0001| HOUSE BILL 104 | 0002| 43rd legislature - STATE OF NEW MEXICO - first session, 1997 | 0003| INTRODUCED BY | 0004| RICHARD T. KNOWLES | 0005| | 0006| | 0007| | 0008| FOR THE COURTS, CORRECTIONS AND CRIMINAL JUSTICE COMMITTEE | 0009| | 0010| AN ACT | 0011| RELATING TO COMMERCIAL TRANSACTIONS; REVISING PROVISIONS OF THE | 0012| UNIFORM COMMERCIAL CODE REGARDING LETTERS OF CREDIT; AMENDING, | 0013| REPEALING AND ENACTING SECTIONS OF THE UNIFORM COMMERCIAL CODE. | 0014| | 0015| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0016| Section 1. Section 55-1-105 NMSA 1978 (being Laws 1961, | 0017| Chapter 96, Section 1-105, as amended) is amended to read: | 0018| "55-1-105. TERRITORIAL APPLICATION OF THE ACT--PARTIES' | 0019| POWER TO CHOOSE APPLICABLE LAW.-- | 0020| (1) Except as provided in this section, when a | 0021| transaction bears a reasonable relation to this state and also | 0022| to another state or nation, the parties may agree that the law | 0023| either of this state or such other state or nation shall govern | 0024| their rights and duties. Failing such agreement, the Uniform | 0025| Commercial Code applies to transactions bearing an appropriate | 0001| relation to this state. | 0002| (2) Where one of the following provisions of the | 0003| Uniform Commercial Code specifies the applicable law, that | 0004| provision governs and a contrary agreement is effective only to | 0005| the extent permitted by the law (including the conflict of laws | 0006| rules) so specified: | 0007| rights of creditors against sold goods. Section | 0008| 55-2-402 NMSA 1978; | 0009| applicability of the article on leases. Sections | 0010| 55-2A-105 and 55-2A-106 NMSA 1978; | 0011| applicability of the article on bank deposits and | 0012| collections. Section 55-4-102 NMSA 1978; | 0013| governing law in the article on fund transfers. | 0014| Section 55-4A-507 NMSA 1978; | 0015| letters of credit. Section 55-5-116 NMSA 1978; | 0016| applicability of the article on investment | 0017| securities. Section 55-8-110 NMSA 1978; and | 0018| perfection provisions of the article on secured | 0019| transactions. Section 55-9-103 NMSA 1978." | 0020| Section 2. Section 55-2-512 NMSA 1978 (being Laws 1961, | 0021| Chapter 96, Section 2-512) is amended to read: | 0022| "55-2-512. PAYMENT BY BUYER BEFORE INSPECTION.-- | 0023| (1) Where the contract requires payment before | 0024| inspection non-conformity of the goods does not excuse the | 0025| buyer from so making payment unless: | 0001| (a) the non-conformity appears without | 0002| inspection; or | 0003| (b) despite tender of the required documents | 0004| the circumstances would justify injunction against honor under | 0005| the provisions of ~~[this Act]~~ the Uniform Commercial Code | 0006| (Section ~~[5-114]~~ 55-5-109 NMSA 1978). | 0007| (2) Payment pursuant to Subsection (1) of this | 0008| section does not constitute an acceptance of goods or impair | 0009| the ~~[buyers]~~ buyer's right to inspect or any of his | 0010| remedies." | 0011| Section 3. Section 55-5-101 NMSA 1978 (being Laws 1961, | 0012| Chapter 96, Section 5-101) is repealed and a new section of the | 0013| Uniform Commercial Code, Section 55-5-101 NMSA 1978, is enacted | 0014| to read: | 0015| "55-5-101. [NEW MATERIAL] SHORT TITLE.--Chapter 55, | 0016| Article 5 NMSA 1978 may be cited as "Uniform Commercial | 0017| Code--Letters of Credit"." | 0018| Section 4. Section 55-5-102 NMSA 1978 (being Laws 1961, | 0019| Chapter 96, Section 5-102) is repealed and a new section of the | 0020| Uniform Commercial Code, Section 55-5-102 NMSA 1978, is enacted | 0021| to read: | 0022| "55-5-102. [NEW MATERIAL] DEFINITIONS.-- | 0023| (a) In this article: | 0024| (1) "adviser" means a person who, at the | 0025| request of the issuer, a confirmer or another adviser, notifies | 0001| or requests another adviser to notify the beneficiary that a | 0002| letter of credit has been issued, confirmed or amended; | 0003| (2) "applicant" means a person at whose | 0004| request or for whose account a letter of credit is issued. The | 0005| term includes a person who requests an issuer to issue a letter | 0006| of credit on behalf of another if the person making the request | 0007| undertakes an obligation to reimburse the issuer; | 0008| (3) "beneficiary" means a person who under the | 0009| terms of a letter of credit is entitled to have its complying | 0010| presentation honored. The term includes a person to whom | 0011| drawing rights have been transferred under a transferable | 0012| letter of credit; | 0013| (4) "confirmer" means a nominated person who | 0014| undertakes, at the request or with the consent of the issuer, | 0015| to honor a presentation under a letter of credit issued by | 0016| another; | 0017| (5) "dishonor" of a letter of credit means | 0018| failure timely to honor or to take an interim action, such as | 0019| acceptance of a draft, that may be required by the letter of | 0020| credit; | 0021| (6) "document" means a draft or other demand, | 0022| document of title, investment security, certificate, invoice, | 0023| or other record, statement, or representation of fact, law, | 0024| right or opinion (i) which is presented in a written or other | 0025| medium permitted by the letter of credit or, unless prohibited | 0001| by the letter of credit, by the standard practice referred to | 0002| in Section 55-5-108(e) NMSA 1978 and (ii) which is capable of | 0003| being examined for compliance with the terms and conditions of | 0004| the letter of credit. A document may not be oral; | 0005| (7) "good faith" means honesty in fact in the | 0006| conduct or transaction concerned; | 0007| (8) "honor" of a letter of credit means | 0008| performance of the issuer's undertaking in the letter of credit | 0009| to pay or deliver an item of value. Unless the letter of | 0010| credit otherwise provides, "honor" occurs: | 0011| (i) upon payment; | 0012| (ii) if the letter of credit provides | 0013| for acceptance, upon acceptance of a draft and, at maturity, | 0014| its payment, or; | 0015| (iii) if the letter of credit provides | 0016| for incurring a deferred obligation, upon incurring the | 0017| obligation and, at maturity, its performance; | 0018| (9) "issuer" means a bank or other person that | 0019| issues a letter of credit, but does not include an individual | 0020| who makes an engagement for personal, family or household | 0021| purposes; | 0022| (10) "letter of credit" means a definite | 0023| undertaking that satisfies the requirements of Section 55-5-104 | 0024| NMSA 1978 by an issuer to a beneficiary at the request or for | 0025| the account of an applicant or, in the case of a financial | 0001| institution, to itself or for its own account, to honor a | 0002| documentary presentation by payment or delivery of an item of | 0003| value; | 0004| (11) "nominated person" means a person whom | 0005| the issuer (i) designates or authorizes to pay, accept, | 0006| negotiate or otherwise give value under a letter of credit and | 0007| (ii) undertakes by agreement or custom and practice to | 0008| reimburse; | 0009| (12) "presentation" means delivery of a | 0010| document to an issuer or nominated person for honor or giving | 0011| of value under a letter of credit; | 0012| (13) "presenter" means a person making a | 0013| presentation as or on behalf of a beneficiary or nominated | 0014| person; | 0015| (14) "record" means information that is | 0016| inscribed on a tangible medium or that is stored in an | 0017| electronic or other medium and is retrievable in perceivable | 0018| form; and | 0019| (15) "successor of a beneficiary" means a | 0020| person who succeeds to substantially all of the rights of a | 0021| beneficiary by operation of law, including a corporation with | 0022| or into which the beneficiary has been merged or consolidated, | 0023| an administrator, executor, personal representative, trustee in | 0024| bankruptcy, debtor in possession, liquidator and receiver. | 0025| (b) Definitions in other articles applying to this | 0001| article and the sections in which they appear are: | 0002| "accept" or "acceptance" Section 55-3-409 NMSA 1978 | 0003| "value" Sections 55-3-303 and 55-4-211 | 0004| NMSA 1978. | 0005| (c) Article 1 contains certain additional general | 0006| definitions and principles of construction and interpretation | 0007| applicable throughout this article." | 0008| Section 5. Section 55-5-103 NMSA 1978 (being Laws 1961, | 0009| Chapter 96, Section 5-103, as amended) is repealed and a new | 0010| section of the Uniform Commercial Code, Section 55-5-103 NMSA | 0011| 1978, is enacted to read: | 0012| "55-5-103. [NEW MATERIAL] SCOPE.-- | 0013| (a) This article applies to letters of credit and | 0014| to certain rights and obligations arising out of transactions | 0015| involving letters of credit. | 0016| (b) The statement of a rule in this article does | 0017| not by itself require, imply or negate application of the same | 0018| or a different rule to a situation not provided for, or to a | 0019| person not specified, in this article. | 0020| (c) With the exception of this subsection, | 0021| Subsections (a) and (d) of this section, Sections 55- | 0022| 5-102(a)(9) and (10) NMSA 1978, Section 55-5-106(d) NMSA 1978 | 0023| and Section 55-5-114(d) NMSA 1978, and except to the extent | 0024| prohibited in Section 55-1-102(3) NMSA 1978 and Section 55- | 0025| 5-117(d) NMSA 1978, the effect of this article may be varied by | 0001| agreement or by a provision stated or incorporated by reference | 0002| in an undertaking. A term in an agreement or undertaking | 0003| generally excusing liability or generally limiting remedies for | 0004| failure to perform obligations is not sufficient to vary | 0005| obligations prescribed by this article. | 0006| (d) Rights and obligations of an issuer to a | 0007| beneficiary or a nominated person under a letter of credit are | 0008| independent of the existence, performance or nonperformance of | 0009| a contract or arrangement out of which the letter of credit | 0010| arises or which underlies it, including contracts or | 0011| arrangements between the issuer and the applicant and between | 0012| the applicant and the beneficiary." | 0013| Section 6. Section 55-5-104 NMSA 1978 (being Laws 1961, | 0014| Chapter 96, Section 5-104) is repealed and a new section of the | 0015| Uniform Commercial Code, Section 55-5-104 NMSA 1978, is enacted | 0016| to read: | 0017| "55-5-104. [NEW MATERIAL] FORMAL REQUIREMENTS.--A | 0018| letter of credit, confirmation, advice, transfer, amendment or | 0019| cancellation may be issued in any form that is a record and is | 0020| authenticated (i) by a signature or (ii) in accordance with the | 0021| agreement of the parties or the standard practice referred to | 0022| in Section 55-5-108(e) NMSA 1978." | 0023| Section 7. Section 55-5-105 NMSA 1978 (being Laws 1961, | 0024| Chapter 96, Section 5-105) is repealed and a new section of the | 0025| Uniform Commercial Code, Section 55-5-105 NMSA 1978, is enacted | 0001| to read: | 0002| "55-5-105. [NEW MATERIAL] CONSIDERATION.-- | 0003| Consideration is not required to issue, amend, transfer or | 0004| cancel a letter of credit, advice or confirmation." | 0005| Section 8. Section 55-5-106 NMSA 1978 (being Laws 1961, | 0006| Chapter 96, Section 5-106) is repealed and a new section of the | 0007| Uniform Commercial Code, Section 55-5-106 NMSA 1978, is enacted | 0008| to read: | 0009| "55-5-106. [NEW MATERIAL] ISSUANCE, AMENDMENT, | 0010| CANCELLATION AND DURATION.-- | 0011| (a) A letter of credit is issued and becomes | 0012| enforceable according to its terms against the issuer when the | 0013| issuer sends or otherwise transmits it to the person requested | 0014| to advise or to the beneficiary. A letter of credit is | 0015| revocable only if it so provides. | 0016| (b) After a letter of credit is issued, rights and | 0017| obligations of a beneficiary, applicant, confirmer and issuer | 0018| are not affected by an amendment or cancellation to which that | 0019| person has not consented except to the extent the letter of | 0020| credit provides that it is revocable or that the issuer may | 0021| amend or cancel the letter of credit without that consent. | 0022| (c) If there is no stated expiration date or other | 0023| provision that determines its duration, a letter of credit | 0024| expires one year after its stated date of issuance or, if none | 0025| is stated, after the date on which it is issued. | 0001| (d) A letter of credit that states that it is | 0002| perpetual expires five years after its stated date of issuance, | 0003| or if none is stated, after the date on which it is issued." | 0004| Section 9. Section 55-5-107 NMSA 1978 (being Laws 1961, | 0005| Chapter 96, Section 5-107) is repealed and a new section of the | 0006| Uniform Commercial Code, Section 55-5-107 NMSA 1978, is enacted | 0007| to read: | 0008| "55-5-107. [NEW MATERIAL] CONFIRMER, NOMINATED PERSON | 0009| AND ADVISER.-- | 0010| (a) A confirmer is directly obligated on a letter | 0011| of credit and has the rights and obligations of an issuer to | 0012| the extent of its confirmation. The confirmer also has rights | 0013| against and obligations to the issuer as if the issuer were an | 0014| applicant and the confirmer had issued the letter of credit at | 0015| the request and for the account of the issuer. | 0016| (b) A nominated person who is not a confirmer is | 0017| not obligated to honor or otherwise give value for a | 0018| presentation. | 0019| (c) A person requested to advise may decline to act | 0020| as an adviser. An adviser that is not a confirmer is not | 0021| obligated to honor or give value for a presentation. An | 0022| adviser undertakes to the issuer and to the beneficiary | 0023| accurately to advise the terms of the letter of credit, | 0024| confirmation, amendment or advice received by that person and | 0025| undertakes to the beneficiary to check the apparent | 0001| authenticity of the request to advise. Even if the advice is | 0002| inaccurate, the letter of credit, confirmation or amendment is | 0003| enforceable as issued. | 0004| (d) A person who notifies a transferee beneficiary | 0005| of the terms of a letter of credit, confirmation, amendment or | 0006| advice has the rights and obligations of an adviser under | 0007| Subsection (c) of this section. The terms in the notice to the | 0008| transferee beneficiary may differ from the terms in any notice | 0009| to the transferor beneficiary to the extent permitted by the | 0010| letter of credit, confirmation, amendment or advice received by | 0011| the person who so notifies." | 0012| Section 10. Section 55-5-108 NMSA 1978 (being Laws 1961, | 0013| Chapter 96, Section 5-108) is repealed and a new section of the | 0014| Uniform Commercial Code, Section 55-5-108 NMSA 1978, is enacted | 0015| to read: | 0016| "55-5-108. [NEW MATERIAL] ISSUER'S RIGHTS AND | 0017| OBLIGATIONS.-- | 0018| (a) Except as otherwise provided in Section 55- | 0019| 5-109 NMSA 1978, an issuer shall honor a presentation that, as | 0020| determined by the standard practice referred to in Subsection | 0021| (e) of this section, appears on its face strictly to comply | 0022| with the terms and conditions of the letter of credit. Except | 0023| as otherwise provided in Section 55-5-113 NMSA 1978 and unless | 0024| otherwise agreed with the applicant, an issuer shall dishonor a | 0025| presentation that does not appear so to comply. | 0001| (b) An issuer has a reasonable time after | 0002| presentation, but not beyond the end of the seventh business | 0003| day of the issuer after the day of its receipt of documents: | 0004| (1) to honor; | 0005| (2) if the letter of credit provides for honor | 0006| to be completed more than seven business days after | 0007| presentation, to accept a draft or incur a deferred obligation; | 0008| or | 0009| (3) to give notice to the presenter of | 0010| discrepancies in the presentation. | 0011| (c) Except as otherwise provided in Subsection (d) | 0012| of this section, an issuer is precluded from asserting as a | 0013| basis for dishonor any discrepancy if timely notice is not | 0014| given or any discrepancy not stated in the notice if timely | 0015| notice is given. | 0016| (d) Failure to give the notice specified in | 0017| Subsection (b) of this section or to mention fraud, forgery or | 0018| expiration in the notice does not preclude the issuer from | 0019| asserting as a basis for dishonor, fraud or forgery as | 0020| described in Section 55-5-109(a) NMSA 1978, or expiration of | 0021| the letter of credit before presentation. | 0022| (e) An issuer shall observe standard practice of | 0023| financial institutions that regularly issue letters of credit. | 0024| Determination of the issuer's observance of the standard | 0025| practice is a matter of interpretation for the court. The | 0001| court shall offer the parties a reasonable opportunity to | 0002| present evidence of the standard practice. | 0003| (f) An issuer is not responsible for: | 0004| (1) the performance or nonperformance of the | 0005| underlying contract, arrangement or transaction; | 0006| (2) an act or omission of others; or | 0007| (3) observance or knowledge of the usage of a | 0008| particular trade other than the standard practice referred to | 0009| in Subsection (e) of this section. | 0010| (g) If an undertaking constituting a letter of | 0011| credit under Section 55-5-102(a)(10) NMSA 1978 contains | 0012| nondocumentary conditions, an issuer shall disregard the | 0013| nondocumentary conditions and treat them as if they were not | 0014| stated. | 0015| (h) An issuer that has dishonored a presentation | 0016| shall return the documents or hold them at the disposal of, and | 0017| send advice to that effect to, the presenter. | 0018| (i) An issuer that has honored a presentation as | 0019| permitted or required by this article: | 0020| (1) is entitled to be reimbursed by the | 0021| applicant in immediately available funds not later than the | 0022| date of its payment of funds; | 0023| (2) takes the documents free of claims of the | 0024| beneficiary or presenter; | 0025| (3) is precluded from asserting a right of | 0001| recourse on a draft under Sections 55-3-414 and 55-3-415 NMSA | 0002| 1978; | 0003| (4) except as otherwise provided in Sections | 0004| 55-5-110 and 55-5-117 NMSA 1978, is precluded from restitution | 0005| of money paid or other value given by mistake to the extent the | 0006| mistake concerns discrepancies in the documents or tender which | 0007| are apparent on the face of the presentation; and | 0008| (5) is discharged to the extent of its | 0009| performance under the letter of credit unless the issuer | 0010| honored a presentation in which a required signature of a | 0011| beneficiary was forged." | 0012| Section 11. Section 55-5-109 NMSA 1978 (being Laws 1961, | 0013| Chapter 96, Section 5-109) is repealed and a new section of the | 0014| Uniform Commercial Code, Section 55-5-109 NMSA 1978, is enacted | 0015| to read: | 0016| "55-5-109. [NEW MATERIAL] FRAUD AND FORGERY.-- | 0017| (a) If a presentation is made that appears on its | 0018| face strictly to comply with the terms and conditions of the | 0019| letter of credit, but a required document is forged or | 0020| materially fraudulent, or honor of the presentation would | 0021| facilitate a material fraud by the beneficiary on the issuer or | 0022| applicant: | 0023| (1) the issuer shall honor the presentation, | 0024| if honor is demanded by (i) a nominated person who has given | 0025| value in good faith and without notice of forgery or material | 0001| fraud, (ii) a confirmer who has honored its confirmation in | 0002| good faith, (iii) a holder in due course of a draft drawn under | 0003| the letter of credit which was taken after acceptance by the | 0004| issuer or nominated person, or (iv) an assignee of the issuer's | 0005| or nominated person's deferred obligation that was taken for | 0006| value and without notice of forgery or material fraud after the | 0007| obligation was incurred by the issuer or nominated person; and | 0008| (2) the issuer, acting in good faith, may | 0009| honor or dishonor the presentation in any other case. | 0010| (b) If an applicant claims that a required document | 0011| is forged or materially fraudulent or that honor of the | 0012| presentation would facilitate a material fraud by the | 0013| beneficiary on the issuer or applicant, a court of competent | 0014| jurisdiction may temporarily or permanently enjoin the issuer | 0015| from honoring a presentation or grant similar relief against | 0016| the issuer or other persons only if the court finds that: | 0017| (1) the relief is not prohibited under the law | 0018| applicable to an accepted draft or deferred obligation incurred | 0019| by the issuer; | 0020| (2) a beneficiary, issuer or nominated person | 0021| who may be adversely affected is adequately protected against | 0022| loss that it may suffer because the relief is granted; | 0023| (3) all of the conditions to entitle a person | 0024| to the relief under the law of this state have been met; and | 0025| (4) on the basis of the information submitted | 0001| to the court, the applicant is more likely than not to succeed | 0002| under its claim of forgery or material fraud and the person | 0003| demanding honor does not qualify for protection under | 0004| Subsection (a)(1) of this section." | 0005| Section 12. Section 55-5-110 NMSA 1978 (being Laws 1961, | 0006| Chapter 96, Section 5-110) is repealed and a new section of the | 0007| Uniform Commercial Code, Section 55-5-110 NMSA 1978, is enacted | 0008| to read: | 0009| "55-5-110. [NEW MATERIAL] WARRANTIES.-- | 0010| (a) If its presentation is honored, the beneficiary | 0011| warrants: | 0012| (1) to the issuer, any other person to whom | 0013| presentation is made and the applicant that there is no fraud | 0014| or forgery of the kind described in Section 55-5-109(a) NMSA | 0015| 1978; and | 0016| (2) to the applicant that the drawing does not | 0017| violate any agreement between the applicant and beneficiary or | 0018| any other agreement intended by them to be augmented by the | 0019| letter of credit. | 0020| (b) The warranties in Subsection (a) of this | 0021| section are in addition to warranties arising under Articles 3, | 0022| 4, 7 and 8 because of the presentation or transfer of documents | 0023| covered by any of those articles." | 0024| Section 13. Section 55-5-111 NMSA 1978 (being Laws 1961, | 0025| Chapter 96, Section 5-111) is repealed and a new section of the | 0001| Uniform Commercial Code, Section 55-5-111 NMSA 1978, is enacted | 0002| to read: | 0003| "55-5-111. [NEW MATERIAL] REMEDIES.-- | 0004| (a) If an issuer wrongfully dishonors or repudiates | 0005| its obligation to pay money under a letter of credit before | 0006| presentation, the beneficiary, successor or nominated person | 0007| presenting on its own behalf may recover from the issuer the | 0008| amount that is the subject of the dishonor or repudiation. If | 0009| the issuer's obligation under the letter of credit is not for | 0010| the payment of money, the claimant may obtain specific | 0011| performance or, at the claimant's election, recover an amount | 0012| equal to the value of performance from the issuer. In either | 0013| case, the claimant may also recover incidental but not | 0014| consequential damages. The claimant is not obligated to take | 0015| action to avoid damages that might be due from the issuer under | 0016| this subsection. If, although not obligated to do so, the | 0017| claimant avoids damages, the claimant's recovery from the | 0018| issuer must be reduced by the amount of damages avoided. The | 0019| issuer has the burden of proving the amount of damages avoided. | 0020| In the case of repudiation, the claimant need not present any | 0021| document. | 0022| (b) If an issuer wrongfully dishonors a draft or | 0023| demand presented under a letter of credit or honors a draft or | 0024| demand in breach of its obligation to the applicant, the | 0025| applicant may recover damages resulting from the breach, | 0001| including incidental but not consequential damages, less any | 0002| amount saved as a result of the breach. | 0003| (c) If an adviser or nominated person other than a | 0004| confirmer breaches an obligation under this article or an | 0005| issuer breaches an obligation not covered in Subsection (a) or | 0006| (b) of this section, a person to whom the obligation is owed | 0007| may recover damages resulting from the breach, including | 0008| incidental but not consequential damages, less any amount saved | 0009| as a result of the breach. To the extent of the confirmation, | 0010| a confirmer has the liability of an issuer specified in this | 0011| subsection and Subsections (a) and (b) of this section. | 0012| (d) An issuer, nominated person or adviser who is | 0013| found liable under Subsection (a), (b) or (c) of this section | 0014| shall pay interest on the amount owed thereunder from the date | 0015| of wrongful dishonor or other appropriate date. | 0016| (e) Reasonable attorney's fees and other expenses | 0017| of litigation must be awarded to the prevailing party in an | 0018| action in which a remedy is sought under this article. | 0019| (f) Damages that would otherwise be payable by a | 0020| party for breach of an obligation under this article may be | 0021| liquidated by agreement or undertaking, but only in an amount | 0022| or by a formula that is reasonable in light of the harm | 0023| anticipated." | 0024| Section 14. Section 55-5-112 NMSA 1978 (being Laws 1961, | 0025| Chapter 96, Section 5-112) is repealed and a new section of the | 0001| Uniform Commercial Code, Section 55-5-112 NMSA 1978, is enacted | 0002| to read: | 0003| "55-5-112. [NEW MATERIAL] TRANSFER OF LETTER OF | 0004| CREDIT.-- | 0005| (a) Except as otherwise provided in Section 55- | 0006| 5-113 NMSA 1978, unless a letter of credit provides that it is | 0007| transferable, the right of a beneficiary to draw or otherwise | 0008| demand performance under a letter of credit may not be | 0009| transferred. | 0010| (b) Even if a letter of credit provides that it is | 0011| transferable, the issuer may refuse to recognize or carry out a | 0012| transfer if: | 0013| (1) the transfer would violate applicable law; | 0014| or | 0015| (2) the transferor or transferee has failed to | 0016| comply with any requirement stated in the letter of credit or | 0017| any other requirement relating to transfer imposed by the | 0018| issuer which is within the standard practice referred to in | 0019| Section | 0020| 55-5-108(e) NMSA 1978 or is otherwise reasonable under the | 0021| circumstances." | 0022| Section 15. Section 55-5-113 NMSA 1978 (being Laws 1961, | 0023| Chapter 96, Section 5-113) is repealed and a new section of the | 0024| Uniform Commercial Code, Section 55-5-113 NMSA 1978, is enacted | 0025| to read: | 0001| "55-5-113. [NEW MATERIAL] TRANSFER BY OPERATION OF | 0002| LAW.-- | 0003| (a) A successor of a beneficiary may consent to | 0004| amendments, sign and present documents, and receive payment or | 0005| other items of value in the name of the beneficiary without | 0006| disclosing its status as a successor. | 0007| (b) A successor of a beneficiary may consent to | 0008| amendments, sign and present documents, and receive payment or | 0009| other items of value in its own name as the disclosed successor | 0010| of the beneficiary. Except as otherwise provided in Subsection | 0011| (e) of this section, an issuer shall recognize a disclosed | 0012| successor of a beneficiary as beneficiary in full substitution | 0013| for its predecessor upon compliance with the requirements for | 0014| recognition by the issuer of a transfer of drawing rights by | 0015| operation of law under the standard practice referred to in | 0016| Section 55-5-108(e) NMSA 1978 or, in the absence of such a | 0017| practice, compliance with other reasonable procedures | 0018| sufficient to protect the issuer. | 0019| (c) An issuer is not obliged to determine whether a | 0020| purported successor is a successor of a beneficiary or whether | 0021| the signature of a purported successor is genuine or | 0022| authorized. | 0023| (d) Honor of a purported successor's apparently | 0024| complying presentation under Subsection (a) or (b) of this | 0025| section has the consequences specified in Section 55-5-108(i) | 0001| NMSA 1978 even if the purported successor is not the successor | 0002| of a beneficiary. Documents signed in the name of the | 0003| beneficiary or of a disclosed successor by a person who is | 0004| neither the beneficiary nor the successor of the beneficiary | 0005| are forged documents for the purposes of Section 55-5-109 NMSA | 0006| 1978. | 0007| (e) An issuer whose rights of reimbursement are not | 0008| covered by Subsection (d) of this section or substantially | 0009| similar law and any confirmer or nominated person may decline | 0010| to recognize a presentation under Subsection (b) of this | 0011| section. | 0012| (f) A beneficiary whose name is changed after the | 0013| issuance of a letter of credit has the same rights and | 0014| obligations as a successor of a beneficiary under this | 0015| section." | 0016| Section 16. Section 55-5-114 NMSA 1978 (being Laws 1961, | 0017| Chapter 96, Section 5-114, as amended) is repealed and a new | 0018| section of the Uniform Commercial Code, Section 55-5-114 NMSA | 0019| 1978, is enacted to read: | 0020| "55-5-114. [NEW MATERIAL] ASSIGNMENT OF PROCEEDS.-- | 0021| (a) In this section, "proceeds of a letter of | 0022| credit" means the cash, check, accepted draft or other item of | 0023| value paid or delivered upon honor or giving of value by the | 0024| issuer or any nominated person under the letter of credit. The | 0025| term does not include a beneficiary's drawing rights or | 0001| documents presented by the beneficiary. | 0002| (b) A beneficiary may assign its right to part or | 0003| all of the proceeds of a letter of credit. The beneficiary may | 0004| do so before presentation as a present assignment of its right | 0005| to receive proceeds contingent upon its compliance with the | 0006| terms and conditions of the letter of credit. | 0007| (c) An issuer or nominated person need not | 0008| recognize an assignment of proceeds of a letter of credit until | 0009| it consents to the assignment. | 0010| (d) An issuer or nominated person has no obligation | 0011| to give or withhold its consent to an assignment of proceeds of | 0012| a letter of credit, but consent may not be unreasonably | 0013| withheld if the assignee possesses and exhibits the letter of | 0014| credit and presentation of the letter of credit is a condition | 0015| to honor. | 0016| (e) Rights of a transferee beneficiary or nominated | 0017| person are independent of the beneficiary's assignment of the | 0018| proceeds of a letter of credit and are superior to the | 0019| assignee's right to the proceeds. | 0020| (f) Neither the rights recognized by this section | 0021| between an assignee and an issuer, transferee beneficiary or | 0022| nominated person nor the issuer's or nominated person's payment | 0023| of proceeds to an assignee or a third person affect the rights | 0024| between the assignee and any person other than the issuer, | 0025| transferee beneficiary or nominated person. The mode of | 0001| creating and perfecting a security interest in or granting an | 0002| assignment of a beneficiary's rights to proceeds is governed by | 0003| Article 9 or other law. Against persons other than the issuer, | 0004| transferee beneficiary or nominated person, the rights and | 0005| obligations arising upon the creation of a security interest or | 0006| other assignment of a beneficiary's right to proceeds and its | 0007| perfection are governed by Article 9 or other law." | 0008| Section 17. Section 55-5-115 NMSA 1978 (being Laws 1961, | 0009| Chapter 96, Section 5-115) is repealed and a new section of the | 0010| Uniform Commercial Code, Section 55-5-115 NMSA 1978, is enacted | 0011| to read: | 0012| "55-5-115. [NEW MATERIAL] STATUTE OF LIMITATIONS.--An | 0013| action to enforce a right or obligation arising under this | 0014| article must be commenced within one year after the expiration | 0015| date of the relevant letter of credit or one year after the | 0016| cause of action accrues, whichever occurs later. A cause of | 0017| action accrues when the breach occurs, regardless of the | 0018| aggrieved party's lack of knowledge of the breach." | 0019| Section 18. Section 55-5-116 NMSA 1978 (being Laws 1961, | 0020| Chapter 96, Section 5-116, as amended) is repealed and a new | 0021| section of the Uniform Commercial Code, Section 55-5-116 NMSA | 0022| 1978, is enacted to read: | 0023| "55-5-116. [NEW MATERIAL] CHOICE OF LAW AND FORUM.-- | 0024| (a) The liability of an issuer, nominated person or | 0025| adviser for action or omission is governed by the law of the | 0001| jurisdiction chosen by an agreement in the form of a record | 0002| signed or otherwise authenticated by the affected parties in | 0003| the manner provided in Section 55-5-104 NMSA 1978 or by a | 0004| provision in the person's letter of credit, confirmation or | 0005| other undertaking. The jurisdiction whose law is chosen need | 0006| not bear any relation to the transaction. | 0007| (b) Unless Subsection (a) of this section applies, | 0008| the liability of an issuer, nominated person or adviser for | 0009| action or omission is governed by the law of the jurisdiction | 0010| in which the person is located. The person is considered to be | 0011| located at the address indicated in the person's undertaking. | 0012| If more than one address is indicated, the person is considered | 0013| to be located at the address from which the person's | 0014| undertaking was issued. For the purpose of jurisdiction, | 0015| choice of law and recognition of interbranch letters of credit, | 0016| but not enforcement of a judgment, all branches of a bank are | 0017| considered separate juridical entities, and a bank is | 0018| considered to be located at the place where its relevant branch | 0019| is considered to be located under this subsection. | 0020| (c) Except as otherwise provided in this | 0021| subsection, the liability of an issuer, nominated person or | 0022| adviser is governed by any rules of custom or practice, such as | 0023| the Uniform Customs and Practice for Documentary Credits, to | 0024| which the letter of credit, confirmation or other undertaking | 0025| is expressly made subject. If (i) this article would govern | 0001| the liability of an issuer, nominated person, or adviser under | 0002| Subsection (a) or (b) of this section, (ii) the relevant | 0003| undertaking incorporates rules of custom or practice, and (iii) | 0004| there is conflict between this article and those rules as | 0005| applied to that undertaking, those rules govern except to the | 0006| extent of any conflict with the nonvariable provisions | 0007| specified in Section 55-5-103(c) NMSA 1978. | 0008| (d) If there is conflict between this article and | 0009| Article 3, 4, 4A or 9, this article governs. | 0010| (e) The forum for settling disputes arising out of | 0011| an undertaking within this article may be chosen in the manner | 0012| and with the binding effect that governing law may be chosen in | 0013| accordance with Subsection (a) of this section." | 0014| Section 19. Section 55-5-117 NMSA 1978 (being Laws 1961, | 0015| Chapter 96, Section 5-117) is repealed and a new section of the | 0016| Uniform Commercial Code, Section 55-5-117 NMSA 1978, is enacted | 0017| to read: | 0018| "55-5-117. [NEW MATERIAL] SUBROGATION OF ISSUER, | 0019| APPLICANT AND NOMINATED PERSON.-- | 0020| (a) An issuer that honors a beneficiary's | 0021| presentation is subrogated to the rights of the beneficiary to | 0022| the same extent as if the issuer were a secondary obligor of | 0023| the underlying obligation owed to the beneficiary and of the | 0024| applicant to the same extent as if the issuer were the | 0025| secondary obligor of the underlying obligation owed to the | 0001| applicant. | 0002| (b) An applicant that reimburses an issuer is | 0003| subrogated to the rights of the issuer against any beneficiary, | 0004| presenter or nominated person to the same extent as if the | 0005| applicant were the secondary obligor of the obligations owed to | 0006| the issuer and has the rights of subrogation of the issuer to | 0007| the rights of the beneficiary stated in Subsection (a) of this | 0008| section. | 0009| (c) A nominated person who pays or gives value | 0010| against a draft or demand presented under a letter of credit is | 0011| subrogated to the rights of: | 0012| (1) the issuer against the applicant to the | 0013| same extent as if the nominated person were a secondary obligor | 0014| of the obligation owed to the issuer by the applicant; | 0015| (2) the beneficiary to the same extent as if | 0016| the nominated person were a secondary obligor of the underlying | 0017| obligation owed to the beneficiary; and | 0018| (3) the applicant to the same extent as if the | 0019| nominated person were a secondary obligor of the underlying | 0020| obligation owed to the applicant. | 0021| (d) Notwithstanding any agreement or term to the | 0022| contrary, the rights of subrogation stated in Subsections (a) | 0023| and (b) of this section do not arise until the issuer honors | 0024| the letter of credit or otherwise pays, and the rights in | 0025| Subsection (c) of this section do not arise until the nominated | 0001| person pays or otherwise gives value. Until then, the issuer, | 0002| nominated person and the applicant do not derive under this | 0003| section present or prospective rights forming the basis of a | 0004| claim, defense or excuse." | 0005| Section 20. Section 55-9-103 NMSA 1978 (being Laws 1961, | 0006| Chapter 96, Section 9-103, as amended) is amended to read: | 0007| "55-9-103. PERFECTION OF SECURITY INTERESTS IN MULTIPLE | 0008| STATE TRANSACTIONS.-- | 0009| (1) Documents, instruments and ordinary goods. | 0010| (a) This subsection applies to documents, | 0011| ~~[and]~~ instruments, rights to proceeds of written letters of | 0012| credit and ~~[to]~~ goods other than those covered by a | 0013| certificate of title described in Subsection (2) of this | 0014| section, mobile goods described in Subsection (3) of this | 0015| section and minerals described in Subsection (5) of this | 0016| section. | 0017| (b) Except as otherwise provided in this | 0018| subsection, perfection and the effect of perfection or non- | 0019| perfection of a security interest in collateral are governed by | 0020| the law of the jurisdiction where the collateral is when the | 0021| last event occurs on which is based the assertion that the | 0022| security interest is perfected or unperfected. | 0023| (c) If the parties to a transaction creating a | 0024| purchase money security interest in goods in one jurisdiction | 0025| understand at the time that the security interest attaches that | 0001| the goods will be kept in another jurisdiction, then the law of | 0002| the other jurisdiction governs the perfection and the effect of | 0003| perfection or non-perfection of the security interest from the | 0004| time it attaches until thirty days after the debtor receives | 0005| possession of the goods and thereafter if the goods are taken | 0006| to the other jurisdiction before the end of the thirty-day | 0007| period. | 0008| (d) When collateral is brought into and kept | 0009| in this state while subject to a security interest perfected | 0010| under the law of the jurisdiction from which the collateral was | 0011| removed, the security interest remains perfected, but if action | 0012| is required by Sections 55-9-301 through 55-9-318 NMSA 1978 to | 0013| perfect the security interest: | 0014| (i) if the action is not taken before | 0015| the expiration of the period of perfection in the other | 0016| jurisdiction or the end of four months after the collateral is | 0017| brought into this state, whichever period first expires, the | 0018| security interest becomes unperfected at the end of that period | 0019| and is thereafter deemed to have been unperfected as against a | 0020| person who became a purchaser after removal; | 0021| (ii) if the action is taken before the | 0022| expiration of the period specified in Subparagraph (i) of this | 0023| paragraph, the security interest continues perfected | 0024| thereafter; or | 0025| (iii) for the purpose of priority over a | 0001| buyer of consumer goods (Subsection (2) of Section 55-9-307 | 0002| NMSA 1978), the period of the effectiveness of a filing in the | 0003| jurisdiction from which the collateral is removed is governed | 0004| by the rules with respect to perfection in Subparagraphs (i) | 0005| and (ii) of this paragraph. | 0006| (2) Certificate of title. | 0007| (a) This subsection applies to goods covered | 0008| by a certificate of title issued under a statute of this state | 0009| or of another jurisdiction under the law of which indication of | 0010| a security interest on the certificate is required as a | 0011| condition of perfection. | 0012| (b) Except as otherwise provided in this | 0013| subsection, perfection and the effect of perfection or non- | 0014| perfection of the security interest are governed by the law | 0015| (including the conflict of laws rules) of the jurisdiction | 0016| issuing the certificate until four months after the goods are | 0017| removed from that jurisdiction and thereafter until the goods | 0018| are registered in another jurisdiction, but in any event not | 0019| beyond surrender of the certificate. After the expiration of | 0020| that period, the goods are not covered by the certificate of | 0021| title within the meaning of this section. | 0022| (c) Except with respect to the rights of a | 0023| buyer described in the next paragraph, a security interest, | 0024| perfected in another jurisdiction otherwise than by notation on | 0025| a certificate of title, in goods brought into this state and | 0001| thereafter covered by a certificate of title issued by this | 0002| state is subject to the rules stated in Paragraph (d) of | 0003| Subsection (1) of this section. | 0004| (d) If goods are brought into this state while | 0005| a security interest therein is perfected in any manner under | 0006| the law of the jurisdiction from which the goods are removed | 0007| and a certificate of title is issued by this state and the | 0008| certificate does not show that the goods are subject to the | 0009| security interest or that they may be subject to security | 0010| interests not shown on the certificate, the security interest | 0011| is subordinate to the rights of a buyer of the goods who is not | 0012| in the business of selling goods of that kind to the extent | 0013| that he gives value and receives delivery of the goods after | 0014| issuance of the certificate and without knowledge of the | 0015| security interest. | 0016| (3) Accounts, general intangibles and mobile goods. | 0017| (a) This subsection applies to accounts (other | 0018| than an account described in Subsection (5) of this section on | 0019| minerals) and general intangibles (other than uncertificated | 0020| securities) and to goods which are mobile and which are of a | 0021| type normally used in more than one jurisdiction, such as motor | 0022| vehicles, trailers, rolling stock, airplanes, shipping | 0023| containers, road building and construction machinery and | 0024| commercial harvesting machinery and the like, if the goods are | 0025| equipment or are inventory leased or held for lease by the | 0001| debtor to others, and are not covered by a certificate of title | 0002| described in Subsection (2) of this section. | 0003| (b) The law (including the conflict of laws | 0004| rules) of the jurisdiction in which the debtor is located | 0005| governs the perfection and the effect of perfection or non- | 0006| perfection of the security interest. | 0007| (c) If, however, the debtor is located in a | 0008| jurisdiction which is not a part of the United States and which | 0009| does not provide for perfection of the security interest by | 0010| filing or recording in that jurisdiction, the law of the | 0011| jurisdiction in the United States in which the debtor has its | 0012| major executive office in the United States governs the | 0013| perfection and the effect of perfection or non-perfection of | 0014| the security interest through filing. In the alternative, if | 0015| the debtor is located in a jurisdiction which is not a part of | 0016| the United States or Canada and the collateral is accounts or | 0017| general intangibles for money due or to become due, the | 0018| security interest may be perfected by notification to the | 0019| accounts debtor. As used in this paragraph, "United States" | 0020| includes its territories and possessions and the Commonwealth | 0021| of Puerto Rico. | 0022| (d) A debtor shall be deemed located at his | 0023| place of business if he has one, at his chief executive office | 0024| if he has more than one place of business, otherwise at his | 0025| residence. If, however, the debtor is a foreign air carrier | 0001| under the Federal Aviation Act of 1958, as amended, it shall be | 0002| deemed located at the designated office of the agent upon whom | 0003| service of process may be made on behalf of the foreign air | 0004| carrier. | 0005| (e) A security interest perfected under the | 0006| law of the jurisdiction of the location of the debtor is | 0007| perfected until the expiration of four months after a change of | 0008| the debtor's location to another jurisdiction or until | 0009| perfection would have ceased by the law of the first | 0010| jurisdiction, whichever period first expires. Unless perfected | 0011| in the new jurisdiction before the end of that period, it | 0012| becomes unperfected thereafter and is deemed to have been | 0013| unperfected as against a person who became a purchaser after | 0014| the change. | 0015| (4) Chattel paper. | 0016| The rules stated for goods in Subsection (1) of this | 0017| section apply to a possessory security interest in chattel | 0018| paper. The rules stated for accounts in Subsection (3) of this | 0019| section apply to a nonpossessory security interest in chattel | 0020| paper, but the security interest may not be perfected by | 0021| notification to the account debtor. | 0022| (5) Minerals. | 0023| Perfection and the effect of perfection or non- | 0024| perfection of a security interest which is created by a debtor | 0025| who has an interest in minerals or the like (including oil and | 0001| gas) before extraction and which attaches thereto as extracted | 0002| or which attaches to an account resulting from the sale thereof | 0003| at the wellhead or minehead are governed by the law (including | 0004| the conflict of laws rules) of the jurisdiction wherein the | 0005| wellhead or minehead is located. | 0006| (6) Investment property. | 0007| (a) This subsection applies to investment | 0008| property. | 0009| (b) Except as otherwise provided in Paragraph | 0010| (f) of this subsection, during the time that a security | 0011| certificate is located in a jurisdiction, perfection of a | 0012| security interest, the effect of perfection or non-perfection | 0013| and the priority of a security interest in the certified | 0014| security represented thereby are governed by the local law of | 0015| that jurisdiction. | 0016| (c) Except as otherwise provided in Paragraph | 0017| (f) of this subsection, perfection of a security interest, | 0018| the effect of perfection or non-perfection and the priority of | 0019| a security interest in an uncertificated security are governed | 0020| by the local law of the issuer's jurisdiction as specified in | 0021| Section ~~[8-110(d)]~~ 55-8-110(d) NMSA 1978. | 0022| (d) Except as otherwise provided in Paragraph | 0023| (f) of this subsection, perfection of a security interest, | 0024| the effect of perfection or non-perfection and the priority of | 0025| a security interest in a security entitlement or securities | 0001| account are governed by the local law of the securities | 0002| intermediary's jurisdiction as specified in Section ~~[8-~~ | 0003| ~~110(e)]~~ 55-8-110(e) NMSA 1978. | 0004| (e) Except as otherwise provided in Paragraph | 0005| (f) of this subsection, perfection of a security interest, | 0006| the effect of perfection or non-perfection and the priority of | 0007| a security interest in a commodity contract or commodity | 0008| account are governed by the local law of the commodity | 0009| intermediary's jurisdiction. The following rules determine a | 0010| "commodity intermediary's jurisdiction" for purposes of this | 0011| paragraph: | 0012| (i) if an agreement between the | 0013| commodity intermediary and commodity customer specifies that it | 0014| is governed by the law of a particular jurisdiction, that | 0015| jurisdiction is the commodity intermediary's jurisdiction; | 0016| (ii) if an agreement between the | 0017| commodity intermediary and commodity customer does not specify | 0018| the governing law as provided in Subparagraph (i) of this | 0019| paragraph, but expressly specifies that the commodity account | 0020| is maintained at an office in a particular jurisdiction, that | 0021| jurisdiction is the commodity intermediary's jurisdiction; | 0022| (iii) if an agreement between the | 0023| commodity intermediary and commodity customer does not specify | 0024| a jurisdiction as provided in ~~[Subparagraphs]~~ Subparagraph | 0025| (i) or (ii) of this paragraph, the commodity intermediary's | 0001| jurisdiction is the jurisdiction in which is located the office | 0002| identified in an account statement as the office serving the | 0003| commodity customer's account; and | 0004| (iv) if an agreement between the | 0005| commodity intermediary and commodity customer does not specify | 0006| a jurisdiction as provided in ~~[Subparagraphs]~~ Subparagraph | 0007| (i) or (ii) of this paragraph and an account statement does | 0008| not identify an office serving the commodity customer's account | 0009| as provided in Subparagraph (iii) of this paragraph, the | 0010| commodity intermediary's jurisdiction is the jurisdiction in | 0011| which is located the chief executive office of the commodity | 0012| intermediary. | 0013| (f) Perfection of a security interest by | 0014| filing, automatic perfection of a security interest in | 0015| investment property granted by a broker or securities | 0016| intermediary and automatic perfection of a security interest in | 0017| a commodity contract or commodity account granted by a | 0018| commodity intermediary are governed by the local law of the | 0019| jurisdiction in which the debtor is located. The rules in | 0020| Paragraphs (c), (d) and (e) of Subsection (3) of this section | 0021| apply to security interests to which this paragraph applies." | 0022| Section 21. Section 55-9-104 NMSA 1978 (being Laws 1961, | 0023| Chapter 96, Section 9-104, as amended) is amended to read: | 0024| "55-9-104. TRANSACTIONS EXCLUDED FROM ARTICLE.--Chapter | 0025| 55, Article 9 NMSA 1978 does not apply: | 0001| (a) to a security interest subject to any statute | 0002| of the United States to the extent that such statute governs | 0003| the rights of parties to and third parties affected by | 0004| transactions in particular types of property; or | 0005| (b) to a landlord's lien; or | 0006| (c) to a lien given by statute or other rule of law | 0007| for services or materials except as provided in Section | 0008| 55-9-310 NMSA 1978 on priority of such liens; or | 0009| (d) to a transfer of a claim for wages, salary or | 0010| other compensation of an employee; or | 0011| (e) to a transfer by government or a governmental | 0012| subdivision or agency; or | 0013| (f) to a sale of accounts or chattel paper as part | 0014| of a sale of the business out of which they arose, or an | 0015| assignment of accounts or chattel paper that is for the purpose | 0016| of collection only, or a transfer of a right to payment under a | 0017| contract to an assignee who is also to do the performance under | 0018| the contract or a transfer of a single account to an assignee | 0019| in whole or partial satisfaction of a preexisting indebtedness; | 0020| or | 0021| (g) to a transfer of an interest in or claim in or | 0022| under any policy of insurance, except as provided with respect | 0023| to proceeds (Section 55-9-306 NMSA 1978) and priorities in | 0024| proceeds (Section 55-9-312 NMSA 1978); or | 0025| (h) to a right represented by a judgment (other | 0001| than a judgment taken on a right to payment that was | 0002| collateral); or | 0003| (i) to any right of set-off; or | 0004| (j) except to the extent that provision is made for | 0005| fixtures in Section 55-9-313 NMSA 1978, to the creation or | 0006| transfer of an interest in or lien on real estate, including a | 0007| lease or rents thereunder; or | 0008| (k) to a transfer in whole or in part of any claim | 0009| arising out of tort; or | 0010| (l) to a transfer of an interest in any deposit | 0011| account (Subsection (1) of Section 55-9-105 NMSA 1978), except | 0012| as provided with respect to proceeds (Section 55-9-306 NMSA | 0013| 1978) and priorities in proceeds (Section 55-9-312 NMSA 1978); | 0014| or | 0015| (m) to a transfer of an interest in a letter | 0016| of credit other than the rights to proceeds of written letters | 0017| of credit." | 0018| Section 22. Section 55-9-105 NMSA 1978 (being Laws 1961, | 0019| Chapter 96, Section 9-105, as amended) is amended to read: | 0020| "55-9-105. DEFINITIONS AND INDEX OF DEFINITIONS.-- | 0021| (1) In Chapter 55, Article 9 NMSA 1978, unless the | 0022| context otherwise requires: | 0023| (a) "account debtor" means the person who is | 0024| obligated on an account, chattel paper or general intangible; | 0025| (b) "chattel paper" means a writing or | 0001| writings which evidence both a monetary obligation and a | 0002| security interest in or a lease of specific goods, but a | 0003| charter or other contract involving the use or hire of a vessel | 0004| is not chattel paper. When a transaction is evidenced both by | 0005| such a security agreement or a lease and by an instrument or a | 0006| series of instruments, the group of writings taken together | 0007| constitutes chattel paper; | 0008| (c) "collateral" means the property subject to | 0009| a security interest and includes accounts and chattel paper | 0010| which have been sold; | 0011| (d) "debtor" means the person who owes payment | 0012| or other performance of the obligation secured, whether or not | 0013| he owns or has rights in the collateral, and includes the | 0014| seller of accounts or chattel paper. Where the debtor and the | 0015| owner of the collateral are not the same person, the term | 0016| "debtor" means the owner of the collateral in any provision of | 0017| the article dealing with the collateral, the obligor in any | 0018| provision dealing with the obligation and may include both | 0019| where the context so requires; | 0020| (e) "deposit account" means a demand, time, | 0021| savings, passbook or like account maintained with a bank, | 0022| savings and loan association, credit union or like | 0023| organization, other than an account evidenced by a certificate | 0024| of deposit; | 0025| (f) "document" means document of title as | 0001| defined in the general definitions of Article 1 (Section | 0002| 55-1-201 NMSA 1978) and a receipt of the kind described in | 0003| Subsection (2) of Section 55-7-201 NMSA 1978; | 0004| (g) "encumbrance" includes real estate | 0005| mortgages and other liens on real estate and all other rights | 0006| in real estate that are not ownership interests; | 0007| (h) "goods" includes all things which are | 0008| movable at the time the security interest attaches or which are | 0009| fixtures (Section 55-9-313 NMSA 1978), but does not include | 0010| money, documents, instruments, investment property, commodity | 0011| contracts, accounts, chattel paper, general intangibles or | 0012| minerals or the like (including oil and gas) before extraction. | 0013| "Goods" also includes standing timber which is to be cut and | 0014| removed under a conveyance or contract for sale, the unborn | 0015| young of animals and growing crops; | 0016| (i) "instrument" means a negotiable instrument | 0017| (defined in Section 55-3-104 NMSA 1978) or any other writing | 0018| which evidences a right to the payment of money and is not | 0019| itself a security agreement or lease and is of a type which is | 0020| in ordinary course of business transferred by delivery with any | 0021| necessary indorsement or assignment. The term does not include | 0022| investment property; | 0023| (j) "mortgage" means a consensual interest | 0024| created by a real estate mortgage, a trust deed on real estate | 0025| or the like; | 0001| (k) an advance is made "pursuant to | 0002| commitment" if the secured party has bound himself to make it, | 0003| whether or not a subsequent event of default or other event not | 0004| within his control has relieved or may relieve him from his | 0005| obligation; | 0006| (l) "security agreement" means an agreement | 0007| which creates or provides for a security interest; | 0008| (m) "secured party" means a lender, seller or | 0009| other person in whose favor there is a security interest, | 0010| including a person to whom accounts or chattel paper have been | 0011| sold. When the holders of obligations issued under an | 0012| indenture of trust, equipment trust agreement or the like are | 0013| represented by a trustee or other person, the representative is | 0014| the secured party; and | 0015| (n) "transmitting utility" means any person | 0016| primarily engaged in the railroad, street railway or trolley | 0017| bus business, the electric or electronics communications | 0018| transmission business, the transmission of goods by pipeline or | 0019| the transmission or the production and transmission of | 0020| electricity, steam, gas or water or the provision of sewer | 0021| service. | 0022| (2) Other definitions applying to Chapter 55, | 0023| Article 9 NMSA 1978 and the sections in which they appear are: | 0024| "account". Section 55-9-106 NMSA 1978; | 0025| "attach". Section 55-9-203 NMSA 1978; | 0001| "commodity contract". Section 55-9-115 NMSA 1978; | 0002| "commodity customer". Section 55-9-115 NMSA 1978; | 0003| "commodity intermediary". Section 55-9-115 NMSA | 0004| 1978; | 0005| "construction mortgage". Subsection (1) of Section | 0006| 55-9-313 NMSA 1978; | 0007| "consumer goods". Subsection (1) of Section | 0008| 55-9-109 NMSA 1978; | 0009| "control". Section 55-9-115 NMSA 1978; | 0010| "equipment". Subsection (2) of Section 55-9-109 | 0011| NMSA 1978; | 0012| "farm products". Subsection (3) of Section 55-9-109 | 0013| NMSA 1978; | 0014| "fixture". Section 55-9-313 NMSA 1978; | 0015| "fixture filing". Section 55-9-313 NMSA 1978; | 0016| "general intangibles". Section 55-9-106 NMSA 1978; | 0017| "inventory". Subsection (4) of Section 55-9-109 | 0018| NMSA 1978; | 0019| "investment property". Section 55-9-115 NMSA 1978; | 0020| "lien creditor". Subsection (3) of Section 55-9-301 | 0021| NMSA 1978; | 0022| "proceeds". Subsection (1) of Section 55-9-306 NMSA | 0023| 1978; | 0024| "purchase money security interest". Section | 0025| 55-9-107 NMSA 1978; and | 0001| "United States". Section 55-9-103 NMSA 1978. | 0002| (3) The following definitions in other articles | 0003| apply to Chapter 55, Article 9 NMSA 1978: | 0004| "broker". Section 55-8-102 NMSA 1978; | 0005| "certificated security". Section 55-8-102 NMSA | 0006| 1978; | 0007| "check". Section 55-3-104 NMSA 1978; | 0008| "clearing corporation". Section 55-8-102 NMSA 1978; | 0009| "contract for sale". Section 55-2-106 NMSA 1978; | 0010| "control". Section 55-8-106 NMSA 1978; | 0011| "delivery". Section 55-8-301 NMSA 1978; | 0012| "entitlement holder". Section 55-8-102 NMSA 1978; | 0013| "financial asset". Section 55-8-102 NMSA 1978; | 0014| "holder in due course". Section 55-3-302 NMSA 1978; | 0015| "letter of credit". Section 55-5-102 NMSA 1978; | 0016| "note". Section 55-3-104 NMSA 1978; | 0017| "proceeds of a letter of credit". Section 55-5-114 | 0018| NMSA 1978; | 0019| "sale". Section 55-2-106 NMSA 1978; | 0020| "securities intermediary". Section 55-8-102 NMSA | 0021| 1978; | 0022| "security". Section 55-8-102 NMSA 1978; | 0023| "security certificate". Section 55-8-102 NMSA 1978; | 0024| and | 0025| "security entitlement". Section 55-8-102 NMSA 1978. | 0001| (4) In addition, Chapter 55, Article 1 NMSA 1978 | 0002| contains general definitions and principles of construction and | 0003| interpretation applicable throughout Chapter 55, Article 9 NMSA | 0004| 1978." | 0005| Section 23. Section 55-9-106 NMSA 1978 (being Laws 1961, | 0006| Chapter 96, Section 9-106, as amended) is amended to read: | 0007| "55-9-106. DEFINITIONS--"ACCOUNT"--"GENERAL | 0008| INTANGIBLES".--"Account" means any right to payment for goods | 0009| sold or leased or for services rendered which is not evidenced | 0010| by an instrument or chattel paper, whether or not it has been | 0011| earned by performance. "General intangibles" means any | 0012| personal property (including things in action) other than | 0013| goods, accounts, chattel paper, documents, instruments, | 0014| investment property, rights to proceeds of written letters of | 0015| credit and money. All rights to payment earned or unearned | 0016| under a charter or other contract involving the use or hire of | 0017| a vessel and all rights incident to the charter or contract are | 0018| accounts." | 0019| Section 24. Section 55-9-304 NMSA 1978 (being Laws 1961, | 0020| Chapter 96, Section 9-304, as amended) is amended to read: | 0021| "55-9-304. PERFECTION OF SECURITY INTEREST IN | 0022| INSTRUMENTS, DOCUMENTS, PROCEEDS OF A WRITTEN LETTER OF | 0023| CREDIT AND GOODS COVERED BY DOCUMENTS--PERFECTION BY | 0024| PERMISSIVE FILING--TEMPORARY PERFECTION WITHOUT FILING OR | 0025| TRANSFER OF POSSESSION.-- | 0001| (1) A security interest in chattel paper or | 0002| negotiable documents may be perfected by filing. A security | 0003| interest in the rights to proceeds of a written letter of | 0004| credit may be perfected by the secured party's taking possesion | 0005| of the letter of credit. A security interest in money or | 0006| instruments (other than instruments which constitute part of | 0007| chattel paper) can be perfected only by the secured party's | 0008| taking possession, except as provided in Subsections (4) and | 0009| (5) of this section and Subsections (2) and (3) of Section 55- | 0010| 9-306 NMSA 1978 on proceeds. | 0011| (2) During the period that goods are in the | 0012| possession of the issuer of a negotiable document therefor, a | 0013| security interest in the goods is perfected by perfecting a | 0014| security interest in the document, and any security interest in | 0015| the goods otherwise perfected during such period is subject | 0016| thereto. | 0017| (3) A security interest in goods in the possession | 0018| of a bailee other than one who has issued a negotiable document | 0019| therefor is perfected by issuance of a document in the name of | 0020| the secured party or by the bailee's receipt of notification of | 0021| the secured party's interest or by filing as to the goods. | 0022| (4) A security interest in instruments, | 0023| certificated securities or negotiable documents is perfected | 0024| without filing or the taking of possession for a period of | 0025| twenty-one days from the time it attaches to the extent that it | 0001| arises for new value given under a written security agreement. | 0002| (5) A security interest remains perfected for a | 0003| period of twenty-one days without filing where a secured party | 0004| having a perfected security interest in an instrument, a | 0005| certificated security, a negotiable document or goods in | 0006| possession of a bailee other than one who has issued a | 0007| negotiable document therefor: | 0008| (a) makes available to the debtor the goods or | 0009| documents representing the goods for the purpose of ultimate | 0010| sale or exchange or for the purpose of loading, unloading, | 0011| storing, shipping, transhipping, manufacturing, processing or | 0012| otherwise dealing with them in a manner preliminary to their | 0013| sale or exchange, but priority between conflicting security | 0014| interests in the goods is subject to Subsection (3) of Section | 0015| 55-9-312 NMSA 1978; or | 0016| (b) delivers the instrument or certificated | 0017| security to the debtor for the purpose of ultimate sale or | 0018| exchange or of presentation, collection, renewal or | 0019| registration of transfer. | 0020| (6) After the twenty-one-day period in Subsections | 0021| (4) and (5) of this section, perfection depends upon compliance | 0022| with applicable provisions of Chapter 55, Article 9 NMSA 1978." | 0023| Section 25. Section 55-9-305 NMSA 1978 (being Laws 1961, | 0024| Chapter 96, Section 9-305, as amended) is amended to read: | 0025| "55-9-305. WHEN POSSESSION BY SECURED PARTY PERFECTS | 0001| SECURITY INTEREST WITHOUT FILING.--A security interest in | 0002| ~~[letters of credit and advices of credit (Paragraph (a) of~~ | 0003| ~~Subsection (2) of Section 55-5-116 NMSA 1978)]~~ goods, | 0004| instruments, money, negotiable documents or chattel paper may | 0005| be perfected by the secured party's taking possession of the | 0006| collateral. A security interest in the rights to proceeds of a | 0007| written letter of credit may be perfected by the secured | 0008| party's taking possession of the letter of credit. If such | 0009| collateral other than goods covered by a negotiable document is | 0010| held by a bailee, the secured party is deemed to have | 0011| possession from the time the bailee receives notification of | 0012| the secured party's interest. A security interest is perfected | 0013| by possession from the time possession is taken without | 0014| relation back and continues only so long as possession is | 0015| retained, unless otherwise specified in Chapter 55, Article 9 | 0016| NMSA 1978. The security interest may be otherwise perfected as | 0017| provided in that article before or after the period of | 0018| possession by the secured party." | 0019| Section 26. SAVING CLAUSE.-- A transaction arising out of | 0020| or associated with a letter of credit that was issued before | 0021| the effective date of this act and the rights, obligations and | 0022| interests flowing from that transaction are governed by any | 0023| statute or other law amended or repealed by this act as if | 0024| repeal or amendment had not occurred and may be terminated, | 0025| completed, consummated or enforced under that statute or other | 0001| law. | 0002| Section 27. APPLICABILITY.--This act applies to a letter | 0003| of credit that is issued on or after the effective date of this | 0004| act. This act does not apply to a transaction, event, | 0005| obligation or duty arising out of or associated with a letter | 0006| of credit that was issued before the effective date of this | 0007| act. | 0008| Section 28. EFFECTIVE DATE.--The effective date of the | 0009| provisions of this act is July 1, 1997. | 0010| | 0011| State of New Mexico | 0012| House of Representatives | 0013| | 0014| FORTY-THIRD LEGISLATURE | 0015| FIRST SESSION, 1997 | 0016| | 0017| | 0018| February 6, 1997 | 0019| | 0020| | 0021| Mr. Speaker: | 0022| | 0023| Your BUSINESS AND INDUSTRY COMMITTEE, to whom | 0024| has been referred | 0025| | 0001| HOUSE BILL 104 | 0002| | 0003| has had it under consideration and reports same with | 0004| recommendation that it DO PASS, and thence referred to the | 0005| JUDICIARY COMMITTEE. | 0006| | 0007| Respectfully submitted, | 0008| | 0009| | 0010| | 0011| | 0012| | 0013| Fred Luna, Chairman | 0014| | 0015| | 0016| Adopted Not Adopted | 0017| | 0018| (Chief Clerk) (Chief Clerk) | 0019| | 0020| Date | 0021| | 0022| The roll call vote was 11 For 0 Against | 0023| Yes: 11 | 0024| Excused: Luna, Varela | 0025| Absent: None | 0001| | 0002| | 0003| G:\BILLTEXT\BILLW_97\H0104 State of New Mexico | 0004| House of Representatives | 0005| | 0006| FORTY-THIRD LEGISLATURE | 0007| FIRST SESSION, 1997 | 0008| | 0009| | 0010| February 17, 1997 | 0011| | 0012| | 0013| Mr. Speaker: | 0014| | 0015| Your JUDICIARY COMMITTEE, to whom has been referred | 0016| | 0017| HOUSE BILL 104 | 0018| | 0019| has had it under consideration and reports same with | 0020| recommendation that it DO PASS. | 0021| | 0022| Respectfully submitted, | 0023| | 0024| | 0025| | 0001| | 0002| | 0003| Thomas P. Foy, Chairman | 0004| | 0005| | 0006| Adopted Not Adopted | 0007| | 0008| (Chief Clerk) (Chief Clerk) | 0009| | 0010| Date | 0011| | 0012| The roll call vote was 8 For 0 Against | 0013| Yes: 8 | 0014| Excused: Luna, Mallory, Rios, Sanchez, Stewart | 0015| Absent: None | 0016| | 0017| | 0018| G:\BILLTEXT\BILLW_97\H0104 | 0019| | 0020| FORTY-THIRD LEGISLATURE | 0021| FIRST SESSION, 1997 | 0022| | 0023| | 0024| March 8, 1997 | 0025| | 0001| Mr. President: | 0002| | 0003| Your CORPORATIONS & TRANSPORTATION COMMITTEE, to | 0004| whom has been referred | 0005| | 0006| HOUSE BILL 104 | 0007| | 0008| has had it under consideration and reports same with | 0009| recommendation that it DO PASS, and thence referred to the | 0010| JUDICIARY COMMITTEE. | 0011| | 0012| Respectfully submitted, | 0013| | 0014| | 0015| | 0016| | 0017| __________________________________ | 0018| Roman M. Maes, III, Chairman | 0019| | 0020| | 0021| | 0022| Adopted_______________________ Not | 0023| Adopted_______________________ | 0024| (Chief Clerk) (Chief Clerk) | 0025| | 0001| | 0002| Date ________________________ | 0003| | 0004| | 0005| The roll call vote was 8 For 0 Against | 0006| Yes: 8 | 0007| No: 0 | 0008| Excused: Kidd, McKibben | 0009| Absent: None | 0010| | 0011| | 0012| H0104CT1 | 0013| |