given notice of dishonor of the 19 instrument complying with this section or notice of dishonor is excused under 20 AS 45.03.504(b). 21 (b) Notice of dishonor may be given by any person; may be given by any 22 commercially reasonable means, including an oral, written, or electronic 23 communication; and is sufficient if it reasonably identifies the instrument and indicates 24 that the instrument has been dishonored or has not been paid or accepted. Return of 25 an instrument given to a bank for collection is sufficient notice of dishonor. 26 (c) Subject to AS 45.03.504(c) with respect to an instrument taken for 27 collection by a collecting bank, notice of dishonor must be given by the bank before 28 midnight of the next banking day following the banking day on which the bank 29 receives notice of dishonor of the instrument, or by another person within 30 days 30 following the day on which the person receives notice of dishonor. With respect to 31 other instruments, notice of dishonor must be given within 30 days following the day
01 on which dishonor occurs. 02 * Sec. 71. AS 45.03.504 is repealed and reenacted to read: 03 Sec. 45.03.504. EXCUSED PRESENTMENT AND NOTICE OF DISHONOR. 04 (a) Presentment for payment or acceptance of an instrument is excused if 05 (1) the person entitled to present the instrument cannot with reasonable 06 diligence make presentment; 07 (2) the maker or acceptor has repudiated an obligation to pay the 08 instrument or is dead or in insolvency proceedings; 09 (3) by the terms of the instrument presentment is not necessary to 10 enforce the obligation of endorsers or the drawer; 11 (4) the drawer or endorser whose obligation is being enforced has 12 waived presentment or otherwise does not have a reason to expect or a right to require 13 that the instrument be paid or accepted; or 14 (5) the drawer instructed the drawee not to pay or accept the draft or 15 the drawee was not obligated to the drawer to pay the draft. 16 (b) Notice of dishonor is excused if by the terms of the instrument notice of 17 dishonor is not necessary to enforce the obligation of a party to pay the instrument, or 18 the party whose obligation is being enforced waived notice of dishonor. A waiver of 19 presentment is also a waiver of notice of dishonor. 20 (c) Delay in giving notice of dishonor is excused if the delay was caused by 21 circumstances beyond the control of the person giving the notice and the person giving 22 the notice exercised reasonable diligence after the cause of the delay ceased to operate. 23 * Sec. 72. AS 45.03.505 is repealed and reenacted to read: 24 Sec. 45.03.505. EVIDENCE OF DISHONOR. (a) The following are 25 admissible as evidence and create a presumption of dishonor and of any notice of 26 dishonor stated: 27 (1) a document regular in form as provided in (b) of this section that 28 purports to be a protest; 29 (2) a purported stamp or writing of the drawee, payor bank, or 30 presenting bank on or accompanying the instrument stating that acceptance or payment 31 has been refused unless reasons for the refusal are stated and the reasons are not
01 consistent with dishonor; or 02 (3) a book or record of the drawee, payor bank, or collecting bank, kept 03 in the usual course of business, which shows dishonor, even if there is no evidence of 04 who made the entry. 05 (b) A protest is a certificate of dishonor made by a United States consul or 06 vice-consul or a notary public or other person authorized to administer oaths by the 07 law of the place where dishonor occurs. The protest may be made upon information 08 satisfactory to that person. The protest must identify the instrument and certify either 09 that presentment has been made or, if not made, the reason why it was not made, and 10 that the instrument has been dishonored by nonacceptance or nonpayment. The protest 11 may also certify that notice of dishonor has been given to some or all parties. 12 * Sec. 73. AS 45.03.601 is repealed and reenacted to read: 13 Sec. 45.03.601. DISCHARGE AND EFFECT OF DISCHARGE. (a) The 14 obligation of a party to pay the instrument is discharged as stated in this chapter or by 15 an act or agreement with the party that would discharge an obligation to pay money 16 under a simple contract. 17 (b) Discharge of the obligation of a party is not effective against a person 18 acquiring rights of a holder in due course of the instrument without notice of the 19 discharge. 20 * Sec. 74. AS 45.03.602 is repealed and reenacted to read: 21 Sec. 45.03.602. PAYMENT. (a) Subject to (b) of this section, an instrument 22 is paid to the extent payment is made by or on behalf of a party obliged to pay the 23 instrument and to a person entitled to enforce the instrument. To the extent of the 24 payment, the obligation of the party obliged to pay the instrument is discharged even 25 though payment is made with knowledge of a claim to the instrument under 26 AS 45.03.306 by another person. 27 (b) The obligation of a party to pay the instrument is not discharged under (a) 28 of this section if 29 (1) a claim to the instrument under AS 45.03.306 is enforceable against 30 the party receiving payment and 31 (A) payment is made with knowledge by the payor that payment
01 is prohibited by injunction or similar process of a court of competent 02 jurisdiction; or 03 (B) in the case of an instrument other than a cashier's check, 04 teller's check, or certified check, the party making payment accepted, from the 05 person having a claim to the instrument, indemnity against loss resulting from 06 refusal to pay the person entitled to enforce the instrument; or 07 (2) the person making payment knows that the instrument is a stolen 08 instrument and pays a person it knows is in wrongful possession of the instrument. 09 * Sec. 75. AS 45.03.603 is repealed and reenacted to read 10 Sec. 45.03.603. TENDER OF PAYMENT. (a) If tender of payment of an 11 obligation to pay an instrument is made to a person entitled to enforce the instrument, 12 the effect of tender is governed by principles of law applicable to tender of payment 13 under a simple contract. 14 (b) If tender of payment of an obligation to pay an instrument is made to a 15 person entitled to enforce the instrument and the tender is refused, there is discharge, 16 to the extent of the amount of the tender, of the obligation of an endorser or 17 accommodation party having a right of recourse with respect to the obligation to which 18 the tender relates. 19 (c) If tender of payment of an amount due on an instrument is made to a 20 person entitled to enforce the instrument, the obligation of the obligor to pay interest 21 after the due date on the amount tendered is discharged. If presentment is required 22 with respect to an instrument and the obligor is able and ready to pay on the due date 23 at every place of payment stated in the instrument, the obligor is deemed to have made 24 tender of payment on the due date to the person entitled to enforce the instrument. 25 * Sec. 76. AS 45.03.604 is repealed and reenacted to read: 26 Sec. 45.03.604. DISCHARGE BY CANCELLATION OR RENUNCIATION. 27 (a) A person entitled to enforce an instrument, with or without consideration, may 28 discharge the obligation of a party to pay the instrument 29 (1) by an intentional voluntary act, such as surrender of the instrument 30 to the party, destruction, mutilation, or cancellation of the instrument, cancellation or 31 striking out of the party's signature, or the addition of words to the instrument
01 indicating discharge; or 02 (2) by agreeing not to sue or otherwise renouncing rights against the 03 party by a signed writing. 04 (b) Cancellation or striking out of an endorsement under (a) of this section 05 does not affect the status and rights of a party derived from the endorsement. 06 * Sec. 77. AS 45.03.605 is repealed and reenacted to read: 07 Sec. 45.03.605. DISCHARGE OF ENDORSERS AND ACCOMMODATION 08 PARTIES. (a) Discharge, under AS 45.03.604, of the obligation of a party to pay an 09 instrument does not discharge the obligation of an endorser or accommodation party 10 having a right of recourse against the discharged party. 11 (b) If a person entitled to enforce an instrument agrees, with or without 12 consideration, to an extension of the due date of the obligation of a party to pay the 13 instrument, the extension discharges an endorser or accommodation party having a 14 right of recourse against the party whose obligation is extended to the extent the 15 endorser or accommodation party proves that the extension caused loss to the endorser 16 or accommodation party with respect to the right of recourse. 17 (c) If a person entitled to enforce an instrument agrees, with or without 18 consideration, to a material modification of the obligation of a party other than an 19 extension of the due date, the modification discharges the obligation of an endorser or 20 accommodation party having a right of recourse against the person whose obligation 21 is modified to the extent the modification causes loss to the endorser or 22 accommodation party with respect to the right of recourse. The loss suffered by the 23 endorser or accommodation party as a result of the modification is equal to the amount 24 of the right of recourse unless the person enforcing the instrument proves that no loss 25 was caused by the modification or that the loss caused by the modification was an 26 amount less than the amount of the right of recourse. 27 (d) If the obligation of a party to pay an instrument is secured by an interest 28 in collateral and a person entitled to enforce the instrument impairs the value of the 29 interest in collateral, the obligation of an endorser or accommodation party having a 30 right of recourse against the obligor is discharged to the extent of the impairment. The 31 value of an interest in collateral is impaired to the extent the value of the interest is
01 reduced to an amount less than the amount of the right of recourse of the party 02 asserting discharge, or to the extent the reduction in value of the interest causes an 03 increase in the amount by which the amount of the right of recourse exceeds the value 04 of the interest. The burden of proving impairment is on the party asserting discharge. 05 (e) If the obligation of a party is secured by an interest in collateral not 06 provided by an accommodation party and a person entitled to enforce the instrument 07 impairs the value of the interest in collateral, the obligation of a party who is jointly 08 and severally liable with respect to the secured obligation is discharged to the extent 09 the impairment causes the party asserting discharge to pay more than that party would 10 have been obliged to pay, taking into account rights of contribution, if impairment had 11 not occurred. If the party asserting discharge is an accommodation party not entitled 12 to discharge under (d) of this section, the party is considered to have a right to 13 contribution based on joint and several liability rather than a right to reimbursement. 14 The burden of proving impairment is on the party asserting discharge. 15 (f) Under (d) or (e) of this section, impairing value of an interest in collateral 16 includes 17 (1) failure to obtain or maintain perfection or recordation of the interest 18 in collateral; 19 (2) release of collateral without substitution of collateral of equal value; 20 (3) failure to perform a duty to preserve the value of collateral owed, 21 under AS 45.09 or other law, to a debtor or surety or other person secondarily liable; 22 or 23 (4) failure to comply with applicable law in disposing of collateral. 24 (g) An accommodation party is not discharged under (b), (c), or (d) of this 25 section unless the person entitled to enforce the instrument knows of the 26 accommodation or has notice under AS 45.03.419(c) that the instrument was signed 27 for accommodation. 28 (h) A party is not discharged under this section if 29 (1) the party asserting discharge consents to the event or conduct that 30 is the basis of the discharge; or 31 (2) the instrument or a separate agreement of the party provides for
01 waiver of discharge under this section either specifically or by general language 02 indicating that parties waive defenses based on suretyship or impairment of collateral. 03 (i) In this section, the term "endorser" includes a drawer having the obligation 04 described in AS 45.03.414(d). 05 * Sec. 78. AS 45.04.101 is amended to read: 06 Sec. 45.04.101. SHORT TITLE. This chapter [SHALL BE KNOWN AND] 07 may be cited as Uniform Commercial Code - Bank Deposits and Collections. 08 * Sec. 79. AS 45.04.102(a) is amended to read: 09 (a) To the extent that items within this chapter are also within [THE SCOPE 10 OF] AS 45.03 and 45.08, they are subject to [THE PROVISIONS OF] those chapters. 11 If there is [IN THE EVENT OF] conflict, [THE PROVISIONS OF] this chapter 12 governs [GOVERN THOSE OF] AS 45.03, but [THE PROVISIONS OF] AS 45.08 13 governs [GOVERN THOSE OF] this chapter. 14 * Sec. 80. AS 45.04.103 is amended to read: 15 Sec. 45.04.103. VARIATION BY AGREEMENT; MEASURE OF 16 DAMAGES; CERTAIN ACTION CONSTITUTING ORDINARY CARE. (a) The 17 effect of this chapter may be varied by agreement, but the parties to the [EXCEPT 18 THAT NO] agreement may not [CAN] disclaim a bank's responsibility for its [OWN] 19 lack of good faith or failure to exercise ordinary care or [CAN] limit the measure of 20 damages for the [THAT] lack or failure. However, [; BUT] the parties may 21 determine by agreement [DETERMINE] the standards by which the bank's [THAT] 22 responsibility is to be measured if the standards are not manifestly unreasonable. 23 (b) Federal Reserve regulations and operating circulars, clearinghouse 24 [LETTERS, CLEARING HOUSE] rules, and the like have the effect of agreements 25 under (a) of this section, whether or not specifically assented to by all parties 26 interested in items handled. 27 (c) Action or nonaction approved by this chapter or under Federal Reserve 28 regulations or operating circulars is [LETTERS CONSTITUTES] the exercise of 29 ordinary care and, in the absence of special instructions, action or nonaction consistent 30 with clearinghouse [CLEARING HOUSE] rules and the like or with a general banking 31 usage not disapproved by this chapter is prima facie [CONSTITUTES] the exercise of
01 ordinary care. 02 (d) The specification or approval of certain procedures by this chapter is not 03 [DOES NOT CONSTITUTE] disapproval of other procedures that [WHICH] may be 04 reasonable under the circumstances. 05 (e) The measure of damages for failure to exercise ordinary care in handling 06 an item is the amount of the item reduced by an amount that [WHICH] could not have 07 been realized by the exercise [USE] of ordinary care, and if there is also bad faith it 08 includes any other damages [SUFFERED BY] the party suffered as a proximate 09 consequence. 10 * Sec. 81. AS 45.04.104(a)(1) is repealed and reenacted to read: 11 (1) "account" means a deposit or credit account with a bank, including 12 a demand, time, savings, passbook, share draft, or like account, other than an account 13 evidenced by a certificate of deposit; 14 * Sec. 82. AS 45.04.104(a)(5) is amended to read: 15 (5) "customer" means a person having an account with a bank or for 16 whom a bank has agreed to collect items, including [AND INCLUDES] a bank that 17 maintains [CARRYING] an account at [WITH] another bank; 18 * Sec. 83. AS 45.04.104(a)(6) is repealed and reenacted to read: 19 (6) "documentary draft" means a draft to be presented for acceptance 20 or payment if specified documents, certificated securities under AS 45.08.102 or 21 instructions for uncertificated securities under AS 45.08.308, or other certificates, 22 statements, or the like are to be received by the drawee or other payor before 23 acceptance or payment of the draft; 24 * Sec. 84. AS 45.04.104(a)(7) is repealed and reenacted to read: 25 (7) "item" means an instrument or a promise or order to pay money 26 handled by a bank for collection or payment; the term does not include a credit or 27 debit card slip; 28 * Sec. 85. AS 45.04.104(a)(10) is amended to read: 29 (10) "settle" means to pay in cash, by clearinghouse [CLEARING 30 HOUSE] settlement, in a charge or credit or by remittance, or otherwise as agreed 31 [INSTRUCTED]; a settlement may be either provisional or final;
01 * Sec. 86. AS 45.04.104(a) is amended by adding new paragraphs to read: 02 (12) "draft" means a draft as defined in AS 45.03.104 or an item, other 03 than an instrument, that is an order; 04 (13) "drawee" means a person ordered in a draft to make payment; 05 * Sec. 87. AS 45.04.104(b) is repealed and reenacted to read: 06 (b) Other definitions applying to this chapter and the sections in which the 07 definitions appear are: 08 (1) "agreement for electronic presentment" in AS 45.04.110; 09 (2) "bank" in AS 45.04.105; 10 (3) "collecting bank" in AS 45.04.105; 11 (4) "depositary bank" in AS 45.04.105; 12 (5) "intermediary bank" in AS 45.04.105; 13 (6) "payor bank" in AS 45.04.105; 14 (7) "presenting bank" in AS 45.04.105; 15 (8) "presentment notice" in AS 45.04.110. 16 * Sec. 88. AS 45.04.104(c) is repealed and reenacted to read: 17 (c) The following definitions in AS 45.03 apply to this chapter: 18 (1) "acceptance" (AS 45.03.409); 19 (2) "alteration" (AS 45.03.407); 20 (3) "cashier's check" (AS 45.03.104); 21 (4) "certificate of deposit" (AS 45.03.104); 22 (5) "certified check" (AS 45.03.409); 23 (6) "check" (AS 45.03.104); 24 (7) "good faith" (AS 45.03.103); 25 (8) "holder in due course" (AS 45.03.302); 26 (9) "instrument" (AS 45.03.104); 27 (10) "notice of dishonor" (AS 45.03.503); 28 (11) "order" (AS 45.03.103); 29 (12) "ordinary care" (AS 45.03.103); 30 (13) "person entitled to enforce" (AS 45.03.301); 31 (14) "presentment" (AS 45.03.501);
01 (15) "promise" (AS 45.03.103); 02 (16) "prove" (AS 45.03.103); 03 (17) "teller's check" (AS 45.03.104); 04 (18) "unauthorized signature" (AS 45.03.403). 05 * Sec. 89. AS 45.04.105 is amended to read: 06 Sec. 45.04.105. "BANK"; "DEPOSITARY BANK"; "INTERMEDIARY 07 BANK"; "COLLECTING BANK"; "PAYOR BANK"; "PRESENTING BANK ["; 08 "REMITTING BANK]." In this chapter, [UNLESS THE CONTEXT OTHERWISE 09 REQUIRES,] 10 (1) "bank" means a person engaged in the business of banking, 11 including a savings bank, savings and loan association, credit union, or trust 12 company; 13 (2) "depositary bank" means the first bank to take [WHICH] an item 14 [IS TRANSFERRED FOR COLLECTION] even though it is also the payor bank, 15 unless the item is presented for immediate payment over the counter; 16 (3) [(2)] "payor bank" means a bank that is the drawee of a draft [BY 17 WHICH AN ITEM IS PAYABLE AS DRAWN OR ACCEPTED]; 18 (4) [(3)] "intermediary bank" means a bank to which an item is 19 transferred in course of collection except the depositary or payor bank; 20 (5) [(4)] "collecting bank" means a bank handling an [THE] item for 21 collection except the payor bank; 22 (6) [(5)] "presenting bank" means a bank presenting an item except a 23 payor bank [; 24 (6) "REMITTING BANK" MEANS A PAYOR OR INTERMEDIARY 25 BANK REMITTING FOR AN ITEM]. 26 * Sec. 90. AS 45.04.106 is repealed and reenacted to read: 27 Sec. 45.04.106. PAYABLE THROUGH OR PAYABLE AT BANK; 28 COLLECTING BANK. (a) If an item states that it is "payable through" a bank 29 identified in the item, the item designates the bank as a collecting bank and does not 30 by itself authorize the bank to pay the item, and the item may be presented for 31 payment only by or through the bank.
01 (b) If an item states that it is "payable at" a bank identified in the item, the 02 item is equivalent to a draft drawn on the bank. 03 (c) If a draft names a nonbank drawee and it is unclear whether a bank named 04 in the draft is a co-drawee or a collecting bank, the bank is a collecting bank. 05 * Sec. 91. AS 45.04.107 is repealed and reenacted to read: 06 Sec. 45.04.107. SEPARATE OFFICE OF A BANK. A branch or separate 07 office of a bank is a separate bank for the purpose of computing the time within which 08 and determining the place at or to which action may be taken or notices or orders must 09 be given under this chapter and under AS 45.03. 10 * Sec. 92. AS 45.04.108 is repealed and reenacted to read: 11 Sec. 45.04.108. TIME OF RECEIPT OF ITEMS. (a) To allow time to 12 process items, prove balances, and make the necessary entries on its books to 13 determine its position for the day, a bank may fix an afternoon hour of two o'clock 14 in the afternoon or later as a cutoff hour for the handling of money and items and the 15 making of entries on the books of the bank. 16 (b) An item or deposit of money received on a day after a cutoff hour so fixed 17 or after the close of the banking day may be treated as received at the opening of the 18 next banking day. 19 * Sec. 93. AS 45.04 is amended by adding new sections to article 1 to read: 20 Sec. 45.04.109. DELAYS. (a) Unless otherwise instructed, a collecting bank 21 in a good faith effort to secure payment of a specific item drawn on a payor other than 22 a bank, and with or without the approval of a person involved, may waive, modify, or 23 extend time limits imposed or permitted by the code for a period not exceeding two 24 additional banking days without discharge of drawers or endorsers or liability to its 25 transferor or a prior party. 26 (b) Delay by a collecting bank or payor bank beyond time limits prescribed 27 or permitted by the code or by instructions is excused if the delay is caused by 28 interruption of communication or computer facilities, suspension of payments by 29 another bank, war, emergency conditions, failure of equipment, or other circumstances 30 beyond the control of the bank, and if the bank exercises the diligence circumstances 31 require.
01 Sec. 45.04.110. ELECTRONIC PRESENTMENT. (a) "Agreement for 02 electronic presentment" means an agreement, clearinghouse rule, or Federal Reserve 03 regulation or operating circular, providing that presentment of an item may be made 04 by transmission of an image of an item or information describing the item, a 05 "presentment notice," rather than delivery of the item itself. The agreement may 06 provide for procedures governing retention, presentment, payment, dishonor, and other 07 matters concerning items subject to the agreement. 08 (b) Presentment of an item under an agreement for presentment is made when 09 the presentment notice is received. 10 (c) If presentment is made by presentment notice, a reference to "item" or 11 "check" in this chapter means the presentment notice unless the context otherwise 12 indicates. 13 Sec. 45.04.111. STATUTE OF LIMITATIONS. An action to enforce an 14 obligation, duty, or right arising under this chapter must be commenced within three 15 years after the cause of action accrues. 16 * Sec. 94. AS 45.04.201 is amended to read: 17 Sec. 45.04.201. [PRESUMPTION AND DURATION OF AGENCY] STATUS 18 OF COLLECTING BANK AS AGENT [BANKS] AND PROVISIONAL STATUS 19 OF CREDITS; APPLICABILITY; ITEM ENDORSED "PAY ANY BANK." (a) 20 Unless a contrary intent clearly appears [,] and before a settlement given by a 21 collecting bank for an item becomes final [(AS 45.04.211(c), 45.04.212 AND 22 45.04.213)], the bank, with respect to the item, is an agent or subagent of the owner 23 of the item and a settlement given for the item is provisional. This provision applies 24 regardless of the form of endorsement or lack of endorsement and even though credit 25 given for the item is subject to immediate withdrawal as of right or is in fact 26 withdrawn; but the continuance of ownership of an item by its owner and the rights 27 of the owner to proceeds of the item are subject to rights of a collecting bank such as 28 those resulting from outstanding advances on the item and [VALID] rights of 29 recoupment or setoff. If an item is handled by banks for purposes of presentment, 30 payment, [AND] collection, or return, the relevant provisions of this chapter apply 31 even though action of the parties clearly establishes that a particular bank has
01 purchased the item and is the owner of it. 02 (b) After an item has been endorsed with the words "pay any bank" or the like, 03 only a bank may acquire the rights of a holder until the item has been 04 (1) [UNTIL THE ITEM HAS BEEN] returned to the customer initiating 05 collection; or 06 (2) [UNTIL THE ITEM HAS BEEN] specially endorsed by a bank to 07 a person who is not a bank. 08 * Sec. 95. AS 45.04.202 is amended to read: 09 Sec. 45.04.202. RESPONSIBILITY FOR COLLECTION OR RETURN; 10 WHEN ACTION TIMELY [SEASONABLE]. (a) A collecting bank must exercise 11 [USE] ordinary care in 12 (1) presenting an item or sending it for presentment; 13 (2) sending notice of dishonor or nonpayment or returning an item 14 other than a documentary draft to the bank's transferor [OR DIRECTLY TO THE 15 DEPOSITARY BANK UNDER AS 45.04.212(b)] after learning that the item has not 16 been paid or accepted, as the case may be; 17 (3) settling for an item when the bank receives final settlement; and 18 (4) [MAKING OR PROVIDING FOR A NECESSARY PROTEST; 19 AND 20 (5)] notifying its transferor of a loss or delay in transit within a 21 reasonable time after discovery of the loss or delay. 22 (b) A collecting bank exercises ordinary care under (a) of this section by 23 taking proper action before its midnight deadline following receipt of an item, notice, 24 or settlement [PAYMENT ACTS SEASONABLY]; taking proper action within a 25 reasonably longer time may constitute the exercise of ordinary care, [BE 26 SEASONABLE] but the bank has the burden of [SO] establishing timeliness. 27 (c) Subject to (a)(1) of this section, a bank is not liable for the insolvency, 28 neglect, misconduct, mistake, or default of another bank or person or for loss or 29 destruction of an item in the possession of others or in transit [OR IN THE 30 POSSESSION OF OTHERS]. 31 * Sec. 96. AS 45.04.203 is amended to read:
01 Sec. 45.04.203. EFFECT OF INSTRUCTIONS. Subject to the provisions 02 concerning conversion of instruments (AS 45.03.420) [(AS 45.03.419)] and [THE 03 PROVISIONS OF AS 45.03 AND THIS CHAPTER CONCERNING] restrictive 04 endorsements (AS 45.03.206), only a collecting bank's transferor can give instructions 05 that [WHICH] affect the bank or constitute notice to it, and a collecting bank is not 06 liable to prior parties for an action taken under these instructions or in accordance with 07 an agreement with its transferor. 08 * Sec. 97. AS 45.04.204 is amended to read: 09 Sec. 45.04.204. METHODS OF SENDING AND PRESENTING; SENDING 10 DIRECTLY [DIRECT] TO PAYOR BANK. (a) A collecting bank shall [MUST] 11 send items by a reasonably prompt method, taking into consideration relevant 12 instructions, the nature of the item, the number of the items on hand, the cost of 13 collection involved, and the method generally used by it or others to present the items. 14 (b) A collecting bank may send an item 15 (1) directly [AN ITEM DIRECT] to the payor bank; 16 (2) [AN ITEM] to a nonbank payor if authorized by its transferor; and 17 (3) [AN ITEM] other than documentary drafts to a nonbank payor, if 18 authorized by federal reserve regulation or operating circular, clearinghouse 19 [LETTER, CLEARING HOUSE] rule, or the like. 20 * Sec. 98. AS 45.04.204 is amended by adding a new subsection to read: 21 (c) Presentment may be made by a presenting bank at a place where the payor 22 bank or other payor has requested that presentment be made. 23 * Sec. 99. AS 45.04.205 is repealed and reenacted to read: 24 Sec. 45.04.205. DEPOSITARY BANK HOLDER OF UNENDORSED ITEM. 25 If a customer delivers an item to a depositary bank for collection 26 (1) the depositary bank becomes a holder of the item at the time it 27 receives the item for collection if the customer at the time of delivery was a holder of 28 the item, whether or not the customer endorses the item, and, if the bank satisfies the 29 other requirements of AS 45.03.302, it is a holder in due course; and 30 (2) the depositary bank warrants to collecting banks, the payor bank or 31 other payor, and the drawer that the amount of the item was paid to the customer or
01 deposited to the customer's account. 02 * Sec. 100. AS 45.04.207 is repealed and reenacted to read: 03 Sec. 45.04.207. TRANSFER WARRANTIES. (a) A customer or collecting 04 bank that transfers an item and receives a settlement or other consideration warrants 05 to the transferee and to any subsequent collecting bank that 06 (1) the warrantor is a person entitled to enforce the item; 07 (2) all signatures on the item are authentic and authorized; 08 (3) the item has not been altered; 09 (4) the item is not subject to a defense or claim in recoupment under 10 AS 45.03.305(a) of any party that can be asserted against the warrantor; and 11 (5) the warrantor does not have knowledge of any insolvency 12 proceeding commenced with respect to the maker or acceptor or, in the case of an 13 unaccepted draft, the drawer. 14 (b) If an item is dishonored, a customer or collecting bank transferring the 15 item and receiving settlement or other consideration is obliged to pay the amount due 16 on the item according to the terms of the item at the time it was transferred, or, if the 17 transfer was of an incomplete item, according to its terms when completed as stated 18 in AS 45.03.115 and 45.03.407. The obligation of a transferor is owed to the 19 transferee and to any subsequent collecting bank that takes the item in good faith. A 20 transferor cannot disclaim its obligation under this subsection by an endorsement 21 stating that it is made "without recourse" or otherwise disclaiming liability. 22 (c) A person to whom the warranties under (a) of this section are made and 23 who took the item in good faith may recover from the warrantor as damages for breach 24 of warranty an amount equal to the loss suffered as a result of the breach, but not 25 more than the amount of the item plus expenses and loss of interest incurred as a result 26 of the breach. 27 (d) The warranties stated in (a) of this section cannot be disclaimed with 28 respect to checks. Unless notice of a claim for breach of warranty is given to the 29 warrantor within 30 days after the claimant has reason to know of the breach and the 30 identity of the warrantor, the warrantor is discharged to the extent of any loss caused 31 by the delay in giving notice of the claim.
01 (e) A cause of action for breach of warranty under this section accrues when 02 the claimant has reason to know of the breach. 03 * Sec. 101. AS 45.04.208 is repealed and reenacted to read: 04 AS 45.04.208. PRESENTMENT WARRANTIES. (a) If an unaccepted draft 05 is presented to the drawee for payment or acceptance and the drawee pays or accepts 06 the draft, the person obtaining payment or acceptance, at the time of presentment, and 07 a previous transferor of the draft, at the time of transfer, warrant to the drawee that 08 pays or accepts the draft in good faith that 09 (1) the warrantor is, or was at the time the warrantor transferred the 10 draft, a person entitled to enforce the draft or authorized to obtain payment or 11 acceptance of the draft on behalf of a person entitled to enforce the draft; 12 (2) the draft has not been altered; and 13 (3) the warrantor does not have knowledge that the signature of the 14 purported drawer of the draft is unauthorized. 15 (b) A drawee making payment may recover from a warrantor damages for 16 breach of warranty equal to the amount paid by the drawee less the amount the drawee 17 received or is entitled to receive from the drawer because of the payment. In addition, 18 the drawee is entitled to compensation for expenses and loss of interest resulting from 19 the breach. The right of the drawee to recover damages under this subsection is not 20 affected by a failure of the drawee to exercise ordinary care in making payment. If 21 the drawee accepts the draft, breach of warranty is a defense to the obligation of the 22 acceptor, and if the acceptor makes payment with respect to the draft, the acceptor is 23 entitled to recover from a warrantor for breach of warranty the amounts stated in this 24 subsection. 25 (c) If a drawee asserts a claim for breach of warranty under (a) of this section 26 based on an unauthorized endorsement of the draft or an alteration of the draft, the 27 warrantor may defend by proving that the endorsement is effective under AS 45.03.404 28 or 45.03.405 or the drawer is precluded under AS 45.03.406 or AS 45.04.406 from 29 asserting against the drawee the unauthorized endorsement or alteration. 30 (d) If a dishonored draft is presented for payment to the drawer or an endorser, 31 or if any other item is presented for payment to a party obliged to pay the item, and
01 the item is paid, the person obtaining payment and a prior transferor of the item 02 warrant to the person making payment in good faith that the warrantor is, or was, at 03 the time the warrantor transferred the item, a person entitled to enforce the item or 04 authorized to obtain payment on behalf of a person entitled to enforce the item. The 05 person making payment may recover from any warrantor for breach of warranty an 06 amount equal to the amount paid plus expenses and loss of interest resulting from the 07 breach. 08 (e) The warranties stated in (a) and (d) of this section may not be disclaimed 09 with respect to checks. Unless notice of a claim for breach of warranty is given to the 10 warrantor within 30 days after the claimant has reason to know of the breach and the 11 identity of the warrantor, the warrantor is discharged to the extent of any loss caused 12 by the delay in giving notice of the claim. 13 (f) A cause of action for breach of warranty under this section accrues when 14 the claimant has reason to know of the breach. 15 * Sec. 102. AS 45.04.209 is repealed and reenacted to read: 16 Sec. 45.04.209. ENCODING AND RETENTION WARRANTIES. (a) A 17 person who encodes information on or with respect to an item after issue warrants to 18 any subsequent collecting bank and to the payor bank or other payor that the 19 information is correctly encoded. If the customer of a depositary bank encodes, that 20 bank also makes the warranty. 21 (b) A person who undertakes to retain an item pursuant to an agreement for 22 electronic presentment warrants to any subsequent collecting bank and to the payor 23 bank or other payor that retention and presentment of the item comply with the 24 agreement. If a customer of a depositary bank undertakes to retain an item, that bank 25 also makes this warranty. 26 (c) A person to whom warranties are made under this section and who took 27 the item in good faith may recover from the warrantor as damages for breach of 28 warranty an amount equal to the loss suffered as a result of the breach, plus expenses 29 and loss of interest incurred as a result of the breach. 30 * Sec. 103. AS 45.04.210 is repealed and reenacted to read: 31 Sec. 45.04.210. SECURITY INTEREST OF COLLECTING BANK IN
01 ITEMS, ACCOMPANYING DOCUMENTS, AND PROCEEDS. (a) A collecting 02 bank has a security interest in an item and any accompanying documents or the 03 proceeds of either 04 (1) in case of an item deposited in an account, to the extent to which 05 credit given for the item has been withdrawn or applied; 06 (2) in case of an item for which it has given credit available for 07 withdrawal as of right, to the extent of the credit given, whether or not the credit is 08 drawn upon or there is a right of charge-back; or 09 (3) if it makes an advance on or against the item. 10 (b) If credit given for several items received at one time or under a single 11 agreement is withdrawn or applied in part, the security interest remains upon all the 12 items, accompanying documents, or the proceeds of either. For the purpose of this 13 section, credits first given are first withdrawn. 14 (c) Receipt by a collecting bank of a final settlement for an item is a 15 realization on its security interest in the item, accompanying documents, and proceeds. 16 So long as the bank does not receive final settlement for the item or give up 17 possession of the item or accompanying documents for purposes other than collection, 18 the security interest continues to that extent and is subject to AS 45.09, but 19 (1) a security agreement is not necessary to make the security interest 20 enforceable (AS 45.09.203(a)); 21 (2) filing is not required to perfect the security interest; and 22 (3) the security interest has priority over conflicting perfected security 23 interests in the item, accompanying documents, or proceeds. 24 * Sec. 104. AS 45.04.211 is repealed and reenacted to read: 25 Sec. 45.04.211. WHEN BANK GIVES VALUE FOR PURPOSES OF 26 HOLDER IN DUE COURSE. To determine its status as a holder in due course, a 27 bank has given value to the extent it has a security interest in an item, if the bank 28 otherwise complies with the requirements of AS 45.03.302 on what constitutes a holder 29 in due course. 30 * Sec. 105. AS 45.04.212 is repealed and reenacted to read: 31 Sec. 45.04.212. PRESENTMENT BY NOTICE OF ITEM NOT PAYABLE
01 BY, THROUGH, OR AT A BANK; LIABILITY OF DRAWER OR ENDORSER. (a) 02 Unless otherwise instructed, a collecting bank may present an item not payable by, 03 through, or at a bank by sending to the party to accept or pay a written notice that the 04 bank holds the item for acceptance or payment. The notice must be sent in time to be 05 received on or before the day when presentment is due and the bank must meet any 06 requirement of the party to accept or pay under AS 45.03.501 by the close of the 07 bank's next banking day after it knows of the requirement. 08 (b) If presentment is made by notice, and payment, acceptance, or request for 09 compliance with a requirement under AS 45.03.501 is not received by the close of 10 business on the day after maturity or, in the case of demand items, by the close of 11 business on the third banking day after notice was sent, the presenting bank may treat 12 the item as dishonored and charge a drawer or endorser by sending the drawer or 13 endorser notice of the facts. 14 * Sec. 106. AS 45.04.213 is repealed and reenacted to read: 15 Sec. 45.04.213. MEDIUM AND TIME OF SETTLEMENT BY BANK. (a) 16 With respect to settlement by a bank, the medium and time of settlement may be 17 prescribed by Federal Reserve regulations or circulars, clearinghouse rules, and the 18 like, or by agreement. In the absence of a prescription 19 (1) the medium of settlement is cash or credit to an account in a 20 Federal Reserve Bank of or specified by the person to receive settlement; and 21 (2) the time of settlement is with respect to tender of settlement 22 (A) by cash, a cashier's check, or teller's check, when the cash 23 or check is sent or delivered; 24 (B) by credit in an account in a Federal Reserve Bank, when the 25 credit is made; 26 (C) by a credit or debit to an account in a bank, when the credit 27 or debit is made or, in the case of tender of settlement by authority to charge 28 an account, when the authority is sent or delivered; or 29 (D) by a funds transfer, when payment is made to the person 30 receiving settlement. 31 (b) If the tender of settlement is not by a medium authorized by (a) of this
01 section or the time of settlement is not fixed by (a) of this section, settlement does not 02 occur until the tender of settlement is accepted by the person receiving settlement. 03 (c) If settlement for an item is made by cashier's check or teller's check and 04 the person receiving settlement, before its midnight deadline, 05 (1) presents or forwards the check for collection, settlement is final 06 when the check is finally paid; or 07 (2) fails to present or forward the check for collection, settlement is 08 final at the midnight deadline of the person receiving settlement. 09 (d) If settlement for an item is made by giving authority to charge the account 10 of the bank giving settlement in the bank receiving settlement, settlement is final when 11 the charge is made by the bank receiving settlement if there are funds available in the 12 account for the amount of the item. 13 * Sec. 107. AS 45.04.214 is repealed and reenacted to read: 14 Sec. 45.04.214. RIGHT OF CHARGE BACK OR REFUND; LIABILITY OF 15 COLLECTING BANK; RETURN OF ITEM. (a) If a collecting bank has made 16 provisional settlement with its customer for an item and fails, by reason of dishonor, 17 suspension of payments by a bank, or otherwise, to receive a settlement for the item 18 that is or becomes final, the bank may revoke the settlement given by it, charge back 19 the amount of a credit given for the item to its customer's account, or obtain refund 20 from its customer, whether or not it is able to return the items, if by its midnight 21 deadline or within a longer reasonable time after it learns the facts it returns the item 22 or sends notification of the facts. If the return or notice is delayed beyond the bank's 23 midnight deadline or a longer reasonable time after it learns the facts, the bank may 24 revoke the settlement, charge back the credit, or obtain refund from its customer, but 25 it is liable for any loss resulting from the delay. These rights to revoke, charge back, 26 and obtain refund terminate if and when a settlement for the item received by the bank 27 is or becomes final. 28 (b) A collecting bank returns an item when it is sent or delivered to the bank's 29 customer or transferor or according to its instructions. 30 (c) A depositary bank that is also the payor may charge back the amount of 31 an item to its customer's account or obtain refund in accordance with AS 45.04.301,
01 the section governing return of an item received by a payor bank for credit on its 02 books. 03 (d) The right to charge back is not affected by 04 (1) previous use of a credit given for the item; or 05 (2) failure by a bank to exercise ordinary care with respect to the item, 06 but a bank so failing remains liable. 07 (e) A failure to charge back or claim refund does not affect other rights of the 08 bank against the customer or another party. 09 (f) If credit is given in dollars as the equivalent of the value of an item 10 payable in foreign money, the dollar amount of a charge back or refund must be 11 calculated on the basis of the bank offered spot rate for the foreign money prevailing 12 on the day when the person entitled to the charge back or refund learns that it will not 13 receive payment in ordinary course. 14 * Sec. 108. AS 45.04 is amended by adding new sections to article 2 to read: 15 Sec. 45.04.215. FINAL PAYMENT OF ITEM BY PAYOR BANK; WHEN 16 PROVISIONAL DEBITS AND CREDITS BECOME FINAL; WHEN CERTAIN 17 CREDITS BECOME AVAILABLE FOR WITHDRAWAL. (a) An item is finally 18 paid by a payor bank when the bank has first 19 (1) paid the item in cash; 20 (2) settled for the item without having a right to revoke the settlement 21 under statute, clearinghouse rule, or agreement; or 22 (3) made a provisional settlement for the item and failed to revoke the 23 settlement in the time and manner permitted by statute, clearinghouse rule, or 24 agreement. 25 (b) If provisional settlement for an item does not become final, the item is not 26 finally paid. 27 (c) If provisional settlement for an item between the presenting and payor 28 banks is made through a clearinghouse or by debits or credits in an account between 29 them, then, to the extent that provisional debits or credits for the item are entered in 30 accounts between the presenting and payor banks or between the presenting and 31 successive prior collecting banks seriatim, they become final upon final payment of the
01 item by the payor bank. 02 (d) If a collecting bank receives a settlement for an item that is or becomes 03 final, the bank is accountable to its customer for the amount of the item and a 04 provisional credit given for the item in an account with its customer becomes final. 05 (e) Subject to applicable law stating a time for availability of funds and a right 06 of the bank to apply the credit to an obligation of the customer, credit given by a bank 07 for an item in a customer's account becomes available for withdrawal as of right if the 08 bank 09 (1) has received a provisional settlement for the item, when the 10 settlement becomes final and the bank has had a reasonable time to receive return of 11 the item and the item has not been received within that time; 12 (2) is both the depositary bank and the payor bank, and the item is 13 finally paid, at the opening of the bank's second banking day following receipt of the 14 item. 15 (f) Subject to applicable law stating a time for availability of funds and a right 16 of a bank to apply a deposit to an obligation of the depositor, a deposit of money 17 becomes available for withdrawal as of right at the opening of the bank's next banking 18 day after receipt of the deposit. 19 Sec. 45.04.216. INSOLVENCY AND PREFERENCE. (a) If an item is in or 20 comes into the possession of a payor or collecting bank that suspends payment and the 21 item has not been finally paid, the item shall be returned by the receiver, trustee, or 22 agent in charge of the closed bank to the presenting bank or the closed bank's 23 customer. 24 (b) If a payor bank finally pays an item and suspends payments without 25 making a settlement for the item with its customer or the presenting bank, which 26 settlement is or becomes final, the owner of the item has a preferred claim against the 27 payor bank. 28 (c) If a payor bank gives or a collecting bank gives or receives a provisional 29 settlement for an item and later suspends payments, the suspension does not prevent 30 or interfere with the settlement's becoming final if the finality occurs automatically 31 upon the lapse of certain time or the happening of certain events.
01 (d) If a collecting bank receives from subsequent parties settlement for an 02 item, which settlement is or becomes final and the bank suspends payments without 03 making a settlement for the item with its customer, which settlement is or becomes 04 final, the owner of the item has a preferred claim against the collecting bank. 05 * Sec. 109. AS 45.04.301 is repealed and reenacted to read: 06 Sec. 45.04.301. DEFERRED POSTING; RECOVERY OF PAYMENT BY 07 RETURN OF ITEMS; TIME OF DISHONOR; RETURN OF ITEMS BY PAYOR 08 BANK. (a) If a payor bank settles for a demand item other than a documentary draft 09 presented other than for immediate payment over the counter before midnight of the 10 banking day of receipt, the payor bank may revoke the settlement and recover the 11 settlement if, before it has made final payment and before its midnight deadline, it 12 (1) returns the item; or 13 (2) sends written notice of dishonor or nonpayment if the item is 14 unavailable for return. 15 (b) If a demand item is received by a payor bank for credit on its books, it 16 may return the item or send notice of dishonor and may revoke a credit given or 17 recover the amount of the credit withdrawn by its customer if it acts within the time 18 limit and in the manner specified in (a) of this section. 19 (c) Unless previous notice of dishonor has been sent, an item is dishonored at 20 the time when, for purposes of dishonor, it is returned or notice is sent in accordance 21 with this section. 22 (d) An item is returned 23 (1) as to an item presented through a clearinghouse, when it is 24 delivered to the presenting or last collecting bank or to the clearinghouse or is sent or 25 delivered in accordance with clearinghouse rules; or 26 (2) in all other cases, when it is sent or delivered to the bank's 27 customer or transferor or under the instructions of the customer or transferor. 28 * Sec. 110. AS 45.04.302 is amended to read: 29 Sec. 45.04.302. PAYOR BANK'S RESPONSIBILITY FOR LATE RETURN 30 OF ITEM. If [IN THE ABSENCE OF A VALID DEFENSE, SUCH AS BREACH 31 OF A PRESENTMENT WARRANTY (AS 45.04.207(a)), SETTLEMENT
01 EFFECTED, OR THE LIKE, IF] an item is presented to [ON] and received by a payor 02 bank, the bank is accountable for the amount of 03 (1) a demand item, other than a documentary draft, whether properly 04 payable or not, if the bank, 05 (A) in any case in which [WHERE] it is not also the depositary 06 bank, retains the item beyond midnight of the banking day of receipt without 07 settling for it; [,] or 08 (B) [REGARDLESS OF] whether or not it is also the 09 depositary bank, does not pay or return the item or send notice of dishonor 10 until after its midnight deadline; or 11 (2) any other properly payable item [,] unless, within the time allowed 12 for acceptance or payment of that item, the bank either accepts or pays the item or 13 returns it and accompanying documents. 14 * Sec. 111. AS 45.04.302 is amended by adding a new subsection to read: 15 (b) The liability of a payor bank to pay an item under (a) of this section is 16 subject to defenses based on breach of a presentment warranty under AS 45.04.208 or 17 proof that the person seeking enforcement of the liability presented or transferred the 18 item for the purpose of defrauding the payor bank. 19 * Sec. 112. AS 45.04.303 is repealed and reenacted to read: 20 Sec. 45.04.303. WHEN ITEMS SUBJECT TO NOTICE, STOP-PAYMENT 21 ORDER, LEGAL PROCESS, OR SETOFF; ORDER IN WHICH ITEMS MAY BE 22 CHARGED OR CERTIFIED. (a) Any knowledge, notice, or stop-payment order 23 received by, legal process served upon, or setoff exercised by a payor bank is too late 24 to terminate, suspend, or modify the bank's right or duty to pay an item or to charge 25 its customer's account for the item if the knowledge, notice, stop-payment order, or 26 legal process is received or served and a reasonable time for the bank to act on it 27 expires or the setoff is exercised after the earliest of the following: 28 (1) the bank accepts or certifies the item; 29 (2) the bank pays the item in cash; 30 (3) the bank settles for the item without having a right to revoke the 31 settlement under statute, clearinghouse rule, or agreement;
01 (4) the bank becomes accountable for the amount of the item under 02 AS 45.04.302, which deals with the payor bank's responsibility for late return of items; 03 or 04 (5) with respect to checks, a cutoff hour no earlier than one hour after 05 the opening of the next banking day after the banking day on which the bank received 06 the check and no later than the close of that next banking day or, if a cutoff hour is 07 not fixed, the close of the next banking day after the banking day on which the bank 08 received the check. 09 (b) Subject to (a) of this section, items may be accepted, paid, certified, or 10 charged to the indicated account of its customer in any order. 11 * Sec. 113. AS 45.04.401 is repealed and reenacted to read: 12 Sec. 45.04.401. WHEN BANK MAY CHARGE CUSTOMER'S ACCOUNT. 13 (a) A bank may charge against the account of a customer an item that is properly 14 payable from that account even though the charge creates an overdraft. An item is 15 properly payable if it is authorized by the customer and is in accordance with any 16 agreement between the customer and the bank. 17 (b) A customer is not liable for the amount of an overdraft if the customer 18 neither signed the item nor benefitted from the proceeds of the item. 19 (c) A bank may charge against the account of a customer a check that is 20 otherwise properly payable from the account, even though payment was made before 21 the date of the check, unless the customer has given notice to the bank of the 22 postdating describing the check with reasonable certainty. The notice is effective for 23 the period stated in AS 45.04.403(b) for stop-payment orders, and must be received 24 at a time and in a manner that afford the bank a reasonable opportunity to act on it 25 before the bank takes any action with respect to the check described in AS 45.04.303. 26 If a bank charges against the account of a customer a check before the date stated in 27 the notice of postdating, the bank is liable for damages for the loss resulting from its 28 act. The loss may include damages for dishonor of subsequent items under 29 AS 45.04.402. 30 (d) A bank that in good faith makes payment to a holder may charge the 31 indicated account of its customer according to
01 (1) the original terms of the altered item; or 02 (2) the terms of the completed item, even though the bank knows the 03 item has been completed, unless the bank has notice that the completion was improper. 04 * Sec. 114. AS 45.04.402 is repealed and reenacted to read: 05 Sec. 45.04.402. BANK'S LIABILITY TO CUSTOMER FOR WRONGFUL 06 DISHONOR; TIME OF DETERMINING INSUFFICIENCY OF ACCOUNT. (a) 07 Except as otherwise provided in this chapter, a payor bank wrongfully dishonors an 08 item if it dishonors an item that is properly payable, but a bank may dishonor an item 09 that would create an overdraft unless it has agreed to pay the overdraft. 10 (b) A payor bank is liable to its customer for damages proximately caused by 11 the wrongful dishonor of an item. Liability is limited to actual damages proved and 12 may include damages for an arrest or prosecution of the customer or other 13 consequential damages. Whether any consequential damages are proximately caused 14 by the wrongful dishonor is a question of fact to be determined in each case. 15 (c) A payor bank's determination of the customer's account balance on which 16 a decision to dishonor for insufficiency of available funds is based may be made at any 17 time between the time the item is received by the payor bank and the time that the 18 payor bank returns the item or gives notice in lieu of return, and the bank does not 19 need to make more than one determination. If, at the election of the payor bank, a 20 subsequent balance determination is made for the purpose of reevaluating the bank's 21 decision to dishonor the item, the account balance at that time is determinative of 22 whether a dishonor for insufficiency of available funds is wrongful. 23 * Sec. 115. AS 45.04.403 is repealed and reenacted to read: 24 Sec. 45.04.403. CUSTOMER'S RIGHT TO STOP PAYMENT; BURDEN OF 25 PROOF OF LOSS. (a) A customer, or any person authorized to draw on the account 26 if there is more than one person, may stop payment of any item drawn on the 27 customer's account or close the account by an order to the bank describing the item 28 or account with reasonable certainty, received at a time and in a manner that affords 29 the bank a reasonable opportunity to act on it before any action by the bank with 30 respect to the item described in AS 45.04.303. If the signature of more than one 31 person is required to draw on an account, any of these persons may stop payment or
01 close the account. 02 (b) A stop-payment order is effective for six months, but it lapses after 14 03 calendar days if the original order was oral and was not confirmed in writing within 04 that period. A stop-payment order may be renewed for additional six-month periods 05 by a writing given to the bank within a period during which the stop-payment order 06 is effective. 07 (c) The burden of establishing the fact and amount of loss resulting from the 08 payment of an item contrary to a stop-payment order or order to close an account is 09 on the customer. The loss from payment of an item contrary to a stop-payment order 10 may include damages for dishonor of subsequent items under AS 45.04.402. 11 * Sec. 116. AS 45.04.406 is repealed and reenacted to read: 12 Sec. 45.04.406. CUSTOMER'S DUTY TO DISCOVER AND REPORT 13 UNAUTHORIZED SIGNATURE OR ALTERATION. (a) A bank that sends or 14 makes available to a customer a statement of account showing payment of items for 15 the account shall either return or make available to the customer the items paid or 16 provide information in the statement of account sufficient to allow the customer 17 reasonably to identify the items paid. The statement of account provides sufficient 18 information if the item is described by item number, amount, and date of payment. 19 (b) If the items are not returned to the customer, the person retaining the items 20 shall either retain the items or, if the items are destroyed, maintain the capacity to 21 furnish legible copies of the items until the expiration of seven years after receipt of 22 the items. A customer may request an item from the bank that paid the item, and that 23 bank must provide in a reasonable time either the item or, if the item has been 24 destroyed or is not otherwise obtainable, a legible copy of the item. 25 (c) If a bank sends or makes available a statement of account or items under 26 (a) of this section, the customer must exercise reasonable promptness in examining the 27 statement or the items to determine whether a payment was not authorized because of 28 an alteration of an item or because a purported signature by or on behalf of the 29 customer was not authorized. If, based on the statement or items provided, the 30 customer should reasonably have discovered the unauthorized payment, the customer 31 must promptly notify the bank of the relevant facts.
01 (d) If the bank proves that the customer failed, with respect to an item, to 02 comply with the duties imposed on the customer by (c) of this section, the customer 03 is precluded from asserting against the bank the customer's unauthorized signature or 04 (1) any alteration on the item, if the bank also proves that it suffered 05 a loss by reason of the failure; and 06 (2) alteration by the same wrongdoer on any other item paid in good 07 faith by the bank, if the payment was made before the bank received notice from the 08 customer of the unauthorized signature or alteration and after the customer had been 09 afforded a reasonable period of time, not exceeding 30 days, in which to examine the 10 item or statement of account and notify the bank. 11 (e) If (d) of this section applies and the customer proves that the bank failed 12 to exercise ordinary care in paying the item and that the failure substantially 13 contributed to loss, the loss is allocated between the customer precluded and the bank 14 asserting the preclusion according to the extent to which the failure of the customer 15 to comply with (c) of this section and the failure of the bank to exercise ordinary care 16 contributed to the loss. If the customer proves that the bank did not pay the item in 17 good faith, the preclusion under (d) of this section does not apply. 18 (f) Without regard to care or lack of care of either the customer or the bank, 19 a customer who does not within one year after the statement or items are made 20 available to the customer under (a) of this section discover and report the customer's 21 unauthorized signature on or an alteration on the item is precluded from asserting 22 against the bank the unauthorized signature or alteration. If there is a preclusion under 23 this subsection, the payor bank may not recover for breach of warranty under 24 AS 45.04.208 with respect to the unauthorized signature or alteration to which the 25 preclusion applies. 26 * Sec. 117. AS 45.04.407 is amended to read: 27 Sec. 45.04.407. PAYOR BANK'S RIGHT TO SUBROGATION ON 28 IMPROPER PAYMENT. If a payor bank has paid an item over the [STOP 29 PAYMENT] order of the drawer or maker to stop payment, or after an account has 30 been closed, or otherwise under circumstances giving a basis for objection by the 31 drawer or maker, to prevent unjust enrichment and only to the extent necessary to
01 prevent loss to the bank by reason of its payment of the item, the payor bank is 02 subrogated to the rights 03 (1) of a holder in due course on the item against the drawer or maker; 04 (2) of the payee or any other holder of the item against the drawer or 05 maker either on the item or under the transaction out of which the item arose; and 06 (3) of the drawer or maker against the payee or another [ANY 07 OTHER] holder of the item with respect to the transaction out of which the item arose. 08 * Sec. 118. AS 45.05.103(c)(1) is amended to read: 09 (1) "accept" or "acceptance" (AS 45.03.409) [(AS 45.03.410)]. 10 * Sec. 119. AS 45.08.102(a)(3) is amended to read: 11 (3) a "security" is either a certificated or an uncertificated security; if 12 a security is certificated, the terms "security" and "certificated security" may mean 13 either the intangible interest, the instrument representing that interest, or both, as the 14 context requires; a writing that is a certificated security is governed by this chapter and 15 not by AS 45.03 on negotiable instruments [COMMERCIAL PAPER], even though 16 it also meets the requirements of that chapter; this chapter does not apply to money; 17 if a certificated security has been retained by or surrendered to the issuer or its transfer 18 agent for reasons other than registration of transfer, other temporary purpose, payment, 19 exchange, or acquisition by the issuer, that security shall be treated as an uncertificated 20 security for purposes of this chapter; 21 * Sec. 120. AS 45.09.113 is amended to read: 22 Sec. 45.09.113. SECURITY INTERESTS ARISING UNDER AS 45.02 23 (SALES) OR AS 45.12 (LEASES). A security interest arising solely under AS 45.02 24 or AS 45.12 is subject to the provisions of this chapter except that, to the extent that 25 and so long as the debtor does not have or does not lawfully obtain possession of the 26 goods, 27 (1) a [NO] security agreement is not necessary to make the security 28 interest enforceable; 29 (2) [NO] filing is not required to perfect the security interest; and 30 (3) the rights of the secured party on default by the debtor are governed 31 by
01 (A) AS 45.02, the chapter on sales, in the case of a security 02 interest arising solely under that chapter; or 03 (B) AS 45.12, the chapter on leases, in the case of a security 04 interest arising solely under that [THIS] chapter. 05 * Sec. 121. AS 45.09.203(a) is amended to read: 06 (a) Subject to the provisions of AS 45.04.210 [AS 45.04.208] on the security 07 interest of a collecting bank, AS 45.08.321 on security interests in securities, and 08 AS 45.09.113 on a security interest arising under AS 45.02, a security interest is not 09 enforceable against the debtor or third parties with respect to the collateral and does 10 not attach unless 11 (1) the collateral is in the possession of the secured party under an 12 [PURSUANT TO] agreement or the debtor has signed a security agreement that 13 contains a description of the collateral, and, in addition, if the security interest covers 14 crops growing or to be grown or timber to be cut, a description of the land concerned; 15 (2) value has been given; and 16 (3) the debtor has rights in the collateral. 17 * Sec. 122. AS 45.09.302(a) is amended to read: 18 (a) A financing statement must be filed to perfect all security interests except 19 the following: 20 (1) a security interest in collateral in possession of the secured party 21 under AS 45.09.305; 22 (2) a security interest temporarily perfected in instruments or documents 23 without delivery under AS 45.09.304 or in proceeds for a 10-day period under 24 AS 45.09.306; 25 (3) a security interest created by an assignment of a beneficial interest 26 in a trust or a decedent's estate; 27 (4) a purchase money security interest in consumer goods; but filing 28 is required for a motor vehicle required to be registered; and fixture filing is required 29 for priority over conflicting interests in fixtures to the extent provided in 30 AS 45.09.313; 31 (5) an assignment of accounts that [WHICH] does not alone or in
01 conjunction with other assignments to the same assignee transfer a significant part of 02 the outstanding accounts of the assignor; 03 (6) a security interest of a collecting bank under AS 45.04.210 04 [(AS 45.04.208)], or in securities under AS 45.08.321 [(AS 45.08.321)], or arising 05 under AS 45.02 (see AS 45.09.113) or covered in (c) of this section; 06 (7) as assignment for the benefit of all the creditors of the transferor, 07 and subsequent transfers by the assignee. 08 * Sec. 123. AS 45.09.312(a) is amended to read: 09 (a) The rules of priority stated in AS 45.09.301 - 45.09.318 and in the 10 following sections govern where applicable: AS 45.04.210 [AS 45.04.208] with respect 11 to the security interest of collecting banks in items being collected, accompanying 12 documents, and proceeds; AS 45.09.103 on security interests related to other 13 jurisdictions; AS 45.09.114 on consignments. 14 * Sec. 124. AS 45.09.408 is amended to read: 15 Sec. 45.09.408. FINANCING STATEMENTS COVERING CONSIGNED OR 16 LEASED GOODS. A consignor or lessor of goods may file a financing statement 17 using the terms "consignor", "consignee", "lessor", "lessee", or the like instead of the 18 terms specified in AS 45.09.402. The provisions of AS 45.09.401 - 45.09.408 apply 19 as appropriate to the financing statement, but its filing may not of itself be a factor in 20 determining whether or not the consignment or lease is intended as security 21 (AS 45.01.201(38)) [(AS 45.01.201(37))]. However, if it is determined for other 22 reasons that the consignment or lease is so intended, a security interest of the 23 consignor or lessor that [WHICH] attaches to the consigned or leased goods is 24 perfected by the filing. 25 * Sec. 125. AS 45 is amended by adding a new chapter to read: 26 CHAPTER 12. LEASES. 27 ARTICLE 1. GENERAL PROVISIONS. 28 Sec. 45.12.101. SHORT TITLE. This chapter may be cited as the Uniform 29 Commercial Code - leases. 30 Sec. 45.12.102. SCOPE. This chapter applies to any transaction, regardless 31 of form, that creates a lease.
01 Sec. 45.12.103. DEFINITIONS AND INDEX OF DEFINITIONS. (a) In this 02 chapter, unless the context otherwise requires 03 (1) "buyer in ordinary course of business" means a person who in good 04 faith and without knowledge that the sale to that person is in violation of the 05 ownership rights or security interest or leasehold interest of a third party in the goods 06 buys in ordinary course from a person in the business of selling goods of that kind but 07 does not include a pawnbroker; "buying" may be for cash or by exchange of other 08 property or on secured or unsecured credit and includes receiving goods or documents 09 of title under a preexisting contract for sale but does not include a transfer in bulk or 10 as security for or in total or partial satisfaction of a money debt; 11 (2) "cancellation" occurs when either party puts an end to the lease 12 contract for default by the other party; 13 (3) "commercial unit" means a unit of goods that by commercial usage 14 is a single whole for purposes of lease and division of which materially impairs its 15 character or value on the market or in use; a commercial unit may be a single article, 16 as a machine, or a set of articles, as a suite of furniture or a line of machinery, or a 17 quantity, as a gross or carload, or any other unit treated in use or in the relevant 18 market as a single whole; 19 (4) "conforming" goods or performance under a lease contract means 20 goods or performance that are in accordance with the obligations under the lease 21 contract; 22 (5) "consumer lease" means a lease that a lessor regularly engaged in 23 the business of leasing or selling makes to a lessee who is an individual and who takes 24 under the lease primarily for personal, family, or household purposes; 25 (6) "fault" means wrongful act, omission, breach, or default; 26 (7) "finance lease" means a lease with respect to which 27 (A) the lessor does not select, manufacture, or supply the goods; 28 (B) the lessor acquires the goods or the right to possession and 29 use of the goods in connection with the lease; and 30 (C) one of the following occurs: 31 (i) the lessee receives a copy of the contract by which
01 the lessor acquired the goods or the right to possession and use of the 02 goods before signing the lease contract; 03 (ii) the lessee's approval of the contract by which the 04 lessor acquired the goods or the right to possession and use of the 05 goods is a condition to effectiveness of the lease contract; 06 (iii) the lessee, before signing the lease contract, receives 07 an accurate and complete statement designating the promises and 08 warranties, and any disclaimers of warranties, limitations or 09 modifications of remedies, or liquidated damages, including those of a 10 third party, such as the manufacturer of the goods, provided to the 11 lessor by the person supplying the goods in connection with or as part 12 of the contract by which the lessor acquired the goods or the right to 13 possession and use of the goods; or 14 (iv) if the lease is not a consumer lease, the lessor, 15 before the lessee signs the lease contract, informs the lessee in writing 16 of the identity of the person supplying the goods to the lessor, unless 17 the lessee has selected that person and directed the lessor to acquire the 18 goods or the right to possession and use of the goods from that person; 19 that the lessee is entitled under this chapter to the promises and 20 warranties, including those of a third party, provided to the lessor by 21 the person supplying the goods in connection with or as part of the 22 contract by which the lessor acquired the goods or the right to 23 possession and use of the goods; and that the lessee may communicate 24 with the person supplying the goods to the lessor and receive an 25 accurate and complete statement of those promises and warranties, 26 including any disclaimers and limitations of them or of remedies; 27 (8) "goods" means all things that are movable at the time of 28 identification to the lease contract, or are fixtures under AS 45.12.309, but the term 29 does not include money, documents, instruments, accounts, chattel paper, general 30 intangibles, or minerals or the like, including oil and gas, before extraction; the term 31 also includes the unborn young of animals;
01 (9) "installment lease contract" means a lease contract that authorizes 02 or requires the delivery of goods in separate lots to be separately accepted, even 03 though the lease contract contains the clause "each delivery is a separate lease" or its 04 equivalent; 05 (10) "lease" means a transfer of the right to possession and use of 06 goods for a term in return for consideration, but a sale, including a sale on approval 07 or a sale or return, or retention or creation of a security interest is not a lease; unless 08 the context clearly indicates otherwise, the term includes a sublease; 09 (11) "lease agreement" means the bargain, with respect to the lease, of 10 the lessor and the lessee in fact as found in their language or by implication from other 11 circumstances including course of dealing or usage of trade or course of performance 12 as provided in this chapter; unless the context clearly indicates otherwise, the term 13 includes a sublease agreement; 14 (12) "lease contract" means the total legal obligation that results from 15 the lease agreement as affected by this chapter and other applicable rules of law; 16 unless the context clearly indicates otherwise, the term includes a sublease contract; 17 (13) "leasehold interest" means the interest of the lessor or the lessee 18 under a lease contract; 19 (14) "lessee" means a person who acquires the right to possession and 20 use of goods under a lease; unless the context clearly indicates otherwise, the term 21 includes a sublessee; 22 (15) "lessee in ordinary course of business" means a person who in 23 good faith and without knowledge that the lease to that person is in violation of the 24 ownership rights or security interest or leasehold interest of a third party in the goods 25 leases in ordinary course from a person in the business of selling or leasing goods of 26 that kind but does not include a pawnbroker; "leasing" may be for cash or by exchange 27 of other property or on secured or unsecured credit and includes receiving goods or 28 documents of title under a preexisting lease contract but does not include a transfer in 29 bulk or as security for or in total or partial satisfaction of a money debt; 30 (16) "lessor" means a person who transfers the right to possession and 31 use of goods under a lease; unless the context clearly indicates otherwise, the term
01 includes a sublessor; 02 (17) "lessor's residual interest" means the lessor's interest in the goods 03 after expiration, termination, or cancellation of the lease contract; 04 (18) "lien" means a charge against or interest in goods to secure 05 payment of a debt or performance of an obligation, but the term does not include a 06 security interest; 07 (19) "lot" means a parcel or a single article that is the subject matter 08 of a separate lease or delivery, whether or not it is sufficient to perform the lease 09 contract; 10 (20) "merchant lessee" means a lessee who is a merchant with respect 11 to goods of the kind subject to the lease; 12 (21) "present value" means the amount as of a date certain of one or 13 more sums payable in the future, discounted to the date certain; the discount is 14 determined by the interest rate specified by the parties if the rate was not manifestly 15 unreasonable at the time the transaction was entered into; otherwise, the discount is de- 16 termined by a commercially reasonable rate that takes into account the facts and circumstances 17 of each case at the time the transaction was entered into; 18 (22) "purchase" includes taking by sale, lease, mortgage, security 19 interest, pledge, gift, or any other voluntary transaction creating an interest in goods; 20 (23) "sublease" means a lease of goods the right to possession and use 21 of which was acquired by the lessor as a lessee under an existing lease; 22 (24) "supplier" means a person from whom a lessor buys or leases 23 goods to be leased under a finance lease; 24 (25) "supply contract" means a contract under which a lessor buys or 25 leases goods to be leased; 26 (26) "termination" occurs when either party under a power created by 27 agreement or law puts an end to the lease contract otherwise than for default. 28 (b) Other definitions applying to this chapter and the sections in which they 29 appear are: 30 (1) "accessions" in AS 45.12.310(a); 31 (2) "construction mortgage" in AS 45.12.309(j)(5);
01 (3) "encumbrance" in AS 45.12.309(j)(1); 02 (4) "fixtures" in AS 45.12.309(j)(3); 03 (5) "fixture filing" in AS 45.12.309(j)(2); 04 (6) "purchase money lease" in AS 45.12.309(j)(4). 05 (c) The following definitions in AS 45.02 and AS 45.09 apply to this chapter: 06 (1) "account" (AS 45.09.106); 07 (2) "between merchants" (AS 45.02.104(c)); 08 (3) "buyer" (AS 45.02.103(a)(1)); 09 (4) "chattel paper" (AS 45.09.105(a)(2)); 10 (5) "consumer goods" (AS 45.09.109(1)); 11 (6) "document" (AS 45.09.105(a)(6)); 12 (7) "entrusting" (AS 45.02.403(c)); 13 (8) "general intangibles" (AS 45.09.106); 14 (9) "good faith" (AS 45.02.103(a)(2)); 15 (10) "instrument" (AS 45.09.105(a)(9)); 16 (11) "merchant" (AS 45.02.104(a)); 17 (12) "mortgage" (AS 45.09.105(a)(10)); 18 (13) "pursuant to a commitment" (AS 45.09.105(a)(11)); 19 (14) "receipt" (AS 45.02.103(a)(3)); 20 (15) "sale" (AS 45.02.106(a)); 21 (16) "sale on approval" (AS 45.02.326); 22 (17) "sale or return" (AS 45.02.326); 23 (18) "seller" (AS 45.02.103(a)(4)). 24 (d) In addition, AS 45.01 contains general definitions and principles of 25 construction and interpretation applicable throughout this chapter. 26 Sec. 45.12.104. LEASES SUBJECT TO OTHER LAW. (a) A lease, although 27 subject to this chapter, is also subject to an applicable 28 (1) certificate of title statute of this state, including AS 28.10.201; 29 (2) certificate of title statute of another jurisdiction as provided in 30 AS 45.12.105; 31 (3) consumer protection statute of this state, or final consumer
01 protection decision of a court of this state existing on the effective date of this chapter; 02 or 03 (4) provision of AS 36.30 (State Procurement Code). 04 (b) In case of conflict between this chapter, other than AS 45.12.105, 05 45.12.304(c), and 45.12.305(c), and a statute or decision referred to in (a) of this 06 section, the statute or decision controls. 07 (c) Failure to comply with an applicable law has only the effect specified in 08 it. 09 Sec. 45.12.105. TERRITORIAL APPLICATION OF ARTICLE TO GOODS 10 COVERED BY CERTIFICATE OF TITLE. Subject to the provisions of 11 AS 45.12.304(c) and 45.12.305(c), with respect to goods covered by a certificate of 12 title issued under a statute of this state or of another jurisdiction, compliance and the 13 effect of compliance or noncompliance with a certificate of title statute are governed 14 by the law, including the conflict of laws rules, of the jurisdiction issuing the 15 certificate until the earlier of 16 (1) surrender of the certificate; or 17 (2) four months after the goods are removed from that jurisdiction and 18 after that date until a new certificate of title is issued by another jurisdiction. 19 Sec. 45.12.106. LIMITATION ON POWER OF PARTIES TO CONSUMER 20 LEASE TO CHOOSE APPLICABLE LAW AND JUDICIAL FORUM. (a) If the law 21 chosen by the parties to a consumer lease is that of a jurisdiction other than a 22 jurisdiction in which the lessee resides at the time the lease agreement becomes 23 enforceable or within 30 days after that date or in which the goods are to be used, the 24 choice is not enforceable. 25 (b) If the judicial forum chosen by the parties to a consumer lease is a forum 26 that would not otherwise have jurisdiction over the lessee, the choice is not 27 enforceable. 28 Sec. 45.12.107. WAIVER OR RENUNCIATION OF CLAIM OR RIGHT 29 AFTER DEFAULT OR BREACH. A claim or right arising out of an alleged default 30 or breach of warranty may be discharged in whole or in part without consideration by 31 a written waiver or renunciation signed and delivered by the aggrieved party.
01 Sec. 45.12.108. UNCONSCIONABILITY. (a) If the court as a matter of law 02 finds a lease contract or a clause of a lease contract to have been unconscionable at 03 the time it was made, the court may refuse to enforce the lease contract, or it may 04 enforce the remainder of the lease contract without the unconscionable clause, or it 05 may so limit the application of an unconscionable clause as to avoid an unconscionable 06 result. 07 (b) With respect to a consumer lease, if the court as a matter of law finds that 08 a lease contract or a clause of a lease contract has been induced by unconscionable 09 conduct or that unconscionable conduct has occurred in the collection of a claim 10 arising from a lease contract, the court may grant appropriate relief. 11 (c) Before making a finding of unconscionability under (a) or (b) of this 12 section, the court, on its own motion or that of a party, shall afford the parties a 13 reasonable opportunity to present evidence as to the setting, purpose, and effect of the 14 lease contract or clause of the contract, or of the conduct. 15 (d) Notwithstanding Alaska Rule of Civil Procedure 82, in an action in which 16 the lessee claims unconscionability with respect to a consumer lease 17 (1) if the court finds unconscionability under (a) or (b) of this section, 18 the court shall award reasonable attorney fees to the lessee; 19 (2) if the court does not find unconscionability and the lessee claiming 20 unconscionability has brought or maintained an action the lessee knew to be 21 groundless, the court shall award reasonable attorney fees to the party against whom 22 the claim is made; 23 (3) in determining attorney fees, the amount of the recovery on behalf 24 of the claimant under (a) and (b) of this section is not controlling. 25 Sec. 45.12.109. OPTION TO ACCELERATE AT WILL. (a) A term 26 providing that one party or the party's successor in interest may accelerate payment 27 or performance or require collateral or additional collateral "at will" or "when the party 28 considers itself insecure," or in words of similar import, shall be construed to mean 29 that the party has power to do so only if the party in good faith believes that the 30 prospect of payment or performance is impaired. 31 (b) With respect to a consumer lease, the burden of establishing good faith
01 under (a) of this section is on the party who exercised the power; otherwise the burden 02 of establishing lack of good faith is on the party against whom the power has been 03 exercised. 04 ARTICLE 2. FORMATION AND CONSTRUCTION OF LEASE CONTRACT. 05 Sec. 45.12.201. STATUTE OF FRAUDS. (a) A lease contract is not 06 enforceable by way of action or defense unless 07 (1) the total payments to be made under the lease contract, excluding 08 payments for options to renew or buy, are less than $1,000; or 09 (2) there is a writing, signed by the party against whom enforcement 10 is sought or by that party's authorized agent, sufficient to indicate that a lease contract 11 has been made between the parties and to describe the goods leased and the lease term. 12 (b) A description of leased goods or of the lease term is sufficient and satisfies 13 (a)(2) of this section, whether or not it is specific, if it reasonably identifies what is 14 described. 15 (c) A writing is not insufficient because it omits or incorrectly states a term 16 agreed upon, but the lease contract is not enforceable under (a)(2) of this section 17 beyond the lease term and the quantity of goods shown in the writing. 18 (d) A lease contract that does not satisfy the requirements of (a) of this 19 section, but that is valid in other respects, is enforceable 20 (1) if the goods are to be specially manufactured or obtained for the 21 lessee and are not suitable for lease or sale to others in the ordinary course of the 22 lessor's business, and the lessor, before notice of repudiation is received and under 23 circumstances that reasonably indicate that the goods are for the lessee, has made 24 either a substantial beginning of their manufacture or commitments for their 25 procurement; 26 (2) if the party against whom enforcement is sought admits in that 27 party's pleading, testimony, or otherwise in court that a lease contract was made, but 28 the lease contract is not enforceable under this paragraph beyond the quantity of goods 29 admitted; or 30 (3) with respect to goods that have been received and accepted by the 31 lessee.
01 (e) The lease term under a lease contract referred to in (d) of this section is 02 (1) if there is a writing signed by the party against whom enforcement 03 is sought or by that party's authorized agent specifying the lease term, the term 04 specified; 05 (2) if the party against whom enforcement is sought admits in that 06 party's pleading, testimony, or otherwise in court a lease term, the term admitted; or 07 (3) a reasonable lease term. 08 Sec. 45.12.202. FINAL WRITTEN EXPRESSION: PAROL OR EXTRINSIC 09 EVIDENCE. Terms with respect to which the confirmatory memoranda of the parties 10 agree or that are otherwise set out in a writing intended by the parties as a final 11 expression of their agreement with respect to the terms that are included in the 12 memoranda or other writing may not be contradicted by evidence of a prior agreement 13 or of a contemporaneous oral agreement but may be explained or supplemented 14 (1) by course of dealing or usage of trade or by course of performance; 15 and 16 (2) by evidence of consistent additional terms unless the court finds the 17 writing to have been intended also as a complete and exclusive statement of the terms 18 of the agreement. 19 Sec. 45.12.203. SEALS INOPERATIVE. The affixing of a seal to a writing 20 evidencing a lease contract or an offer to enter into a lease contract does not render 21 the writing a sealed instrument, and the law with respect to sealed instruments does 22 not apply to the lease contract or offer. 23 Sec. 45.12.204. FORMATION IN GENERAL. (a) A lease contract may be 24 made in any manner sufficient to show agreement, including conduct by both parties 25 that recognizes the existence of a lease contract. 26 (b) An agreement sufficient to constitute a lease contract may be found 27 although the moment of its making is undetermined. 28 (c) Although one or more terms are left open, a lease contract does not fail for 29 indefiniteness if the parties have intended to make a lease contract and there is a 30 reasonably certain basis for giving an appropriate remedy. 31 Sec. 45.12.205. FIRM OFFERS. An offer by a merchant to lease goods to or
01 from another person in a signed writing that by its terms gives assurance that it will 02 be held open is not revocable, for lack of consideration, during the time stated or, if 03 no time is stated, for a reasonable time; however, in no event may the period of 04 irrevocability exceed three months. A term of assurance under this section on a form 05 supplied by the offeree shall be separately signed by the offeror. 06 Sec. 45.12.206. OFFER AND ACCEPTANCE IN FORMATION OF LEASE 07 CONTRACT. (a) Unless otherwise unambiguously indicated by the language or 08 circumstances, an offer to make a lease contract must be construed as inviting 09 acceptance in any manner and by any medium reasonable under the circumstances. 10 (b) If the beginning of a requested performance is a reasonable mode of 11 acceptance, an offeror who is not notified of acceptance within a reasonable time may 12 treat the offer as having lapsed before acceptance. 13 Sec. 45.12.207. COURSE OF PERFORMANCE OR PRACTICAL 14 CONSTRUCTION. (a) If a lease contract involves repeated occasions for 15 performance by either party with knowledge of the nature of the performance and 16 opportunity for objection to it by the other, any course of performance accepted or 17 acquiesced in without objection is relevant to determine the meaning of the lease 18 agreement. 19 (b) The express terms of a lease agreement and any course of performance, as 20 well as any course of dealing and usage of trade, must be construed whenever 21 reasonable as consistent with each other; but if that construction is unreasonable, 22 express terms control course of performance, course of performance controls both 23 course of dealing and usage of trade, and course of dealing controls usage of trade. 24 (c) Subject to the provisions of AS 45.12.208 on modification and waiver, 25 course of performance is relevant to show a waiver or modification of any term 26 inconsistent with the course of performance. 27 Sec. 45.12.208. MODIFICATION, RESCISSION, AND WAIVER. (a) An 28 agreement modifying a lease contract does not need consideration to be binding. 29 (b) A signed lease agreement that excludes modification or rescission except 30 by a signed writing may not be otherwise modified or rescinded, but, except as 31 between merchants, such a requirement on a form supplied by a merchant must be
01 separately signed by the other party. 02 (c) Although an attempt at modification or rescission does not satisfy the 03 requirements of (b) of this section, it may operate as a waiver. 04 (d) A party who has made a waiver affecting an executory portion of a lease 05 contract may retract the waiver by reasonable notification received by the other party 06 that strict performance will be required of any term waived, unless the retraction would 07 be unjust in view of a material change of position in reliance on the waiver. 08 Sec. 45.12.209. LESSEE UNDER FINANCE LEASE AS BENEFICIARY OF 09 SUPPLY CONTRACT. (a) The benefit of a supplier's promises to the lessor under 10 the supply contract and of all warranties, whether express or implied, including those 11 of a third party provided in connection with or as part of the supply contract, extends 12 to the lessee to the extent of the lessee's leasehold interest under a finance lease 13 related to the supply contract, but is subject to the terms of the warranty and of the 14 supply contract and all defenses or claims arising from the warranty or supply contract. 15 (b) The extension of the benefit of a supplier's promises and of warranties to 16 the lessee under (a) of this section does not 17 (1) modify the rights and obligations of the parties to the supply 18 contract, whether arising from it or otherwise; or 19 (2) impose a duty or liability under the supply contract on the lessee. 20 (c) A modification or rescission of the supply contract by the supplier and the 21 lessor is effective between the supplier and the lessee unless, before the modification 22 or rescission, the supplier has received notice that the lessee has entered into a finance 23 lease related to the supply contract. If the modification or rescission is effective 24 between the supplier and the lessee, the lessor is considered to have assumed, in 25 addition to the obligations of the lessor under the lease contract, promises of the 26 supplier to the lessor and warranties that were so modified or rescinded as they existed 27 and were available to the lessee before modification or rescission. 28 (d) In addition to the extension of the benefit of the supplier's promises and 29 of warranties to the lessee under (a) of this section, the lessee retains all rights that the 30 lessee may have against the supplier that arise from an agreement between the lessee 31 and the supplier or under other law.
01 Sec. 45.12.210. EXPRESS WARRANTIES. (a) Express warranties by the 02 lessor are created as follows: 03 (1) an affirmation of fact or promise made by the lessor to the lessee 04 that relates to the goods and becomes part of the basis of the bargain creates an 05 express warranty that the goods will conform to the affirmation or promise; 06 (2) a description of the goods that is made part of the basis of the 07 bargain creates an express warranty that the goods will conform to the description; 08 (3) a sample or model that is made part of the basis of the bargain 09 creates an express warranty that the whole of the goods will conform to the sample or 10 model. 11 (b) It is not necessary to the creation of an express warranty that the lessor use 12 formal words, such as "warrant" or "guarantee," or that the lessor have a specific 13 intention to make a warranty, but an affirmation merely of the value of the goods or 14 a statement purporting to be merely the lessor's opinion or commendation of the goods 15 does not create a warranty. 16 Sec. 45.12.211. WARRANTIES AGAINST INTERFERENCE AND AGAINST 17 INFRINGEMENT; LESSEE'S OBLIGATION AGAINST INFRINGEMENT. (a) 18 There is in a lease contract a warranty that for the lease term a person does not hold 19 a claim to or interest in the goods that arose from an act or omission of the lessor, 20 other than a claim by way of infringement or the like, that will interfere with the 21 lessee's enjoyment of its leasehold interest. 22 (b) Except in a finance lease, there is in a lease contract by a lessor who is a 23 merchant regularly dealing in goods of the kind a warranty that the goods are delivered 24 free of the rightful claim of any person by way of infringement or the like. 25 (c) A lessee who furnishes specifications to a lessor or a supplier shall hold 26 the lessor and the supplier harmless against any claim by way of infringement or the 27 like that arises out of compliance with the specifications. 28 Sec. 45.12.212. IMPLIED WARRANTY OF MERCHANTABILITY. (a) 29 Except in a finance lease, a warranty that the goods will be merchantable is implied 30 in a lease contract if the lessor is a merchant with respect to goods of that kind. 31 (b) Goods to be merchantable must be at least goods that
01 (1) pass without objection in the trade under the description in the lease 02 agreement; 03 (2) in the case of fungible goods, are of fair average quality within the 04 description; 05 (3) are fit for the ordinary purposes for which goods of that type are 06 used; 07 (4) run, within the variation permitted by the lease agreement, of even 08 kind, quality, and quantity within each unit and among all units involved; 09 (5) are adequately contained, packaged, and labeled as the lease 10 agreement may require; and 11 (6) conform to any promises or affirmations of fact made on the 12 container or label. 13 (c) Other implied warranties may arise from course of dealing or usage of 14 trade. 15 Sec. 45.12.213. IMPLIED WARRANTY OF FITNESS FOR PARTICULAR 16 PURPOSE. Except in a finance lease, if the lessor at the time the lease contract is 17 made has reason to know of a particular purpose for which the goods are required and 18 that the lessee is relying on the lessor's skill or judgment to select or furnish suitable 19 goods, there is in the lease contract an implied warranty that the goods will be fit for 20 that purpose. 21 Sec. 45.12.214. EXCLUSION OR MODIFICATION OF WARRANTIES. (a) 22 Words or conduct relevant to the creation of an express warranty and words or conduct 23 tending to negate or limit a warranty shall be construed wherever reasonable as 24 consistent with each other; but, subject to the provisions of AS 45.12.202 on parol or 25 extrinsic evidence, negation or limitation is inoperative to the extent that the con- 26 struction is unreasonable. 27 (b) Subject to (c) of this section, to exclude or modify the implied warranty 28 of merchantability or a part of it the language must mention "merchantability," be by 29 a writing, and be conspicuous. Subject to (c) of this section, to exclude or modify an 30 implied warranty of fitness the exclusion must be by a writing and be conspicuous. 31 Language to exclude all implied warranties of fitness is sufficient if it is in writing, is
01 conspicuous, and states, for example, "There is no warranty that the goods will be fit 02 for a particular purpose." 03 (c) Notwithstanding (b) of this section, but subject to (d) of this section, 04 (1) unless the circumstances indicate otherwise, all implied warranties 05 are excluded by expressions like "as is," or "with all fault," or by other language that 06 in common understanding calls the lessee's attention to the exclusion of warranties and 07 makes plain that there is no implied warranty, if in writing and conspicuous; 08 (2) if the lessee before entering into the lease contract has examined 09 the goods or the sample or model as fully as desired or has refused to examine the 10 goods, there is no implied warranty with regard to defects that an examination ought 11 in the circumstances to have revealed; and 12 (3) an implied warranty may also be excluded or modified by course 13 of dealing, course of performance, or usage of trade. 14 (d) To exclude or modify a warranty against interference or against 15 infringement described in AS 45.12.211 or a part of the warranty, the language must 16 be specific, be by a writing, and be conspicuous, unless the circumstances, including 17 course of performance, course of dealing, or usage of trade, give the lessee reason to 18 know that the goods are being leased subject to a claim or interest of any person. 19 Sec. 45.12.215. CUMULATION AND CONFLICT OF WARRANTIES 20 EXPRESS OR IMPLIED. Warranties, whether express or implied, shall be construed 21 as consistent with each other and as cumulative, but if that construction is 22 unreasonable, the intention of the parties determines which warranty is dominant. In 23 ascertaining that intention the following rules apply: 24 (1) exact or technical specifications displace an inconsistent sample or 25 model or general language of description; 26 (2) a sample from an existing bulk displaces inconsistent general 27 language of description; 28 (3) express warranties displace inconsistent implied warranties other 29 than an implied warranty of fitness for a particular purpose. 30 Sec. 45.12.216. THIRD-PARTY BENEFICIARIES OF EXPRESS AND 31 IMPLIED WARRANTIES. A warranty to or for the benefit of a lessee under this
01 chapter, whether express or implied, extends to any natural person who may reasonably 02 be expected to use, consume, or be affected by the goods and who is injured in person 03 by breach of the warranty. This section does not displace principles of law and equity 04 that extend a warranty to or for the benefit of a lessee to other persons. The operation 05 of this section may not be excluded, modified, or limited, but an exclusion, 06 modification, or limitation of the warranty, including an exclusion, a modification, or 07 a limitation with respect to rights and remedies, effective against the lessee is also 08 effective against the beneficiary designated under this section. 09 Sec. 45.12.217. IDENTIFICATION. Identification of goods as goods to which 10 a lease contract refers may be made at any time and in any manner explicitly agreed 11 to by the parties. In the absence of explicit agreement, identification occurs 12 (1) when the lease contract is made if the lease contract is for a lease 13 of goods that are existing and identified; 14 (2) when the goods are shipped, marked, or otherwise designated by 15 the lessor as goods to which the lease contract refers if the lease contract is for a lease 16 of goods that are not existing and identified; or 17 (3) when the young are conceived if the lease contract is for a lease of 18 unborn young of animals. 19 Sec. 45.12.218. INSURANCE AND PROCEEDS. (a) A lessee obtains an 20 insurable interest when existing goods are identified to the lease contract even though 21 the goods identified are nonconforming and the lessee has an option to reject them. 22 (b) If a lessee has an insurable interest only by reason of the lessor's 23 identification of the goods, the lessor, until default or insolvency or notification to the 24 lessee that identification is final, may substitute other goods for those identified. 25 (c) Notwithstanding a lessee's insurable interest under (a) - (b) of this section, 26 the lessor retains an insurable interest until an option to buy has been exercised by the 27 lessee and risk of loss has passed to the lessee. 28 (d) This section does not impair an insurable interest recognized under another 29 statute or rule of law. 30 (e) The parties by agreement may determine that one or more parties have an 31 obligation to obtain and pay for insurance covering the goods and by agreement may
01 determine the beneficiary of the proceeds of the insurance. 02 Sec. 45.12.219. RISK OF LOSS. (a) Except in the case of a finance lease, 03 risk of loss is retained by the lessor and does not pass to the lessee. In the case of a 04 finance lease, risk of loss passes to the lessee. 05 (b) Subject to the provisions of AS 45.12.220 on the effect of default on risk 06 of loss, if risk of loss is to pass to the lessee and the time of passage is not stated, the 07 following rules apply: 08 (1) if the lease contract requires or authorizes the goods to be shipped 09 by carrier 10 (A) and it does not require delivery at a particular destination, 11 the risk of loss passes to the lessee when the goods are duly delivered to the 12 carrier; but 13 (B) if it does require delivery at a particular destination and the 14 goods are there duly tendered while in the possession of the carrier, the risk of 15 loss passes to the lessee when the goods are there duly so tendered as to enable 16 the lessee to take delivery; 17 (2) if the goods are held by a bailee to be delivered without being 18 moved, the risk of loss passes to the lessee on acknowledgment by the bailee of the 19 lessee's right to possession of the goods; 20 (3) in a case not covered in (1) or (2) of this subsection, the risk of loss 21 passes to the lessee on the lessee's receipt of the goods if the lessor, or, in the case of 22 a finance lease, the supplier, is a merchant; otherwise the risk passes to the lessee on 23 tender of delivery. 24 Sec. 45.12.220. EFFECT OF DEFAULT ON RISK OF LOSS. (a) Where risk 25 of loss is to pass to the lessee and the time of passage is not stated 26 (1) if a tender or delivery of goods so fails to conform to the lease 27 contract as to give a right of rejection, the risk of their loss remains with the lessor, 28 or, in the case of a finance lease, the supplier, until cure or acceptance; 29 (2) if the lessee rightfully revokes acceptance, the lessee, to the extent 30 of a deficiency in the lessee's effective insurance coverage, may treat the risk of loss 31 as having remained with the lessor from the beginning.
01 (b) Whether or not risk of loss is to pass to the lessee, if the lessee as to 02 conforming goods already identified to a lease contract repudiates or is otherwise in 03 default under the lease contract, the lessor, or, in the case of a finance lease, the 04 supplier, to the extent of a deficiency in the lessor's or supplier's effective insurance 05 coverage may treat the risk of loss as resting on the lessee for a commercially 06 reasonable time. 07 Sec. 45.12.221. CASUALTY TO IDENTIFIED GOODS. If a lease contract 08 requires goods identified when the lease contract is made, and the goods suffer 09 casualty without fault of the lessee, the lessor, or the supplier before delivery, or the 10 goods suffer casualty before risk of loss passes to the lessee under the lease agreement 11 or AS 45.12.219 then, if the loss is 12 (1) total, the lease contract is avoided; and 13 (2) partial or the goods have so deteriorated as to no longer conform 14 to the lease contract, the lessee may nevertheless demand inspection and at the lessee's 15 option either treat the lease contract as avoided or, except in a finance lease that is not 16 a consumer lease, accept the goods with due allowance from the rent payable for the 17 balance of the lease term for the deterioration or the deficiency in quantity but without 18 further right against the lessor. 19 ARTICLE 3. EFFECT OF LEASE CONTRACT. 20 Sec. 45.12.301. ENFORCEABILITY OF LEASE CONTRACT. Except as 21 otherwise provided in this chapter, a lease contract is effective and enforceable 22 according to its terms between the parties, against purchasers of the goods, and against 23 creditors of the parties. 24 Sec. 45.12.302. TITLE TO AND POSSESSION OF GOODS. Except as 25 otherwise provided in this chapter, each provision of this chapter applies whether the 26 lessor or a third party has title to the goods, and whether the lessor, the lessee, or a 27 third party has possession of the goods, notwithstanding a statute or rule of law that 28 possession or the absence of possession is fraudulent. 29 Sec. 45.12.303. ALIENABILITY OF PARTY'S INTEREST UNDER LEASE 30 CONTRACT OR OF LESSOR'S RESIDUAL INTEREST IN GOODS; DELEGATION 31 OF PERFORMANCE; TRANSFER OF RIGHTS. (a) Except as provided in (b) - (d)
01 of this section, a provision in a lease agreement that does either of the following gives 02 rise to the rights and remedies provided in (e) of this section, but a transfer that is 03 prohibited or is an event of default under the lease agreement is otherwise effective: 04 (1) prohibits the voluntary or involuntary transfer, including a transfer 05 by sale, sublease, creation or enforcement of a security interest, or attachment, levy, 06 or other judicial process, of 07 (A) an interest of a party under the lease contract; or 08 (B) the lessor's residual interest in the goods; or 09 (2) makes a transfer under (1) of this subsection an event of default. 10 (b) A provision in a lease agreement that does either of the following is not 11 enforceable unless, and then only to the extent that, there is an actual transfer by the 12 lessee of the lessee's right of possession or use of the goods in violation of the 13 provision or there is an actual delegation of a material performance of either party to 14 the lease contract in violation of the provision: 15 (1) prohibits the creation or enforcement of a security interest in 16 (A) an interest of a party under the lease contract; or 17 (B) the lessor's residual interest in the goods; or 18 (2) makes a transfer under (1) of this subsection an event of default. 19 (c) In (b) of this section, neither the granting nor the enforcement of a security 20 interest in either the lessor's interest under the lease contract or the lessor's residual 21 interest in the goods is a transfer that materially impairs the prospect of obtaining 22 return performance by, materially changes the duty of, or materially increases the 23 burden or risk imposed on, the lessee within the purview of (e) of this section unless, 24 and then only to the extent that, there is an actual delegation of a material performance 25 of the lessor. 26 (d) A provision in a lease agreement that does either of the following is not 27 enforceable, and the transfer is not a transfer that materially impairs the prospect of 28 obtaining return performance by, materially changes the duty of, or materially increases 29 the burden or risk imposed on, the other party to the lease contract within the purview 30 of (e) of this section: 31 (1) prohibits a transfer of a right to damages for default with respect
01 to the whole lease contract or of a right to payment arising out of the transferor's due 02 performance of the transferor's entire obligation; or 03 (2) makes a transfer under (1) of this subsection an event of default. 04 (e) Subject to (b) - (d) of this section, 05 (1) if a transfer is made that is made an event of default under a lease 06 agreement, the party to the lease contract not making the transfer, unless that party 07 waives the default or otherwise agrees, has the rights and remedies under 08 AS 45.12.501(b); 09 (2) if (1) of this subsection is not applicable and if a transfer is made 10 that is prohibited under a lease agreement or that materially impairs the prospect of 11 obtaining return performance by, materially changes the duty of, or materially increases 12 the burden or risk imposed on, the other party to the lease contract, unless the party 13 not making the transfer agrees at any time to the transfer in the lease contract or 14 otherwise, then, except as limited by contract, the transferor is liable to the party not 15 making the transfer for damages caused by the transfer to the extent that the damages 16 could not reasonably be prevented by the party not making the transfer, and a court 17 having jurisdiction may grant other appropriate relief, including cancellation of the 18 lease contract or an injunction against the transfer. 19 (f) A transfer of "the lease" or of "all my rights under the lease," or a transfer 20 in similar general terms, is a transfer of rights, and, unless the language or the 21 circumstances, as in a transfer for security, indicate the contrary, the transfer is a 22 delegation of duties by the transferor to the transferee. Acceptance by the transferee 23 constitutes a promise by the transferee to perform those duties. The promise is 24 enforceable by either the transferor or the other party to the lease contract. 25 (g) Unless otherwise agreed by the lessor and the lessee, a delegation of 26 performance does not relieve the transferor as against the other party of any duty to 27 perform or any liability for default. 28 (h) In a consumer lease, to prohibit the transfer of an interest of a party under 29 the lease contract or to make a transfer an event of default, the language must be 30 specific, by a writing, and conspicuous. 31 (i) In this section, "creation of a security interest" includes the sale of a lease
01 contract that is subject to AS 45.09, on secured transactions, by reason of 02 AS 45.09.102(a)(2). 03 Sec. 45.12.304. SUBSEQUENT LEASE OF GOODS BY LESSOR. (a) 04 Subject to AS 45.12.303, a subsequent lessee from a lessor of goods under an existing 05 lease contract obtains, to the extent of the leasehold interest transferred, the leasehold 06 interest in the goods that the lessor had or had power to transfer, and except as 07 provided in (b) of this section and AS 45.12.527(d), takes subject to the existing lease 08 contract. A lessor with voidable title has power to transfer a good leasehold interest 09 to a good faith subsequent lessee for value, but only to the extent set out in the 10 preceding sentence. If goods have been delivered under a transaction of purchase, the 11 lessor has that power even though 12 (1) the lessor's transferor was deceived as to the identity of the lessor; 13 (2) the delivery was in exchange for a check that is later dishonored; 14 (3) it was agreed that the transaction was to be a "cash sale"; or 15 (4) the delivery was procured through fraud punishable as larcenous 16 under criminal law. 17 (b) A subsequent lessee in the ordinary course of business from a lessor who 18 is a merchant dealing in goods of that kind to whom the goods were entrusted by the 19 existing lessee of that lessor before the interest of the subsequent lessee became 20 enforceable against that lessor obtains, to the extent of the leasehold interest 21 transferred, all of that lessor's and the existing lessee's rights to the goods, and takes 22 free of the existing lease contract. 23 (c) A subsequent lessee from the lessor of goods that are subject to an existing 24 lease contract and are covered by a certificate of title issued under a statute of this 25 state or of another jurisdiction does not take greater rights than those provided both 26 by this section and by the certificate of title statute. 27 Sec. 45.12.305. SALE OR SUBLEASE OF GOODS BY LESSEE. (a) 28 Subject to the provisions of AS 45.12.303, a buyer or sublessee from the lessee of 29 goods under an existing lease contract obtains, to the extent of the interest transferred, 30 the leasehold interest in the goods that the lessee had or had power to transfer, and 31 except as provided in (b) of this section and AS 45.12.511(d), takes subject to the
01 existing lease contract. A lessee with a voidable leasehold interest has power to 02 transfer a good leasehold interest to a good faith buyer for value or a good faith 03 sublessee for value, but only to the extent set out in the preceding sentence. If goods 04 have been delivered under a transaction of lease, the lessee has that power even though 05 (1) the lessor was deceived as to the identity of the lessee; 06 (2) the delivery was in exchange for a check that is later dishonored; 07 or 08 (3) the delivery was procured through fraud punishable as larcenous 09 under criminal law. 10 (b) A buyer in the ordinary course of business or a sublessee in the ordinary 11 course of business from a lessee who is a merchant dealing in goods of that kind to 12 whom the goods were entrusted by the lessor obtains, to the extent of the interest 13 transferred, all of the lessor's and lessee's rights to the goods, and takes free of the 14 existing lease contract. 15 (c) A buyer or sublessee from the lessee of goods that are subject to an 16 existing lease contract and are covered by a certificate of title issued under a statute 17 of this state or of another jurisdiction does not take greater rights than those provided 18 both by this section and by the certificate of title statute. 19 Sec. 45.12.306. PRIORITY OF CERTAIN LIENS ARISING BY OPERATION 20 OF LAW. If a person in the ordinary course of the person's business furnishes 21 services or materials with respect to goods subject to a lease contract, a lien upon 22 those goods in the possession of that person given by statute or rule of law for those 23 materials or services takes priority over any interest of the lessor or lessee under the 24 lease contract or this chapter unless the lien is created by statute and the statute 25 provides otherwise or unless the lien is created by rule of law and the rule of law 26 provides otherwise. 27 Sec. 45.12.307. PRIORITY OF LIENS ARISING BY ATTACHMENT OR 28 LEVY ON, SECURITY INTERESTS IN, AND OTHER CLAIMS TO GOODS. (a) 29 Except as otherwise provided in AS 45.12.306, a creditor of a lessee takes subject to 30 the lease contract. 31 (b) Except as otherwise provided in (c) and (d) of this section and in
01 AS 45.12.306 and 45.12.308, a creditor of a lessor takes subject to the lease contract 02 unless 03 (1) the creditor holds a lien that attached to the goods before the lease 04 contract became enforceable; 05 (2) the creditor holds a security interest in the goods and the lessee 06 gave value and received delivery of the goods with knowledge of the security interest; 07 or 08 (3) the creditor holds in the goods a security interest that was perfected 09 under AS 45.09.303 before the lease contract became enforceable. 10 (c) A lessee in the ordinary course of business takes the leasehold interest free 11 of a security interest in the goods created by the lessor even though the security 12 interest is perfected under AS 45.09.303 and the lessee knows of its existence. 13 (d) A lessee other than a lessee in the ordinary course of business takes the 14 leasehold interest free of a security interest to the extent that the leasehold interest 15 secures future advances made after the secured party acquires knowledge of the lease 16 or more than 45 days after the lease contract becomes enforceable, whichever first 17 occurs, unless the future advances are made pursuant to a commitment entered into 18 without knowledge of the lease and before the expiration of the 45-day period. 19 Sec. 45.12.308. SPECIAL RIGHTS OF CREDITORS. (a) A creditor of a 20 lessor in possession of goods subject to a lease contract may treat the lease contract 21 as void if as against the creditor retention of possession by the lessor is fraudulent, but 22 retention of possession in good faith and current course of trade by the lessor for a 23 commercially reasonable time after the lease contract becomes enforceable is not 24 fraudulent. 25 (b) Nothing in this chapter impairs the rights of creditors of a lessor if the 26 lease contract 27 (1) becomes enforceable, not in current course of trade but in 28 satisfaction of or as security for a preexisting claim for money, security, or the like; 29 and 30 (2) is made under circumstances that under law apart from this chapter 31 would constitute the transaction a fraudulent transfer or voidable preference.
01 (c) A creditor of a seller may treat a sale or an identification of goods to a 02 contract for sale as void if as against the creditor retention of possession by the seller 03 is fraudulent but retention of possession of the goods under a lease contract entered 04 into by the seller as lessee and the buyer as lessor in connection with the sale or 05 identification of the goods is not fraudulent if the buyer bought for value and in good 06 faith. 07 Sec. 45.12.309. LESSOR'S AND LESSEE'S RIGHTS WHEN GOODS 08 BECOME FIXTURES. (a) Under this chapter a lease may be of goods that are 09 fixtures or may continue in goods that become fixtures, but a lease does not exist 10 under this chapter of ordinary building materials incorporated into an improvement on 11 land. 12 (b) This chapter does not prevent creation of a lease of fixtures under real 13 estate law. 14 (c) The perfected interest of a lessor of fixtures has priority over a conflicting 15 interest of an encumbrancer or owner of the real estate if 16 (1) the lease is a purchase money lease, the conflicting interest of the 17 encumbrancer or owner arises before the goods become fixtures, the interest of the 18 lessor is perfected by a fixture filing before the goods become fixtures or within 10 19 days after becoming fixtures, and the lessee has an interest of record in the real estate 20 or is in possession of the real estate; or 21 (2) the interest of the lessor is perfected by a fixture filing before the 22 interest of the encumbrancer or owner is of record, the lessor's interest has priority 23 over a conflicting interest of a predecessor in title of the encumbrancer or owner, and 24 the lessee has an interest of record in the real estate or is in possession of the real 25 estate. 26 (d) The interest of a lessor of fixtures, whether or not perfected, has priority 27 over the conflicting interest of an encumbrancer or owner of the real estate if 28 (1) the fixtures are readily removable factory or office machines, 29 readily removable equipment that is not primarily used or leased for use in the 30 operation of the real estate, or readily removable replacements of domestic appliances 31 that are goods subject to a consumer lease, and before the goods become fixtures the
01 lease contract is enforceable; 02 (2) the conflicting interest is a lien on the real estate obtained by legal 03 or equitable proceedings after the lease contract is enforceable; 04 (3) the encumbrancer or owner has consented in writing to the lease or 05 has disclaimed an interest in the goods as fixtures; or 06 (4) the lessee has a right to remove the goods as against the 07 encumbrancer or owner; if the lessee's right to remove terminates, the priority of the 08 interest of the lessor continues for a reasonable time. 09 (e) Notwithstanding (c)(1) of this section but otherwise subject to (c) and (d) 10 of this section, the interest of a lessor of fixtures, including the lessor's residual 11 interest, is subordinate to the conflicting interest of an encumbrancer of the real estate 12 under a construction mortgage recorded before the goods become fixtures if the goods 13 become fixtures before the completion of the construction. To the extent given to 14 refinance a construction mortgage, the conflicting interest of an encumbrancer of the 15 real estate under a mortgage has this priority to the same extent as the encumbrancer 16 of the real estate under the construction mortgage. 17 (f) In cases not within (a) - (e) of this section, priority between the interest of 18 a lessor of fixtures, including the lessor's residual interest, and the conflicting interest 19 of an encumbrancer or owner of the real estate who is not the lessee is determined by 20 the priority rules governing conflicting interests in real estate. 21 (g) Subject to (h) of this section, if the interest of a lessor of fixtures, 22 including the lessor's residual interest, has priority over all conflicting interests of all 23 owners and encumbrances of the real estate, the lessor or the lessee may remove the 24 goods from the real estate, free and clear of all conflicting interests of all owners and 25 encumbrancers of the real estate, but the lessor or the lessee must reimburse an 26 encumbrancer or owner of the real estate who is not the lessee and who has not 27 otherwise agreed, for the cost of repair of physical injury, but not for a diminution in 28 value of the real estate caused by the absence of the goods removed or by a necessity 29 of replacing them. A person entitled to reimbursement may refuse permission to 30 remove until the party seeking removal gives adequate security for the performance 31 of this obligation.
01 (h) The lessor or the lessee may remove the goods under (g) of this section 02 (1) on default, expiration, termination, or cancellation of the lease 03 agreement but subject to the lease agreement and this chapter; or 04 (2) if necessary to enforce other rights and remedies of the lessor or the 05 lessee under this chapter. 06 (i) Even though the lease agreement does not create a security interest, the 07 interest of a lessor of fixtures, including the lessor's residual interest, is perfected by 08 recording a financing statement as a fixture filing for leased goods that are or are to 09 become fixtures under the relevant provisions of AS 45.09 on secured transactions. 10 (j) In this section, 11 (1) "encumbrance" includes real estate mortgages and other liens on 12 real estate and all other rights in real estate that are not ownership interests; 13 (2) a "fixture filing" is the recording, in the office where a mortgage 14 on the real estate would be recorded, of a financing statement covering goods that are 15 or are to become fixtures and conforming to the requirements of AS 45.09.402(f); 16 (3) "fixtures" means goods that become so related to particular real 17 estate that an interest in them arises under real estate law; 18 (4) a lease is a "purchase money lease" unless the lessee has possession 19 or use of the goods or the right to possession or use of the goods before the lease 20 agreement is enforceable; and 21 (5) a mortgage is a "construction mortgage" to the extent that it secures 22 an obligation incurred for the construction of an improvement on land including the 23 acquisition cost of the land if the recorded writing indicates. 24 Sec. 45.12.310. LESSOR'S AND LESSEE'S RIGHTS WHEN GOODS 25 BECOME ACCESSIONS. (a) "Accessions" means goods when they are installed in 26 or affixed to other goods. 27 (b) The interest of a lessor or a lessee under a lease contract entered into 28 before the goods became accessions is superior to all interests in the whole except as 29 stated in (d) of this section. 30 (c) The interest of a lessor or a lessee under a lease contract entered into at 31 the time or after the goods became accessions is superior to all subsequently acquired
01 interests in the whole except as stated in (d) of this section but is subordinate to 02 interests in the whole existing at the time the lease contract was made unless the 03 holders of those interests in the whole have in writing consented to the lease or 04 disclaimed an interest in the goods as part of the whole. 05 (d) The interest of a lessor or a lessee under a lease contract described in (b) 06 or (c) of this section is subordinate to the interest of 07 (1) a buyer in the ordinary course of business or a lessee in the 08 ordinary course of business of any interest in the whole acquired after the goods 09 became accessions; or 10 (2) a creditor with a security interest in the whole perfected before the 11 lease contract was made to the extent that the creditor makes subsequent advances 12 without knowledge of the lease contract. 13 (e) When under (b) - (d) of this section, and subject to (f) of this section, a 14 lessor or a lessee of accessions holds an interest that is superior to all interests in the 15 whole, the lessor or the lessee may remove the goods from the whole, free and clear 16 of all interests in the whole, but the lessor or lessee must reimburse a holder of an 17 interest in the whole who is not the lessee and who has not otherwise agreed, for the 18 cost of repair of physical injury but not for a diminution in value of the whole caused 19 by the absence of the goods removed or by a necessity for replacing them. A person 20 entitled to reimbursement may refuse permission to remove until the party seeking 21 removal gives adequate security for the performance of this obligation. 22 (f) The lessor of the lessee may remove the goods under (e) of this section 23 (1) on default, expiration, termination, or cancellation of the lease 24 contract by the other party but subject to the provisions of the lease contract and this 25 chapter; and 26 (2) if necessary to enforce other rights and remedies of the lessor under 27 this chapter. 28 Sec. 45.12.311. PRIORITY SUBJECT TO SUBORDINATION. Nothing in 29 this chapter prevents subordination by agreement by a person entitled to priority. 30 ARTICLE 4. PERFORMANCE OF LEASE CONTRACT. 31 Sec. 45.12.401. INSECURITY: ADEQUATE ASSURANCE OF
01 PERFORMANCE. (a) A lease contract imposes an obligation on each party that the 02 other's expectation of receiving due performance will not be impaired. 03 (b) If reasonable grounds for insecurity arise with respect to the performance 04 of either party, the insecure party may demand in writing adequate assurance of due 05 performance. Until the insecure party receives that assurance, if commercially 06 reasonable, the insecure party may suspend any performance for which the insecure 07 party has not already received the agreed return. 08 (c) A repudiation of the lease contract occurs if assurance of due performance 09 adequate under the circumstances of the particular case is not provided to the insecure 10 party within a reasonable time, not to exceed 30 days after receipt of a demand by the 11 other party. 12 (d) Between merchants, the reasonableness of grounds for insecurity and the 13 adequacy of any assurance offered must be determined according to commercial 14 standards. 15 (e) Acceptance of nonconforming delivery or payment does not prejudice the 16 aggrieved party's right to demand adequate assurance of future performance. 17 Sec. 45.12.402. ANTICIPATORY REPUDIATION. (a) If either party 18 repudiates a lease contract with respect to a performance not yet due under the lease 19 contract, the loss of which performance will substantially impair the value of the lease 20 contract to the other, the aggrieved party may 21 (1) for a commercially reasonable time, await retraction of repudiation 22 and performance by the repudiating party; 23 (2) make demand under AS 45.12.401 and await assurance of future 24 performance adequate under the circumstances of the particular case; or 25 (3) resort to any right or remedy upon default under the lease contract 26 or this chapter, even though the aggrieved party has notified the repudiating party that 27 the aggrieved party would await the repudiating party's performance and assurance and 28 has urged retraction. 29 (b) In addition to pursuing the remedies in (a) of this section and whether or 30 not the aggrieved party is pursuing one of the foregoing remedies, the aggrieved party 31 may suspend performance or, if the aggrieved party is the lessor, proceed under the
01 provisions of this chapter on the lessor's right to identify goods to the lease contract 02 notwithstanding default or to salvage unfinished goods under AS 45.12.524. 03 Sec. 45.12.403. RETRACTION OF ANTICIPATORY REPUDIATION. (a) 04 Until the repudiating party's next performance is due, the repudiating party can retract 05 the repudiation unless, since the repudiation, the aggrieved party has cancelled the 06 lease contract or materially changed the aggrieved party's position or otherwise 07 indicated that the aggrieved party considers the repudiation final. 08 (b) Retraction may be by any method that clearly indicates to the aggrieved 09 party that the repudiating party intends to perform under the lease contract and 10 includes any assurance demanded under AS 45.12.401. 11 (c) Retraction reinstates a repudiating party's rights under a lease contract with 12 due excuse and allowance to the aggrieved party for any delay occasioned by the 13 repudiation. 14 Sec. 45.12.404. SUBSTITUTED PERFORMANCE. (a) If without fault of 15 the lessee, the lessor, and the supplier, the agreed berthing, loading, or unloading 16 facilities fail or the agreed type of carrier becomes unavailable or the agreed manner 17 of delivery otherwise becomes commercially impracticable, but a commercially 18 reasonable substitute is available, the substitute performance must be tendered and 19 accepted. 20 (b) If the agreed means or manner of payment fails because of domestic or 21 foreign governmental regulation 22 (1) the lessor may withhold or stop delivery or cause the supplier to 23 withhold or stop delivery unless the lessee provides a means or manner of payment 24 that is commercially a substantial equivalent; and 25 (2) if delivery has already been taken, payment by the means or in the 26 manner provided by the regulation discharges the lessee's obligation unless the 27 regulation is discriminatory, oppressive, or predatory. 28 Sec. 45.12.405. EXCUSED PERFORMANCE. Subject to AS 45.12.404 on 29 substituted performance, the following rules apply: 30 (1) delay in delivery or nondelivery in whole or in part by a lessor or 31 a supplier who complies with (2) and (3) of this section is not a default under the lease
01 contract if performance as agreed has been made impracticable by the occurrence of 02 a contingency the nonoccurrence of which was a basic assumption on which the lease 03 contract was made or by compliance in good faith with an applicable foreign or 04 domestic governmental regulation or order, whether or not the regulation or order later 05 proves to be invalid; 06 (2) if the causes mentioned in (1) of this section affect only part of the 07 lessor's or the supplier's capacity to perform, the lessor or supplier shall allocate 08 production and deliveries among the customers of the lessor or supplier but at the 09 option of the lessor or supplier may include regular customers not then under contract 10 for sale or lease as well as the requirements of the lessor or supplier for further 11 manufacture; the lessor or supplier may allocate under this paragraph in a manner that 12 is fair and reasonable; 13 (3) the lessor seasonably shall notify the lessee and in the case of a 14 finance lease the supplier seasonably shall notify the lessor and the lessee, if known, 15 that there will be delay or nondelivery and, if allocation is required under (2) of this 16 section, of the estimated quota made available for the lessee. 17 Sec. 45.12.406. PROCEDURE ON EXCUSED PERFORMANCE. (a) If the 18 lessee receives notification of a material or indefinite delay or an allocation justified 19 under AS 45.12.405, the lessee may by written notification to the lessor as to any 20 goods involved, and with respect to all of the goods if under an installment lease 21 contract the value of the whole lease contract is substantially impaired under 22 AS 45.12.510, 23 (1) terminate the lease contract (AS 45.12.505(b)); or 24 (2) except in a finance lease that is not a consumer lease, modify the 25 lease contract by accepting the available quota in substitution, with due allowance from 26 the rent payable for the balance of the lease term for the deficiency but without further 27 right against the lessor. 28 (b) If, after receipt of a notification from the lessor under AS 45.12.405, the 29 lessee fails to modify the lease agreement as provided in (a)(2) of this section within 30 a reasonable time not exceeding 30 days, the lease contract lapses with respect to 31 deliveries affected.
01 Sec. 45.12.407. IRREVOCABLE PROMISES: FINANCE LEASES. (a) In 02 the case of a finance lease that is not a consumer lease, the lessee's promises under 03 the lease contract become irrevocable and independent upon the lessee's acceptance 04 of the goods. 05 (b) A promise that has become irrevocable and independent under (a) of this 06 section 07 (1) is effective and enforceable between the parties, and by or against 08 the third parties including assignees of the parties; and 09 (2) is not subject to cancellation, termination, modification, repudiation, 10 excuse, or substitution without the consent of the party to whom the promise runs. 11 (c) This section does not affect the validity, under another law, of a covenant 12 in a lease contract making the lessee's promises irrevocable and independent upon the 13 lessee's acceptance of the goods. 14 ARTICLE 5. DEFAULT. 15 Sec. 45.12.501. DEFAULT: PROCEDURE. (a) Whether the lessor or the 16 lessee is in default under a lease contract is determined by the lease agreement and this 17 chapter. 18 (b) If the lessor or the lessee is in default under the lease contract, the party 19 seeking enforcement has rights and remedies as provided in this chapter and, except 20 as limited by this chapter, as provided in the lease agreement. 21 (c) If the lessor or the lessee is in default under the lease contract, the party 22 seeking enforcement may reduce the party's claim to judgment, or otherwise enforce 23 the lease contract by self-help or any available judicial procedure or nonjudicial 24 procedure, including administrative proceeding, arbitration, or the like, under this 25 chapter. 26 (d) Except as otherwise provided in AS 45.01.106(a) or this chapter or the 27 lease agreement, the rights and remedies referred to in (b) and (c) of this section are 28 cumulative. 29 (e) If the lease agreement covers both real property and goods, the party 30 seeking enforcement may proceed under AS 45.12.501 - 45.12.532 as to the goods, or 31 under other applicable law as to both the real property and the goods in accordance
01 with that party's rights and remedies in respect of the real property, in which case 02 AS 45.12.501 - 45.12.532 do not apply. 03 Sec. 45.12.502. NOTICE AFTER DEFAULT. Except as otherwise provided 04 in this chapter or the lease agreement, the lessor or lessee in default under the lease 05 contract is not entitled to notice of default or notice of enforcement from the other 06 party to the lease agreement. 07 Sec. 45.12.503. MODIFICATION OR IMPAIRMENT OF RIGHTS AND 08 REMEDIES. (a) Except as otherwise provided in this chapter, the lease agreement 09 may include rights and remedies for default in addition to or in substitution for those 10 provided in this chapter and may limit or alter the measure of damages recoverable 11 under this chapter. 12 (b) Resort to a remedy provided under this chapter or in the lease agreement 13 is optional unless the remedy is expressly agreed to be exclusive. If circumstances 14 cause an exclusive or limited remedy to fail of its essential purpose, or provision for 15 an exclusive remedy is unconscionable, remedy may be had as provided in this 16 chapter. 17 (c) Consequential damages may be liquidated under AS 45.12.504, or may 18 otherwise be limited, altered, or excluded unless the limitation, alteration, or exclusion 19 is unconscionable. Limitation, alteration, or exclusion of consequential damages for 20 injury to the person in the case of consumer goods is prima facie unconscionable but 21 limitation, alteration, or exclusion of damages where the loss is commercial is not 22 prima facie unconscionable. 23 (d) Rights and remedies on default by the lessor or the lessee with respect to 24 an obligation or a promise collateral or ancillary to the lease contract are not impaired 25 by this chapter. 26 Sec. 45.12.504. LIQUIDATION OF DAMAGES. (a) Damages payable by 27 either party for default, or another act or omission, including indemnity for loss or 28 diminution of anticipated tax benefits or loss or damage to lessor's residual interest, 29 may be liquidated in the lease agreement but only at an amount or by a formula that 30 is reasonable in light of the then anticipated harm caused by the default or other act 31 or omission.
01 (b) If the lease agreement provides for liquidation of damages, and the 02 provision does not comply with (a) of this section, or the provision is an exclusive or 03 limited remedy that circumstances cause to fail of its essential purpose, remedy may 04 be had as provided in this chapter. 05 (c) If the lessor justifiably withholds or stops delivery of goods under 06 AS 45.12.525 or 45.12.526 because of the lessee's default or insolvency, the lessee is 07 entitled to restitution of any amount by which the sum of the lessee's payments 08 exceeds 09 (1) the amount to which the lessor is entitled by virtue of terms 10 liquidating the lessor's damages under (a) of this section; or 11 (2) in the absence of the terms under (1) of this subsection, 20 percent 12 of the then present value of the total rent the lessee was obligated to pay for the 13 balance of the lease term, or, in the case of a consumer lease, the lesser of that amount 14 or $500. 15 (d) A lessee's right to restitution under (c) of this section is subject to offset 16 to the extent the lessor establishes 17 (1) a right to recover damages under the provisions of this chapter other 18 than (a) of this section; and 19 (2) the amount or value of any benefits received by the lessee directly 20 or indirectly by reason of the lease contract. 21 Sec. 45.12.505. CANCELLATION AND TERMINATION, AND EFFECT OF 22 CANCELLATION, TERMINATION, RESCISSION, OR FRAUD ON RIGHTS AND 23 REMEDIES. (a) On cancellation of the lease contract, all obligations that are still 24 executory on both sides are discharged, but any right based on prior default or 25 performance survives, and the cancelling party also retains a remedy for default of the 26 whole lease contract or an unperformed balance. 27 (b) On termination of the lease contract, all obligations that are still executory 28 on both sides are discharged but a right based on prior default or performance 29 survives. 30 (c) Unless the contrary intention clearly appears, expressions of "cancellation," 31 "rescission," or the like of the lease contract may not be construed as a renunciation
01 or discharge of a claim in damages for an antecedent default. 02 (d) Rights and remedies for material misrepresentation or fraud include all 03 rights and remedies available under this chapter for default. 04 (e) Neither rescission nor a claim for rescission of the lease contract nor 05 rejection or return of the goods bars or is inconsistent with a claim for damages or 06 other right or remedy. 07 Sec. 45.12.506. STATUTE OF LIMITATIONS. (a) An action for default 08 under a lease contract, including breach of warranty or indemnity, must be commenced 09 within four years after the cause of action accrued. By the original lease contract the 10 parties may reduce the period of limitation to not less than one year. 11 (b) A cause of action for default accrues when the act or omission on which 12 the default or breach of warranty is based is or should have been discovered by the 13 aggrieved party, or when the default occurs, whichever is later. A cause of action for 14 indemnity accrues when the act or omission on which the claim for indemnity is based 15 is or should have been discovered by the indemnified party, whichever is later. 16 (c) If an action commenced within the time limited by (a) of this section is so 17 terminated as to leave available a remedy by another action for the same default or 18 breach of warranty or indemnity, the other action may be commenced after the 19 expiration of the time limited and within six months after the termination of the first 20 action unless the termination resulted from voluntary discontinuance or from dismissal 21 for failure or neglect to prosecute. 22 (d) This section does not alter the law on tolling of the statute of limitations. 23 Sec. 45.12.507. PROOF OF MARKET RENT: TIME AND PLACE. (a) 24 Damages based on market rent under AS 45.12.519 or 45.12.528 are determined 25 according to the rent for the use of the goods concerned for a lease term identical to 26 the remaining lease term of the original lease agreement and prevailing at the times 27 specified in AS 45.12.519 or 45.12.528, as appropriate. 28 (b) If evidence of rent for the use of the goods concerned for a lease term 29 identical to the remaining lease term of the original lease agreement and prevailing at 30 the times or places described in this chapter is not readily available, the rent prevailing 31 within any reasonable time before or after the time described or at any other place or
01 for a different lease term that in commercial judgment or under usage of trade would 02 serve as a reasonable substitute for the one described may be used, making proper 03 allowance for the difference, including the cost of transporting the goods to or from 04 the other place. 05 (c) Evidence of a relevant rent prevailing at a time or place or for a lease term 06 other than the one described in this chapter offered by one party is not admissible until 07 the party has given the other party notice the court finds sufficient to prevent unfair 08 surprise. 09 (d) If the prevailing rent or value of goods regularly leased in an established 10 market is in issue, reports in official publications or trade journals or in newspapers 11 or periodicals of general circulation published as the reports of that market are admis- 12 sible in evidence. The circumstances of the preparation of the report may be shown to affect 13 its weight but not its admissibility. 14 Sec. 45.12.508. LESSEE'S REMEDIES. (a) If a lessor fails to deliver the 15 goods in conformity with the lease contract (AS 45.12.509) or repudiates the lease 16 contract (AS 45.12.402), or a lessee rightfully rejects the goods (AS 45.12.509) or 17 justifiably revokes acceptance of the goods under AS 45.12.517, then with respect to 18 the goods involved, and with respect to all of the goods if under an installment lease 19 contract, the value of the whole lease contract is substantially impaired (AS 45.12.510), 20 the lessor is in default under the lease contract and the lessee may 21 (1) cancel the lease contract under AS 45.12.505(a); 22 (2) recover as much of the rent and security as has been paid and as 23 is just under the circumstances; 24 (3) cover and recover damages under AS 45.12.518 and 45.12.520 as 25 to all goods affected whether or not they have been identified to the lease contract, or 26 recover damages for nondelivery under AS 45.12.519 and 45.12.520; 27 (4) exercise other rights or pursue other remedies provided in the lease 28 contract. 29 (b) If a lessor fails to deliver the goods in conformity to the lease contract or 30 repudiates the lease contract, the lessee may also 31 (1) if the goods have been identified, recover them under AS 45.12.522;
01 or 02 (2) in a proper case, obtain specific performance or replevy the goods 03 under AS 45.12.521. 04 (c) If a lessor is otherwise in default under a lease contract, the lessee may 05 exercise the rights and pursue the remedies provided in the lease contract, which may 06 include a right to cancel the lease, and AS 45.12.519(c). 07 (d) If a lessor has breached a warranty, whether express or implied, the lessee 08 may recover damages under AS 45.12.519(d). 09 (e) On rightful rejection or justifiable revocation of acceptance, a lessee has 10 a security interest in goods in the lessee's possession or control for any rent and 11 security that has been paid and any expenses reasonably incurred in their inspection, 12 receipt, transportation, and care and custody, and may hold those goods and dispose 13 of them in good faith and in a commercially reasonable manner, subject to 14 AS 45.12.527(e). 15 (f) Subject to AS 45.12.407, a lessee, on notifying the lessor of the lessee's 16 intention to do so, may deduct all or part of the damages resulting from a default 17 under the lease contract from a part of the rent still due under the same lease contract. 18 Sec. 45.12.509. LESSEE'S RIGHTS ON IMPROPER DELIVERY; 19 RIGHTFUL REJECTION. (a) Subject to the provisions of AS 45.12.510 on default 20 in installment lease contracts, if the goods or the tender or delivery fail in any respect 21 to conform to the lease contract, the lessee may reject or accept the goods or accept 22 any commercial unit or units and reject the rest of the goods. 23 (b) Rejection of goods is ineffective unless it is within a reasonable time after 24 tender or delivery of the goods and the lessee seasonably notifies the lessor. 25 Sec. 45.12.510. INSTALLMENT LEASE CONTRACTS: REJECTION AND 26 DEFAULT. (a) Under an installment lease contract a lessee may reject a delivery that 27 is nonconforming if the nonconformity substantially impairs the value of that delivery 28 and cannot be cured or the nonconformity is a defect in the required documents; but 29 if the nonconformity does not fall within (b) of this section and the lessor or the 30 supplier gives adequate assurance of its cure, the lessee must accept that delivery. 31 (b) If nonconformity or default with respect to one or more deliveries
01 substantially impairs the value of the installment lease contract as a whole, there is a 02 default with respect to the whole. The aggrieved party reinstates the installment lease 03 contract as a whole if the aggrieved party accepts a nonconforming delivery without 04 seasonably notifying of cancellation or brings an action with respect only to past 05 deliveries or demands performance as to future deliveries. 06 Sec. 45.12.511. MERCHANT LESSEE'S DUTIES AS TO RIGHTFULLY 07 REJECTED GOODS. (a) Subject to a security interest of a lessee under 08 AS 45.12.508(e), if a lessor or a supplier does not have an agent or place of business 09 at the market of rejection, a merchant lessee, after rejection of goods in the lessee's 10 possession or control, shall follow any reasonable instructions received from the lessor 11 or the supplier with respect to the goods. In the absence of those instructions, a 12 merchant lessee shall make reasonable efforts to sell, lease, or otherwise dispose of the 13 goods for the lessor's account if they threaten to decline in value speedily. 14 Instructions are not reasonable if on demand indemnity for expenses is not 15 forthcoming. 16 (b) If a merchant lessee under (a) of this section or another lessee disposes of 17 goods under AS 45.12.512, the lessee is entitled to reimbursement either from the 18 lessor or the supplier or out of the proceeds for reasonable expenses of caring for and 19 disposing of the goods and, if the expenses do not include a disposition commission, 20 to the commission as is usual in the trade, or if there is none, to a reasonable sum not 21 exceeding 10 percent of the gross proceeds. 22 (c) In complying with this section or AS 45.12.512, the lessee is held only to 23 good faith. Good faith conduct under this provision is neither acceptance or 24 conversion nor the basis of an action for damages. 25 (d) A purchaser who purchases in good faith from a lessee under this section 26 or AS 45.12.512 takes the goods free of any rights of the lessor and the supplier even 27 though the lessee fails to comply with one or more of the requirements of this chapter. 28 Sec. 45.12.512. LESSEE'S DUTIES AS TO RIGHTFULLY REJECTED 29 GOODS. (a) Except as otherwise provided under AS 45.12.511, with respect to goods 30 that threaten to decline in value speedily and subject to a security interest of a lessee 31 under AS 45.12.508(e),
01 (1) the lessee, after rejection of goods in the lessee's possession, shall 02 hold them with reasonable care at the lessor's or the supplier's disposition for a 03 reasonable time after the lessee's seasonable notification of rejection; 04 (2) if the lessor or the supplier does not give instructions within a 05 reasonable time after notification of rejection, the lessee may store the rejected goods 06 for the lessor's or the supplier's account or ship them to the lessor or the supplier or 07 dispose of them for the lessor's or the supplier's account with reimbursement in the 08 manner provided in AS 45.12.511; but 09 (3) the lessee does not have further obligations with regard to goods 10 rightfully rejected. 11 (b) Action by the lessee under (a) of this section is not acceptance or 12 conversion. 13 Sec. 45.12.513. CURE BY LESSOR OF IMPROPER TENDER OR 14 DELIVERY; REPLACEMENT. (a) If a tender or delivery by the lessor or the 15 supplier is rejected because it is nonconforming and the time for performance has not 16 yet expired, the lessor or the supplier may seasonably notify the lessee of the lessor's 17 or the supplier's intention to cure and may then make a conforming delivery within 18 the time provided in the lease contract. 19 (b) If the lessee rejects a nonconforming tender that the lessor or the supplier 20 had reasonable grounds to believe would be acceptable with or without money 21 allowance, the lessor or the supplier may have a further reasonable time to substitute 22 a conforming tender if the lessor or supplier seasonably notifies the lessee. 23 Sec. 45.12.514. WAIVER OF LESSEE'S OBJECTIONS. (a) In rejecting 24 goods, a lessee's failure to state a particular defect that is ascertainable by reasonable 25 inspection precludes the lessee from relying on the defect to justify rejection or to 26 establish default 27 (1) if, stated seasonably, the lessor or the supplier could have cured it 28 under AS 45.12.513; or 29 (2) between merchants if the lessor or the supplier after rejection has 30 made a request in writing for a full and final written statement of all defects on which 31 the lessee proposes to rely.
01 (b) A lessee's failure to reserve rights when paying rent or other consideration 02 against documents precludes recovery of the payment for defects apparent on the face 03 of the documents. 04 Sec. 45.12.515. ACCEPTANCE OF GOODS. (a) Acceptance of goods occurs 05 after the lessee has had a reasonable opportunity to inspect the goods and 06 (1) the lessee signifies or acts with respect to the goods in a manner 07 that signifies to the lessor or the supplier that the goods are conforming or that the 08 lessee will take or retain them in spite of their nonconformity; or 09 (2) the lessee fails to make an effective rejection of the goods under 10 AS 45.12.509(b). 11 (b) Acceptance of a part of a commercial unit is acceptance of that entire unit. 12 Sec. 45.12.516. EFFECT OF ACCEPTANCE OF GOODS; NOTICE OF 13 DEFAULT; BURDEN OF ESTABLISHING DEFAULT AFTER ACCEPTANCE; 14 NOTICE OF CLAIM OR LITIGATION TO PERSON ANSWERABLE OVER. (a) 15 A lessee must pay rent for goods accepted in accordance with the lease contract, with 16 due allowance for goods rightfully rejected or not delivered. 17 (b) A lessee's acceptance of goods precludes rejection of the goods accepted. 18 In the case of a finance lease, if made with knowledge of a nonconformity, acceptance 19 cannot be revoked because of it. In any other case, if made with knowledge of a 20 nonconformity, acceptance cannot be revoked because of it unless the acceptance was 21 on the reasonable assumption that the nonconformity would be seasonably cured. 22 Acceptance does not of itself impair another remedy provided by this chapter or the 23 lease agreement for nonconformity. 24 (c) If a tender has been accepted 25 (1) within a reasonable time after the lessee discovers or should have 26 discovered a default, the lessee shall notify the lessor and the supplier, if any, or be 27 barred from a remedy against the party not notified; 28 (2) except in the case of a consumer lease, within a reasonable time 29 after the lessee receives notice of litigation for infringement or the like under 30 AS 45.12.211 the lessee shall notify the lessor or be barred from a remedy over for 31 liability established by the litigation; and
01 (3) the burden is on the lessee to establish a default. 02 (d) If a lessee is sued for breach of a warranty or other obligation for which 03 a lessor or a supplier is answerable over, the following apply: 04 (1) the lessee may give the lessor or the supplier, or both, written 05 notice of the litigation; if the notice states that the person notified may come in and 06 defend and that if the person notified does not do so that person will be bound in an 07 action against that person by the lessee by a determination of fact common to the two 08 litigations, then unless the person notified after seasonable receipt of the notice does 09 come in and defend that person is so bound; 10 (2) the lessor or the supplier may demand in writing that the lessee turn 11 over control of the litigation including settlement if the claim is one for infringement 12 or the like under AS 45.12.211 or else be barred from a remedy over; if the demand 13 states that the lessor or the supplier agrees to bear all expense and to satisfy an adverse 14 judgment, then, unless the lessee after seasonable receipt of the demand does turn over 15 control, the lessee is so barred. 16 (e) Subsections (c) and (d) of this section apply to an obligation of a lessee 17 to hold the lessor or the supplier harmless against infringement or the like under 18 AS 45.12.211. 19 Sec. 45.12.517. REVOCATION OF ACCEPTANCE OF GOODS. (a) A 20 lessee may revoke acceptance of a lot or commercial unit whose nonconformity 21 substantially impairs its value to the lessee if the lessee has accepted it, 22 (1) except in the case of a finance lease, on the reasonable assumption 23 that its nonconformity would be cured and it has not been seasonably cured; or 24 (2) without discovery of the nonconformity if the lessee's acceptance 25 was reasonably induced either by the lessor's assurances or, except in the case of a 26 finance lease, by the difficulty of discovery before acceptance. 27 (b) Except in the case of a finance lease that is not a consumer lease, a lessee 28 may revoke acceptance of a lot or commercial unit if the lessor defaults under the 29 lease contract and the default substantially impairs the value of that lot or commercial 30 unit to the lessee. 31 (c) If the lease agreement provides, the lessee may revoke acceptance of a lot
01 or commercial unit because of other defaults by the lessor. 02 (d) Revocation of acceptance must occur within a reasonable time after the 03 lessee discovers or should have discovered the ground for it and before a substantial 04 change in condition of the goods that is not caused by the nonconformity. Revocation 05 is not effective until the lessee notifies the lessor. 06 (e) A lessee who revokes under this section has the same rights and duties 07 with regard to the goods involved as if the lessee had rejected them. 08 Sec. 45.12.518. COVER; SUBSTITUTE GOODS. (a) After a default, by a 09 lessor under the lease contract, of the type described in AS 45.12.508(a), or, if agreed, 10 after other default by the lessor, the lessee may cover by making a purchase or lease 11 of or contract to purchase or lease goods in substitution for those due from the lessor. 12 (b) Except as otherwise provided under AS 45.12.504 with respect to damages 13 liquidated in the lease agreement or otherwise determined under agreement of the 14 parties under AS 45.01.102(c) and AS 45.12.503, if a lessee's cover is by lease 15 agreement substantially similar to the original lease agreement and the new lease 16 agreement is made in good faith and in a commercially reasonable manner, the lessee 17 may recover from the lessor as damages 18 (1) the present value, as of the date of the commencement of the term 19 of the new lease agreement, of the rent under the new lease agreement applicable to 20 that period of the new lease term that is comparable to the then remaining term of the 21 original lease agreement minus the present value as of the same date of the total rent 22 for the then remaining lease term of the original lease agreement; and 23 (2) incidental or consequential damages, less expenses saved in 24 consequence of the lessor's default. 25 (c) If a lessee's cover is by lease agreement that for any reason does not 26 qualify for treatment under (b) of this section, or is by purchase or otherwise, the 27 lessee may recover from the lessor as if the lessee had elected not to cover and 28 AS 45.12.519 governs. 29 Sec. 45.12.519. LESSEE'S DAMAGES FOR NONDELIVERY, 30 REPUDIATION, DEFAULT, AND BREACH OF WARRANTY IN REGARD TO 31 ACCEPTED GOODS. (a) Except as otherwise provided under AS 45.12.504 with
01 respect to damages liquidated in the lease agreement or otherwise determined under 02 agreement of the parties under AS 45.01.102(c) and AS 45.12.503, if a lessee elects 03 not to cover or a lessee elects to cover and the cover is by lease agreement that for any 04 reason does not qualify for treatment under AS 45.12.518(b), or is by purchase or 05 otherwise, the measure of damages for nondelivery or repudiation by the lessor or for 06 rejection or revocation of acceptance by the lessee is the present value, as of the date 07 of the default, of the then market rent minus the present value as of the same date of 08 the original rent, computed for the remaining lease term of the original lease 09 agreement, together with incidental and consequential damages, less expenses saved 10 in consequence of the lessor's default. 11 (b) Market rent is to be determined as of the place for tender or, in cases of 12 rejection after arrival or revocation of acceptance, as of the place of arrival. 13 (c) Except as otherwise agreed, if the lessee has accepted goods and given 14 notification under AS 45.12.516(c), the measure of damages for non-conforming tender 15 or delivery or other default by a lessor is the loss resulting in the ordinary course of 16 events from the lessor's default as determined in any manner that is reasonable 17 together with incidental and consequential damages, less expenses saved in 18 consequence of the lessor's default. 19 (d) Except as otherwise agreed, the measure of damages for breach of warranty 20 is the present value at the time and place of acceptance of the difference between the 21 value of the use of the goods accepted and the value if they had been as warranted for 22 the lease term, unless special circumstances show proximate damages of a different 23 amount, together with incidental and consequential damages, less expenses saved in 24 consequence of the lessor's default or breach of warranty. 25 Sec. 45.12.520. LESSEE'S INCIDENTAL AND CONSEQUENTIAL 26 DAMAGES. (a) Incidental damages resulting from a lessor's default include expenses 27 reasonably incurred in inspection, receipt, transportation, and care and custody of 28 goods rightfully rejected or goods the acceptance of which is justifiably revoked, any 29 commercially reasonable charges, expenses, or commissions in connection with 30 effecting cover, and any other reasonable expense incident to the default. 31 (b) Consequential damages resulting from a lessor's default include
01 (1) any loss resulting from general or particular requirements and needs 02 of which the lessor at the time of contracting had reason to know and that could not 03 reasonably be prevented by cover or otherwise; and 04 (2) injury to person or property proximately resulting from a breach of 05 warranty. 06 Sec. 45.12.521. LESSEE'S RIGHT TO SPECIFIC PERFORMANCE OR 07 REPLEVIN. (a) Specific performance may be decreed if the goods are unique or in 08 other proper circumstances. 09 (b) A decree for specific performance may include any terms and conditions 10 as to payment of the rent, damages, or other relief that the court considers just. 11 (c) A lessee has a right of replevin, detinue, sequestration, claim and delivery, 12 or the like for goods identified to the lease contract if after reasonable effort the lessee 13 is unable to effect cover for those goods or the circumstances reasonably indicate that 14 the effort will be unavailing. 15 Sec. 45.12.522. LESSEE'S RIGHT TO GOODS ON LESSOR'S 16 INSOLVENCY. (a) Subject to (b) of this section and even though the goods have not 17 been shipped, a lessee who has paid a part or all of the rent and security for goods 18 identified to a lease contract under AS 45.12.217 on making and keeping good a tender 19 of any unpaid portion of the rent and security due under the lease contract may recover 20 the goods identified from the lessor if the lessor becomes insolvent within 10 days 21 after receipt of the first installment of rent and security. 22 (b) A lessee acquires the right to recover goods identified to a lease contract 23 only if they conform to the lease contract. 24 Sec. 45.12.523. LESSOR'S REMEDIES. (a) If a lessee wrongfully rejects 25 or revokes acceptance of goods or fails to make a payment when due or repudiates 26 with respect to a part or the whole, then, with respect to the goods involved, and with 27 respect to all of the goods if under an installment lease contract the value of the whole 28 lease contract is substantially impaired (AS 45.12.510), the lessee is in default under 29 the lease contract and the lessor may 30 (1) cancel the lease contract (AS 45.12.505(a)); 31 (2) proceed respecting goods not identified to the lease contract under
01 AS 45.12.524; 02 (3) withhold delivery of the goods and under AS 45.12.525 take 03 possession of goods previously delivered; 04 (4) stop delivery of the goods by a bailee under AS 45.12.526; 05 (5) dispose of the goods under AS 45.12.527 and recover damages, or 06 retain the goods and recover damages under AS 45.12.528, or in a proper case recover 07 rent under AS 45.12.529; 08 (6) exercise any other rights or pursue any other remedies provided in 09 the lease contract. 10 (b) If a lessor does not fully exercise a right or obtain a remedy to which the 11 lessor is entitled under (a) of this section, the lessor may recover the loss resulting in 12 the ordinary course of events from the lessee's default as determined in any reasonable 13 manner, together with incidental damages, less expenses saved in consequence of the 14 lessee's default. 15 (c) If a lessee is otherwise in default under a lease contract, the lessor may 16 exercise the rights and pursue the remedies provided in the lease contract, which may 17 include a right to cancel the lease. In addition, unless otherwise provided in the lease 18 contract, 19 (1) if the default substantially impairs the value of the lease contract 20 to the lessor, the lessor may exercise the rights and pursue the remedies provided in 21 (a) or (b) of this section; or 22 (2) if the default does not substantially impair the value of the lease 23 contract to the lessor, the lessor may recover as provided in (b) of this section. 24 Sec. 45.12.524. LESSOR'S RIGHT TO IDENTIFY GOODS TO LEASE 25 CONTRACT. (a) After default, by the lessee under the lease contract, of the type 26 described in AS 45.12.523(a) or (c)(1) or, if agree, after other default by the lessee, 27 the lessor may 28 (1) identify to the lease contract conforming goods not already 29 identified if at the time the lessor learned of the default they were in the lessor's or 30 the supplier's possession or control; and 31 (2) dispose of goods under AS 45.12.527(a) that demonstrably have
01 been intended for the particular lease contract even though those goods are unfinished. 02 (b) If the goods are unfinished, in the exercise of reasonable commercial 03 judgment for the purposes of avoiding loss and of effective realization, an aggrieved 04 lessor or the supplier may either complete manufacture and wholly identify the goods 05 to the lease contract or cease manufacture and lease, sell, or otherwise dispose of the 06 goods for scrap or salvage value or proceed in another reasonable manner. 07 Sec. 45.12.525. LESSOR'S RIGHT TO POSSESSION OF GOODS. (a) If 08 a lessor discovers the lessee to be insolvent, the lessor may refuse to deliver the goods. 09 (b) After a default, by the lessee under the lease contract, of the type described 10 in AS 45.12.523(a) or (c)(1), or, if agreed, after other default by the lessee, the lessor 11 has the right to take possession of the goods. If the lease contract provides, the lessor 12 may require the lessee to assemble the goods and make them available to the lessor 13 at a place to be designated by the lessor that is reasonably convenient to both parties. 14 Without removal, the lessor may render unusable any goods employed in trade or 15 business, and may dispose of goods on the lessee's premises under AS 45.12.527. 16 (c) The lessor may proceed under (b) of this section without judicial process 17 if it can be done without breach of the peace, or the lessor may proceed by action. 18 Sec. 45.12.526. LESSOR'S STOPPAGE OF DELIVERY IN TRANSIT OR 19 OTHERWISE. (a) A lessor may stop delivery of goods in the possession of a carrier 20 or other bailee if the lessor discovers the lessee to be insolvent and may stop delivery 21 of carload, truckload, planeload, or larger shipments of express or freight if the lessee 22 repudiates or fails to make a payment due before delivery, whether for rent, security, 23 or otherwise under the lease contract, or for any other reason the lessor has a right to 24 withhold or take possession of the goods. 25 (b) In pursuing its remedies under (a) of this section, the lessor may stop 26 delivery until 27 (1) receipt of the goods by the lessee; 28 (2) acknowledgment to the lessee by a bailee of the goods, except a 29 carrier, that the bailee holds the goods for the lessee; or 30 (3) such an acknowledgment to the lessee by a carrier via reshipment 31 or as warehouseman.
01 (c) To stop delivery, a lessor shall so notify as to enable the bailee by 02 reasonable diligence to prevent delivery of the goods. 03 (d) After notification, the bailee shall hold and deliver the goods according to 04 the directions of the lessor, but the lessor is liable to the bailee for any ensuing charges 05 or damages. 06 (e) A carrier who has issued a nonnegotiable bill of lading is not obliged to 07 obey a notification to stop received from a person other than the consignor. 08 Sec. 45.12.527. LESSOR'S RIGHTS TO DISPOSE OF GOODS. (a) After 09 a default, by a lessee under the lease contract, of the type described in AS 45.12.523(a) 10 or (c)(1) or after the lessor refuses to deliver or takes possession of goods under 11 AS 45.12.525 or 45.12.526, or, if agreed, after other default by a lessee, the lessor may 12 dispose of the goods concerned or the undelivered balance of them by lease, sale, or 13 otherwise. 14 (b) Except as otherwise provided with respect to damages liquidated in the 15 lease agreement under AS 45.12.504 or otherwise determined under agreement of the 16 parties under AS 45.01.102(c) and AS 45.12.503, if the disposition is by lease 17 agreement substantially similar to the original lease agreement and the new lease 18 agreement is made in good faith and in a commercially reasonable manner, the lessor 19 may recover from the lessee as damages 20 (1) accrued and unpaid rent as of the date of the commencement of the 21 term of the new lease agreement; 22 (2) the present value, as of the same date, of the total rent for the then 23 remaining lease term of the original lease agreement minus the present value, as of the 24 same date, of the rent under the new lease agreement applicable to that period of the 25 new lease term that is comparable to the then remaining term of the original lease 26 agreement; and 27 (3) any incidental damages allowed under AS 45.12.530, less expenses 28 saved in consequence of the lessee's default. 29 (c) If the lessor's disposition is by lease agreement that for any reason does 30 not qualify for treatment under (b) of this section, or is by sale or otherwise, the lessor 31 may recover from the lessee as if the lessor had elected not to dispose of the goods
01 and AS 45.12.528 governs. 02 (d) A subsequent buyer or lessee who buys or leases from the lessor in good 03 faith for value as a result of a disposition under this section takes the goods free of the 04 original lease contract and any rights of the original lessee even though the lessor fails 05 to comply with one or more of the requirements of this chapter. 06 (e) The lessor is not accountable to the lessee for profit made on a disposition. 07 A lessee who has rightfully rejected or justifiably revoked acceptance shall account to 08 the lessor for any excess over the amount of the lessee's security interest under 09 AS 45.12.508(e). 10 Sec. 45.12.528. LESSOR'S DAMAGES FOR NONACCEPTANCE, FAILURE 11 TO PAY, REPUDIATION, OR OTHER DEFAULT. (a) Except as otherwise 12 provided with respect to damages liquidated in the lease agreement under 13 AS 45.12.504 or otherwise determined under agreement of the parties under 14 AS 45.01.102(c) and AS 45.12.503, if a lessor elects to retain the goods or a lessor 15 elects to dispose of the goods and the disposition is by lease agreement that for any 16 reason does not qualify for treatment under AS 45.12.527(b), or is by sale or 17 otherwise, the lessor may recover from the lessee as damages for a default described 18 in AS 45.12.523(a) or (c)(1), or, if agreed, for other default of the lessee 19 (1) accrued and unpaid rent as of the date of default if the lessee has 20 never taken possession of the goods, or, if the lessee has taken possession of the 21 goods, as of the date the lessor repossesses the goods or an earlier date on which the 22 lessee makes a tender of the goods to the lessor; 23 (2) the present value as of the date determined under (1) of this 24 subsection of the total rent for the then remaining lease term of the original lease 25 agreement minus the present value as of the same date of the market rent at the place 26 where the goods are located, computed for the same lease term; and 27 (3) any incidental damages allowed under AS 45.12.530, less expenses 28 saved in consequence of the lessee's default. 29 (b) If the measure of damages provided in (a) of this section is inadequate to 30 put a lessor in as good a position as performance would have, the measure of damages 31 is the present value of the profit, including reasonable overhead, the lessor would have
01 made from full performance by the lessee, together with any incidental damages 02 allowed under AS 45.12.530, due allowance for costs reasonably incurred, and due 03 credit for payments or proceeds of disposition. 04 Sec. 45.12.529. LESSOR'S ACTION FOR THE RENT. (a) After default, by 05 the lessee under the lease contract, of the type described in AS 45.12.523(a) or (c)(1) 06 or, if agreed, after other default by the lessee, if the lessor complies with (b) of this 07 section, the lessor may recover from the lessee as damages 08 (1) for goods accepted by the lessee and not repossessed by or tendered 09 to the lessor, and for conforming goods lost or damaged within a commercially 10 reasonable time after risk of loss passes to the lessee under AS 45.12.219 11 (A) accrued and unpaid rent as of the date of entry of judgment 12 in favor of the lessor; 13 (B) the present value as of the same date of the rent for the then 14 remaining lease term of the lease agreement; and 15 (C) any incidental damages allowed under AS 45.12.530, less 16 expenses saved in consequence of the lessee's default; and 17 (2) for goods identified to the lease contract if the lessor is unable after 18 reasonable effort to dispose of them at a reasonable price or the circumstances 19 reasonably indicate that effort will be unavailing 20 (A) accrued and unpaid rent as of the date of entry of judgment 21 in favor of the lessor; 22 (B) the present value as of the same date of the rent for the then 23 remaining lease term of the lease agreement; and 24 (C) any incidental damages allowed under AS 45.12.530, less 25 expenses saved in consequence of the lessee's default. 26 (b) Except as provided in (c) of this section, the lessor shall hold for the lessee 27 for the remaining lease term of the lease agreement any goods that have been 28 identified to the lease contract and are in the lessor's control. 29 (c) The lessor may dispose of the goods at any time before collection of the 30 judgment for damages obtained under (a) of this section. If the disposition is before 31 the end of the remaining lease term of the lease agreement, the lessor's recovery
01 against the lessee for damages will be governed by AS 45.12.527 or 45.12.528, and 02 the lessor will cause an appropriate credit to be provided against a judgment for 03 damages to the extent that the amount of the judgment exceeds the recovery available 04 under AS 45.12.527 or 45.12.528. 05 (d) Payment of the judgment for damages obtained under (a) of this section 06 entitles the lessee to the use and possession of the goods not then disposed of for the 07 remaining lease term of and in accordance with the lease agreement. 08 (e) After default, by the lessee under the lease contract, of the type described 09 in AS 45.12.523(a) or (c)(1) or, if agreed, after other default by the lessee, a lessor 10 who is held not entitled to rent under this section shall nevertheless be awarded 11 damages for nonacceptance under AS 45.12.527 or 45.12.528. 12 Sec. 45.12.530. LESSOR'S INCIDENTAL DAMAGES. Incidental damages 13 to an aggrieved lessor include commercially reasonable charges, expenses, or 14 commissions incurred in stopping delivery, in the transportation, care, and custody of 15 goods after the lessee's default, in connection with return or disposition of the goods, 16 or otherwise resulting from the default. 17 Sec. 45.12.531. STANDING TO SUE THIRD PARTIES FOR INJURY TO 18 GOODS. (a) If a third party so deals with goods that have been identified to a lease 19 contract as to cause actionable injury to a party to the lease contract 20 (1) the lessor has a right of action against the third party; and 21 (2) the lessee also has a right of action against the third party if the 22 lessee 23 (A) has a security interest in the goods; 24 (B) has an insurable interest in the goods; or 25 (C) bears the risk of loss under the lease contract or has since 26 the injury assumed that risk as against the lessor and the goods have been 27 converted or destroyed. 28 (b) If at the time of the injury the party plaintiff did not bear the risk of loss 29 as against the other party to the lease contract and there is no arrangement between 30 them for disposition of the recovery, the plaintiff's suit or settlement, subject to the 31 plaintiff's own interest, is as a fiduciary for the other party to the lease contract.
01 (c) Either party with the consent of the other may sue for the benefit of whom 02 it may concern. 03 Sec. 45.12.532. LESSOR'S RIGHTS REGARDING RESIDUAL INTEREST. 04 In addition to any other recovery permitted by this chapter or other law, the lessor may 05 recover from the lessee an amount that will fully compensate the lessor for any loss 06 of or damage to the lessor's residual interest in the goods caused by the default of the 07 lessee. 08 * Sec. 126. AS 45.50.820 is amended to read: 09 Sec. 45.50.820. OBLIGATION OF DISTRIBUTOR TO REPURCHASE 10 UPON TERMINATION, ETC., OF AGREEMENT. If the refiner or distributor 11 terminates, cancels or fails to renew under AS 45.50.810(c)(1), (2), or (3) or for any 12 good cause other than under AS 45.50.810(c)(4), the refiner or distributor shall 13 compensate the dealer for the fair market value of the business, excluding goodwill. 14 Refiners or distributors terminating, cancelling, or failing to renew under 15 AS 45.50.810(c)(4) shall compensate the dealer for the fair market value of the 16 business, including good will [GOODWILL]. Valuation other than good will 17 [GOODWILL] shall include the fair market value of the dealer's inventory supplies, 18 equipment and furnishings purchased from the refiner or distributor exclusive of 19 personalized materials that do not [WHICH] have a [NO] value to the refiner or 20 distributor and inventory supplies, equipment and furnishings not reasonably required 21 in the conduct of the business. Compensation shall be made within 60 days from the 22 date of termination unless it is necessary that a lawsuit be filed under AS 45.50.830 23 [OR THE DEALER FAILS TO COMPLY WITH THE BULK SALES PROVISIONS 24 OF AS 45.06]. The refiner or distributor may offset against accounts owed by the 25 dealer under this section any amount owed by the dealer to the refiner or distributor. 26 * Sec. 127. AS 45.03.120, 45.03.121, 45.03.122, 45.03.208, 45.03.506, 45.03.507, 27 45.03.508, 45.03.509, 45.03.510, 45.03.511, 45.03.606, 45.03.701, 45.03.801, 45.03.802, 28 45.03.803, 45.03.804, 45.03.805; AS 45.04.104(a)(9); AS 45.06; and AS 45.09.111 are 29 repealed. 30 * Sec. 128. REVISOR CHANGES. The revisor of statutes shall update the citations to the 31 state's Uniform Commercial Code throughout the state statutes, especially in AS 45.01 -
01 AS 45.09, to reflect the changes made by this Act. 02 * Sec. 129. APPLICABILITY. (a) Rights and obligations that arise before the effective 03 date of this Act under AS 45.01 - AS 45.09, as those chapters exist before the effective date 04 of this Act, remain valid and may be enforced under AS 45.01 - AS 45.09, as those chapters 05 exist before the effective date of this Act, as though secs. 1 - 124 and 126 of this Act had not 06 been enacted. 07 (b) Rights and obligations that arise before the effective date of this Act under 08 AS 45.50.820, as that section exists before being amended by sec. 125 of this Act, remain 09 valid and may be enforced as though AS 45.50.820 had not been amended. 10 * Sec. 130. AMENDMENT OF COURT RULES. (a) AS 45.03.308(a), enacted by sec. 47 11 of this Act, amends Alaska Rule of Civil Procedure 8(d) by requiring that the denial of certain 12 facts be specific. 13 (b) AS 45.12.108(d), enacted by sec. 125 of this Act, amends Alaska Rule of Civil 14 Procedure 82 by requiring the court to award a specified level of attorney fees without 15 consideration of who prevails in the entire action even if the entitled party is not ultimately 16 the prevailing party in the action, and without reference to the amount of recovery, even if the 17 rule would require that the amount of the award of attorney fees be based on a percentage of 18 the amount of recovery. 19 (c) AS 45.12.507(c), enacted by sec. 125 of this Act, amends Alaska Rule of Evidence 20 402, by prohibiting the introduction of certain evidence even if it is relevant and otherwise 21 admissible under the Alaska Rules of Evidence until sufficient notice is given to the other 22 party to prevent unfair surprise. 23 * Sec. 131. This Act takes effect January 1, 1994.