03/02/1993 02:35 PM Senate L&C

  SENATOR KELLY  introduced CS  FOR SENATE  BILL NO.  112(L&C)                 
  (UNIFORM COMMERCIAL  CODE REVISIONS),  sponsored by  SENATOR                 
  JAY  KERTTULA, and  invited  ARTHUR  PETERSON,  Uniform  Law                 
  Commissioner for Alaska, to explain the bill.                                
                                                                               
  MR. PETERSON explained that although  he was now an attorney                 
  in private practice with Dillon & Findley,  he was appearing                 
  in his role as a Uniform Law Commissioner for Alaska, and he                 
  strongly supported SB 112.                                                   
                                                                               
  MR. PETERSON said the  bill was a faithful adherence  to the                 
  national uniform versions and covers three areas: (1)  a new                 
  article  2A on personal property leasing (Section 125 of the                 
  bill),  (2)  amendments to  the  UCC's  articles  3  and  4,                 
  regarding   negotiable   instruments,  bank   deposits,  and                 
  collections (Sections 14 through 117  and 127 of the  bill),                 
  and (3) repeal of UCC's article 6 on bulk sales (Section 127                 
  of the  bill). He  explained Alaska's  numbering system  was                 
  different, and he preferred to refer to the article numbers.                 
                                                                               
  Number 382                                                                   
                                                                               
  MR.  PETERSON  said   the  Labor   and  Commerce   Committee                 
  Substitute for  SB 112 before  the committee was  a faithful                 
  reproduction, which makes a couple of technical corrections.                 
  He noted an additional  typo on line 27, which  would insert                 
  "lessor  or"  in  front of  "lessee,"  and  he  said he  had                 
  discussed it with the drafting department.                                   
                                                                               
  MR. PETERSON said there was presently  no law on the subject                 
  of Personal Property Leasing, which means that any questions                 
  that arise go  to litigation depending on  the disagreement,                 
  go to the  courts, and provide activity  for attorneys, when                 
  statutory authority  should provide the  necessary guidance.                 
  He reviewed the items that fall under personal property  and                 
  said the current absence of these rules inspires litigation.                 
  He explained a national system was needed since commerce was                 
  conducted across state lines.                                                
                                                                               
  MR. PETERSON noted that  the Negotiable Instruments articles                 
  of the UCC had not been revised in about 30 or 40 years, and                 
  he reviewed the proliferation of negotiable instruments from                 
  9  billion in the  late 1950 to  48 billion checks  now.  He                 
  explained SB 112 recognized the need  to provide a number of                 
  simple and fair answers on a national basis.                                 
                                                                               
  In the Bulk Sales area, MR. PETERSON noted it was a sale out                 
  of the ordinary course of business or a "bulk transfer," and                 
  he explained, under the  old law, there was a  great concern                 
                                                                               
                                                                               
  for  the  creditors,   leaving  the   buyers  to  fend   for                 
  themselves.  He described new laws have partially overlapped                 
  article 6, and more  sophisticated and wide-spread inventory                 
  financing under article 9 of the UCC have provided even more                 
  significant protection for creditors.   He reviewed a letter                 
  from a  group of  16 Alaska  business law  attorneys listing                 
  their reasons for unanimously supporting SB 112.                             
                                                                               
  Number 447                                                                   
                                                                               
  SENATOR  LINCOLN  asked  MR.  PETERSON   to  point  out  the                 
  difference between the original bill and the changes made in                 
  the Labor and Commerce Committee.                                            
                                                                               
  MR.  PETERSON  listed  the  changes  which  dealt  with  the                 
  insertion of  words to  avoid changing  the citations  every                 
  time another chapter is added, to correct typos,  to promote                 
  consistency   with   the   national  version,   to   resolve                 
  inconsistencies, to correct significant  punctuation, and to                 
  add relevant language.                                                       
                                                                               
  Number 511                                                                   
                                                                               
  SENATOR LINCOLN discussed some  of the inconsistent language                 
  with MR. PETERSON, and MR. PETERSON agreed she was correct.                  
                                                                               
  SENATOR RIEGER had a question on page 93 with the use of the                 
  word, unconscionability, and  MR. PETERSON  directed him  to                 
  line 15 (d) to read the modification to be sure the national                 
  approach  prevails,  within the  context  of Alaska  Rule of                 
  Civil Procedure 82 dealing with a consumer lease.                            
                                                                               
  SENATOR RIEGER  was still concerned with  an "unconscionable                 
  clause" in a  contract, and he  gave an  example of its  use                 
  being a  blank check in  a contract.   MR.  PETERSON used  a                 
  similar example to explain the need for a nationally uniform                 
  system of rights and obligations.                                            
                                                                               
  SENATOR KELLY said the  bill would be discussed at  the next                 
  meeting,  and  he  invited  GERALD   KURTZ,  a  Uniform  Law                 
  Commissioner in  Alaska, to testify from his off-net site in                 
  Anchorage.                                                                   
                                                                               
  MR.  KURTZ  explained  that  in  addition  to  a  tremendous                 
  increase in the number of  checks, electronic transfers have                 
  become the way of doing business without any modification of                 
  the law.  He suggested, in the personal property leasing, to                 
  read  a few  car ads  to get  an  idea of  personal property                 
  leasing on the car business.  He said those two areas of the                 
  legislation were catching up  with the times and need  to be                 
  adopted.                                                                     
                                                                               
  Number 565                                                                   
                                                                               
                                                                               
  In response to  SENATOR RIEGER's question on  the attorney's                 
  fees, said the key word in the legislation was "reasonable,"                 
  and he claimed a typical Alaskan judge is quick to crawl all                 
  over  an  attorney who  tries  to continue  litigation where                 
  there is no reason.  They continued a discussion of attorney                 
  fees.                                                                        
                                                                               
  SENATOR KELLY checked with MR. KIRKPATRICK, MR. CRANDALL,                    
                                                                               
  TAPE 93-16, SIDE B                                                           
  Number 001                                                                   
                                                                               
  and GARY AMANDOLA for their opinions on the bill.