Secs. 45.01.101 — 45.01.109. Short title, construction, application, and subject matter of act. [Repealed, § 113 ch 44 SLA 2009.]

Sec. 45.01.111. Short titles.

1. AS 45.01 — AS 45.08, AS 45.12, AS 45.14, and AS 45.29 may be cited as the Uniform Commercial Code.
2. This chapter may be cited as the Uniform Commercial Code — General Provisions.

History. (§ 8 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.112. Scope of chapter.

This chapter applies to a transaction to the extent that the transaction is governed by another chapter of the code.

History. (§ 8 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.113. Construction of code to promote its purposes and policies; applicability of supplemental principles of law.

1. The code shall be liberally construed and applied to promote the code’s underlying purposes and policies, which are to
   1. simplify, clarify, and modernize the law governing commercial transactions;
   2. permit the continued expansion of commercial practices through custom, usage, and agreement of the parties; and
   3. make uniform the law among the various jurisdictions.
2. Unless displaced by the particular provisions of the code, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause, supplement the code’s provisions.

History. (§ 8 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.114. Construction against implied repeal.

The code being a general act intended as a unified coverage of its subject matter, no part of it may be considered to be impliedly repealed by subsequent legislation if that construction can reasonably be avoided.

History. (§ 8 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.115. Severability.

If a provision or clause of the code or application of the clause or provision to a person or circumstances is held invalid, the invalidity does not affect other provisions or applications of the code that can be given effect without the invalid provision or application, and, to this end, the provisions of the code are severable.

History. (§ 8 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.116. Use of singular and plural; gender.

In the code, the rules of construction in AS 01.10.050(b) and (c) apply, unless the statutory context otherwise requires.

History. (§ 8 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.117. Section captions.

Notwithstanding AS 01.05.006 and 01.05.031(b)(2) , section captions are part of the code.

History. (§ 8 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.118. Relation to Electronic Signatures in Global and National Commerce Act.

The code modifies, limits, and supersedes 15 U.S.C. 7001 — 7031 (Electronic Signatures in Global and National Commerce Act) but does not modify, limit, or supersede 15 U.S.C. 7001(c) or authorize electronic delivery of a notice described in 15 U.S.C. 7003(b).

History. (§ 8 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Secs. 45.01.201 — 45.01.208. General definitions and principles of interpretation. [Repealed, § 113 ch 44 SLA 2009.]

Sec. 45.01.211. General definitions.

1. Unless the context otherwise requires, words or phrases defined in this section, or in the additional definitions contained in other chapters of the code that apply to particular chapters or articles of the code, have the meanings stated.
2. Subject to definitions contained in other chapters of the code that apply to particular chapters or articles of the code,
   1. “action,” in the sense of a judicial proceeding, includes recoupment, counterclaim, set-off, suit in equity, and another proceeding in which rights are determined;
   2. “aggrieved party” means a party entitled to pursue a remedy;
   3. “agreement,” as distinguished from “contract,” means the bargain of the parties in fact, as found in their language or inferred from other circumstances, including course of performance, course of dealing, or usage of trade as provided in AS 45.01.303 ;
   4. “bank” means a person engaged in the business of banking and includes a savings bank, savings and loan association, credit union, and trust company;
   5. “bearer” means a person in control of a negotiable electronic document of title or a person in possession of a negotiable instrument, negotiable tangible document of title, or certificated security that is payable to bearer or endorsed in blank;
   6. “bill of lading” means a document of title evidencing the receipt of goods for shipment issued by a person engaged in the business of directly or indirectly transporting or forwarding goods; “bill of lading” does not include a warehouse receipt;
   7. “branch” includes a separately incorporated foreign branch of a bank;
   8. “burden of establishing” a fact means the burden of persuading the trier of fact that the existence of the fact is more probable than its nonexistence;
   9. “buyer in ordinary course of business” means a person who buys goods in good faith, without knowledge that the sale violates the rights of another person in the goods, and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind; a person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller’s own usual or customary practices; a person who sells oil, gas, or other minerals at the wellhead or minehead is a person in the business of selling goods of that kind; a buyer in ordinary course of business may buy for cash, by exchange of other property, or on secured or unsecured credit, and may acquire goods or documents of title under a preexisting contract for sale; only a buyer who takes possession of the goods or has a right to recover the goods from the seller under AS 45.02 may be a buyer in ordinary course of business; “buyer in ordinary course of business” does not include a person who acquires goods in a transfer in bulk or as security for or in total or partial satisfaction of a money debt;
   10. “code” means AS 45.01 — AS 45.08, AS 45.12, AS 45.14, and AS 45.29;
   11. “conspicuous,” with reference to a term, means written, displayed, or presented in a way that a reasonable person against whom it is to operate ought to have noticed it; whether a term is “conspicuous” or not is a decision for the court; conspicuous terms include
       1. a heading in capitals equal to or greater in size than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same or lesser size; and
       2. language in the body of a record or display in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from surrounding text of the same size by symbols or other marks that call attention to the language;
   12. “consumer” means an individual who enters into a transaction primarily for personal, family, or household purposes;
   13. “contract,” as distinguished from “agreement,” means the total legal obligation that results from the parties’ agreement as determined by the code as supplemented by other applicable laws;
   14. “creditor” includes a general creditor, a secured creditor, a lien creditor, and a representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity, and an executor or administrator of an insolvent debtor’s or assignor’s estate;
   15. “defendant” includes a person in the position of defendant in a counterclaim, cross-claim, or third-party claim;
   16. “delivery,” with respect to an electronic document of title, means voluntary transfer of control and, with respect to an instrument, a tangible document of title, or chattel paper, means voluntary transfer of possession;
   17. “document of title”
       1. means a record that
          1. in the regular course of business or financing, is treated as adequately evidencing that the person in possession or control of the record is entitled to receive, control, hold, and dispose of the record and the goods the record covers; and
          2. purports to be issued by or addressed to a bailee and to cover goods in the bailee’s possession that are either identified or are fungible portions of an identified mass;
       2. includes a bill of lading, transport document, dock warrant, dock receipt, warehouse receipt, and order for delivery of goods;
   18. “electronic document of title” means a document of title evidenced by a record consisting of information stored in an electronic medium;
   19. “fault” means a default, breach, or wrongful act or omission;
   20. “fungible goods” means goods
       1. of which a unit, by nature or usage of trade, is the equivalent of another like unit; or
       2. that, by agreement, are treated as equivalent;
   21. “genuine” means free of forgery or counterfeiting;
   22. “good faith,” except as otherwise provided in AS 45.05, means honesty in fact and the observance of reasonable commercial standards of fair dealing;
   23. “holder” means the person in
       1. possession of a negotiable instrument that is payable either to bearer or to an identified person who is the person in possession;
       2. possession of a negotiable tangible document of title if the goods are deliverable either to bearer or to the order of the person in possession; or
       3. control of a negotiable electronic document of title;
   24. “insolvency proceeding” includes an assignment for the benefit of creditors or another proceeding intended to liquidate or rehabilitate the estate of the person involved;
   25. “insolvent” means
       1. having generally ceased to pay debts in the ordinary course of business other than as a result of bona fide dispute;
       2. being unable to pay debts as they become due; or
       3. being insolvent within the meaning of federal bankruptcy law;
   26. “money” means a medium of exchange currently authorized or adopted by a domestic or foreign government, and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries;
   27. “organization” means a person other than an individual;
   28. “party,” as distinguished from “third party,” means a person who has engaged in a transaction or made an agreement subject to the code;
   29. “pawnbroker” has the meaning given in AS 08.76.590 ;
   30. “person” means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, public corporation, or another legal or commercial entity;
   31. “present value” means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain
       1. by use of an interest rate that is specified by the parties if that rate is not manifestly unreasonable at the time the transaction is entered into; or
       2. if an interest rate is not determined under (A) of this paragraph, by use of a commercially reasonable rate that takes into account the facts and circumstances at the time the transaction is entered into;
   32. “purchase” means taking by sale, lease, discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift, or another voluntary transaction creating an interest in property;
   33. “purchaser” means a person who takes by purchase;
   34. “record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form;
   35. “remedy” means a remedial right to which an aggrieved party is entitled with or without resort to a tribunal;
   36. “representative” means a person empowered to act for another, including an agent, an officer of a corporation or association, and a trustee, executor, or administrator of an estate;
   37. “right” includes remedy;
   38. “security interest” means an interest in personal property or fixtures that secures payment or performance of an obligation; “security interest” includes an interest of a consignor and a buyer of accounts, chattel paper, a payment intangible, or a promissory note in a transaction that is subject to AS 45.29; “security interest” does not include the special property interest of a buyer of goods on identification of those goods to a contract for sale under AS 45.02.401 , but a buyer may also acquire a security interest by complying with AS 45.29; except as otherwise provided in AS 45.02.505 , the right of a seller or lessor of goods under AS 45.02 or AS 45.12 to retain or acquire possession of the goods is not a security interest, but a seller or lessor may also acquire a security interest by complying with AS 45.29; the retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer under AS 45.02.401 is limited in effect to a reservation of a security interest; whether a transaction in the form of a lease creates a security interest is determined under AS 45.01.213 ;
   39. “send,” in connection with a writing, record, or notice, means
       1. to deposit in the mail or deliver for transmission by a usual means of communication with postage or cost of transmission provided for and properly addressed and, in the case of an instrument, to an address specified on the instrument or otherwise agreed on, or, if an address is not specified on the instrument or otherwise agreed on, to an address reasonable under the circumstances; or
       2. in another way to cause to be received a record or notice within the time it would have arrived if properly sent;
   40. “signed” includes using a symbol executed or adopted with present intention to adopt or accept a writing;
   41. “state” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or a territory or insular possession subject to the jurisdiction of the United States;
   42. “surety” includes a guarantor or other secondary obligor;
   43. “tangible document of title” means a document of title evidenced by a record consisting of information that is inscribed on a tangible medium;
   44. “term” means a portion of an agreement that relates to a particular matter;
   45. “unauthorized signature” means a signature made without actual, implied, or apparent authority, and includes a forgery;
   46. “warehouse receipt” means a document of title issued by a warehouse; in this paragraph, “warehouse” has the meaning given in AS 45.07.112(a) ;
   47. “writing” includes printing, typewriting, or another intentional reduction to tangible form; “written” has a corresponding meaning.

History. (§ 9 ch 44 SLA 2009; am § 6 ch 49 SLA 2010)

Revisor’s notes. —

Paragraph (b)(29) was enacted as (b)(47) and renumbered in 2010, at which time former paragraphs (b)(29)—(46) were renumbered as (b)(30)—(47).

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2010 amendment, effective July 1, 2011, added the definition of “pawnbroker” in (b).

Sec. 45.01.212. Notice; knowledge.

1. Subject to (f) of this section, a person has “notice” of a fact if the person
   1. has actual knowledge of it;
   2. has received a notice or notification of it; or
   3. from all the facts and circumstances known to the person at the time in question, has reason to know that it exists.
2. “Knowledge” means actual knowledge. “Knows” has a corresponding meaning.
3. “Discover,” “learn,” or words of similar import refer to knowledge rather than to reason to know.
4. A person “notifies” or “gives” a notice or notification to another person by taking those steps that may be reasonably required to inform the other person in ordinary course, whether or not the other person actually comes to know of it.
5. Subject to (f) of this section, a person “receives” a notice or notification when it
   1. comes to that person’s attention; or
   2. is duly delivered in a form reasonable under the circumstances at the place of business through which the contract was made or at another location held out by that person as the place for receipt of that type of communication.
6. Notice, knowledge, or a notice or notification received by an organization is effective for a particular transaction from the time it is brought to the attention of the individual conducting that transaction and, in any event, from the time it would have been brought to the individual’s attention if the organization had exercised due diligence. An organization exercises due diligence if it maintains reasonable routines for communicating significant information to the person conducting the transaction and there is reasonable compliance with the routines. Due diligence does not require an individual acting for the organization to communicate information unless the communication is part of the individual’s regular duties or the individual has reason to know of the transaction and that the transaction would be materially affected by the information.

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.213. Lease distinguished from security interest.

1. Whether a transaction in the form of a lease creates a lease or security interest is determined by the facts of each case.
2. A transaction in the form of a lease creates a security interest if the consideration that the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease and is not subject to termination by the lessee, and the
   1. original term of the lease is equal to or greater than the remaining economic life of the goods;
   2. lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods;
   3. lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or for nominal additional consideration upon compliance with the lease agreement; or
   4. lessee has an option to become the owner of the goods for no additional consideration or for nominal additional consideration on compliance with the lease agreement.
3. A transaction in the form of a lease does not create a security interest merely because the
   1. present value of the consideration the lessee is obligated to pay the lessor for the right to possession and use of the goods is substantially equal to or greater than the fair market value of the goods at the time the lease is entered into;
   2. lessee assumes risk of loss of the goods;
   3. lessee agrees to pay, with respect to the goods, taxes, insurance, filing, recording, or registration fees, or service or maintenance costs;
   4. lessee has an option to renew the lease or to become the owner of the goods;
   5. lessee has an option to renew the lease for a fixed rent that is equal to or greater than the reasonably predictable fair market rent for the use of the goods for the term of the renewal at the time the option is to be performed; or
   6. lessee has an option to become the owner of the goods for a fixed price that is equal to or greater than the reasonably predictable fair market value of the goods at the time the option is to be performed.
4. Additional consideration is nominal if it is less than the lessee’s reasonably predictable cost of performing under the lease agreement if the option is not exercised. Additional consideration is not nominal if, when the option to
   1. renew the lease is granted to the lessee, the rent is stated to be the fair market rent for the use of the goods for the term of the renewal determined at the time the option is to be performed; or
   2. become the owner of the goods is granted to the lessee, the price is stated to be the fair market value of the goods determined at the time the option is to be performed.
5. The remaining economic life of the goods and reasonably predictable fair market rent, fair market value, or cost of performing under the lease agreement must be determined with reference to the facts and circumstances at the time the transaction is entered into.

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.214. Value.

Except as otherwise provided in AS 45.03, AS 45.04, and AS 45.05, a person gives value for rights if the person acquires them

1. in return for a binding commitment to extend credit or for the extension of immediately available credit, whether or not drawn upon and whether or not a charge-back is provided for in the event of difficulties in collection;
2. as security for, or in total or partial satisfaction of, a preexisting claim;
3. by accepting delivery under a preexisting contract for purchase; or
4. in return for consideration sufficient to support a simple contract.

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.215. Reasonable time; seasonableness.

1. Whether a time for taking an action required by the code is reasonable depends on the nature, purpose, and circumstances of the action.
2. An action is taken seasonably if it is taken at or within the time agreed on or, if no time is agreed on, at or within a reasonable time.

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.216. Presumptions.

Whenever the code creates a presumption with respect to a fact, or provides that a fact is presumed, the trier of fact must find the existence of the fact unless and until evidence is introduced that supports a finding of the nonexistence of the fact.

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.301. Territorial applicability; parties’ power to choose applicable law.

1. Except as otherwise provided in this section, when a transaction bears a reasonable relation to this state and also to another state or nation, the parties may agree that the law of this state or of the other state or nation shall govern the parties’ rights and duties.
2. In the absence of an agreement effective under (a) of this section, and except as provided in (c) of this section, the code applies to transactions bearing an appropriate relation to this state.
3. If one of the following provisions of the code specifies the applicable law, that provision governs, and a contrary agreement is effective only to the extent permitted by the applicable law specified by that provision:
   1. AS 45.02.402 ;
   2. AS 45.04.102 ;
   3. AS 45.05.116 ;
   4. AS 45.08.110 ;
   5. AS 45.12.105 and 45.12.106 ;
   6. AS 45.14.507 ;
   7. AS 45.29.301 — 45.29.307 .

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.302. Variation by agreement.

1. Except as otherwise provided in (b) of this section or elsewhere in the code, the effect of provisions of the code may be varied by agreement.
2. The obligations of good faith, diligence, reasonableness, and care prescribed by the code may not be disclaimed by agreement. The parties, by agreement, may determine the standards by which the performance of those obligations is to be measured if those standards are not manifestly unreasonable. Whenever the code requires an action to be taken within a reasonable time, a time that is not manifestly unreasonable may be fixed by agreement.
3. The presence in certain provisions of the code of the phrase “unless otherwise agreed,” or words of similar import, does not imply that the effect of other provisions may not be varied by agreement under this section.

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.303. Course of performance, course of dealing, and usage of trade.

1. A “course of performance” is a sequence of conduct between the parties to a particular transaction that exists if the
   1. agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and
   2. other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.
2. A “course of dealing” is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting the parties’ expressions and other conduct.
3. A “usage of trade” is a practice or method of dealing having the regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of a usage of trade must be proved as facts. If it is established that a usage of trade is embodied in a trade code or similar record, the interpretation of the record is a question of law.
4. A course of performance or course of dealing between the parties or usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware is relevant in ascertaining the meaning of the parties’ agreement, may give particular meaning to specific terms of the agreement, and may supplement or qualify the terms of the agreement. A usage of trade applicable in the place in which part of the performance under the agreement is to occur may be used as indicated in the previous sentence as to that part of the performance.
5. Except as otherwise provided in (f) of this section, the express terms of an agreement and an applicable course of performance, course of dealing, or usage of trade must be construed whenever reasonable as consistent with each other. If this construction is unreasonable,
   1. express terms prevail over course of performance, course of dealing, and usage of trade;
   2. course of performance prevails over course of dealing and usage of trade; and
   3. course of dealing prevails over usage of trade.
6. Subject to AS 45.02.209 , a course of performance is relevant to show a waiver or modification of a term inconsistent with the course of performance.
7. Evidence of a relevant usage of trade offered by one party is not admissible unless that party has given the other party notice that the court finds sufficient to prevent unfair surprise to the other party.

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

For effect of provisions of (g) of this section on Rule 403 (requiring exclusion of certain relevant evidence relating to usage of trade) of the Alaska Rules of Evidence, see § 114(a), ch. 44, SLA 2009 in the 2009 Temporary and Special Acts.

Sec. 45.01.304. Obligation of good faith.

Every contract or duty within the code imposes an obligation of good faith in its performance and enforcement.

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.305. Remedies to be liberally administered.

1. The remedies provided by the code must be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed, but neither consequential or special damages nor penal damages may be had except as specifically provided in the code or by other rule of law.
2. A right or obligation declared by the code is enforceable by action unless the provision declaring it specifies a different and limited effect.

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.306. Waiver or renunciation of claim or right after breach.

A claim or right arising out of an alleged breach may be discharged in whole or in part without consideration by agreement of the aggrieved party in an authenticated record.

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.307. Prima facie evidence by third-party documents.

A document in due form purporting to be a bill of lading, policy or certificate of insurance, official weigher’s or inspector’s certificate, consular invoice, or another document authorized or required by the contract to be issued by a third party is prima facie evidence of its own authenticity and genuineness and of the facts stated in the document by the third party.

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

For effect of provisions of this section on Rule 902 (establishing the authenticity and stated facts of certain documents) of the Alaska Rules of Evidence, see § 114(b), ch. 44, SLA 2009 in the 2009 Temporary and Special Acts.

Sec. 45.01.308. Performance or acceptance under reservation of rights.

1. A party who, with explicit reservation of rights, performs or promises performance or assents to performance in a manner demanded or offered by the other party does not by the performance, promise, or assent prejudice the rights reserved. The words, “without prejudice,” “under protest,” or the like are sufficient.
2. The provisions of (a) of this section do not apply to an accord and satisfaction.

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.309. Option to accelerate at will.

A term providing that one party or that party’s successor in interest may accelerate payment or performance or require collateral or additional collateral “at will” or when the party “deems itself insecure,” or words of similar import, means that the party has power to make the acceleration or requirement only if that party in good faith believes that the prospect of payment or performance is impaired. The burden of establishing lack of good faith is on the party against whom the power has been exercised.

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.01.310. Subordinated obligations.

An obligation may be issued as subordinated to performance of another obligation of the person obligated, or a creditor may subordinate its right to performance of an obligation by agreement with either the person obligated or another creditor of the person obligated. Subordination does not create a security interest as against either the common debtor or a subordinated creditor.

History. (§ 9 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Sec. 45.02.101. Short title.

This chapter shall be known and may be cited as Uniform Commercial Code — Sales.

History. (§ 2.101 ch 114 SLA 1962)

Sec. 45.02.102. Scope; certain security and other transactions excluded.

Unless the context otherwise requires, this chapter applies to transactions in goods; it does not apply to a transaction that, although in the form of an unconditional contract to sell or present sale, is intended to operate only as a security transaction, nor does this chapter impair or repeal any statute regulating sales to consumers, farmers, or other specified class of buyers.

History. (§ 2.102 ch 114 SLA 1962)

Sec. 45.02.103. Definitions and index of definitions.

1. In this chapter, unless the context otherwise requires,
   1. “buyer” means a person who buys or contracts to buy goods;
   2. [Repealed, § 113 ch 44 SLA 2009.]
   3. “receipt” of goods means taking physical possession of them;
   4. “seller” means a person who sells or contracts to sell goods.
2. Other definitions applying to this chapter and the sections in which they appear are
   1. “acceptance” (AS 45.02.606 );
   2. “banker’s credit” (AS 45.02.325 );
   3. “between merchants” (AS 45.02.104 );
   4. “cancellation” (AS 45.02.106(d) );
   5. “commercial unit” (AS 45.02.105 );
   6. “confirmed credit” (AS 45.02.325 );
   7. “conforming to contract” (AS 45.02.106 );
   8. “contract for sale” (AS 45.02.106 );
   9. “cover” (AS 45.02.712 );
   10. “entrusting” (AS 45.02.403 );
   11. “financing agency” (AS 45.02.104 );
   12. “future goods” (AS 45.02.105 );
   13. “goods” (AS 45.02.105);
   14. “identification” (AS 45.02.501 );
   15. “installment contract” (AS 45.02.612 );
   16. “letter of credit” (AS 45.02.325);
   17. “lot” (AS 45.02.105);
   18. “merchant” (AS 45.02.104);
   19. “overseas” (AS 45.02.323 );
   20. “person in position of seller” (AS 45.02.707 );
   21. “present sale” (AS 45.02.106);
   22. “sale” (AS 45.02.106);
   23. “sale or return” (AS 45.02.326 );
   24. “termination” (AS 45.02.106).
3. The following definitions in other chapters apply to this chapter:
   1. “check” (AS 45.03.104 );
   2. “consignee” (AS 45.07.112 );
   3. “consignor” (AS 45.07.112 );
   4. “consumer goods” (AS 45.29.102 );
   5. “control” (AS 45.07.116 );
   6. “dishonor” (AS 45.03.502 );
   7. “draft” (AS 45.03.104 ).
4. In addition, AS 45.01 contains general definitions and principles of construction and interpretation applicable throughout this chapter.

History. (§ 2.103 ch 114 SLA 1962; am § 11 ch 35 SLA 1993; am § 7 ch 113 SLA 2000; am §§ 10 — 12, 113 ch 44 SLA 2009)

Revisor’s notes. —

Paragraph (c)(5) was enacted as (c)(7) and renumbered in 2009, at which time former paragraphs (c)(5) and (c)(6) were renumbered as (c)(6) and (c)(7).

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, repealed (a)(2), which read, “ ‘good faith’ in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade”; in (c)(2) and (c)(3), substituted “(AS 45.07.112 )” for “(AS 45.07.102)”; added (c)(7) (now (c)(5)).

Sec. 45.02.104. Definitions: “merchant”; “between merchants”; “financing agency.”

1. “Merchant” means a person who deals in goods of the kind or otherwise by occupation holds oneself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom this knowledge or skill may be attributed by the person’s employment of an agent or broker or other intermediary who by occupation holds oneself out as having this knowledge or skill.
2. “Financing agency” means a bank, finance company, or other person who, in the ordinary course of business, makes advances against goods or documents of title or who, by arrangement with either the seller or the buyer, intervenes in ordinary course to make or collect payment due or claimed under the contract for sale, as by purchasing or paying the seller’s draft or making advances against it or by merely taking it for collection whether or not documents of title accompany or are associated with the draft. “Financing agency” includes also a bank or other person who similarly intervenes between persons who are in the position of seller and buyer in respect to the goods (AS 45.02.707 ).
3. “Between merchants” means in any transaction with respect to which both parties are chargeable with the knowledge or skill of merchants.

History. (§ 2.104 ch 114 SLA 1962; am § 13 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (b), added “or are associated with” following “documents of title accompany”.

Sec. 45.02.105. Definitions: transferability; “goods”; “future” goods; “lot”; “commercial unit.”

1. “Goods” means all things, including specially manufactured goods, that are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (AS 45.08), and things in action.  “Goods” also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty (AS 45.02.107 ).
2. Goods must be both existing and identified before an interest in them can pass.  Goods that are not both existing and identified are “future” goods.  A purported present sale of future goods or of an interest in future goods operates as a contract to sell.
3. There may be a sale of a part interest in existing identified goods.
4. An undivided share in an identified bulk of fungible goods is sufficiently identified to be sold although the quantity of the bulk is not determined. Any agreed proportion of the bulk or a quantity of the bulk agreed upon by number, weight, or other measure may, to the extent of the seller’s interest in the bulk, be sold to the buyer, who then becomes an owner in common.
5. “Lot” means a parcel or a single article that is the subject matter of a separate sale or delivery, whether or not it is sufficient to perform the contract.
6. “Commercial unit” means such a unit of goods as by commercial usage is a single whole for purposes of sale and division of which materially impairs its character or value on the market or in use.  A commercial unit may be a single article (as a machine), or a set of articles (as a suite of furniture or an assortment of sizes), or a quantity (as a bale, gross, or carload), or any other unit treated in use or in the relevant market as a single whole.

History. (§ 2.105 ch 114 SLA 1962)

Sec. 45.02.106. Definitions: “contract”; “agreement”; “contract for sale”; “sale”; “present sale”; “conforming” to contract; “termination”; “cancellation.”

1. In this chapter, unless the context otherwise requires, “contract” and “agreement” are limited to those relating to the present or future sale of goods. “Contract for sale” includes both a present sale of goods and a contract to sell goods at a future time.  A “sale” consists in the passing of title from the seller to the buyer for a price (AS 45.02.401 ). A “present sale” means a sale that is accomplished by the making of the contract.
2. Goods or conduct including any part of a performance are “conforming” or conform to the contract when they are in accordance with the obligations under the contract.
3. “Termination” occurs when either party, under a power created by agreement or law, puts an end to the contract otherwise than for its breach.  On “termination” all obligations that are still executory on both sides are discharged, but a right based on a prior breach of performance survives.
4. “Cancellation” occurs when either party puts an end to the contract for breach by the other and its effect is the same as that of “termination,” except that the cancelling party also retains any remedy for breach of the whole contract or an unperformed balance.

History. (§ 2.106 ch 114 SLA 1962)

Sec. 45.02.107. Goods to be severed from realty; recording.

1. A contract for the sale of minerals or the like, including oil and gas, or a structure or its materials to be removed from realty is a contract for the sale of goods within this chapter if they are to be severed by the seller, but until severance a purported present sale that is not effective as a transfer of an interest in land is effective only as a contract to sell.
2. A contract for the sale apart from the land of growing crops or other things attached to realty and capable of severance without material harm to them but not described in (a) of this section or of timber to be cut is a contract for the sale of goods within this chapter, whether the subject matter is to be severed by the buyer or by the seller even though it forms part of the realty at the time of contracting, and the parties can by identification effect a present sale before severance.
3. This section is subject to third party rights provided by the law relating to realty records. The contract for sale may be executed and recorded as a document transferring an interest in land.  It then constitutes notice to third parties of the buyer’s rights under the contract for sale.

History. (§ 2.107 ch 114 SLA 1962; am §§ 4, 5 ch 16 SLA 1982; am § 36 ch 22 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (b), substituted “attached to realty” for “attached to a realty”.

Sec. 45.02.201. Formal requirements; statute of frauds.

1. Except as otherwise provided in this section a contract for the sale of goods, including the sale or transfer of a boat or vessel, for the price of $500 or more is not enforceable by action or defense unless there is a writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by an authorized agent or broker of that party.  A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this subsection beyond the quantity of goods shown in such writing.
2. Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of (a) of this section against the party unless written notice of objection to its contents is given within 10 days after it is received.
3. A contract that does not satisfy the requirements of (a) of this section but that is valid in other respects is enforceable
   1. if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller’s business and the seller, before notice of repudiation is received and under circumstances that reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement;
   2. if the party against whom enforcement is sought admits in a pleading, in testimony, or in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or
   3. with respect to goods for which payment has been made and accepted or that have been received and accepted (AS 45.02.606 ).

History. (§ 2.201 ch 114 SLA 1962)

Sec. 45.02.202. Final written expression; parol or extrinsic evidence.

Terms with respect to which the confirmatory memoranda of the parties agree, or that are otherwise set out in a writing intended by the parties as a final expression of their agreement with respect to the terms included in the writing, may not be contradicted by evidence of a prior agreement or of a contemporaneous oral agreement, but may be explained or supplemented

1. by course of performance, course of dealing, or usage of trade (AS 45.01.303 ); and
2. by evidence of consistent additional terms unless the court finds the writing was intended also as a complete and exclusive statement of the terms of the agreement.

History. (§ 2.202 ch 114 SLA 1962; am § 14 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, rewrote (1), which read, “by course of dealing or usage of trade (AS 45.01.205) or by course of performance (AS 45.02.208 )”.

Sec. 45.02.203. Seals inoperative.

The affixing of a seal to a writing evidencing a contract for sale or an offer to buy or sell goods does not make the writing a sealed instrument and the law with respect to sealed instruments does not apply to the contract or offer.

History. (§ 2.203 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, § 104.

Sec. 45.02.204. Formation in general.

1. A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties that recognizes the existence of the contract.
2. An agreement sufficient to be a contract for sale may be found even though the moment of its making is undetermined.
3. Even though one or more terms are left open, a contract for sale does not fail for indefiniteness if the parties intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

History. (§ 2.204 ch 114 SLA 1962)

Sec. 45.02.205. Firm offers.

An offer by a merchant to buy or sell goods in a signed writing that by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may the period or irrevocability exceed three months. A term of assurance on a form supplied by the offeree must be separately signed by the offeror.

History. (§ 2.205 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, § 132.

Sec. 45.02.206. Offer and acceptance in formation of contract.

1. Unless otherwise unambiguously indicated by the language or circumstances
   1. an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;
   2. an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods, but a shipment of nonconforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.
2. If the beginning of a requested performance is a reasonable mode of acceptance, an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

History. (§ 2.206 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, § 124 et seq.

Sec. 45.02.207. Additional terms in acceptance or confirmation.

1. A definite and seasonable expression of acceptance or a written confirmation that is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
2. The additional terms are to be construed as proposals for addition to the contract.  Between merchants these terms become part of the contract unless
   1. the offer expressly limits acceptance to the terms of the offer;
   2. they materially alter it; or
   3. notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
3. Conduct by both parties that recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract.  In this case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with supplementary terms incorporated under other provisions of the code.

History. (§ 2.207 ch 114 SLA 1962)

Revisor’s notes. —

In 1993, under § 13, ch. 34, SLA 1993 and § 128, ch. 35, SLA 1993 the citation to the Uniform Commercial Code was revised.

Sec. 45.02.208. Course of performance or practical construction. [Repealed, § 113 ch 44 SLA 2009.]

Sec. 45.02.209. Modification, rescission, and waiver.

1. An agreement modifying a contract within this chapter needs no consideration to be binding.
2. A signed agreement that excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.
3. The requirements of the statute of frauds section (AS 45.02.201 ) must be satisfied if the contract as modified is within its provision.
4. Although an attempt at modification or rescission does not satisfy the requirements of (b) or (c) of this section it can operate as a waiver.
5. A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.

History. (§ 2.209 ch 114 SLA 1962)

Sec. 45.02.210. Delegation of performance; assignment of rights.

1. A party may perform the party’s duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having the original promisor perform or control the acts required by the contract. No delegation of performance relieves the party delegating of a duty to perform or a liability for breach.
2. Unless otherwise agreed, all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, increase materially the burden or risk imposed on the other party by the contract, or impair materially the chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor’s due performance of the entire obligation can be assigned despite agreement otherwise.
3. The creation, attachment, perfection, or enforcement of a security interest in the seller’s interest under a contract is not a transfer that materially changes the duty of or increases materially the burden or risk imposed on the buyer or impairs materially the buyer’s chance of obtaining return performance within the purview of (b) of this section unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the seller; even in that event, the creation, attachment, perfection, and enforcement of the security interest remain effective, but
   1. the seller is liable to the buyer for damages caused by the delegation to the extent that the damages could not reasonably be prevented by the buyer; and
   2. a court having jurisdiction may grant other appropriate relief, including cancellation of the contract for sale or an injunction against enforcement of the security interest or consummation of the enforcement.
4. Unless the circumstances indicate the contrary, a prohibition of assignment of “the contract” is to be construed as barring only the delegation to the assignee of the assignor’s performance.
5. An assignment of “the contract” or “all my rights under the contract” or an assignment in similar general terms is an assignment of rights and, unless the language or the circumstances, as in an assignment for security, indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by the assignee to perform those duties. This promise is enforceable by either the assignor or the other party to the original contract.
6. The other party may treat an assignment that delegates performance as creating reasonable grounds for insecurity and may, without prejudice to the party’s rights against the assignor, demand assurances from the assignee (AS 45.02.609 ).

History. (§ 2.210 ch 114 SLA 1962; am § 8 ch 113 SLA 2000)

Sec. 45.02.301. General obligations of parties.

The obligation of the seller is to transfer and deliver, and that of the buyer to accept and pay, in accordance with the contract.

History. (§ 2.301 ch 114 SLA 1962)

Sec. 45.02.302. Unconscionable contract or clause.

1. If the court as a matter of law finds the contract or a clause of the contract was unconscionable at the time it was made, the court may refuse to enforce the contract, enforce the remainder of the contract without the unconscionable clause, or so limit the application of an unconscionable clause as to avoid an unconscionable result.
2. If it is claimed or appears to the court that the contract or any clause of the contract may be unconscionable, the parties shall be given a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.

History. (§ 2.302 ch 114 SLA 1962)

Sec. 45.02.303. Allocation or division of risks.

Where this chapter allocates a risk or a burden as between the parties “unless otherwise agreed,” the agreement may not only shift the allocation but may also divide the risk or burden.

History. (§ 2.303 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, § 378 et seq.

Sec. 45.02.304. Price payable in money, goods, realty, or otherwise.

1. The price can be made payable in money or otherwise.  If it is payable in whole or in part in goods, each party is a seller of the goods that the party is to transfer.
2. Even though all or part of the price is payable in an interest in realty, the transfer of the goods and the seller’s obligations with reference to them are subject to this chapter but not the transfer of the interest in realty or the transferor’s obligations in connection with the transfer of the real interest.

History. (§ 2.304 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, § 605 et seq.

Sec. 45.02.305. Open price term.

1. The parties if they so intend can conclude a contract for sale even though the price is not settled.  In this case the price is a reasonable price at the time for delivery if
   1. nothing is said as to price;
   2. the price is left to be agreed by the parties and they fail to agree; or
   3. the price is to be fixed in terms of an agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.
2. A price to be fixed by the seller or by the buyer means a price for the party to fix in good faith.
3. If a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party, the other party has the option to treat the contract as cancelled or fix a reasonable price.
4. If, however, the parties intend not to be bound unless the price is fixed or agreed and it is not fixed or agreed, there is no contract.  In this case the buyer must return goods already received or if unable so to do must pay their reasonable value at the time of delivery and the seller must return any portion of the price paid on account.

History. (§ 2.305 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, § 111 et seq.

Construction and application of UCC § 2-305 dealing with open price term contracts, 91 ALR3d 1237.

Sec. 45.02.306. Output, requirements, and exclusive dealings.

1. A term that measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to a stated estimate or, in the absence of a stated estimate, to a normal or otherwise comparable prior output or requirements may be tendered or demanded.
2. A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes, unless otherwise agreed, an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.

History. (§ 2.306 ch 114 SLA 1962)

Sec. 45.02.307. Delivery in single lot or several lots.

Unless otherwise agreed, all goods called for by a contract for sale must be tendered in a single delivery and payment is due only on this tender, but, where the circumstances give either party the right to make or demand delivery in lots, the price if it can be apportioned may be demanded for each lot.

History. (§ 2.307 ch 114 SLA 1962)

Sec. 45.02.308. Absence of specified place for delivery.

Unless otherwise agreed

1. the place for delivery of goods is the seller’s place of business or if the seller has none the seller’s residence; but
2. in a contract for sale of identified goods that to the knowledge of the parties at the time of contracting are in some other place, that place is the place for their delivery; and
3. documents of title may be delivered through customary banking channels.

History. (§ 2.308 ch 114 SLA 1962)

Sec. 45.02.309. Absence of specific time provisions; notice of termination.

1. The time for shipment or delivery or any other action under a contract if not provided in this chapter or agreed upon is a reasonable time.
2. If the contract provides for successive performances but is indefinite in duration, it is valid for a reasonable time, but, unless otherwise agreed, may be terminated at any time by either party.
3. Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party.  An agreement dispensing with notification is invalid if its operation would be unconscionable.

History. (§ 2.309 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, §§ 267, 268.

Sec. 45.02.310. Open time for payment or running of credit; authority to ship under reservation.

Unless otherwise agreed,

1. payment is due at the time and place at which the buyer is to receive the goods even though the place of shipment is the place of delivery;
2. if the seller is authorized to send the goods, the seller may ship them under reservation and may tender the documents of title, but the buyer may inspect the goods after their arrival before payment is due unless inspection is inconsistent with the terms of the contract (AS 45.02.513 );
3. if delivery is authorized and made by way of documents of title other than by (2) of this section, then payment is due, regardless of where the goods are to be received, at the time
   1. and place at which the buyer is to receive delivery of the tangible documents; or
   2. the buyer is to receive delivery of the electronic documents and at the seller’s place of business or, if the seller does not have a place of business, the seller’s residence; and
4. if the seller is required or authorized to ship the goods on credit, the credit period runs from the time of shipment, but postdating the invoice or delaying its dispatch correspondingly delays the starting of the credit period.

History. (§ 2.310 ch 114 SLA 1962; am § 15 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, rewrote (3), adding “, regardless of where the goods are to be received,” following “payment is due”, adding the (A) and (B) designations, in (A) substituted “and place at which the buyer is to receive delivery of the tangible documents;” for “and place at which the buyer is to receive the documents regardless of where the goods are to be received;”; added (3)(B); made related stylistic changes.

Sec. 45.02.311. Options and cooperation respecting performance.

1. An agreement for sale that is otherwise sufficiently definite (AS 45.02.204(c) ) to be a contract is not made invalid by the fact that it leaves particulars of performance to be specified by one of the parties.  The specification must be made in good faith and within limits set by commercial reasonableness.
2. Unless otherwise agreed, specifications relating to assortment of the goods are at the buyer’s option and, except as otherwise provided in AS 45.02.319(a)(3) and (c), specifications or arrangements relating to shipment are at the seller’s option.
3. If the specification would materially affect the other party’s performance but is not seasonably made or if one party’s cooperation is necessary to the agreed performance of the other but is not seasonably forthcoming, the other party in addition to all other remedies
   1. is excused for a resulting delay in the party’s own performance; and
   2. may either proceed to perform in a reasonable manner or, after the time for a material part of the party’s own performance, treat the failure to specify or to cooperate as a breach by failure to deliver or accept the goods.

History. (§ 2.311 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, §§ 131, 141.

Sec. 45.02.312. Warranty of title and against infringement; buyer’s obligation against infringement.

1. Subject to (b) of this section there is in a contract for sale a warranty by the seller that
   1. the title conveyed shall be good, and its transfer rightful; and
   2. the goods shall be delivered free from a security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge.
2. A warranty under (a) of this section will be excluded or modified only by specific language or by circumstances that give the buyer reason to know that the person selling does not claim title in the seller or that the person is purporting to sell only such right or title as the person selling or a third person may have.
3. Unless otherwise agreed, a seller who is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of a third person by way of infringement or the like, but a buyer who furnishes specifications to the seller must hold the seller harmless against any such claim that arises out of compliance with the specifications.

History. (§ 2.312 ch 114 SLA 1962)

Sec. 45.02.313. Express warranties by affirmation, promise, description, sample.

1. Express warranties by the seller are created as follows:
   1. an affirmation of fact or promise made by the seller to the buyer that relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise;
   2. a description of the goods that is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description;
   3. a sample or model that is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.
2. It is not necessary to the creation of an express warranty that the seller use formal words such as “warrant” or “guarantee” or that the seller have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller’s opinion of commendation of the goods does not create a warranty.

History. (§ 2.313 ch 114 SLA 1962)

Sec. 45.02.314. Implied warranty: Merchantability; usage of trade.

1. Unless excluded or modified (AS 45.02.316 ), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind.  Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.
2. Goods to be merchantable must at least
   1. pass without objection in the trade under the contract description;
   2. in the case of fungible goods, be of fair average quality within the description;
   3. be fit for the ordinary purposes for which the goods are used;
   4. run, within the variations permitted by the agreement, of even kind, quality, and quantity within each unit and among all units involved;
   5. be adequately contained, packaged, and labeled as the agreement requires; and
   6. conform to the promises or affirmations of fact made on the container or label.
3. Unless excluded or modified (AS 45.02.316 ), other implied warranties may arise from course of dealing or usage of trade.

History. (§ 2.314 ch 114 SLA 1962)

Sec. 45.02.315. Implied warranty: Fitness for particular purpose.

If the seller at the time of contracting has reason to know a particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is, unless excluded or modified under AS 45.02.316 , an implied warranty that the goods shall be fit for that purpose.

History. (§ 2.315 ch 114 SLA 1962)

Sec. 45.02.316. Exclusion or modification of warranties.

1. Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed where reasonable as consistent with each other; but, subject to the provisions on parol or extrinsic evidence (AS 45.02.202 ), negation or limitation is inoperative to the extent that such construction is unreasonable.
2. Subject to (c) of this section, to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify an implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that “There are no warranties which extend beyond the description on the face of this instrument.”
3. Notwithstanding (b) of this section,
   1. unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like “as is,” “with all faults,” or other language that in common understanding calls the buyer’s attention to the exclusion of warranties and makes plain that there is no implied warranty; and
   2. when the buyer, before entering into the contract, has examined the goods or the sample or model as fully as the buyer desired or has refused to examine the goods, there is no implied warranty with regard to defects that an examination ought in the circumstances to have revealed to the buyer; and
   3. an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade.
4. Remedies for breach of warranty can be limited in accordance with the provisions on liquidation or limitation of damages and on contractual modification of remedy (AS 45.02.718 and 45.02.719 ).
5. Implied warranties of merchantability and fitness are not applicable to a contract for the sale of human blood, blood plasma or other human tissue or organs from a blood bank or reservoir of tissue or organs.  The blood, blood plasma, tissue, or organs may not, for the purposes of this chapter, be considered commodities subject to sale or barter, but shall be considered medical services.

History. (§ 2.316 ch 114 SLA 1962; am § 1 ch 88 SLA 1968)

Editor’s notes. —

Subsection (e), which was added by the 1968 amendment, is not part of the official text of the Uniform Commercial Code.

Sec. 45.02.317. Cumulation and conflict of warranties express or implied.

Warranties whether express or implied shall be construed as consistent with each other and as cumulative, but if that construction is unreasonable the intention of the parties determines which warranty is dominant. In ascertaining that intention the following rules apply:

1. exact or technical specifications displace an inconsistent sample or model or general language of description;
2. a sample from an existing bulk displaces inconsistent general language of description;
3. an express warranty displaces an inconsistent implied warranty other than an implied warranty of fitness for a particular purpose.

History. (§ 2.317 ch 114 SLA 1962)

Sec. 45.02.318. Third-party beneficiaries of warranties express or implied.

A seller’s warranty whether express or implied extends to a natural person who is in the family or household of the buyer or who is a guest in the buyer’s home if it is reasonable to expect that the person may use, consume, or be affected by the goods and who is injured in person by breach of the warranty. A seller may not exclude or limit the operation of this section.

History. (§ 2.318 ch 114 SLA 1962)

Sec. 45.02.319. F.O.B. and F.A.S. terms.

1. Unless otherwise agreed, the term F.O.B., which means “free on board”, at a named place, even though used only in connection with the stated price, is a delivery term under which,
   1. when the term is F.O.B. the place of shipment, the seller must at that place ship the goods in the manner provided in AS 45.02.504 and bear the expense and risk of putting them into the possession of the carrier; or
   2. when the term is F.O.B. the place of destination, the seller must, at the expense and risk of the seller, transport the goods to that place and there tender delivery of them in the manner provided in AS 45.02.503 ;
   3. when under either (1) or (2) of this subsection the term is also F.O.B. vessel, car, or other vehicle, the seller must in addition, at the expense and risk of the seller, load the goods on board; if the term is F.O.B. vessel, the buyer must name the vessel and in an appropriate case the seller must comply with the provisions on the form of bill of lading (AS 45.02.323 ).
2. Unless otherwise agreed, the term F.A.S. vessel (which means “free alongside”) at a named port, even though used only in connection with the stated price, is a delivery term under which the seller must
   1. at the expense and risk of the seller deliver the goods alongside the vessel in the manner usual in that port or on a dock designated and provided by the buyer; and
   2. obtain and tender a receipt for the goods in exchange for which the carrier is under a duty to issue a bill of lading.
3. Unless otherwise agreed, in a case falling within (a)(1) or (3) or (b) of this section, the buyer must seasonably give needed instructions for making delivery, including when the term is F.A.S. or F.O.B. the loading berth of the vessel and in an appropriate case its name and sailing date.  The seller may treat the failure of needed instructions as a failure of cooperation under AS 45.02.311 .  The seller also has the option to move the goods in a reasonable manner preparatory to delivery or shipment.
4. Under the term F.O.B. vessel or F.A.S., unless otherwise agreed, the buyer must make payment against tender of the required documents and the seller may not tender or the buyer demand delivery of the goods in substitution for the documents.

History. (§ 2.319 ch 114 SLA 1962)

Sec. 45.02.320. C.I.F. and C. & F. terms.

1. The term C.I.F. means that the price includes in a lump sum the cost of the goods and the insurance and freight to the named destination. The term C. & F. or C.F. means that the price so includes cost and freight to the named destination.
2. Unless otherwise agreed and even though used only in connection with the stated price and destination, the term C.I.F. destination or its equivalent requires the seller at the expense and risk of the seller to
   1. put the goods into the possession of a carrier at the port for shipment and obtain a negotiable bill or bills of lading covering the entire transportation to the named destination; and
   2. load the goods and obtain a receipt from the carrier, which may be contained in the bill of lading, showing that the freight has been paid or provided for; and
   3. obtain a policy or certificate of insurance, including war risk insurance, of a kind and on terms then current at the port of shipment in the usual amount, in the currency of the contract, shown to cover the same goods covered by the bill of lading and providing for payment of loss to the order of the buyer or for the account of whom it may concern; but the seller may add to the price the amount of the premium for war risk insurance; and
   4. prepare an invoice of the goods and procure any other documents required to effect shipment or to comply with the contract; and
   5. forward and tender with commercial promptness all the documents in due form and with the endorsement necessary to perfect the buyer’s rights.
3. Unless otherwise agreed, the term C. & F. or its equivalent has the same effect and imposes upon the seller the same obligations and risks as a C.I.F. term except the obligation as to insurance.
4. Under the term C.I.F. or C. & F., unless otherwise agreed, the buyer must make payment against tender of the required documents and the seller may not tender or the buyer demand delivery of the goods in substitution for the documents.

History. (§ 2.320 ch 114 SLA 1962)

Sec. 45.02.321. C.I.F. or C. & F.: “Net landed weights”; “payment on arrival”; warranty of conditions on arrival.

Under a contract containing a term C.I.F. or C. & F.,

1. if the price is based on or is to be adjusted according to “net landed weights,” “delivered weights,” “out turn” quantity or quality, or the like, unless otherwise agreed, the seller must reasonably estimate the price; the payment due on tender of the documents called for by the contract is the amount so estimated, but after final adjustment of the price a settlement must be made with commercial promptness;
2. an agreement described in (1) of this section, or a warranty of quality or condition of the goods on arrival places upon the seller the risk of ordinary deterioration, shrinkage, and the like in transportation, but has no effect on the place or time of identification to the contract for sale or delivery or on the passing of the risk of loss;
3. unless otherwise agreed, if the contract provides for payment on or after arrival of the goods, the seller must before payment allow such preliminary inspection as is feasible; but if the goods are lost, delivery of the documents and payment are due when the goods should have arrived.

History. (§ 2.321 ch 114 SLA 1962)

Sec. 45.02.322. Delivery “ex-ship.”

1. Unless otherwise agreed, a term for delivery of goods “ex-ship”, which means from the carrying vessel, or in equivalent language is not restricted to a particular ship and requires delivery from a ship that has reached a place at the named port of destination where goods of the kind are usually discharged.
2. Under such a term, unless otherwise agreed,
   1. the seller must discharge all liens arising out of the carriage and furnish the buyer with a direction that puts the carrier under a duty to deliver the goods; and
   2. the risk of loss does not pass to the buyer until the goods leave the ship’s tackle or are otherwise properly unloaded.

History. (§ 2.322 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, § 520.

Sec. 45.02.323. Form of bill of lading required in overseas shipment; “overseas.”

1. Where the contract contemplates overseas shipment and contains a term C.I.F. or C. & F. or F.O.B. vessel, the seller, unless otherwise agreed, must obtain a negotiable bill of lading stating that the goods have been loaded on board or, in the case of a term C.I.F. or C. &. F., received for shipment.
2. Where, in a case within (a) of this section, a tangible bill of lading has been issued in a set of parts, unless otherwise agreed, if the documents are not to be sent from abroad, the buyer may demand tender of the full set; otherwise only one part of the bill of lading need be tendered. Even if the agreement expressly requires a full set,
   1. due tender of a single part is acceptable within the provisions on cure of improper delivery (AS 45.02.508(a) ); and
   2. even though the full set is demanded, if the documents are sent from abroad, the person tendering an incomplete set may nevertheless require payment upon furnishing an indemnity that the buyer in good faith considers adequate.
3. A shipment by water or by air or a contract contemplating the shipment is “overseas” insofar as by usage of trade or agreement it is subject to the commercial, financing, or shipping practices characteristic of international deep water commerce.

History. (§ 2.323 ch 114 SLA 1962; am § 16 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (b), added “tangible” preceding “bill of lading has been issued”, and made stylistic changes.

Sec. 45.02.324. “No arrival, no sale” term.

Under a term “no arrival, no sale” or terms of like meaning, unless otherwise agreed,

1. the seller must properly ship conforming goods and if they arrive by any means the seller must tender them on arrival, but the seller assumes no obligation that the goods will arrive unless the seller has caused the nonarrival; and
2. if without fault of the seller the goods are in part lost or have so deteriorated as no longer to conform to the contract or arrive after the contract time, the buyer may proceed as if there had been casualty to identified goods (AS 45.02.613 ).

History. (§ 2.324 ch 114 SLA 1962)

Collateral references. —

Construction and effect of UCC § 2-613 governing casualty to goods identified to a contract, without fault of buyer or seller, 51 ALR4th 537.

Sec. 45.02.325. “Letter of credit” term; “confirmed credit.”

1. Failure of the buyer seasonably to furnish an agreed letter of credit is a breach of the contract for sale.
2. The delivery to seller of a proper letter of credit suspends the buyer’s obligation to pay. If the letter of credit is dishonored, the seller may on seasonable notification to the buyer require payment directly from the buyer.
3. Unless otherwise agreed, the term “letter of credit” or “banker’s credit” in a contract for sale means an irrevocable credit issued by a financing agency of good repute and, if the shipment is overseas, of good international repute. The term “confirmed credit” means that the credit must also carry the direct obligation of such an agency that does business in the seller’s financial market.

History. (§ 2.325 ch 114 SLA 1962)

Sec. 45.02.326. Sale on approval and sale or return; rights of creditors.

1. Unless otherwise agreed, if delivered goods may be returned by the buyer even though they conform to the contract, the transaction is
   1. a “sale on approval” if the goods are delivered primarily for use; and
   2. a “sale or return” if the goods are delivered primarily for resale.
2. Goods held on approval are not subject to the claims of the buyer’s creditors until acceptance; goods held on sale or return are subject to such claims while in the buyer’s possession.
3. An “or return” term of a contract for sale is to be treated as a separate contract for sale within the statute of frauds section (AS 45.02.201 ), and as contradicting the sale aspect of the contract within the provisions on parol or extrinsic evidence (AS 45.02.202 ).
4. Whenever an artist delivers or causes to be delivered a work of fine art of the artist’s creation to an art dealer for the purpose of sale, or exhibition and sale to the public on a commission or fee or other basis of compensation, the work of fine art is not subject to the claims of the art dealer’s creditors. For the purposes of this subsection,
   1. “art dealer” means a person other than a public auctioneer engaged in the business of selling works of fine art;
   2. “artist” means the creator of a work of fine art;
   3. “fine art” includes a painting, sculpture, drawing, photograph, or work of graphic art.

History. (§ 2.326 ch 114 SLA 1962; am § 1 ch 8 SLA 1979; am § 9 ch 113 SLA 2000)

Cross references. —

For additional provisions related to artist-art dealer relationships, see AS 45.65.200 .

Collateral references. —

Consignment transactions under the Uniform Commercial Code, 40 ALR3d 1078.

Sec. 45.02.327. Special incidents of sale on approval and sale or return.

1. Under a sale on approval, unless otherwise agreed,
   1. although the goods are identified to the contract, the risk of loss and the title do not pass to the buyer until acceptance;
   2. use of the goods consistent with the purpose of trial is not acceptance, but failure seasonably to notify the seller of election to return the goods is acceptance, and, if the goods conform to the contract, acceptance of any part is acceptance of the whole; and
   3. after due notification of election to return, the return is at the seller’s risk and expense but a merchant buyer must follow reasonable instructions.
2. Under a sale or return, unless otherwise agreed,
   1. the option to return extends to the whole or a commercial unit of the goods while in substantially their original condition, but must be exercised seasonably; and
   2. the return is at the buyer’s risk and expense.

History. (§ 2.327 ch 114 SLA 1962)

Collateral references. —

Goods in “sale or return” transaction under U.C.C. § 2-327, 66 ALR3d 190.

Sec. 45.02.328. Sale by auction.

1. In a sale by auction if goods are put up in lots each lot is the subject of a separate sale.
2. A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner. Where a bid is made while the hammer is falling in acceptance of a prior bid, the auctioneer has discretion to reopen the bidding or declare the goods sold under the bid on which the hammer was falling.
3. A sale by auction is with reserve unless the goods are in explicit terms put up without reserve.  In an auction with reserve, the auctioneer may withdraw the goods at any time until the auctioneer announces completion of the sale.  In an auction without reserve, after the auctioneer calls for bids on an article or lot, that article or lot cannot be withdrawn unless no bid is made within a reasonable time.  In either case a bidder may retract a bid until the auctioneer’s announcement of completion of the sale, but a bidder’s retraction does not revive any previous bid.
4. If the auctioneer knowingly receives a bid on the seller’s behalf or the seller makes or procures such a bid, and notice has not been given that liberty for the bidding is reserved, the buyer has the option to avoid the sale or take the goods at the price of the last good faith bid before the completion of the sale.  This subsection does not apply to a bid at a forced sale.

History. (§ 2.328 ch 114 SLA 1962)

Collateral references. —

7 Am. Jur. 2d, Auctions and Auctioneers, § 1 et seq.

Sec. 45.02.350. Sale by door-to-door solicitation.

1. A contract for the purchase of goods or services in the amount of $10 or more from a person soliciting a door-to-door sale shall require, as a condition of taking effect, that the purchaser may revoke the offer to buy within five business days of entering into the contract, and that the seller, at the time of the sale, give the purchaser written notice of the right to revoke. Revocation is effective either upon the tender of the rejected goods to the seller or an agent of the seller, or upon the posting of a registered letter (marked Deliver to Addressee Only, Return Receipt) of rejection to the seller or an agent of the seller.
2. The cost of returning rejected goods shall be borne by the seller.
3. A “door-to-door sale” occurs when the seller, or a representative of the seller, personally solicits the sale and the purchaser’s agreement or offer to purchase is made at a place other than the place of business of the seller.  The term “door-to-door sale” does not include a transaction
   1. made under prior negotiations in the course of a visit by the buyer to a retail business establishment having a fixed permanent location where the goods are exhibited or the services are offered for sale on a continuing basis;
   2. in which the buyer has initiated the contact and the goods or services are needed to meet a bona fide immediate personal emergency of the buyer;
   3. conducted and consummated entirely by mail;
   4. in which the buyer has initiated the contact and specifically requested the seller to visit the buyer’s home for the purpose of repairing or performing maintenance upon the buyer’s personal property; or
   5. conducted at the purchaser’s place of business.
4. As used in (c) of this section, “personally” means in person or by telephone.

History. (§ 1 ch 54 SLA 1970; am §§ 2, 3 ch 183 SLA 1975)

Cross references. —

For failure to comply with this section as an unlawful trade practice, see AS 45.50.471(b) .

Editor’s notes. —

This section is not part of the official text of the Uniform Commercial Code.

Collateral references. —

Applicability of warranty of fitness under UCC § 2-315 to supplies or equipment used in performance of service contract, 47 ALR4th 238.

Sec. 45.02.401. Passing of title; reservation for security; limited application of this section.

Each provision of this chapter with regard to the rights, obligations, and remedies of the seller, the buyer, purchasers, or other third parties applies irrespective of title to the goods except where the provision refers to the title. Insofar as situations are not covered by the other provisions of this chapter and matters concerning title become material, the following rules apply:

1. title to goods cannot pass under a contract for sale before their identification to the contract (AS 45.02.501 ), and, unless otherwise explicitly agreed, the buyer acquires by their identification a special property as limited by the code; a retention or reservation by the seller of the title (property) in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest; subject to these provisions and to the provisions of AS 45.29, title to goods passes from the seller to the buyer in the manner and on the conditions explicitly agreed on by the parties;
2. unless otherwise explicitly agreed, title passes to the buyer at the time and place at which the seller completes performance with reference to the physical delivery of the goods, despite a reservation of a security interest and even though a document of title is to be delivered at a different time or place; in particular and despite a reservation of a security interest by the bill of lading,
   1. if the contract requires or authorizes the seller to send the goods to the buyer but does not require the seller to deliver them at destination, title passes to the buyer at the time and place of shipment; but
   2. if the contract requires delivery at destination, title passes on tender there;
3. unless otherwise explicitly agreed, where delivery is to be made without moving the goods,
   1. if the seller is to deliver a tangible document of title, title passes at the time and place the seller delivers the document, and, if the seller is to deliver an electronic document of title, title passes when the seller delivers the document; or
   2. if the goods are, at the time of contracting, already identified and no documents of title are to be delivered, title passes at the time and place of contracting;
4. a rejection or other refusal by the buyer to receive or retain the goods, whether or not justified, or a justified revocation of acceptance revests title to the goods in the seller; this revesting occurs by operation of law and is not a “sale.”

History. (§ 2.401 ch 114 SLA 1962; am § 13 ch 20 SLA 2002; am § 17 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (3)(A) added “tangible” preceding “document of title” and substituted “document, and, if the seller is to deliver an electronic document of title, title passes when the seller delivers the document” for “documents”; in (3)(B), added “of title” following “no documents”; made stylistic changes.

Sec. 45.02.402. Rights of seller’s creditors against sold goods.

1. Except as provided in (b) and (c) of this section, rights of unsecured creditors of the seller with respect to goods that have been identified to a contract for sale are subject to the buyer’s rights to recover the goods under AS 45.02.502 and 45.02.716 .
2. A creditor of the seller may treat a sale or an identification of goods to a contract for sale as void if as against the creditor a retention of possession by the seller is fraudulent under any rule of law of the state where the goods are located, except that retention of possession in good faith and current course of trade by a merchant seller for a commercially reasonable time after a sale or identification is not fraudulent.
3. Nothing in this chapter may be considered to impair the rights of creditors of the seller
   1. under the provisions of AS 45.29; or
   2. if identification to the contract or delivery is made not in current course of trade but in satisfaction of or as security for a pre-existing claim for money, security, or the like and is made under circumstances that under any rule of law of the state where the goods are located would, apart from this chapter, constitute the transaction of a fraudulent transfer or voidable preference.

History. (§ 2.402 ch 114 SLA 1962)

Revisor’s notes. —

In 2000, “AS 45.29” was substituted for “AS 45.09” in accordance with § 35, ch. 113, SLA 2000.

Sec. 45.02.403. Power to transfer; good faith purchase of goods; “entrusting.”

1. A purchaser of goods acquires all title that the transferor had or had power to transfer, except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased. A person with voidable title has power to transfer a good title to a good faith purchaser for value. When goods have been delivered under a transaction of purchase, the purchaser has such power even though
   1. the transferor was deceived as to the identity of the purchaser;
   2. the delivery was in exchange for a check that was later dishonored;
   3. it was agreed that the transaction was to be a “cash sale”; or
   4. the delivery was procured through fraud punishable as larcenous under the criminal law.
2. An entrusting of possession of goods to a merchant who deals in goods of that kind gives the merchant power to transfer all rights of the entruster to a buyer in ordinary course of business.
3. “Entrusting” includes a delivery and an acquiescence in retention of possession regardless of a condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor’s disposition of the goods is larcenous under the criminal law.
4. The rights of other purchasers of goods and of lien creditors are governed by AS 45.07 and AS 45.29.

History. (§ 2.403 ch 114 SLA 1962; am § 12 ch 35 SLA 1993)

Revisor’s notes. —

In 2000, “AS 45.29” was substituted for “AS 45.09” in accordance with § 35, ch. 113, SLA 2000.

Sec. 45.02.501. Insurable interest in goods; manner of identification of goods.

1. The buyer obtains a special property and an insurable interest in goods by identification of existing goods as goods to which the contract refers even though the goods so identified are nonconforming and the buyer has an option to return or reject them. Identification can be made at any time and in any manner explicitly agreed to by the parties.  In the absence of explicit agreement, identification occurs
   1. when the contract is made if it is for the sale of goods already existing and identified;
   2. if the contract is for the sale of future goods other than those described in (3) of this subsection, when goods are shipped, marked, or otherwise designated by the seller as goods to which the contract refers;
   3. when the crops are planted or otherwise become growing crops or the young are conceived if the contract is for the sale of unborn young to be born within 12 months after contracting or for the sale of crops to be harvested within 12 months or the next normal harvest season after contracting, whichever is longer.
2. The seller retains an insurable interest in the goods as long as title to or a security interest in the goods remains in the seller and, if the identification is by the seller alone, the seller may, until default or insolvency or notification to the buyer that the identification is final, substitute other goods for those identified.
3. Nothing in this section impairs an insurable interest recognized under another statute or rule of law.

History. (§ 2.501 ch 114 SLA 1962)

Collateral references. —

43 Am. Jur. 2d, Insurance, § 1 et seq.

Sec. 45.02.502. Buyer’s right to goods on seller’s repudiation, failure to deliver, or insolvency.

1. Subject to (b) and (c) of this section and even though the goods have not been shipped, a buyer who has paid a part or all of the price of goods in which the buyer has a special property under the provisions of AS 45.02.501 may, on making and keeping good a tender of an unpaid portion of their price, recover them from the seller if
   1. in the case of goods bought for personal, family, or household purposes, the seller repudiates or fails to deliver as required by the contract; or
   2. in all cases, the seller becomes insolvent within 10 days after receipt of the first installment on their price.
2. The buyer’s right to recover the goods under (a)(1) of this section vests upon acquisition of a special property even if the seller had not then repudiated or failed to deliver.
3. If the identification creating the buyer’s special property has been made by the buyer, the buyer acquires the right to recover the goods only if they conform to the contract for sale.

History. (§ 2.502 ch 114 SLA 1962; am § 10 ch 113 SLA 2000)

Collateral references. —

67A Am. Jur. 2d, Sales, § 1053.

Sec. 45.02.503. Manner of seller’s tender of delivery.

1. Tender of delivery requires that the seller put and hold conforming goods at the buyer’s disposition and give the buyer any notification reasonably necessary to enable the buyer to take delivery. The manner, time, and place for tender are determined by the agreement and this chapter, and, in particular,
   1. tender must be at a reasonable hour and, if it is of goods, they must be kept available for the period reasonably necessary to enable the buyer to take possession; but
   2. unless otherwise agreed, the buyer must furnish facilities reasonably suited to the receipt of the goods.
2. If the case is within AS 45.02.504 respecting shipment, tender requires that the seller comply with its provisions.
3. If the seller is required to deliver at a particular destination, tender requires that the seller comply with (a) of this section and also in an appropriate case tender documents as described in (d) and (e) of this section.
4. If goods are in the possession of a bailee and are to be delivered without being moved,
   1. tender requires that the seller either tender a negotiable document of title covering the goods or procure acknowledgment by the bailee of the buyer’s right to possession of the goods; but
   2. tender to the buyer of a nonnegotiable document of title or of a record directing the bailee to deliver is sufficient tender unless the buyer seasonably objects, and, except as otherwise provided in AS 45.29, receipt by the bailee of notification of the buyer’s rights fixes those rights as against the bailee and all third persons; but risk of loss of the goods and of a failure by the bailee to honor the nonnegotiable document of title or to obey the direction remains on the seller until the buyer has had a reasonable time to present the document or direction, and a refusal by the bailee to honor the document or to obey the direction defeats the tender.
5. If the contract requires the seller to deliver documents,
   1. the seller must tender all such documents in correct form except as provided in AS 45.02.323(b) with respect to bills of lading in a set; and
   2. tender through customary banking channels is sufficient, and dishonor of a draft accompanying or associated with the documents constitutes nonacceptance or rejection.

History. (§ 2.503 ch 114 SLA 1962; am §§ 18, 19 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (d)(2), substituted “record directing” for “written direction to” following “document of title or of a”, and substituted “, except as otherwise provided in AS 45.29” following “buyer seasonably objects, and”; in (e)(2), added “or associated with” following “a draft accompanying”.

Collateral references. —

67 Am. Jur. 2d, Sales, § 489 et seq.

Sec. 45.02.504. Shipment by seller.

1. If the seller is required or authorized to send the goods to the buyer and the contract does not require the seller to deliver them at a particular destination, then, unless otherwise agreed, the seller must
   1. put the goods in the possession of such a carrier and make such a contract for their transportation as is reasonable, having regard to the nature of the goods and other circumstances of the case;
   2. obtain and promptly deliver or tender in due form any document necessary to enable the buyer to obtain possession of the goods or otherwise required by the agreement or by usage of trade; and
   3. promptly notify the buyer of the shipment.
2. Failure to notify the buyer under (a)(3) of this section or to make a proper contract under (a)(1) of this section is a ground for rejection only if material delay or loss ensues.

History. (§ 2.504 ch 114 SLA 1962)

Sec. 45.02.505. Seller’s shipment under reservation.

1. If the seller has identified goods to the contract by or before shipment,
   1. the seller’s procurement of a negotiable bill of lading to the seller’s order or otherwise reserves in the seller a security interest in the goods; the seller’s procurement of the bill to the order of a financing agency or of the buyer indicates in addition only the seller’s expectation of transferring that interest to the person named;
   2. a nonnegotiable bill of lading to the seller or the nominee of the seller reserves possession of the goods as security, but, except in a case of conditional delivery (AS 45.02.507(b) ), a nonnegotiable bill of lading naming the buyer as consignee reserves no security interest even though the seller retains possession or control of the bill of lading.
2. If shipment by the seller with reservation of a security interest is in violation of the contract for sale, it constitutes an improper contract for transportation within AS 45.02.504 but impairs neither the rights given to the buyer by shipment and identification of the goods to the contract nor the seller’s powers as a holder of a negotiable document of title.

History. (§ 2.505 ch 114 SLA 1962; am § 20 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (a)(2), added “or control” preceding “of the bill of lading”; in (b), substituted “AS 45.02.504 ” for “the preceding section” and added “of title” at the end of the subsection; made a stylistic change.

Sec. 45.02.506. Rights of financing agency.

1. A financing agency by paying or purchasing for value a draft that relates to a shipment of goods acquires to the extent of the payment or purchase and in addition to its own rights under the draft and a document of title securing it any rights of the shipper in the goods including the right to stop delivery and the shipper’s right to have the draft honored by the buyer.
2. The right to reimbursement of a financing agency that has in good faith honored or purchased the draft under commitment to or authority from the buyer is not impaired by subsequent discovery of defects with reference to a relevant document that was apparently regular.

History. (§ 2.506 ch 114 SLA 1962; am § 21 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (b), deleted “on its face” following “that was apparently regular”.

Sec. 45.02.507. Effect of seller’s tender; delivery on condition.

1. Tender of delivery is a condition to the buyer’s duty to accept the goods and, unless otherwise agreed, to the buyer’s duty to pay for them.  Tender entitles the seller to acceptance of the goods and to payment according to the contract.
2. If payment is due and demanded on the delivery to the buyer of goods or documents of title, the buyer’s right as against the seller to retain or dispose of them is conditional upon the buyer’s making the payment due.

History. (§ 2.507 ch 114 SLA 1962)

Sec. 45.02.508. Cure by seller of improper tender or delivery; replacement.

1. If a tender or delivery by the seller is rejected because nonconforming and the time for performance has not yet expired, the seller may seasonably notify the buyer of the intent of the seller to cure and may then, within the contract time, make a conforming delivery.
2. If the buyer rejects a nonconforming tender that the seller had reasonable grounds to believe would be acceptable with or without money allowance, the seller may, if the seller seasonably notified the buyer, have a further reasonable time to substitute a conforming tender.

History. (§ 2.508 ch 114 SLA 1962)

Sec. 45.02.509. Risk of loss in the absence of breach.

1. Where the contract requires or authorizes the seller to ship the goods by carrier,
   1. if it does not require the seller to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier even though the shipment is under reservation (AS 45.02.505 ); but
   2. if it does require the seller to deliver them at a particular destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the buyer when the goods are there duly so tendered as to enable the buyer to take delivery.
2. Where the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the buyer
   1. on the buyer’s receipt of possession or control of a negotiable document of title covering the goods;
   2. on acknowledgment by the bailee of the buyer’s right to possession of the goods; or
   3. after the buyer’s receipt of possession or control of a nonnegotiable document of title or other direction to deliver in a record, as provided in AS 45.02.503(d)(2) .
3. In any case not within (a) or (b) of this section, the risk of loss passes to the buyer on the buyer’s receipt of the goods if the seller is a merchant; otherwise the risk passes to the buyer on tender of delivery.
4. This section is subject to contrary agreement of the parties and to the provisions on sale on approval (AS 45.02.327 ), and on effect of breach on risk of loss (AS 45.02.510 ).

History. (§ 2.509 ch 114 SLA 1962; am § 22 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (b)(1), added “possession or control of” preceding “a negotiable document”; in (b)(3), added “possession or control of” preceding “a nonnegotiable document”, deleted “written” preceding “direction to deliver”, added “in a record,” preceding “as provided in AS 45.02.503(d)(2) ”.

Collateral references. —

67 Am. Jur. 2d, Sales, §§ 383 to 390.

Who bears risk of loss of goods under UCC §§ 2-509, 2-510, 66 ALR3d 145.

Sec. 45.02.510. Effect of breach on risk of loss.

1. If a tender or delivery of goods so fails to conform to the contract as to give a right of rejection, the risk of their loss remains on the seller until cure or acceptance.
2. If the buyer rightfully revokes acceptance, the buyer may, to the extent of a deficiency in the buyer’s effective insurance coverage, treat the risk of loss as having rested on the seller from the beginning.
3. If the buyer as to conforming goods already identified to the contract for sale repudiates or is otherwise in breach before risk of their loss has passed to the buyer, the seller may, to the extent of a deficiency in the seller’s effective insurance coverage, treat the risk of loss as resting on the buyer for a commercially reasonable time.

History. (§ 2.510 ch 114 SLA 1962)

Collateral references. —

Who bears risk of loss of goods under UCC §§ 2-509, 2-510, 66 ALR3d 145.

Sec. 45.02.511. Tender of payment by buyer; payment by check.

1. Unless otherwise agreed, tender of payment is a condition to the seller’s duty to tender and complete a delivery.
2. Tender of payment is sufficient when made by a means or in a manner current in the ordinary course of business unless the seller demands payment in legal tender and gives an extension of time reasonably necessary to procure it.
3. Subject to the provisions of the code on the effect of an instrument on an obligation (AS 45.03.310 ), payment by check is conditional and is defeated as between the parties by dishonor of the check on due presentment.

History. (§ 2.511 ch 114 SLA 1962; am § 10 ch 34 SLA 1993; am § 13 ch 35 SLA 1993)

Collateral references. —

67 Am. Jur. 2d, Sales, § 607

67A Am. Jur. 2d, Sales, § 922.

Sec. 45.02.512. Payment by buyer before inspection.

1. If the contract requires payment before inspection, nonconformity of the goods does not excuse the buyer from so making payment unless
   1. the nonconformity appears without inspection; or
   2. despite tender of the required documents, the circumstances would justify injunction against honor under AS 45.05.109(b) .
2. Payment under (a) of this section does not constitute an acceptance of goods or impair the buyer’s right to inspect or any of the buyer’s remedies.

History. (§ 2.512 ch 114 SLA 1962; am § 3 ch 75 SLA 1999)

Cross references. —

For transition provisions relating to the applicability of the 1999 amendment of subsection (a), see § 26, ch. 75, SLA 1999 in the 1999 Temporary & Special Acts.

Sec. 45.02.513. Buyer’s right to inspection of goods.

1. Unless otherwise agreed and subject to (c) of this section, if goods are tendered, delivered or identified to the contract for sale, the buyer may before payment or acceptance inspect them at a reasonable place and time and in a reasonable manner. If the seller is required or authorized to send the goods to the buyer, the inspection may be after their arrival.
2. Expenses of inspection must be borne by the buyer but may be recovered from the seller if the goods do not conform and are rejected.
3. Unless otherwise agreed and subject to the provisions on C.I.F. contracts (AS 45.02.321 ), the buyer is not entitled to inspect the goods before payment of the price if the contract provides
   1. for delivery “C.O.D.” or on other like terms; or
   2. for payment against documents of title, except where the payment is due only after the goods are to become available for inspection.
4. A place or method of inspection fixed by the parties is presumed to be exclusive but, unless otherwise expressly agreed, it does not postpone identification or shift the place for delivery or for passing the risk of loss.  If compliance becomes impossible, inspection is as provided in this section unless the place or method fixed was clearly intended as an indispensable condition, failure of which avoids the contract.

History. (§ 2.513 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, § 560 et seq.

Time, place and manner of buyer’s inspection of goods under UCC § 2-513, 36 ALR4th 726.

Sec. 45.02.514. When documents deliverable on acceptance; when on payment.

Unless otherwise agreed, documents against which a draft is drawn are to be delivered to the drawee on acceptance of the draft if it is payable more than three days after presentment; otherwise, only on payment.

History. (§ 2.514 ch 114 SLA 1962)

Sec. 45.02.515. Preserving evidence of goods in dispute.

In furtherance of the adjustment of a claim or dispute,

1. either party, on reasonable notification to the other and to ascertain the facts and preserve evidence, may inspect, test, and sample the goods, including the goods in the possession or control of the other; and
2. the parties may agree to a third party inspection or survey to determine the conformity or condition of the goods and may agree that the findings shall be binding upon them in a subsequent litigation or adjustment.

History. (§ 2.515 ch 114 SLA 1962)

Sec. 45.02.601. Buyer’s rights on improper delivery.

Subject to the provisions on breach in installment contracts (AS 45.02.612 ) and unless otherwise agreed under the sections on contractual limitations of remedy (AS 45.02.718 and 45.02.719 ), if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may

1. reject the whole;
2. accept the whole; or
3. accept any commercial unit and reject the rest.

History. (§ 2.601 ch 114 SLA 1962)

Sec. 45.02.602. Manner and effect of rightful rejection.

1. Rejection of goods must be within a reasonable time after their delivery or tender.  It is ineffective unless the buyer seasonably notifies the seller.
2. Subject to the provisions of AS 45.02.603 and 45.02.604 on rejected goods,
   1. after rejection, an exercise of ownership by the buyer with respect to a commercial unit is wrongful as against the seller; and
   2. if the buyer has, before rejection, taken physical possession of goods in which the buyer does not have a security interest under AS 45.02.711(c) , the buyer is under a duty after rejection to hold them with reasonable care at the seller’s disposition for a time sufficient to permit the seller to remove them; but
   3. the buyer has no further obligations with regard to goods rightfully rejected.
3. The seller’s rights with respect to goods wrongfully rejected are governed by the provisions on seller’s remedies in general (AS 45.02.703 ).

History. (§ 2.602 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, §§ 456, 587 et seq.

Sec. 45.02.603. Merchant buyer’s duties as to rightfully rejected goods.

1. Subject to a security interest in the buyer (AS 45.02.711(c) ), if the seller has no agent or place of business at the market of rejection, a merchant buyer is under a duty after rejection of goods in the buyer’s possession or control to follow reasonable instructions received from the seller with respect to the goods and, in the absence of the instructions, to make reasonable efforts to sell them for the seller’s account if they are perishable or threaten to decline in value speedily. Instructions are not reasonable if on demand indemnity for expenses is not forthcoming.
2. If the buyer sells goods under (a) of this section, the buyer is entitled to reimbursement from the seller, or out of the proceeds, for reasonable expenses of caring for and selling them, and if the expenses include no selling commission then to such commission as is usual in the trade or if there is none to a reasonable sum not exceeding 10 percent on the gross proceeds.
3. In complying with this section, the buyer is held only to good faith, and good faith conduct here is not acceptance, conversion, or the basis of an action for damages.

History. (§ 2.603 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, §§ 598 to 600

67A Am. Jur. 2d, Sales, § 1085 et seq.

Sec. 45.02.604. Buyer’s options as to salvage of rightfully rejected goods.

Subject to the provisions of AS 45.02.603 on perishables, if the seller gives no instructions within a reasonable time after notification of rejection, the buyer may store the rejected goods for the seller’s account or reship them to the seller or resell them for the seller’s account with reimbursement as provided in AS 45.02.603 . This action is not acceptance or conversion.

History. (§ 2.604 ch 114 SLA 1962)

Sec. 45.02.605. Waiver of buyer’s objections by failure to particularize.

1. The buyer’s failure to state in connection with rejection a particular defect that is ascertainable by reasonable inspection precludes the buyer from relying on the unstated defect to justify rejection or to establish breach
   1. if the seller could have cured it if stated seasonably; or
   2. between merchants if the seller has, after rejection, made a request in writing for a full and final written statement of all defects on which the buyer proposes to rely.
2. Payment against documents made without reservation of rights precludes recovery of the payment for defects apparent in the documents.

History. (§ 2.605 ch 114 SLA 1962; am § 23 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (b), substituted “in” for “on the face of” following “for defects apparent”.

Sec. 45.02.606. What constitutes acceptance of goods.

1. Acceptance of goods occurs when the buyer,
   1. after a reasonable opportunity to inspect the goods, signifies to the seller that the goods are conforming or that the buyer will take or retain them in spite of their nonconformity;
   2. fails to make an effective rejection (AS 45.02.602 ), but this acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or
   3. does an act inconsistent with the seller’s ownership; but if this act is wrongful as against the seller it is an acceptance only if ratified by the seller.
2. Acceptance of a part of a commercial unit is acceptance of that entire unit.

History. (§ 2.606 ch 114 SLA 1962)

Sec. 45.02.607. Effect of acceptance; notice of breach; burden of establishing breach after acceptance; notice of claim or litigation to person answerable over.

1. The buyer must pay at the contract rate for any goods accepted.
2. Acceptance of goods by the buyer precludes rejection of the goods accepted and, if made with knowledge of a nonconformity, cannot be revoked because of it unless the acceptance was on the reasonable assumption that the nonconformity would be seasonably cured, but acceptance does not of itself impair any other remedy provided by this chapter for nonconformity.
3. If a tender has been accepted,
   1. the buyer must, within a reasonable time after the buyer discovers or should have discovered a breach, notify the seller of the breach or be barred from any remedy; and
   2. if the claim is one for infringement or the like (AS 45.02.312(c) ) and the buyer is sued as a result of such a breach, the buyer must so notify the seller within a reasonable time after the buyer receives notice of the litigation or be barred from any remedy over for liability established by the litigation.
4. The burden is on the buyer to establish a breach with respect to the goods accepted.
5. If the buyer is sued for breach of a warranty or other obligation for which the buyer’s seller is answerable over,
   1. the buyer may give the seller written notice of the litigation; if the notice states that the seller may come in and defend and that if the seller does not do so the seller will be bound in an action against the seller by the seller’s buyer by a determination of fact common to the two litigations, then, unless the seller, after seasonable receipt of the notice, does come in and defend, the seller is so bound;
   2. if the claim is one for infringement or the like (AS 45.02.312(c) ), the original seller may demand in writing that the seller’s buyer turn over to the seller control of the litigation including settlement or else be barred from any remedy over, and if the seller also agrees to bear all expense and to satisfy an adverse judgment, then unless the buyer after seasonable receipt of the demand does turn over control the buyer is so barred.
6. The provisions of (c) — (e) of this section apply to an obligation of a buyer to hold the seller harmless against infringement or the like (AS 45.02.312(c) ).

History. (§ 2.607 ch 114 SLA 1962)

Sec. 45.02.608. Revocation of acceptance in whole or in part.

1. The buyer may revoke acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to the buyer if the buyer has accepted it
   1. on the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or
   2. without discovery of the nonconformity if the buyer’s acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller’s assurances.
2. Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before a substantial change in condition of the goods that is not caused by their own defects. It is not effective until the buyer notifies the seller of it.
3. A buyer who so revokes has the same rights and duties with regard to the goods involved as if the buyer had rejected them.

History. (§ 2.608 ch 114 SLA 1962)

Sec. 45.02.609. Right to adequate assurance of performance.

1. A contract for sale imposes an obligation on each party that the other’s expectation of receiving due performance will not be impaired.  If reasonable grounds for insecurity arise with respect to the performance of either party, the other may in writing demand adequate assurance of due performance and, until the party receives this assurance, may, if commercially reasonable, suspend any performance for which the party has not already received the agreed return.
2. Between merchants the reasonableness of grounds for insecurity and the adequacy of an assurance offered shall be determined according to commercial standards.
3. Acceptance of an improper delivery or payment does not prejudice the aggrieved party’s right to demand adequate assurance of future performance.
4. After receipt of a justified demand, failure to provide, within a reasonable time not exceeding 30 days, such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract.

History. (§ 2.609 ch 114 SLA 1962)

Sec. 45.02.610. Anticipatory repudiation.

When either party repudiates the contract with respect to a performance not yet due, the loss of which will substantially impair the value of the contract to the other, the aggrieved party may

1. for a commercially reasonable time await performance by the repudiating party; or
2. resort to any remedy for breach (AS 45.02.703 or 45.02.711 ), even though the aggrieved party has notified the repudiating party that the former would await the latter’s performance and has urged retraction; and
3. in either case suspend the aggrieved party’s own performance or proceed in accordance with the provisions of this chapter on the seller’s right to identify goods to the contract notwithstanding breach or to salvage unfinished goods (AS 45.02.704 ).

History. (§ 2.610 ch 114 SLA 1962)

Collateral references. —

67A Am. Jur. 2d, Sales, § 801 et seq.

What constitutes anticipatory repudiation of sales contract under UCC § 2-610, 1 ALR4th 527.

Sec. 45.02.611. Retraction of anticipatory repudiation.

1. Until the repudiating party’s next performance is due, that party can retract the repudiation unless the aggrieved party has, since the repudiation, cancelled or materially changed the aggrieved party’s position or otherwise indicated that the aggrieved party considers the repudiation final.
2. Retraction may be by any method that clearly indicates to the aggrieved party that the repudiating party intends to perform, but must include any assurance justifiably demanded under the provisions of AS 45.02.609 .
3. Retraction reinstates the repudiating party’s right under the contract with due excuse and allowance to the aggrieved party for any delay occasioned by the repudiation.

History. (§ 2.611 ch 114 SLA 1962)

Sec. 45.02.612. “Installment contract”; breach.

1. An “installment contract” is one that requires or authorizes the delivery of goods in separate lots to be separately accepted, even though the contract contains a clause, “each delivery is a separate contract,” or its equivalent.
2. The buyer may reject an installment that is nonconforming if the nonconformity substantially impairs the value of that installment and cannot be cured or if the nonconformity is a defect in the required documents; but if the nonconformity does not fall within (c) of this section and the seller gives adequate assurance of its cure, the buyer must accept that installment.
3. If nonconformity or default with respect to one or more installments substantially impairs the value of the whole contract, there is a breach of the whole.  But the aggrieved party reinstates the contract if the party accepts a nonconforming installment without seasonably notifying of cancellation or if the party brings an action with respect only to past installments or demands performance as to future installments.

History. (§ 2.612 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, § 617 et seq.

Sec. 45.02.613. Casualty to identified goods.

If the contract requires for its performance goods identified when the contract is made, and the goods suffer casualty without fault of either party before the risk of loss passes to the buyer, or in a proper case under a “no arrival, no sale” term (AS 45.02.324 ), then (1) if the loss is total, the contract is avoided, and (2) if the loss is partial or the goods have so deteriorated as no longer to conform to the contract, the buyer may nevertheless demand inspection and at the buyer’s option either treat the contract as avoided or accept the goods with due allowance from the contract price for the deterioration or the deficiency in quantity but without further right against the seller.

History. (§ 2.613 ch 114 SLA 1962)

Collateral references. —

Casualty, construction and effect of UCC § 2-613 governing casualty to goods identified to a contract, without fault of buyer or seller, 51 ALR4th 537.

Sec. 45.02.614. Substituted performance.

1. If without fault of either party the agreed berthing, loading, or unloading facilities fail or an agreed type of carrier becomes unavailable or the agreed manner of delivery otherwise becomes commercially impracticable but a commercially reasonable substitute is available, the substitute performance must be tendered and accepted.
2. If the agreed means or manner of payment fails because of domestic or foreign governmental regulation, the seller may withhold or stop delivery unless the buyer provides a means or manner of payment that is commercially a substantial equivalent.  If delivery has already been taken, payment by the means or in the manner provided by the regulation discharges the buyer’s obligation unless the regulation is discriminatory, oppressive, or predatory.

History. (§ 2.614 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, § 531 et seq.

Sec. 45.02.615. Excuse by failure of presupposed conditions.

Except so far as a seller may have assumed a greater obligation and subject to the preceding section on substituted performance,

1. delay in delivery or nondelivery in whole or in part by a seller who complies with (2) and (3) of this section is not a breach of the seller’s duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency, the nonoccurrence of which was a basic assumption on which the contract was made or by compliance in good faith with an applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid;
2. if the causes mentioned in (1) of this section affect only a part of the seller’s capacity to perform, the seller must allocate production and deliveries among the seller’s customers, but may at the seller’s option include regular customers not then under contract as well as the seller’s own requirements for further manufacture; the seller may so allocate in a manner that is fair and reasonable;
3. the seller must notify the buyer seasonably that there will be delay or nondelivery and, when allocation is required under (2) of this section, of the estimated quota thus made available for the buyer.

History. (§ 2.615 ch 114 SLA 1962)

Collateral references. —

67 Am. Jur. 2d, Sales, § 543 et seq.

Labor disputes as excusing, under UCC § 2-615, failure to deliver goods sold, 70 ALR3d 1266.

Impracticability of performance of sales contract as defense under UCC § 2-615, 93 ALR3d 584.

Sec. 45.02.616. Procedure on notice claiming excuse.

1. If the buyer receives notification of a material or indefinite delay or an allocation justified under AS 45.02.615 , the buyer may by written notification to the seller as to any delivery concerned and if the prospective deficiency substantially impairs the value of the whole contract under the provisions relating to breach of installment contracts, AS 45.02.612 , then also as to the whole,
   1. terminate and thereby discharge any unexecuted portion of the contract; or
   2. modify the contract by agreeing to take the buyer’s available quota in substitution.
2. If, after receipt of the notification from the seller, the buyer fails so to modify the contract within a reasonable time not exceeding 30 days, the contract lapses with respect to deliveries affected.
3. This section may not be negated by agreement except insofar as the seller has assumed a greater obligation under AS 45.02.615 .

History. (§ 2.616 ch 114 SLA 1962)

Sec. 45.02.701. Remedies for breach of collateral contracts not impaired.

Remedies for breach of an obligation or promise collateral or ancillary to a contract for sale are not impaired by this chapter.

History. (§ 2.701 ch 114 SLA 1962)

Sec. 45.02.702. Seller’s remedies on discovery of buyer’s insolvency.

1. If the seller discovers the buyer is insolvent, the seller may refuse delivery except for cash including payment for all goods previously delivered under the contract, and stop delivery under AS 45.02.705 .
2. If the seller discovers that the buyer has received goods on credit while insolvent, the seller may reclaim the goods upon demand made within 10 days after the receipt, but if misrepresentation of solvency has been made to the particular seller in writing within three months before delivery the 10-day limitation does not apply.  Except as provided in this subsection the seller may not base a right to reclaim goods on the buyer’s fraudulent or innocent misrepresentation of solvency or of intent to pay.
3. The seller’s right to reclaim under (b) of this section is subject to the rights of a buyer in ordinary course or other good faith purchaser or lien creditor under AS 45.02.403 . Successful reclamation of goods excludes all other remedies with respect to them.

History. (§ 2.702 ch 114 SLA 1962)

Sec. 45.02.703. Seller’s remedies in general.

If the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part or the whole, then with respect to goods directly affected and, if the breach is of the whole contract (AS 45.02.612 ), then also with respect to the whole undelivered balance, the aggrieved seller may

1. withhold delivery of the goods;
2. stop delivery by a bailee as provided in AS 45.02.705 ;
3. proceed under AS 45.02.704 respecting goods still unidentified to the contract;
4. resell and recover damages as provided in AS 45.02.706 ;
5. recover damages for nonacceptance (AS 45.02.708 ) or in a proper case the price (AS 45.02.709 );
6. cancel.

History. (§ 2.703 ch 114 SLA 1962)

Collateral references. —

Measure of recovery where buyer repudiates contract for goods to be manufactured to special order, before completion of manufacture, 42 ALR3d 182.

Sec. 45.02.704. Seller’s right to identify goods to the contract notwithstanding breach or to salvage unfinished goods.

1. An aggrieved seller under AS 45.02.703 may
   1. identify to the contract conforming goods not already identified if at the time the seller learned of the breach they are in the seller’s possession or control;
   2. treat as the subject of resale goods that have demonstrably been intended for the particular contract even though those goods are unfinished.
2. Where the goods are unfinished, an aggrieved seller may in the exercise of reasonable commercial judgment for the purposes of avoiding loss and of effective realization either complete the manufacture and wholly identify the goods to the contract or cease manufacture and resell for scrap or salvage value or proceed in any other reasonable manner.

History. (§ 2.704 ch 114 SLA 1962)

Sec. 45.02.705. Seller’s stoppage of delivery in transit or otherwise.

1. The seller may stop delivery of goods in the possession of a carrier or other bailee when the seller discovers the buyer to be insolvent (AS 45.02.702 ) and may stop delivery of carload, truckload, planeload, or larger shipments of express or freight when the buyer repudiates or fails to make a payment due before delivery or if for any other reason the seller has a right to withhold or reclaim the goods.
2. As against the buyer, the seller may stop delivery until
   1. receipt of the goods by the buyer;
   2. acknowledgment to the buyer by a bailee of the goods, except a carrier, that the bailee holds the goods for the buyer;
   3. an acknowledgment to the buyer under (1) or (2) of this subsection by a carrier by reshipment or as a warehouse; or
   4. negotiation to the buyer of a negotiable document of title covering the goods.
3. To stop delivery the seller must so notify as to enable the bailee by reasonable diligence to prevent delivery of the goods.
4. After that notification the bailee must hold and deliver the goods according to the direction of the seller, but the seller is liable to the bailee for any ensuing charges or damages.
5. If a negotiable document of title has been issued for goods, the bailee is not obliged to obey a notification to stop until surrender of possession or control of the document.
6. A carrier who has issued a nonnegotiable bill of lading is not obliged to obey a notification to stop received from a person other than the consignor.

History. (§ 2.705 ch 114 SLA 1962; am §§ 24, 25 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, rewrote (b)(3), which read, “that acknowledgment to the buyer by a carrier by reshipment or as warehouseman;”; in (e), added “possession or control of” following “stop until surrender of”.

Sec. 45.02.706. Seller’s resale including contract for resale.

1. Under the conditions stated in AS 45.02.703 on seller’s remedies, the seller may resell the goods concerned or the undelivered balance of the goods.  If the resale is made in good faith and in a commercially reasonable manner, the seller may recover the difference between the resale price and the contract price together with incidental damages allowed under AS 45.02.710 , but less expenses saved in consequence of the buyer’s breach.
2. Except as otherwise provided in (c) of this section or unless otherwise agreed, resale may be at public or private sale including sale by way of one or more contracts to sell or of identification to an existing contract of the seller.  Sale may be as a unit or in parcels and at any time and place and on any terms, but every aspect of the sale including the method, manner, time, place, and terms must be commercially reasonable.  The resale must be reasonably identified as referring to the broken contract, but it is not necessary that the goods be in existence or that any or all of them have been identified to the contract before the breach.
3. If the resale is at private sale, the seller must give the buyer reasonable notification of the intention to resell.
4. If the resale is at public sale,
   1. only identified goods can be sold unless there is a recognized market for a public sale of futures in goods of the kind;
   2. it must be made at a usual place or market for public sale if one is reasonably available, and, except in the case of goods that are perishable or threaten to decline in value speedily, the seller must give the buyer reasonable notice of the time and place of the resale;
   3. if the goods are not to be within the view of those attending the sale, the notification of sale must state the place where the goods are located and provide for their reasonable inspection by prospective bidders; and
   4. the seller may buy.
5. A purchaser who buys in good faith at a resale takes the goods free of rights of the original buyer even though the seller fails to comply with one or more of the requirements of this section.
6. The seller is not accountable to the buyer for a profit made on a resale.  A person in the position of a seller (AS 45.02.707 ), or a buyer who has rightfully rejected or justifiably revoked acceptance must account for an excess over the amount of the person’s security interest, as defined in AS 45.02.711(c) .

History. (§ 2.706 ch 114 SLA 1962; am § 37 ch 22 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (d), deleted “and” at the end of (d)(1) and (d)(2).

Collateral references. —

67A Am. Jur. 2d, Sales, § 969 et seq.

Resale of goods under UCC § 2-706, 101 ALR5th 563.

Sec. 45.02.707. Person in the position of a seller.

1. A person in the position of a seller includes, as against a principal, an agent who has paid or become responsible for the price of goods on behalf of the principal or anyone who otherwise holds a security interest or other right in goods similar to that of a seller.
2. A person in the position of a seller may withhold or stop delivery (AS 45.02.705 ) and resell (AS 45.02.706 ) and recover incidental damages (AS 45.02.710 ).

History. (§ 2.707 ch 114 SLA 1962)

Sec. 45.02.708. Seller’s damages for nonacceptance or repudiation.

1. Subject to (b) of this section and to the provisions with respect to proof of market price (AS 45.02.723 ), the measure of damages for nonacceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in AS 45.02.710 , but less expenses saved in consequence of the buyer’s breach.
2. If the measure of damages provided in (a) of this section is inadequate to put the seller in as good a position as performance would have done, then the measure of damages is the profit, including reasonable overhead, that the seller would have made from full performance by the buyer, together with any incidental damages provided in AS 45.02.710 , due allowance for costs reasonably incurred, and due credit for payments or proceeds of resale.

History. (§ 2.708 ch 114 SLA 1962)

Sec. 45.02.709. Action for the price.

1. If the buyer fails to pay the price as it becomes due, the seller may recover, together with any incidental damages under AS 45.02.710 , the price
   1. of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and
   2. of goods identified to the contract if the seller is unable, after reasonable effort, to resell them at a reasonable price or the circumstances reasonably indicate that a reasonable effort will be unavailing.
2. If the seller sues for the price, the seller must hold for the buyer goods that have been identified to the contract and are still in the control of the seller, except that if resale becomes possible the seller may resell them at any time before the collection of the judgment.  The net proceeds of this resale must be credited to the buyer and payment of the judgment entitles the buyer to goods not resold.
3. After the buyer has wrongfully rejected or revoked acceptance of the goods or has failed to make a payment due or has repudiated (AS 45.02.610 ), a seller who is held not entitled to the price under this section shall nevertheless be awarded damages for nonacceptance under AS 45.02.708 .

History. (§ 2.709 ch 114 SLA 1962)

Sec. 45.02.710. Seller’s incidental damages.

Incidental damages to an aggrieved seller include commercially reasonable charges, expenses, or commissions incurred in stopping delivery, in the transportation, care, and custody of goods after the buyer’s breach, in connection with return or resale of the goods or otherwise resulting from the breach.

History. (§ 2.710 ch 114 SLA 1962)

Sec. 45.02.711. Buyer’s remedies in general; buyer’s security interest in rejected goods.

1. If the seller fails to make delivery or repudiates or the buyer rightfully rejects or justifiably revokes acceptance, then, with respect to goods involved and with respect to the whole if the breach goes to the whole contract (AS 45.02.612 ), the buyer may cancel and, whether or not the buyer has done so, may, in addition to recovering so much of the price as has been paid,
   1. “cover” and have damages under AS 45.02.712 as to all the goods affected, whether or not they have been identified to the contract; or
   2. recover damages for nondelivery as provided in AS 45.02.713 .
2. If the seller fails to deliver or repudiates, the buyer may also
   1. if the goods have been identified, recover them as provided in AS 45.02.502 ; or
   2. in a proper case obtain specific performance or replevy the goods as provided in AS 45.02.716 .
3. On rightful rejection or justifiable revocation of acceptance, a buyer has a security interest in goods in the possession or control of the buyer for payments made on their price and expenses reasonably incurred in their inspection, receipt, transportation, care, and custody and may hold the goods and resell them in like manner as an aggrieved seller (AS 45.02.706 ).

History. (§ 2.711 ch 114 SLA 1962)

Sec. 45.02.712. “Cover”; buyer’s procurement of substitute goods.

1. After a breach within AS 45.02.711 , the buyer may “cover” by making in good faith and without unreasonable delay a reasonable purchase of or contract to purchase goods in substitution for those due from the seller.
2. The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages as defined in AS 45.02.715 , but less expenses saved in consequence of the seller’s breach.
3. Failure of the buyer to effect cover within this section does not bar the buyer from any other remedy.

History. (§ 2.712 ch 114 SLA 1962)

Collateral references. —

67A Am. Jur. 2d, Sales, § 1039 et seq.

What constitutes “cover” upon breach by seller under UCC § 2-712(1), 79 ALR4th 844.

Sec. 45.02.713. Buyer’s damages for nondelivery or repudiation.

1. Subject to the provisions with respect to proof of market price (AS 45.02.723 ), the measure of damages for nondelivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in AS 45.02.715 , but less expenses saved in consequence of the seller’s breach.
2. Market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.

History. (§ 2.713 ch 114 SLA 1962)

Collateral references. —

67A Am. Jur. 2d, Sales, § 1135 et seq.

Sec. 45.02.714. Buyer’s damages for breach in regard to accepted goods.

1. If the buyer has accepted goods and given notification (AS 45.02.607(c) ), the buyer may recover as damages for a nonconformity of tender the loss resulting in the ordinary course of events from the seller’s breach as determined in a reasonable manner.
2. The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount.
3. In a proper case any incidental and consequential damages under AS 45.02.715 may also be recovered.

History. (§ 2.714 ch 114 SLA 1962)

Sec. 45.02.715. Buyer’s incidental and consequential damages.

1. Incidental damages resulting from the seller’s breach include expenses reasonably incurred in inspection, receipt, transportation, and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses, or commissions in connection with effecting cover and other reasonable expense incident to the delay or other breach.
2. Consequential damages resulting from the seller’s breach include
   1. loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and that could not reasonably be prevented by cover or otherwise; and
   2. injury to person or property proximately resulting from a breach of warranty.

History. (§ 2.715 ch 114 SLA 1962)

Sec. 45.02.716. Buyer’s right to specific performance or replevin.

1. Specific performance may be decreed where the goods are unique or in other proper circumstances.
2. The decree for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court considers just.
3. The buyer has a right of replevin for goods identified to the contract if after reasonable effort the buyer is unable to effect cover for the goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security interest in them has been made or tendered. In the case of goods bought for personal, family, or household purposes, the buyer’s right of replevin vests upon acquisition of a special property even if the seller had not then repudiated or failed to deliver.

History. (§ 2.716 ch 114 SLA 1962; am § 11 ch 113 SLA 2000)

Sec. 45.02.717. Deduction of damages from the price.

The buyer on notifying the seller of the intention to do so may deduct all or any part of the damages resulting from a breach of the contract from any part of the price still due under the same contract.

History. (§ 2.717 ch 114 SLA 1962)

Sec. 45.02.718. Liquidation or limitation of damages; deposits.

1. Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy.  A term fixing unreasonably large liquidated damages is void as a penalty.
2. If the seller justifiably withholds delivery of goods because of the buyer’s breach, the buyer is entitled to restitution of an amount by which the sum of the buyer’s payments exceeds
   1. the amount to which the seller is entitled by virtue of terms liquidating the seller’s damages in accordance with (a) of this section, or
   2. in the absence of those terms, 20 percent of the value of the total performance for which the buyer is obligated under the contract or $500, whichever is smaller.
3. The buyer’s right to restitution under (b) of this section is subject to offset to the extent that the seller establishes
   1. a right to recover damages under this chapter other than (a) of this section, and
   2. the amount or value of benefits received by the buyer directly or indirectly by reason of the contract.
4. If a seller has received payment in goods, their reasonable value or the proceeds of their resale shall be treated as payments for the purposes of (b) of this section; but, if the seller has notice of the buyer’s breach before reselling goods received in part performance, the resale is subject to the conditions laid down on resale by an aggrieved seller (AS 45.02.706 ).

History. (§ 2.718 ch 114 SLA 1962)

Collateral references. —

67A Am. Jur. 2d, Sales, §§ 823 to 829.

Contractual liquidated damages provisions under UCC Art. 2 [AS 45.02.101 — 45.02.725 ], 98 ALR3d 586.

Sec. 45.02.719. Contractual modification or limitation of remedy.

1. Subject to (b) and (c) of this section and AS 45.02.718 on liquidation and limitation of damages,
   1. the agreement may provide for remedies in addition to or in substitution for those provided in this chapter and may limit or alter the measure of damages recoverable under this chapter, as by limiting the buyer’s remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts; and
   2. resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy.
2. If circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in the code.
3. Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable.  Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable, but limitation of damages where the loss is commercial is not.

History. (§ 2.719 ch 114 SLA 1962)

Revisor’s notes. —

In 1993, under § 13, ch. 34, SLA 1993 and § 128, ch. 35, SLA 1993, the citation to the Uniform Commercial Code was revised.

Sec. 45.02.720. Effect of cancellation or rescission on claims for antecedent breach.

Unless the contrary intention clearly appears, expressions of cancellation or rescission of the contract or the like shall not be construed as a renunciation or discharge of a claim in damages for an antecedent breach.

History. (§ 2.720 ch 114 SLA 1962)

Sec. 45.02.721. Remedies for fraud.

Remedies for material misrepresentation or fraud include all remedies available under this chapter for nonfraudulent breach. Neither rescission or a claim for rescission of the contract for sale nor rejection or return of the goods bars or is inconsistent with a claim for damages or other remedy.

History. (§ 2.721 ch 114 SLA 1962)

Sec. 45.02.722. Who can sue third parties for injury to goods.

If a third party so deals with goods that have been identified to a contract for sale as to cause actionable injury to a party to that contract,

1. a right of action against the third party is in either party to the contract for sale who has title to or a security interest or a special property or an insurable interest in the goods; and, if the goods have been destroyed or converted, a right of action is also in the party who either bore the risk of loss under the contract for sale or has since the injury assumed that risk as against the other;
2. if at the time of the injury the party plaintiff did not fear the risk of loss as against the other party to the contract for sale and there is no arrangement between them for disposition of the recovery, the party plaintiff’s suit or settlement is, subject to the party’s own interest, as a fiduciary for the other party to the contract;
3. either party may with the consent of the other sue for the benefit of whom it may concern.

History. (§ 2.722 ch 114 SLA 1962)

Sec. 45.02.723. Proof of market price; time and place.

1. If an action based on anticipatory repudiation comes to trial before the time for performance with respect to some or all of the goods, damages based on market price (AS 45.02.708 or 45.02.713 ) shall be determined according to the price of the goods prevailing at the time the aggrieved party learned of the repudiation.
2. If evidence of a price prevailing at the times or places described in this chapter is not readily available, the price prevailing within a reasonable time before or after the time described or at any other place that in commercial judgment or under usage of trade would serve as a reasonable substitute for the one described may be used, making a proper allowance for the cost of transporting the goods to or from the other place.
3. Evidence of a relevant price prevailing at a time or place other than the one described in this chapter offered by one party is not admissible until the party has given the other party notice the court finds sufficient to prevent unfair surprise.

History. (§ 2.723 ch 114 SLA 1962)

Sec. 45.02.724. Admissibility of market quotations.

When the prevailing price or value of goods regularly bought and sold in an established commodity market is in issue, reports in official publications or trade journals or in newspapers or periodicals of general circulation published as the reports of the market are admissible in evidence. The circumstances of the preparation of such a report may be shown to affect its weight but not its admissibility.

History. (§ 2.724 ch 114 SLA 1962)

Sec. 45.02.725. Statute of limitations in contracts for sale.

1. An action for breach of a contract for sale must be commenced within four years after the cause of action has accrued.  By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it.
2. A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach.  A breach of warranty occurs when tender of delivery is made, except that, if a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of performance, the cause of action accrues when the breach is or should have been discovered.
3. If an action commenced within the time limited by (a) of this section is so terminated as to leave available a remedy by another action for the same breach, the other action may be commenced after the expiration of the time limited and within six months after the termination of the first action unless the termination resulted from voluntary discontinuance or from dismissal for failure or neglect to prosecute.
4. This section does not alter the law on tolling of the statute of limitations nor does it apply to causes of action that accrue before midnight, December 31, 1962.

History. (§ 2.725 ch 114 SLA 1962)

Sec. 45.03.101. Short title.

This chapter may be cited as the Uniform Commercial Code — Negotiable Instruments.

History. (§ 3.101 ch 114 SLA 1962; am § 14 ch 35 SLA 1993)

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 1 et seq.

Construction and effect of UCC Art. 3, dealing with commercial paper, 23 ALR3d 932; 67 ALR3d 144; 78 ALR3d 1020; 88 ALR3d 1100; 97 ALR3d 798; 97 ALR3d 1114; 23 ALR4th 855; 36 ALR4th 212; 42 ALR5th 137; 45 ALR5th 389.

Duty of pledgee of commercial paper as to its enforcement or collection, 45 ALR3d 248.

Sec. 45.03.102. Subject matter.

1. This chapter applies to negotiable instruments. It does not apply to money or to securities governed by AS 45.08.
2. If there is conflict between this chapter and AS 45.04 or AS 45.29, AS 45.04 and AS 45.29 govern.
3. Regulations of the Board of Governors of the Federal Reserve System and operating circulars of the Federal Reserve Banks supersede any inconsistent provision of this chapter to the extent of the inconsistency.

History. (§ 3.102 ch 114 SLA 1962; am § 15 ch 35 SLA 1993)

Revisor’s notes. —

In 2000, “AS 45.29” was substituted for “AS 45.09” in accordance with § 35, ch. 113, SLA 2000.

Sec. 45.03.103. Definitions.

1. In this chapter,
   1. “acceptor” means a drawee who has accepted a draft;
   2. “drawee” means a person ordered in a draft to make payment;
   3. “drawer” means a person who signs or is identified in a draft as a person ordering payment;
   4. [Repealed, § 113 ch 44 SLA 2009.]
   5. “maker” means a person who signs or is identified in a note as a person undertaking to pay;
   6. “order” means a written instruction to pay money signed by the person giving the instruction; the instruction may be addressed to any person, including the person giving the instruction, or to one or more persons jointly or in the alternative but not in succession; an authorization to pay is not an order unless the person authorized to pay is also instructed to pay;
   7. “ordinary care” in the case of a person engaged in business means observance of reasonable commercial standards, prevailing in the area in which the person is located, with respect to the business in which the person is engaged; in the case of a bank that takes an instrument for processing for collection or payment by automated means, reasonable commercial standards do not require the bank to examine the instrument if the failure to examine does not violate the bank’s prescribed procedures and the bank’s procedures do not vary unreasonably from general banking usage not disapproved by this chapter or AS 45.04;
   8. “party” means a party to an instrument;
   9. “promise” means a written undertaking to pay money signed by the person undertaking to pay; an acknowledgment of an obligation by the obligor is not a promise unless the obligor also undertakes to pay the obligation;
   10. “prove,” with respect to a fact, means to meet the burden of establishing the fact (AS 45.01.211 );
   11. “remitter” means a person who purchases an instrument from the issuer of the instrument if the instrument is payable to an identified person other than the purchaser.
2. Other definitions applying to this chapter, and the sections in which they appear, are
   1. “acceptance” in AS 45.03.409 ;
   2. “accommodated party” in AS 45.03.419 ;
   3. “accommodation party” in AS 45.03.419 ;
   4. “alteration” in AS 45.03.407 ;
   5. “anomalous endorsement” in AS 45.03.205 ;
   6. “blank endorsement” in AS 45.03.205 ;
   7. “cashier’s check” in AS 45.03.104 ;
   8. “certificate of deposit” in AS 45.03.104 ;
   9. “certified check” in AS 45.03.409 ;
   10. “check” in AS 45.03.104;
   11. “consideration” in AS 45.03.303 ;
   12. “draft” in AS 45.03.104;
   13. “endorsement” in AS 45.03.204 ;
   14. “endorser” in AS 45.03.204 ;
   15. “holder in due course” in AS 45.03.302 ;
   16. “incomplete instrument” in AS 45.03.115 ;
   17. “instrument” in AS 45.03.104;
   18. “issue” in AS 45.03.105 ;
   19. “issuer” in AS 45.03.105 ;
   20. “negotiable instrument” in AS 45.03.104;
   21. “negotiation” in AS 45.03.201 ;
   22. “note” in AS 45.03.104;
   23. “payable at a definite time” in AS 45.03.108 ;
   24. “payable on demand” in AS 45.03.108 ;
   25. “payable to bearer” in AS 45.03.109 ;
   26. “payable to order” in AS 45.03.109 ;
   27. “payment” in AS 45.03.602 ;
   28. “person entitled to enforce” in AS 45.03.301 ;
   29. “presentment” in AS 45.03.501 ;
   30. “reacquisition” in AS 45.03.207 ;
   31. “special endorsement” in AS 45.03.205;
   32. “teller’s check” in AS 45.03.104;
   33. “transfer of instrument” in AS 45.03.203 ;
   34. “traveler’s check” in AS 45.03.104;
   35. “value” in AS 45.03.303 .
3. The following definitions in AS 45.04 apply to this chapter:
   1. “bank” (AS 45.04.105 );
   2. “banking day” (AS 45.04.104 );
   3. “clearinghouse” (AS 45.04.104 );
   4. “collecting bank” (AS 45.04.105 );
   5. “depositary bank” (AS 45.04.105);
   6. “documentary draft” (AS 45.04.104);
   7. “intermediary bank” (AS 45.04.105);
   8. “item” (AS 45.04.104);
   9. “payor bank” (AS 45.04.105);
   10. “suspends payments” (AS 45.04.104).
4. In addition, AS 45.01 contains general definitions and principles of construction and interpretation applicable throughout this chapter.

History. (§ 3.103 ch 114 SLA 1962; am § 16 ch 35 SLA 1993; am §§ 26, 113 ch 44 SLA 2009)

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, repealed (a)(4), which read, “ ‘good faith’ means honesty in fact and the observance of reasonable commercial standards of fair dealing;”; and in (a)(10), substituted “(AS 45.01.211 )” for “(AS 45.01.201 )”.

Sec. 45.03.104. Negotiable instrument.

1. Except as provided in (c) — (d) of this section, “negotiable instrument” means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if the unconditional promise or order
   1. is payable to bearer or to order at the time it is issued or first comes into possession of a holder;
   2. is payable on demand or at a definite time; and
   3. does not state any other undertaking or instruction by the person promising or ordering payment to do an act in addition to the payment of money, but the promise or order may contain an undertaking or power to give, maintain, or protect collateral to secure payment, an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or a waiver of the benefit of a law intended for the advantage or protection of an obligor.
2. “Instrument” means a negotiable instrument.
3. An order that meets all of the requirements of (a)(2) — (3) of this section, and otherwise falls within the definition of “check” in (f) of this section, is a negotiable instrument and a check.
4. A promise or order other than a check is not an instrument if, at the time the promise or order is issued or first comes into possession of a holder, the promise or order contains a conspicuous statement, however expressed, to the effect that the promise or order is not negotiable or is not an instrument governed by this chapter.
5. An instrument is a “note” if the instrument is a promise and a “draft” if the instrument is an order. If an instrument falls within the definition of both “note” and “draft,” a person entitled to enforce the instrument may treat the instrument as either.
6. “Check” means a draft, other than a documentary draft, payable on demand and drawn on a bank, or a cashier’s check or teller’s check. An instrument may be a check even though the instrument is described on its face by another term, such as “money order.”
7. “Cashier’s check” means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank.
8. “Teller’s check” means a draft drawn by a bank
   1. on another bank; or
   2. payable at or through a bank.
9. “Traveler’s check” means an instrument that
   1. is payable on demand;
   2. is drawn on or payable at or through a bank;
   3. is designated by the term “traveler’s check” or by a substantially similar term; and
   4. requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the instrument.
10. “Certificate of deposit” means an instrument containing an acknowledgment by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money. A certificate of deposit is a note of the bank.

History. (§ 3.104 ch 114 SLA 1962; am § 17 ch 35 SLA 1993)

Cross references. —

For nonnegotiability of consumer paper, see AS 45.50.541 .

Opinions of attorney general. —

A pay order card drawn on the unemployment benefit account for the payment of unemployment benefits would not be a check because it is not a negotiable instrument. It is not a negotiable instrument because it can only be negotiated by the named payee. 1966 Alas. Op. Att'y Gen. No. 7.

Sec. 45.03.105. Issue of instrument.

1. “Issue” means the first delivery of an instrument by the maker or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person.
2. An unissued instrument, or an unissued incomplete instrument that is completed, is binding on the maker or drawer, but nonissuance is a defense. An instrument that is conditionally issued or is issued for a special purpose is binding on the maker or drawer, but failure of the condition or special purpose to be fulfilled is a defense.
3. “Issuer” applies to issued and unissued instruments and means a maker or drawer of an instrument.

History. (§ 3.105 ch 114 SLA 1962; am § 18 ch 35 SLA 1993)

Sec. 45.03.106. Unconditional promise or order.

1. Except as provided in this section, for the purposes of AS 45.03.104(a) , a promise or order is unconditional unless it states an express condition to payment, that the promise or order is subject to or governed by another writing, or that rights or obligations with respect to the promise or order are stated in another writing. A reference to another writing does not of itself make a promise or order conditional.
2. A promise or order is not made conditional
   1. by a reference to another writing for a statement of rights with respect to collateral, prepayment, or acceleration; or
   2. because payment is limited to resort to a particular fund or source.
3. If a promise or order requires, as a condition to payment, a countersignature by a person whose specimen signature appears on the promise or order, the condition does not make the promise or order conditional for the purposes of AS 45.03.104(a) . If the person whose specimen signature appears on an instrument fails to countersign the instrument, the failure to countersign is a defense to the obligation of the issuer, but the failure does not prevent a transferee of the instrument from becoming a holder of the instrument.
4. If a promise or order at the time it is issued or first comes into possession of a holder contains a statement, required by applicable statutory or administrative law, to the effect that the rights of a holder or transferee are subject to claims or defenses that the issuer could assert against the original payee, the promise or order is not thereby made conditional for the purposes of AS 45.03.104(a) , but if the promise or order is an instrument, there cannot be a holder in due course of the instrument.

History. (§ 3.106 ch 114 SLA 1962; am § 19 ch 35 SLA 1993)

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 75.

Negotiability of instrument providing for variable rate of interest under UCC § 3-106, 69 ALR4th 1127.

Sec. 45.03.107. Instrument payable in foreign money.

Unless the instrument otherwise provides, an instrument that states the amount payable in foreign money may be paid in the foreign money or in an equivalent amount in dollars calculated by using the current bank-offered spot rate at the place of payment for the purchase of dollars on the day on which the instrument is paid.

History. (§ 3.107 ch 114 SLA 1962; am § 20 ch 35 SLA 1993)

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 112.

Sec. 45.03.108. Payable on demand or at definite time.

1. A promise or order is payable on demand if it
   1. states that it is payable on demand or at sight, or otherwise indicates that it is payable at the will of the holder; or
   2. does not state a time of payment.
2. A promise or order is payable at a definite time if it is payable on elapse of a definite period of time after sight or acceptance or at a fixed date or dates or at a time or times readily ascertainable at the time the promise or order is issued, subject to rights of
   1. prepayment;
   2. acceleration;
   3. extension at the option of the holder; or
   4. extension to a further definite time at the option of the maker or acceptor, or automatically on or after a specified act or event.
3. If an instrument, payable at a fixed date, is also payable upon demand made before the fixed date, the instrument is payable on demand until the fixed date and, if demand for payment is not made before that date, becomes payable at a definite time on the fixed date.

History. (§ 3.108 ch 114 SLA 1962; am § 21 ch 35 SLA 1993)

Sec. 45.03.109. Payable to bearer or to order.

1. A promise or order is payable to bearer if it
   1. states that it is payable to bearer or to the order of bearer or otherwise indicates that the person in possession of the promise or order is entitled to payment;
   2. does not state a payee; or
   3. states that it is payable to or to the order of cash, or otherwise indicates that it is not payable to an identified person.
2. A promise or order that is not payable to bearer is payable to order if it is payable to the order of an identified person, or to an identified person or order. A promise or order that is payable to order is payable to the identified person.
3. An instrument payable to bearer may become payable to an identified person if it is specially endorsed under AS 45.03.205(a) . An instrument payable to an identified person may become payable to bearer if it is endorsed in blank under AS 45.03.205(b) .

History. (§ 3.109 ch 114 SLA 1962; am § 22 ch 35 SLA 1993)

Sec. 45.03.110. Identification of person to whom instrument is payable.

1. The person to whom an instrument is initially payable is determined by the intent of the person, whether or not authorized, signing as, or in the name or on the behalf of, the issuer of the instrument. The instrument is payable to the person intended by the signer even if that person is identified in the instrument by a name or other identification that is not that of the intended person. If more than one person signs in the name or on the behalf of the issuer of an instrument and all the signers do not intend the same person as payee, the instrument is payable to any person intended by one or more of the signers.
2. If the signature of the issuer of an instrument is made by automated means, such as a check-writing machine, the payee of the instrument is determined by the intent of the person who supplied the name or identification of the payee, whether or not authorized to do so.
3. A person to whom an instrument is payable may be identified in any way, including by name, identifying number, office, or account number. For the purpose of determining the holder of an instrument, the following rules apply:
   1. if an instrument is payable to an account and the account is identified only by number, the instrument is payable to the person to whom the account is payable. If an instrument is payable to an account identified by number and by the name of a person, the instrument is payable to the named person, whether or not that person is the owner of the account identified by number;
   2. if an instrument is payable to
      1. a trust, an estate, or a person described as trustee or representative of a trust or estate, the instrument is payable to the trustee, the representative, or a successor of either, whether or not the beneficiary or estate is also named;
      2. a person described as agent or similar representative of a named or identified person, the instrument is payable to the represented person, the representative, or a successor of the representative;
      3. a fund or organization that is not a legal entity, the instrument is payable to a representative of the members of the fund or organization; or
      4. an office or a person described as holding an office, the instrument is payable to the named person, the incumbent of the office, or a successor to the incumbent.
4. If an instrument is payable to two or more persons alternatively, it is payable to any of them and may be negotiated, discharged, or enforced by any or all of them in possession of the instrument. If an instrument is payable to two or more persons not alternatively, it is payable to all of them and may be negotiated, discharged, or enforced only by all of them. If an instrument payable to two or more persons is ambiguous as to whether it is payable to the persons alternatively, the instrument is payable to the persons alternatively.

History. (§ 3.110 ch 114 SLA 1962; am § 23 ch 35 SLA 1993)

Sec. 45.03.111. Place of payment.

Except as otherwise provided for items in AS 45.04, an instrument is payable at the place of payment stated in the instrument. If no place of payment is stated, an instrument is payable at the address of the drawee or maker stated in the instrument. If no address is stated, the place of payment is the place of business of the drawee or maker. If a drawee or maker has more than one place of business, the place of payment is any place of business of the drawee or maker chosen by the person entitled to enforce the instrument. If the drawee or maker has no place of business, the place of payment is the residence of the drawee or maker.

History. (§ 3.111 ch 114 SLA 1962; am § 24 ch 35 SLA 1993)

Sec. 45.03.112. Interest.

1. Unless otherwise provided in the instrument, an instrument is not payable with interest, and interest on an interest-bearing instrument is payable from the date of the instrument.
2. Interest may be stated in an instrument as a fixed or variable amount of money or it may be expressed as a fixed or variable rate or rates. The amount or rate of interest may be stated or described in the instrument in any manner and may require reference to information not contained in the instrument. If an instrument provides for interest but the amount of interest payable cannot be ascertained from the description, interest is payable at the judgment rate in effect at the place of payment of the instrument and at the time interest first accrues.

History. (§ 3.112 ch 114 SLA 1962; am § 25 ch 35 SLA 1993)

Sec. 45.03.113. Date of instrument.

1. An instrument may be antedated or postdated. The date stated determines the time of payment if the instrument is payable at a fixed period after the date. Except as provided in AS 45.04.401(c) , an instrument payable on demand is not payable before the date of the instrument.
2. If an instrument is undated, the date of the instrument is the date of the instrument’s issue or, in the case of an unissued instrument, the date the instrument first comes into possession of a holder.

History. (§ 3.113 ch 114 SLA 1962; am § 26 ch 35 SLA 1993)

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, §§ 48, 49.

Sec. 45.03.114. Contradictory terms of instrument.

If an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers.

History. (§ 3.114 ch 114 SLA 1962; am § 27 ch 35 SLA 1993)

Sec. 45.03.115. Incomplete instrument.

1. “Incomplete instrument” means a signed writing, whether or not issued by the signer, the contents of which show at the time of signing that it is incomplete but that the signer intended it to be completed by the addition of words or numbers.
2. Subject to (c) of this section, if an incomplete instrument is an instrument under AS 45.03.104 , it may be enforced according to its terms if it is not completed, or according to its terms as augmented by completion. If an incomplete instrument is not an instrument under AS 45.03.104 but, after completion, the requirements of AS 45.03.104 are met, the instrument may be enforced according to its terms as augmented by completion.
3. If words or numbers are added to an incomplete instrument without authority of the signer, there is an alteration of the incomplete instrument under AS 45.03.407 .
4. The burden of establishing that words or numbers were added to an incomplete instrument without authority of the signer is on the person asserting the lack of authority.

History. (§ 3.115 ch 114 SLA 1962; am § 28 ch 35 SLA 1993)

Sec. 45.03.116. Joint and several liability; contribution.

1. Except as otherwise provided in the instrument, two or more persons who have the same liability on an instrument as makers, drawers, acceptors, endorsers who endorse as joint payees, or anomalous endorsers are jointly and severally liable in the capacity in which they sign.
2. Except as provided in AS 45.03.419(e) , or by agreement of the affected parties, a party having joint and several liability who pays the instrument is entitled to receive from any party having the same joint and several liability contribution in accordance with applicable law.
3. Discharge of one party having joint and several liability by a person entitled to enforce the instrument does not affect the right under (b) of this section of a party having the same joint and several liability to receive contribution from the party discharged.

History. (§ 3.116 ch 114 SLA 1962; am § 29 ch 35 SLA 1993)

Sec. 45.03.117. Other agreements affecting instrument.

Subject to applicable law regarding exclusion of proof of contemporaneous or previous agreements, the obligation of a party to an instrument to pay the instrument may be modified, supplemented, or nullified by a separate agreement of the obligor and a person entitled to enforce the instrument, if the instrument is issued or the obligation is incurred in reliance on the agreement or a part of the same transaction giving rise to the agreement. To the extent an obligation is modified, supplemented, or nullified by an agreement under this section, the agreement is a defense to the obligation.

History. (§ 3.117 ch 114 SLA 1962; am § 30 ch 35 SLA 1993)

Sec. 45.03.118. Statute of limitations.

1. Except as provided in (e) of this section, an action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date.
2. Except as provided in (d) or (e) of this section, if demand for payment is made to the maker of a note payable on demand, an action to enforce the obligation of a party to pay the note must be commenced within six years after the demand. If no demand for payment is made to the maker, an action to enforce the note is barred if neither principal nor interest on the note has been paid for a continuous period of 10 years.
3. Except as provided in (d) of this section, an action to enforce the obligation of a party to an unaccepted draft to pay the draft must be commenced within three years after dishonor of the draft or 10 years after the date of the draft, whichever period expires first.
4. An action to enforce the obligation of the acceptor of a certified check, or the issuer of a teller’s check, cashier’s check, or traveler’s check, must be commenced within three years after demand for payment is made to the acceptor or issuer.
5. An action to enforce the obligation of a party to a certificate of deposit to pay the instrument must be commenced within six years after demand for payment is made to the maker, but if the instrument states a due date and the maker is not required to pay before that date, the six-year period begins when a demand for payment is in effect and the due date has passed.
6. An action to enforce the obligation of a party to pay an accepted draft, other than a certified check, must be commenced
   1. within six years after the due date stated in the draft or acceptance, if the obligation of the acceptor is payable at a definite time; or
   2. within six years after the date of the acceptance, if the obligation of the acceptor is payable on demand.
7. Unless governed by other law regarding claims for indemnity or contribution, an action for conversion of an instrument, for money had and received, or like action based on conversion, for breach of warranty, or to enforce an obligation, duty, or right arising under this chapter and not governed by this section, must be commenced within three years after the cause of action accrues.

History. (§ 3.118 ch 114 SLA 1962; am § 31 ch 35 SLA 1993)

Sec. 45.03.119. Notice of right to defend action.

In an action for breach of an obligation for which a third person is answerable over under this chapter or AS 45.04, the defendant may give the third person written notice of the litigation, and the person notified may then give similar notice to any other person who is answerable over. If the notice states that the person notified may come in and defend and that failure to do so will bind the person notified in an action later brought by the person giving the notice as to any determination of fact common to the two litigations, the person notified is so bound unless after seasonable receipt of the notice the person notified does come in and defend.

History. (§ 3.119 ch 114 SLA 1962; am § 32 ch 35 SLA 1993)

Secs. 45.03.120 — 45.03.122. Instruments payable through bank; instruments payable at bank; accrual of cause of action. [Repealed, § 127 ch 35 SLA 1993.]

Sec. 45.03.201. Negotiation.

1. “Negotiation” means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes the holder of the instrument.
2. Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its endorsement by the holder. If an instrument is payable to bearer, the instrument may be negotiated by transfer of possession alone.

History. (§ 3.201 ch 114 SLA 1962; am § 33 ch 35 SLA 1993)

Sec. 45.03.202. Negotiation subject to rescission.

1. Negotiation is effective even if obtained
   1. from an infant, a corporation exceeding its powers, or a person without capacity;
   2. by fraud, duress, or mistake; or
   3. in breach of duty or as part of an illegal transaction.
2. To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the instrument in good faith and without knowledge of facts that are a basis for rescission or other remedy.

History. (§ 3.202 ch 114 SLA 1962; am § 34 ch 35 SLA 1993)

Sec. 45.03.203. Transfer of instrument; rights acquired by transfer.

1. An instrument is transferred when the instrument is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.
2. Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.
3. Unless otherwise agreed, if an instrument is transferred for value and the transferee does not become a holder because of lack of endorsement by the transferor, the transferee has a specifically enforceable right to the unqualified endorsement of the transferor, but negotiation of the instrument does not occur until the endorsement is made.
4. If a transferor purports to transfer less than the entire instrument, negotiation of the instrument does not occur, and the transferee obtains no rights under this chapter and has only the rights of a partial assignee.

History. (§ 3.203 ch 114 SLA 1962; am § 35 ch 35 SLA 1993)

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 177 et seq.

Sec. 45.03.204. Endorsement.

1. “Endorsement” means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of negotiating the instrument, restricting payment of the instrument, or incurring endorser’s liability on the instrument, but regardless of the intent of the signer, a signature and its accompanying words are an endorsement unless the accompanying words, terms of the instrument, place of the signature, or other circumstances unambiguously indicate that the signature was made for a purpose other than endorsement. For the purpose of determining whether a signature is made on an instrument, a paper affixed to the instrument is a part of the instrument.
2. “Endorser” means a person who makes an endorsement.
3. For the purpose of determining whether the transferee of an instrument is a holder, an endorsement that transfers a security interest in the instrument is effective as an unqualified endorsement of the instrument.
4. If an instrument is payable to a holder under a name that is not the name of the holder, endorsement may be made by the holder in the name stated in the instrument or in the holder’s name or both, but signature in both names may be required by a person paying or taking the instrument for value or collection.

History. (§ 3.204 ch 114 SLA 1962; am § 36 ch 35 SLA 1993)

Sec. 45.03.205. Special endorsement; blank endorsement; anomalous endorsement.

1. If an endorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the endorsement identifies a person to whom it makes the instrument payable, it is a “special endorsement.” When specially endorsed, an instrument becomes payable to the identified person and may be negotiated only by the endorsement of that person. The principles stated in AS 45.03.110 apply to special endorsements.
2. If an endorsement is made by the holder of an instrument and it is not a special endorsement, it is a “blank endorsement.” When endorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially endorsed.
3. The holder may convert a blank endorsement that consists only of a signature into a special endorsement by writing, above the signature of the endorser, words identifying the person to whom the instrument is made payable.
4. “Anomalous endorsement” means an endorsement made by a person who is not the holder of the instrument. An anomalous endorsement does not affect the manner in which the instrument may be negotiated.

History. (§ 3.205 ch 114 SLA 1962; am § 37 ch 35 SLA 1993)

Sec. 45.03.206. Restrictive endorsement.

1. An endorsement limiting payment to a particular person or otherwise prohibiting further transfer or negotiation of the instrument is not effective to prevent further transfer or negotiation of the instrument.
2. An endorsement stating a condition to the right of the endorsee to receive payment does not affect the right of the endorsee to enforce the instrument. A person paying the instrument or taking it for value or collection may disregard the condition, and the rights and liabilities of that person are not affected by whether the condition has been fulfilled.
3. If an instrument bears an endorsement described in AS 45.04.201(b) , or an endorsement in blank or to a particular bank using the words “for deposit,” “for collection,” or other words indicating a purpose of having the instrument collected by a bank for the endorser or for a particular account, the following rules apply:
   1. a person, other than a bank, who purchases the instrument when so endorsed converts the instrument unless the amount paid for the instrument is received by the endorser or applied consistently with the endorsement;
   2. a depositary bank that purchases the instrument or takes it for collection when so endorsed converts the instrument unless the amount paid by the bank with respect to the instrument is received by the endorser or applied consistently with the endorsement;
   3. a payor bank that is also the depositary bank or that takes the instrument for immediate payment over the counter from a person other than a collecting bank converts the instrument unless the proceeds of the instrument are received by the endorser or applied consistently with the endorsement; and
   4. except as otherwise provided in (3) of this subsection, a payor bank or intermediary bank may disregard the endorsement and is not liable if the proceeds of the instrument are not received by the endorser or applied consistently with the endorsement.
4. Except for an endorsement covered by (c) of this section, if an instrument bears an endorsement using words to the effect that payment is to be made to the endorsee as agent, trustee, or other fiduciary for the benefit of the endorser or another person, the following rules apply:
   1. unless there is notice of breach of fiduciary duty as provided in AS 45.03.307 , a person who purchases the instrument from the endorsee or takes the instrument from the endorsee for collection or payment may pay the proceeds of payment or the value given for the instrument to the endorsee without regard to whether the endorsee violates a fiduciary duty to the endorser; and
   2. a subsequent transferee of the instrument or person who pays the instrument is neither given notice nor otherwise affected by the restriction in the endorsement unless the transferee or payor knows that the fiduciary dealt with the instrument or its proceeds in breach of a fiduciary duty.
5. The presence on an instrument of an endorsement to which this section applies does not prevent a purchaser of the instrument from becoming a holder in due course of the instrument unless the purchaser is a converter under (c) of this section or has notice or knowledge of breach of fiduciary duty as stated in (d) of this section.
6. In an action to enforce the obligation of a party to pay the instrument, the obligor has a defense if payment would violate an endorsement to which this section applies and the payment is not permitted by this section.

History. (§ 3.206 ch 114 SLA 1962; am § 38 ch 35 SLA 1993)

Sec. 45.03.207. Reacquisition.

Reacquisition of an instrument occurs if it is transferred to a former holder, by negotiation or otherwise. A former holder who reacquires the instrument may cancel endorsements made after the reacquirer first became a holder of the instrument. If the cancellation causes the instrument to be payable to the reacquirer or to bearer, the reacquirer may negotiate the instrument. An endorser whose endorsement is canceled is discharged, and the discharge is effective against a subsequent holder.

History. (§ 3.207 ch 114 SLA 1962; am § 39 ch 35 SLA 1993)

Sec. 45.03.208. Reacquisition. [Repealed, § 127 ch 35 SLA 1993.]

Sec. 45.03.301. Person entitled to enforce instrument.

A person entitled to enforce an instrument is the holder of the instrument, a nonholder in possession of the instrument who has the rights of a holder, or a person not in possession of the instrument who is entitled to enforce the instrument under AS 45.03.309 or 45.03.418(d) . A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.

History. (§ 3.301 ch 114 SLA 1962; am § 40 ch 35 SLA 1993)

Sec. 45.03.302. Holder in due course.

1. Subject to (c) of this section and AS 45.03.106(d) , “holder in due course” means the holder of an instrument, if
   1. the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and
   2. the holder took the instrument
      1. for value;
      2. in good faith;
      3. without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series;
      4. without notice that the instrument contains an unauthorized signature or has been altered;
      5. without notice of any claim to the instrument described in AS 45.03.306 ; and
      6. without notice that any party has a defense or claim in recoupment described in AS 45.03.305(a) .
2. Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under (a) of this section, but discharge is effective against a person who became a holder in due course with notice of the discharge. Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.
3. Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument taken by legal process or by purchase in an execution, bankruptcy, or creditor’s sale or similar proceeding, by purchase as part of a bulk transaction not in the ordinary course of business of the transferor, or as the successor in interest to an estate or other organization.
4. If, under AS 45.03.303(a)(1) , the promise of performance that is the consideration for an instrument has been partially performed, the holder may assert rights as a holder in due course of the instrument only to the fraction of the amount payable under the instrument equal to the value of the partial performance divided by the value of the promised performance.
5. If the person entitled to enforce an instrument has only a security interest in the instrument and the person obliged to pay the instrument has a defense, claim in recoupment, or claim to the instrument that may be asserted against the person who granted the security interest, the person entitled to enforce the instrument may assert rights as a holder in due course only to an amount payable under the instrument that, at the time of enforcement of the instrument, does not exceed the amount of the unpaid obligation secured.
6. To be effective, notice must be received at a time and in a manner that gives a reasonable opportunity to act on it.
7. This section is subject to any law limiting status as a holder in due course in particular classes of transactions.

History. (§ 3.302 ch 114 SLA 1962; am § 41 ch 35 SLA 1993)

Sec. 45.03.303. Value and consideration.

1. An instrument is issued or transferred for value if
   1. the instrument is issued or transferred for a promise of performance, to the extent the promise has been performed;
   2. the transferee acquires a security interest or other lien in the instrument other than a lien obtained by judicial proceeding;
   3. the instrument is issued or transferred as payment of, or as security for, an antecedent claim against a person, whether or not the claim is due;
   4. the instrument is issued or transferred in exchange for a negotiable instrument; or
   5. the instrument is issued or transferred in exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument.
2. “Consideration” means any consideration sufficient to support a simple contract. The drawer or maker of an instrument has a defense if the instrument is issued without consideration. If an instrument is issued for a promise of performance, the issuer has a defense to the extent performance of the promise is due and the promise has not been performed. If an instrument is issued for value as stated in (a) of this section, the instrument is also issued for consideration.

History. (§ 3.303 ch 114 SLA 1962; am § 42 ch 35 SLA 1993)

Collateral references. —

Who is holder of instrument for “value” under UCC § 3-303, 97 ALR3d 1114.

Sec. 45.03.304. Overdue instrument.

1. An instrument payable on demand becomes overdue at the earliest of the following times:
   1. on the day after the day demand for payment is duly made;
   2. if the instrument is a check, 90 days after its date; or
   3. if the instrument is not a check, when the instrument has been outstanding for a period of time after the instrument’s date that is unreasonably long under the circumstances of the particular case in light of the nature of the instrument and usage of the trade.
2. With respect to an instrument payable at a definite time, the following rules apply:
   1. if the principal is payable in installments and a due date has not been accelerated, the instrument becomes overdue upon default under the instrument for nonpayment of an installment, and the instrument remains overdue until the default is cured;
   2. if the principal is not payable in installments and the due date has not been accelerated, the instrument becomes overdue on the day after the due date; and
   3. if a due date with respect to principal has been accelerated, the instrument becomes overdue on the day after the accelerated due date.
3. Unless the due date of principal has been accelerated, an instrument does not become overdue if there is default in payment of interest but no default in payment of principal.

History. (§ 3.304 ch 114 SLA 1962; am § 43 ch 35 SLA 1993)

Sec. 45.03.305. Defenses and claims in recoupment.

1. Except as stated in (b) of this section, the right to enforce the obligation of a party to pay an instrument is subject to the following:
   1. a defense of the obligor based on
      1. infancy of the obligor, to the extent it is a defense to a simple contract;
      2. duress, lack of legal capacity, or illegality of the transaction that, under other law, nullifies the obligation of the obligor;
      3. fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to learn of its character or its essential terms; or
      4. discharge of the obligor in insolvency proceedings;
   2. a defense of the obligor stated in another section of this chapter or a defense of the obligor that would be available if the person entitled to enforce the instrument were enforcing a right to payment under a simple contract; and
   3. a claim in recoupment of the obligor against the original payee of the instrument if the claim arose from the transaction that gave rise to the instrument, but the claim of the obligor may be asserted against a transferee of the instrument only to reduce the amount owing in the instrument at the time the action is brought.
2. The right of a holder in due course to enforce the obligation of a party to pay the instrument is subject to defenses of the obligor stated in (a)(1) of this section, but is not subject to defenses of the obligor stated in (a)(2) of this section or claims in recoupment stated in (a)(3) of this section against a person other than the holder.
3. Except as stated in (d) of this section, in an action to enforce the obligation of a party to pay the instrument, the obligor may not assert against the person entitled to enforce the instrument a defense, claim in recoupment, or claim to the instrument under AS 45.03.306 of another person, but the other person’s claim to the instrument may be asserted by the obligor if the other person is joined in the action and personally asserts the claim against the person entitled to enforce the instrument. An obligor is not obliged to pay the instrument if the person seeking enforcement of the instrument does not have rights of a holder in due course and the obligor proves that the instrument is a lost or stolen instrument.
4. In an action to enforce the obligation of an accommodation party to pay an instrument, the accommodation party may assert against the person entitled to enforce the instrument any defense or claim in recoupment under (a) of this section that the accommodated party could assert against the person entitled to enforce the instrument, except the defenses of discharge in insolvency proceedings, infancy, and lack of legal capacity.

History. (§ 3.305 ch 114 SLA 1962; am § 44 ch 35 SLA 1993)

Sec. 45.03.306. Claims to an instrument.

A person taking an instrument, other than a person having rights of a holder in due course, is subject to a claim of a property or possessory right in the instrument or its proceeds, including a claim to rescind a negotiation and to recover the instrument or its proceeds. A person having rights of a holder in due course takes free of the claim to the instrument.

History. (§ 3.306 ch 114 SLA 1962; am § 45 ch 35 SLA 1993)

Sec. 45.03.307. Notice of breach of fiduciary duty.

1. If an instrument is taken from a fiduciary for payment or collection or for value, the taker has knowledge of the fiduciary status of the fiduciary, and the represented person makes a claim to the instrument or its proceeds on the basis that the transaction of the fiduciary is a breach of fiduciary duty, the following rules apply:
   1. notice of breach of fiduciary duty by the fiduciary is notice of the claim of the represented person;
   2. in the case of an instrument payable to the represented person or the fiduciary as such, the taker has notice of the breach of fiduciary duty if the instrument is
      1. taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary;
      2. taken in a transaction known by the taker to be for the personal benefit of the fiduciary; or
      3. deposited to an account other than an account of the fiduciary, as such, or an account of the represented person;
   3. if an instrument is issued by the represented person or the fiduciary as such, and made payable to the fiduciary personally, the taker does not have notice of the breach of fiduciary duty unless the taker knows of the breach of fiduciary duty; and
   4. if an instrument is issued by the represented person or the fiduciary as such, to the taker as payee, the taker has notice of the breach of fiduciary duty if the instrument is
      1. taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary;
      2. taken in a transaction known by the taker to be for the personal benefit of the fiduciary; or
      3. deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.
2. In this section,
   1. “fiduciary” means an agent, trustee, partner, corporate officer or director, or other representative owing a fiduciary duty with respect to an instrument;
   2. “represented person” means the principal, beneficiary, partnership, corporation, or other person to whom a fiduciary duty with respect to an instrument is owed.

History. (§ 3.307 ch 114 SLA 1962; am § 46 ch 35 SLA 1993)

Sec. 45.03.308. Proof of signatures and status as holder in due course.

1. In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings to which a responsive pleading is required. If the validity of a signature is denied in the pleadings, the burden of establishing validity is on the person claiming validity, but the signature is presumed to be authentic and authorized, unless the action is to enforce the liability of the purported signer and the signer is dead or incompetent at the time of trial of the issue of validity of the signature. If an action to enforce the instrument is brought against a person as the undisclosed principal of a person who signed the instrument as a party to the instrument, the plaintiff has the burden of establishing that the defendant is liable on the instrument as a represented person under AS 45.03.402(a) .
2. If the validity of signatures is admitted or proved and there is compliance with (a) of this section, a plaintiff producing the instrument is entitled to payment if the plaintiff proves entitlement to enforce the instrument under AS 45.03.301 , unless the defendant proves a defense or claim in recoupment. If a defense or claim in recoupment is proved, the right to payment of the plaintiff is subject to the defense or claim, except to the extent the plaintiff proves that the plaintiff has rights of a holder in due course which are not subject to the defense or claim.

History. (§ 47 ch 35 SLA 1993)

Cross references. —

For effect of the enactment of (a) of this section on Alaska Rule of Civil Procedure 8(d), see § 130(a), ch. 35, SLA 1993 in the Temporary and Special Acts.

Sec. 45.03.309. Enforcement of lost, destroyed, or stolen instrument.

1. A person not in possession of an instrument is entitled to enforce the instrument if
   1. the person was in possession of the instrument and entitled to enforce it when loss of possession occurred;
   2. the loss of possession was not the result of a transfer by the person or a lawful seizure; and
   3. the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person who cannot be found or is not amenable to service of process.
2. A person seeking enforcement of an instrument under (a) of this section must prove the terms of the instrument and the person’s right to enforce the instrument. If that proof is made, AS 45.03.308 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.

History. (§ 47 ch 35 SLA 1993)

Sec. 45.03.310. Effect of instrument on obligation for which taken.

1. Unless otherwise agreed, if a certified check, cashier’s check, or teller’s check is taken for an obligation, the obligation is discharged to the same extent discharge would result if an amount of money equal to the amount of the instrument were taken in payment of the obligation. Discharge of the obligation does not affect any liability that the obligor may have as an endorser of the instrument.
2. Unless otherwise agreed and except as provided in (a) of this section, if a note or an uncertified check is taken for an obligation, the obligation is suspended to the same extent the obligation would be discharged if an amount of money equal to the amount of the instrument were taken, and the following rules apply:
   1. in the case of an uncertified check, suspension of the obligation continues until dishonor of the check or until it is paid or certified; payment or certification of the check results in discharge of the obligation to the extent of the amount of the check;
   2. in the case of a note, suspension of the obligation continues until dishonor of the note or until it is paid; payment of the note results in discharge of the obligation to the extent of the payment;
   3. except as provided in (4) of this subsection, if the check or note is dishonored and the obligee of the obligation for which the instrument was taken is the person entitled to enforce the instrument, the obligee may enforce either the instrument or the obligation; in the case of an instrument of a third person that is negotiated to the obligee by the obligor, discharge of the obligor on the instrument also discharges the obligation; and
   4. if the person entitled to enforce the instrument taken for an obligation is a person other than the obligee, the obligee may not enforce the obligation to the extent the obligation is suspended; if the obligee is the person entitled to enforce the instrument but no longer has possession of it because it was lost, stolen, or destroyed, the obligation may not be enforced to the extent of the amount payable on the instrument, and to that extent the obligee’s rights against the obligor are limited to enforcement of the instrument.
3. If an instrument other than one described in (a) or (b) of this section is taken for an obligation, the effect is that stated in (a) if the instrument is one on which a bank is liable as maker or acceptor, or that stated in (b) in any other case.

History. (§ 47 ch 35 SLA 1993)

Sec. 45.03.311. Accord and satisfaction by use of instrument.

1. The provisions of this section apply if a person against whom a claim is asserted proves that
   1. the person in good faith tendered an instrument to the claimant as full satisfaction on the claim;
   2. the amount of the claim was unliquidated or subject to a bona fide dispute; and
   3. the claimant obtained payment of the instrument.
2. Unless (c) of this section applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim.
3. Subject to (d) of this section, a claim is not discharged under (b) of this section if either of the following applies:
   1. the claimant, if an organization, proves that
      1. within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office, or place; and
      2. the instrument or accompanying communication was not received by that designated person, office, or place; or
   2. the claimant, whether or not an organization, proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the person against whom the claim is asserted, unless the claimant is an organization that sent a statement complying with (1)(A) of this subsection.
4. A claim is discharged if the person against whom the claim is asserted proves that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim.

History. (§ 47 ch 35 SLA 1993)

Sec. 45.03.312. Lost, destroyed, or stolen cashier’s check, teller’s check, or certified check.

1. A claimant may assert a claim to the amount of a check by a communication to the obligated bank describing the check with reasonable certainty and requesting payment of the amount of the check, if
   1. the claimant is the drawer or payee of a certified check or the remitter or payee of a cashier’s check or teller’s check;
   2. the communication contains or is accompanied by a declaration of loss of the claimant with respect to the check;
   3. the communication is received at a time and in a manner affording the bank a reasonable time to act on it before the check is paid; and
   4. the claimant provides reasonable identification if requested by the obligated bank.
2. Delivery of a declaration of loss under (a)(2) of this section is a warranty of the truth of the statements made in the declaration.
3. If a claim is asserted in compliance with (a) of this section, the following rules apply:
   1. the claim becomes enforceable at the later of
      1. the time the claim is asserted; or
      2. the 90th day following the date of the check, in the case of a cashier’s check or teller’s check, or the 90th day following the date of the acceptance, in the case of a certified check;
   2. until the claim becomes enforceable, it does not have legal effect and the obligated bank may pay the check or, in the case of a teller’s check, may permit the drawee to pay the check; payment to a person entitled to enforce the check discharges all liability of the obligated bank with respect to the check;
   3. if the claim becomes enforceable before the check is presented for payment, the obligated bank is not obliged to pay the check;
   4. when the claim becomes enforceable, the obligated bank becomes obliged to pay the amount of the check to the claimant if payment of the check has not been made to a person entitled to enforce the check; subject to AS 45.04.302(a)(1) , payment to the claimant discharges all liability of the obligated bank with respect to the check.
4. If the obligated bank pays the amount of a check to a claimant under (c)(4) of this section and the check is presented for payment by a person having rights of a holder in due course, the claimant is obliged to
   1. refund the payment to the obligated bank if the check is paid; or
   2. pay the amount of the check to the person having rights of a holder in due course if the check is dishonored.
5. If a claimant has the right to assert a claim under (a) — (c) of this section and is also a person entitled to enforce a cashier’s check, teller’s check, or certified check that is lost, destroyed, or stolen, the claimant may assert rights with respect to the check either under this section or AS 45.03.309 .
6. In this section,
   1. “check” means a cashier’s check, teller’s check, or certified check;
   2. “claimant” means a person who claims the right to receive the amount of a cashier’s check, teller’s check, or certified check that was lost, destroyed, or stolen;
   3. “declaration of loss” means a written statement, made under penalty of perjury, to the effect that
      1. the declarer lost possession of a check;
      2. the declarer is the drawer or payee of the check, in the case of a certified check, or the remitter or payee of the check, in the case of a cashier’s check or teller’s check;
      3. the loss of possession was not the result of a transfer by the declarer or a lawful seizure; and
      4. the declarer cannot reasonably obtain possession of the check because the check was destroyed, the check’s whereabouts cannot be determined, or the check is in the wrongful possession of an unknown person or a person who cannot be found or is not amenable to service of process;
   4. “obligated bank” means the issuer of a cashier’s check or teller’s check or the acceptor of a certified check.

History. (§ 47 ch 35 SLA 1993)

Collateral references. —

Liability of bank for diversion to benefit of presenter or third party of proceeds of check drawn to bank’s order by drawer not indebted to bank, 69 ALR4th 778.

Sec. 45.03.401. Signature.

1. A person is not liable on an instrument unless
   1. the person signed the instrument; or
   2. the person is represented by an agent or representative who signed the instrument and the signature is binding on the represented person under AS 45.03.402 .
2. A signature may be made manually or by means of a device or machine, and by the use of any name, including a trade or assumed name, or by a word, mark, or symbol executed or adopted by a person with present intention to authenticate a writing.

History. (§ 3.401 ch 114 SLA 1962; am § 48 ch 35 SLA 1993)

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 42 et seq.

Sec. 45.03.402. Signature by representative.

1. If a person acting, or purporting to act, as a representative signs an instrument by signing either the name of the represented person or the name of the signer, the represented person is bound by the signature to the same extent the represented person would be bound if the signature were on a simple contract. If the represented person is bound, the signature of the representative is the authorized signature of the represented person and the represented person is liable on the instrument, whether or not identified in the instrument.
2. If a representative signs the name of the representative to an instrument and the signature is an authorized signature of the represented person, the following rules apply:
   1. if the form of the signature shows unambiguously that the signature is made on behalf of the represented person who is identified in the instrument, the representative is not liable on the instrument; and
   2. subject to (c) of this section, if the form of the signature does not show unambiguously that the signature is made in a representative capacity or the represented person is not identified in the instrument, the representative is liable on the instrument to a holder in due course that took the instrument without notice that the representative was not intended to be liable on the instrument; with respect to another person, the representative is liable on the instrument unless the representative proves that the original parties did not intend the representative to be liable on the instrument.
3. If a representative signs the name of the representative as drawer of a check without indication of the representative status and the check is payable from an account of the represented person who is identified on the check, the signer is not liable on the check if the signature is an authorized signature of the represented person.

History. (§ 3.402 ch 114 SLA 1962; am § 49 ch 35 SLA 1993)

Sec. 45.03.403. Unauthorized signature.

1. Unless otherwise provided in this chapter or AS 45.04, an unauthorized signature is ineffective except as the signature of the unauthorized signer in favor of a person who in good faith pays the instrument or takes it for value. An unauthorized signature may be ratified for all purposes of this chapter.
2. If the signature of more than one person is required to constitute the authorized signature of an organization, the signature of the organization is unauthorized if one of the required signatures is lacking.
3. The civil or criminal liability of a person who makes an unauthorized signature is not affected by any provision of this chapter that makes the unauthorized signature effective for the purposes of this chapter.

History. (§ 3.403 ch 114 SLA 1962; am § 50 ch 35 SLA 1993)

Collateral references. —

What constitutes ratification of unauthorized signature under UCC § 3-404, 93 ALR3d 967.

Sec. 45.03.404. Impostors; fictitious payees.

1. If an impostor, by use of the mails or otherwise, induces the issuer of an instrument to issue the instrument to the impostor or a person acting in concert with the impostor, by impersonating the payee of the instrument or a person authorized to act for the payee, an endorsement of the instrument by any person in the name of the payee is effective as the endorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.
2. If a person whose intent determines to whom an instrument is payable (AS 45.03.110(a) or (b)) does not intend the person identified as payee to have an interest in the instrument, or if the person identified as payee of an instrument is a fictitious person, the following rules apply until the instrument is negotiated by special endorsement:
   1. any person in possession of the instrument is the holder of the instrument; and
   2. an endorsement by any person in the name of the payee stated in the instrument is effective as the endorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.
3. Under (a) or (b) of this section, an endorsement is made in the name of a payee if
   1. it is made in a name substantially similar to that of the payee; or
   2. the instrument, whether or not endorsed, is deposited in a depositary bank to an account in a name substantially similar to that of the payee.
4. With respect to an instrument to which (a) or (b) of this section applies, if a person paying the instrument or taking it for value or for collection fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss resulting from payment of the instrument, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss.

History. (§ 3.404 ch 114 SLA 1962; am § 51 ch 35 SLA 1993)

Collateral references. —

Construction and application of UCC § 3-405(1)(a) involving issuance of negotiable instrument induced by imposter, 92 ALR3d 608.

Sec. 45.03.405. Employer’s responsibility for fraudulent endorsement by employee.

1. For the purpose of determining the rights and liabilities of a person who, in good faith, pays an instrument or takes it for value or for collection, if an employer entrusted an employee with responsibility with respect to the instrument and the employee or a person acting in concert with the employee makes a fraudulent endorsement of the instrument, the endorsement is effective as the endorsement of the person to whom the instrument is payable if it is made in the name of that person. If the person paying the instrument or taking it for value or for collection fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss resulting from the fraud, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss.
2. Under (a) of this section, an endorsement is made in the name of the person to whom an instrument is payable if
   1. it is made in a name substantially similar to the name of that person; or
   2. the instrument, whether or not endorsed, is deposited in a depositary bank to an account in a name substantially similar to the name of that person.
3. In this section,
   1. “employee” includes an independent contractor and an employee of an independent contractor retained by the employer;
   2. “fraudulent endorsement” means
      1. in the case of an instrument payable to the employer, a forged endorsement purporting to be that of the employer; or
      2. in the case of an instrument with respect to which the employer is the issuer, a forged endorsement purporting to be that of the person identified as payee;
   3. “responsibility” with respect to instruments means authority to sign or endorse instruments on behalf of the employer; to process instruments received by the employer for bookkeeping purposes, for deposit to an account, or for other disposition; to prepare or process instruments for issue in the name of the employer; to supply information determining the names or addresses of payees of instruments to be issued in the name of the employer; to control the disposition of instruments to be issued in the name of the employer; or to act otherwise with respect to instruments in a responsible capacity; “responsibility” does not include authority that merely allows an employee to have access to instruments or blank or incomplete instrument forms that are being stored or transported or are part of incoming or outgoing mail, or similar access.

History. (§ 3.405 ch 114 SLA 1962; am § 52 ch 35 SLA 1993)

Sec. 45.03.406. Negligence contributing to forged signature or alteration of instrument.

1. A person whose failure to exercise ordinary care substantially contributes to an alteration of an instrument or to the making of a forged signature on an instrument is precluded from asserting the alteration or the forgery against a person who, in good faith, pays the instrument or takes it for value or for collection.
2. Under (a) of this section, if the person asserting the preclusion fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss, the loss is allocated between the person precluded and the person asserting the preclusion according to the extent to which the failure of each to exercise ordinary care contributed to the loss.
3. Under (a) of this section, the burden of proving failure to exercise ordinary care is on the person asserting the preclusion. Under (b) of this section, the burden of proving failure to exercise ordinary care is on the person precluded.

History. (§ 3.406 ch 114 SLA 1962; am § 53 ch 35 SLA 1993)

Collateral references. —

What amounts to “negligence contributing to alteration or unauthorized signature” under UCC § 3-406, 67 ALR3d 144.

Sec. 45.03.407. Alteration.

1. Except as provided in (b) of this section, an alteration fraudulently made discharges a party whose obligation is affected by the alteration unless that party assents or is precluded from asserting the alteration. Another alteration does not discharge a party, and the instrument may be enforced according to its original terms.
2. A payor bank or drawee paying a fraudulently altered instrument or a person taking it for value, in good faith and without notice of the alteration, may enforce rights with respect to the instrument according to its original terms or, in the case of an incomplete instrument altered by unauthorized completion, according to its terms as completed.
3. “Alteration” means
   1. an unauthorized change in an instrument that purports to modify in any respect the obligation of a party; or
   2. an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party.

History. (§ 3.407 ch 114 SLA 1962; am § 54 ch 35 SLA 1993)

Collateral references. —

4 Am. Jur. 2d, Alteration of Instruments, § 1 et seq.

What constitutes “fraudulent and material” alteration of negotiable instrument under UCC § 3-407(2)(a), 88 ALR3d 905.

Sec. 45.03.408. Drawee not liable on unaccepted draft.

A check or other draft does not of itself operate as an assignment of funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until the drawee accepts the instrument.

History. (§ 3.408 ch 114 SLA 1962; am § 55 ch 35 SLA 1993)

Sec. 45.03.409. Acceptance of draft; certified check.

1. “Acceptance” means the drawee’s signed agreement to pay a draft as presented. Acceptance must be written on the draft and may consist of the drawee’s signature alone. Acceptance may be made at any time and becomes effective when notification in accordance with instructions is given or the accepted draft is delivered for the purpose of giving rights on the acceptance to any person.
2. A draft may be accepted although it has not been signed by the drawer, is otherwise incomplete, is overdue, or has been dishonored.
3. If a draft is payable at a fixed period after sight and the acceptor fails to date the acceptance, the holder may complete the acceptance by supplying a date in good faith.
4. “Certified check” means a check accepted by the bank on which it is drawn. Acceptance may be made as stated in (a) of this section or by a writing on the check that indicates that the check is certified. The drawee of a check does not have an obligation to certify the check, and refusal to certify is not dishonor of the check.

History. (§ 3.409 ch 114 SLA 1962; am § 56 ch 35 SLA 1993)

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 344 et seq.

Sec. 45.03.410. Acceptance varying draft.

1. If the terms of a drawee’s acceptance vary from the terms of the draft as presented, the holder may refuse the acceptance and treat the draft as dishonored. In that case, the drawee may cancel the acceptance.
2. The terms of a draft are not varied by an acceptance to pay at a particular bank or place in the United States, unless the acceptance states that the draft is to be paid only at that bank or place.
3. If the holder assents to an acceptance varying the terms of a draft, the obligation of each drawer and endorser that does not expressly assent to the acceptance is discharged.

History. (§ 3.410 ch 114 SLA 1962; am § 57 ch 35 SLA 1993)

Sec. 45.03.411. Refusal to pay cashier’s checks, teller’s checks, and certified checks.

1. If the obligated bank wrongfully refuses to pay a cashier’s check or certified check, stops payment of a teller’s check, or refuses to pay a dishonored teller’s check, the person asserting the right to enforce the check is entitled to compensation for expenses and loss of interest resulting from the nonpayment and may recover consequential damages if the obligated bank refuses to pay after receiving notice of particular circumstances giving rise to the damages.
2. Expenses or consequential damages under (a) of this section are not recoverable if
   1. the refusal of the obligated bank to pay occurs because the bank suspends payments;
   2. the obligated bank asserts a claim or defense of the bank that it has reasonable grounds to believe is available against the person entitled to enforce the instrument;
   3. the obligated bank has a reasonable doubt whether the person demanding payment is the person entitled to enforce the instrument; or
   4. payment is prohibited by law.
3. In this section, “obligated bank” means the acceptor of a certified check or the issuer of a cashier’s check or teller’s check bought from the issuer.

History. (§ 3.411 ch 114 SLA 1962; am § 58 ch 35 SLA 1993)

Sec. 45.03.412. Obligation of issuer of note or cashier’s check.

The issuer of a note, cashier’s check, or other draft drawn on the drawer is obliged to pay the instrument according to its terms at the time it was issued or, if not issued, at the time it first came into possession of a holder; if the issuer signed an incomplete instrument, the issuer is obligated to pay the instrument according to its terms when completed, to the extent stated in AS 45.03.115 and 45.03.407 . The obligation is owed to a person entitled to enforce the instrument or to an endorser who paid the instrument under AS 45.03.415 .

History. (§ 3.412 ch 114 SLA 1962; am § 59 ch 35 SLA 1993)

Sec. 45.03.413. Obligation of acceptor.

1. The acceptor of a draft is obliged to pay the draft according to its terms at the time it was accepted, even though the acceptance states that the draft is payable “as originally drawn” or equivalent terms; if the acceptance varies the terms of the draft, the acceptor is obliged to pay the draft according to the terms of the draft as varied; if the acceptance is of a draft that is an incomplete instrument, the acceptor is obliged to pay the draft according to its terms when completed, to the extent stated in AS 45.03.115 and 45.03.407 . The obligation is owed to a person entitled to enforce the draft or to the drawer or an endorser who paid the draft under AS 45.03.414 — 45.03.415 .
2. If the certification of a check or other acceptance of a draft states the amount certified or accepted, the obligation of the acceptor is that amount. If the certification or acceptance does not state an amount, the amount of the instrument is subsequently raised, and the instrument is then negotiated to a holder in due course, the obligation of the acceptor is the amount of the instrument at the time it was taken by the holder in due course.

History. (§ 3.413 ch 114 SLA 1962; am § 60 ch 35 SLA 1993)

Sec. 45.03.414. Obligation of drawer.

1. This section does not apply to cashier’s checks or other drafts drawn on the drawer.
2. If an unaccepted draft is dishonored, the drawer is obliged to pay the draft according to its terms at the time it was issued or, if not issued, at the time it first came into possession of a holder. If the drawer signed an incomplete instrument, the drawer is obliged to pay the draft according to its terms when completed, to the extent stated in AS 45.03.115 and 45.03.407 . The obligation is owed to a person entitled to enforce the draft or to an endorser who paid the draft under AS 45.03.415 .
3. If a draft is accepted by a bank, the drawer is discharged, regardless of when or by whom acceptance was obtained.
4. If a draft is accepted and the acceptor is not a bank, the obligation of the drawer to pay the draft, if the draft is dishonored by the acceptor, is the same as the obligation of an endorser under AS 45.03.415(a) and (c).
5. If a draft states that it is drawn “without recourse” or otherwise disclaims liability of the drawer to pay the draft, the drawer is not liable under (b) of this section to pay the draft if the draft is not a check. A disclaimer of the liability stated in (b) of this section is not effective if the draft is a check.
6. If a check is not presented for payment or given to a depositary bank for collection within 30 days after its date and the drawee suspends payments after expiration of the 30-day period without paying the check and, because of the suspension of payments, the drawer is deprived of funds maintained with the drawee to cover payment of the check, the drawer to the extent deprived of funds may discharge its obligation to pay the check by assigning to the person entitled to enforce the check the rights of the drawer against the drawee with respect to the funds.

History. (§ 3.414 ch 114 SLA 1962; am § 61 ch 35 SLA 1993)

Sec. 45.03.415. Obligation of endorser.

1. Subject to (b) — (e) of this section and AS 45.03.419(d) , if an instrument is dishonored an endorser is obliged to pay the amount due on the instrument according to the terms of the instrument at the time it was endorsed or, if the endorser endorsed an incomplete instrument, according to its terms when completed to the extent stated in AS 45.03.115 and 45.03.407 . The obligation of the endorser is owed to a person entitled to enforce the instrument or to a subsequent endorser who paid the instrument under this section.
2. If an endorsement states that it is made “without recourse” or otherwise disclaims liability of the endorser, the endorser is not liable under (a) of this section to pay the instrument.
3. If notice of dishonor of an instrument is required by AS 45.03.503 and notice of dishonor complying with that section is not given to an endorser, the liability of the endorser under (a) of this section is discharged.
4. If a draft is accepted by a bank after an endorsement is made, the liability of the endorser under (a) of this section is discharged.
5. If an endorser of a check is liable under (a) of this section and the check is not presented for payment or given to a depositary bank for collection within 30 days after the date the endorsement was made, the liability of the endorser under (a) of this section is discharged.

History. (§ 3.415 ch 114 SLA 1962; am § 62 ch 35 SLA 1993)

Sec. 45.03.416. Transfer warranties.

1. A person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by endorsement, to any subsequent transferee that
   1. the warrantor is a person entitled to enforce the instrument;
   2. all signatures on the instrument are authentic and authorized;
   3. the instrument has not been altered;
   4. the instrument is not subject to a defense or claim in recoupment of any party that can be asserted against the warrantor; and
   5. the warrantor does not know of any insolvency proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer.
2. A person to whom the warranties under (a) of this section are made and who took the instrument in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, but not more than the amount of the instrument plus expenses and loss of interest incurred as a result of the breach.
3. The warranties stated in (a) of this section cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under (b) of this section is discharged to the extent of any loss caused by the delay in giving notice of the claim.
4. A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.

History. (§ 3.416 ch 114 SLA 1962; am § 63 ch 35 SLA 1993)

Sec. 45.03.417. Presentment warranties.

1. If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, the person obtaining payment or acceptance, at the time of presentment, and a previous transferor of the draft, at the time of transfer, warrant to the drawee making payment or accepting the draft in good faith that
   1. the warrantor is, or was at the time the warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment or acceptance of the draft on behalf of a person entitled to enforce the draft;
   2. the draft has not been altered; and
   3. the warrantor does not know that the signature of the drawer of the draft is unauthorized.
2. A drawee making payment may recover from any warrantor damages for breach of warranty equal to the amount paid by the drawee less the amount the drawee received or is entitled to receive from the drawer because of the payment. In addition, the drawee is entitled to compensation for expenses and loss of interest resulting from the breach. The right of the drawee to recover damages under this subsection is not affected by any failure of the drawee to exercise ordinary care in making payment. If the drawee accepts the draft, breach of warranty is a defense to the obligation of the acceptor. If the acceptor makes payment with respect to the draft, the acceptor is entitled to recover from any warrantor for breach of warranty the amounts stated in this subsection.
3. If a drawee asserts a claim for breach of warranty under (a) of this section based on an unauthorized endorsement of the draft or an alteration of the draft, the warrantor may defend by proving that the endorsement is effective under AS 45.03.404 or 45.03.405 , or that the drawer is precluded under AS 45.03.406 or AS 45.04.406 from asserting against the drawee the unauthorized endorsement or alteration.
4. If a dishonored draft is presented for payment to the drawer or an endorser, or if any other instrument is presented for payment to a party obliged to pay the instrument, and payment is received, the following rules apply:
   1. the person obtaining payment and a prior transferor of the instrument warrant to the person making payment in good faith that the warrantor is, or was at the time the warrantor transferred the instrument, a person entitled to enforce the instrument or authorized to obtain payment on behalf of a person entitled to enforce the instrument;
   2. the person making payment may recover from any warrantor for breach of warranty an amount equal to the amount paid plus expenses and loss of interest resulting from the breach.
5. The warranties stated in (a) and (d) of this section cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under (b) or (d) of this section is discharged to the extent of any loss caused by the delay in giving notice of the claim.
6. A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.

History. (§ 3.417 ch 114 SLA 1962; am § 64 ch 35 SLA 1993)

Sec. 45.03.418. Payment or acceptance by mistake.

1. Except as provided in (c) of this section, if the drawee of a draft pays or accepts the draft and the drawee acted on the mistaken belief that payment of the draft had not been stopped under AS 45.04.403 or that the signature of the drawer of the draft was authorized, the drawee may recover the amount of the draft from the person to whom or for whose benefit payment was made or, in the case of acceptance, may revoke the acceptance. Rights of the drawee under this subsection are not affected by failure of the drawee to exercise ordinary care in paying or accepting the draft.
2. Except as provided in (c) of this section, if an instrument has been paid or accepted by mistake and the case is not covered by (a) of this section, the person paying or accepting may, to the extent permitted by the law governing mistake and restitution, recover the payment from the person to whom or for whose benefit payment was made or, in the case of acceptance, may revoke the acceptance.
3. The remedies provided by (a) or (b) of this section may not be asserted against a person who took the instrument in good faith and for value or who in good faith changed position in reliance on the payment or acceptance. This subsection does not limit remedies provided by AS 45.03.407 or AS 45.04.407 .
4. Notwithstanding AS 45.04.215 , if an instrument is paid or accepted by mistake and the payor or acceptor recovers payment or revokes acceptance under (a) or (b) of this section, the instrument is considered not to have been paid or accepted and is treated as dishonored, and the person from whom payment is recovered has rights as a person entitled to enforce the dishonored instrument.

History. (§ 3.418 ch 114 SLA 1962; am § 65 ch 35 SLA 1993)

Sec. 45.03.419. Instruments signed for accommodation.

1. If an instrument is issued for value given for the benefit of a party to the instrument, the “accommodated party,” and another party to the instrument, the “accommodation party,” signs the instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument, the instrument is signed by the accommodation party “for accommodation.”
2. An accommodation party may sign the instrument as maker, drawer, acceptor, or endorser and, subject to (d) of this section, is obliged to pay the instrument in the capacity in which the accommodation party signs. The obligation of an accommodation party may be enforced notwithstanding a statute of frauds and whether or not the accommodation party receives consideration for the accommodation.
3. If the signature is an anomalous endorsement or is accompanied by words indicating that the signer is acting as surety or guarantor with respect to the obligation of another party to an instrument, a person signing an instrument is presumed to be an accommodation party and there is notice that the instrument is signed for accommodation. Except as provided in AS 45.03.605 , the obligation of an accommodation party to pay the instrument is not affected by the fact that the person enforcing the obligation had notice when the instrument was taken by that person that the accommodation party signed the instrument for accommodation.
4. If the signature of a party to an instrument is accompanied by words indicating unambiguously that the party is guaranteeing collection rather than payment of the obligation of another party to the instrument, the signer is obliged to pay the amount due on the instrument to a person entitled to enforce the instrument only if
   1. execution of judgment against the other party has been returned unsatisfied;
   2. the other party is insolvent or in an insolvency proceeding;
   3. the other party cannot be served with process; or
   4. it is otherwise apparent that payment cannot be obtained from the other party.
5. An accommodation party who pays the instrument is entitled to reimbursement from the accommodated party and is entitled to enforce the instrument against the accommodated party. An accommodated party who pays the instrument does not have a right of recourse against, and is not entitled to contribution from, an accommodation party.

History. (§ 3.419 ch 114 SLA 1962; am § 105 ch 59 SLA 1982; am § 66 ch 35 SLA 1993)

Sec. 45.03.420. Conversion of instrument.

1. The law applicable to conversion of personal property applies to instruments. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument, or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. An action for conversion of an instrument may not be brought by the issuer or acceptor of the instrument, or by a payee or endorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a co-payee.
2. In an action under (a) of this section, the measure of liability is presumed to be the amount payable on the instrument, but recovery may not exceed the amount of the plaintiff’s interest in the instrument.
3. A representative, other than a depositary bank, who has in good faith dealt with an instrument or its proceeds on behalf of one who was not the person entitled to enforce the instrument is not liable in conversion to that person beyond the amount of any proceeds that it has not paid out.

History. (§ 67 ch 35 SLA 1993)

Collateral references. —

Payee’s right of recovery, in conversion under UCC § 3-419(1)(c), for money paid on unauthorized indorsement, 23 ALR4th 855.

Liability of bank for diversion to benefit of presenter or third party of proceeds of check drawn to bank’s order by drawer not indebted to bank, 69 ALR4th 778.

Payee’s and drawer’s right of recovery, in conversion under pre-1990 UCC § 3-419, or post-1990 UCC § 3-420, for money paid on unauthorized indorsement, 91 ALR5th 89.

Drawer’s right of recovery against depositary bank that accepts check with missing indorsement or in violation of restrictive covenant, 104 ALR5th 459.

Sec. 45.03.501. Presentment.

1. “Presentment” means a demand made by or on behalf of a person entitled to enforce an instrument
   1. to pay the instrument made to the drawee or a party obliged to pay the instrument or, in the case of a note or accepted draft payable at a bank, to the bank; or
   2. to accept a draft made to the drawee.
2. The following rules are subject to AS 45.04, agreement of the parties, and clearinghouse rules and the like:
   1. presentment may be made at the place of payment of the instrument and must be made at the place of payment if the instrument is payable at a bank in the United States; may be made by any commercially reasonable means, including an oral, written, or electronic communication; is effective when the demand for payment or acceptance is received by the person to whom presentment is made; and is effective if made to any one of two or more makers, acceptors, drawees, or other payors;
   2. upon demand of the person to whom presentment is made, the person making presentment must
      1. exhibit the instrument;
      2. give reasonable identification and, if presentment is made on behalf of another person, reasonable evidence of authority to do so; and
      3. sign a receipt on the instrument for any payment made or surrender the instrument if full payment is made;
   3. without dishonoring the instrument, the party to whom presentment is made may
      1. return the instrument for lack of a necessary endorsement; or
      2. refuse payment or acceptance for failure of the presentment to comply with the terms of the instrument, an agreement of the parties, or other applicable law or rule; and
   4. the party to whom presentment is made may treat presentment as occurring on the next business day after the day of presentment, if the party to whom presentment is made has established a cut-off hour not earlier than two o’clock in the afternoon for the receipt and processing of instruments presented for payment or acceptance and presentment is made after the cut-off hour.

History. (§ 3.501 ch 114 SLA 1962; am § 68 ch 35 SLA 1993)

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 288 et seq.

Sec. 45.03.502. Dishonor.

1. Dishonor of a note is governed by the following rules:
   1. if the note is payable on demand, the note is dishonored if presentment is duly made to the maker and the note is not paid on the day of presentment;
   2. if the note is not payable on demand and is payable at or through a bank or the terms of the note require presentment, the note is dishonored if presentment is duly made and the note is not paid on the day it becomes payable or the day of presentment, whichever is later; and
   3. if the note is not payable on demand and (2) of this subsection does not apply, the note is dishonored if it is not paid on the day it becomes payable.
2. Dishonor of an unaccepted draft, other than a documentary draft, is governed by the following rules:
   1. if a check is duly presented for payment to the payor bank other than for immediate payment over the counter, the check is dishonored if the payor bank makes timely return of the check or sends timely notice of dishonor or nonpayment under AS 45.04.301 — 45.04.302 , or becomes accountable for the amount of the check under AS 45.04.302 ;
   2. if a draft is payable on demand and (1) of this subsection does not apply, the draft is dishonored if presentment for payment is duly made to the drawee and the draft is not paid on the day of presentment;
   3. if a draft is payable on a date stated in the draft, the draft is dishonored if presentment for
      1. payment is duly made to the drawee and payment is not made on the day the draft becomes payable or the day of presentment, whichever is later; or
      2. acceptance is duly made before the day the draft becomes payable and the draft is not accepted on the day of presentment; and
   4. if a draft is payable on elapse of a period of time after sight or acceptance, the draft is dishonored if presentment for acceptance is duly made and the draft is not accepted on the day of presentment.
3. Dishonor of an unaccepted documentary draft occurs according to the rules stated in (b)(2) — (4) of this section, except that payment or acceptance may be delayed without dishonor until no later than the close of the third business day of the drawee following the day on which payment or acceptance is required by (b)(2) — (4) of this section.
4. Dishonor of an accepted draft is governed by the following rules:
   1. if the draft is payable on demand, the draft is dishonored if presentment for payment is duly made to the acceptor and the draft is not paid on the day of presentment; and
   2. if the draft is not payable on demand, the draft is dishonored if presentment for payment is duly made to the acceptor and payment is not made on the day it becomes payable or the day of presentment, whichever is later.
5. In any case in which presentment is otherwise required for dishonor under this section and presentment is excused under AS 45.03.504 , dishonor occurs without presentment if the instrument is not duly accepted or paid.
6. If a draft is dishonored because timely acceptance of the draft was not made and the person entitled to demand acceptance consents to a late acceptance, from the time of acceptance the draft is treated as never having been dishonored.

History. (§ 3.502 ch 114 SLA 1962; am § 69 ch 35 SLA 1993)

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 318 et seq.

Sec. 45.03.503. Notice of dishonor.

1. The obligation of an endorser stated in AS 45.03.415(a) and the obligation of a drawer stated in AS 45.03.414(d) may not be enforced unless the endorser or drawer is given notice of dishonor of the instrument complying with this section or notice of dishonor is excused under AS 45.03.504(b) .
2. Notice of dishonor may be given by any person; may be given by any commercially reasonable means, including an oral, written, or electronic communication; and is sufficient if it reasonably identifies the instrument and indicates that the instrument has been dishonored or has not been paid or accepted. Return of an instrument given to a bank for collection is sufficient notice of dishonor.
3. Subject to AS 45.03.504(c) with respect to an instrument taken for collection by a collecting bank, notice of dishonor must be given by the bank before midnight of the next banking day following the banking day on which the bank receives notice of dishonor of the instrument, or by another person within 30 days following the day on which the person receives notice of dishonor. With respect to other instruments, notice of dishonor must be given within 30 days following the day on which dishonor occurs.

History. (§ 3.503 ch 114 SLA 1962; am § 70 ch 35 SLA 1993)

Sec. 45.03.504. Excused presentment and notice of dishonor.

1. Presentment for payment or acceptance of an instrument is excused if
   1. the person entitled to present the instrument cannot with reasonable diligence make presentment;
   2. the maker or acceptor has repudiated an obligation to pay the instrument or is dead or in insolvency proceedings;
   3. by the terms of the instrument presentment is not necessary to enforce the obligation of endorsers or the drawer;
   4. the drawer or endorser whose obligation is being enforced has waived presentment or otherwise does not have a reason to expect or a right to require that the instrument be paid or accepted; or
   5. the drawer instructed the drawee not to pay or accept the draft or the drawee was not obligated to the drawer to pay the draft.
2. Notice of dishonor is excused if by the terms of the instrument notice of dishonor is not necessary to enforce the obligation of a party to pay the instrument, or the party whose obligation is being enforced waived notice of dishonor. A waiver of presentment is also a waiver of notice of dishonor.
3. Delay in giving notice of dishonor is excused if the delay was caused by circumstances beyond the control of the person giving the notice and the person giving the notice exercised reasonable diligence after the cause of the delay ceased to operate.

History. (§ 3.504 ch 114 SLA 1962; am § 71 ch 35 SLA 1993)

Sec. 45.03.505. Evidence of dishonor.

1. The following are admissible as evidence and create a presumption of dishonor and of any notice of dishonor stated:
   1. a document regular in form as provided in (b) of this section that purports to be a protest;
   2. a purported stamp or writing of the drawee, payor bank, or presenting bank on or accompanying the instrument stating that acceptance or payment has been refused unless reasons for the refusal are stated and the reasons are not consistent with dishonor; or
   3. a book or record of the drawee, payor bank, or collecting bank, kept in the usual course of business, that shows dishonor, even if there is no evidence of who made the entry.
2. A protest is a certificate of dishonor made by a United States consul or vice-consul or a notary public or other person authorized to administer oaths by the law of the place where dishonor occurs. The protest may be made upon information satisfactory to that person. The protest must identify the instrument and certify either that presentment has been made or, if not made, the reason why it was not made, and that the instrument has been dishonored by nonacceptance or nonpayment. The protest may also certify that notice of dishonor has been given to some or all parties.

History. (§ 3.505 ch 114 SLA 1962; am § 72 ch 35 SLA 1993)

Secs. 45.03.506 — 45.03.511. Time for acceptance or payment; dishonor; protest; waiver or excuse. [Repealed, § 127 ch 35 SLA 1993.]

Sec. 45.03.601. Discharge and effect of discharge.

1. The obligation of a party to pay the instrument is discharged as stated in this chapter or by an act or agreement with the party that would discharge an obligation to pay money under a simple contract.
2. Discharge of the obligation of a party is not effective against a person acquiring rights of a holder in due course of the instrument without notice of the discharge.

History. (§ 3.601 ch 114 SLA 1962; am § 73 ch 35 SLA 1993)

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 354 et seq.

Sec. 45.03.602. Payment.

1. Subject to (b) of this section, an instrument is paid to the extent payment is made by or on behalf of a party obliged to pay the instrument and to a person entitled to enforce the instrument. To the extent of the payment, the obligation of the party obliged to pay the instrument is discharged even though payment is made with knowledge of a claim to the instrument under AS 45.03.306 by another person.
2. The obligation of a party to pay the instrument is not discharged under (a) of this section if
   1. a claim to the instrument under AS 45.03.306 is enforceable against the party receiving payment and
      1. payment is made with knowledge by the payor that payment is prohibited by injunction or similar process of a court of competent jurisdiction; or
      2. in the case of an instrument other than a cashier’s check, teller’s check, or certified check, the party making payment accepted, from the person having a claim to the instrument, indemnity against loss resulting from refusal to pay the person entitled to enforce the instrument; or
   2. the person making payment knows that the instrument is a stolen instrument and pays a person it knows is in wrongful possession of the instrument.

History. (§ 3.602 ch 114 SLA 1962; am § 74 ch 35 SLA 1993)

Sec. 45.03.603. Tender of payment.

1. If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument, the effect of tender is governed by principles of law applicable to tender of payment under a simple contract.
2. If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument and the tender is refused, there is discharge, to the extent of the amount of the tender, of the obligation of an endorser or accommodation party having a right of recourse with respect to the obligation to which the tender relates.
3. If tender of payment of an amount due on an instrument is made to a person entitled to enforce the instrument, the obligation of the obligor to pay interest after the due date on the amount tendered is discharged. If presentment is required with respect to an instrument and the obligor is able and ready to pay on the due date at every place of payment stated in the instrument, the obligor is deemed to have made tender of payment on the due date to the person entitled to enforce the instrument.

History. (§ 3.603 ch 114 SLA 1962; am § 75 ch 35 SLA 1993)

Sec. 45.03.604. Discharge by cancellation or renunciation.

1. A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument
   1. by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, cancellation or striking out of the party’s signature, or the addition of words to the instrument indicating discharge; or
   2. by agreeing not to sue or otherwise renouncing rights against the party by a signed writing.
2. Cancellation or striking out of an endorsement under (a) of this section does not affect the status and rights of a party derived from the endorsement.

History. (§ 3.604 ch 114 SLA 1962; am § 76 ch 35 SLA 1993)

Sec. 45.03.605. Discharge of endorsers and accommodation parties.

1. Discharge, under AS 45.03.604 , of the obligation of a party to pay an instrument does not discharge the obligation of an endorser or accommodation party having a right of recourse against the discharged party.
2. If a person entitled to enforce an instrument agrees, with or without consideration, to an extension of the due date of the obligation of a party to pay the instrument, the extension discharges an endorser or accommodation party having a right of recourse against the party whose obligation is extended to the extent the endorser or accommodation party proves that the extension caused loss to the endorser or accommodation party with respect to the right of recourse.
3. If a person entitled to enforce an instrument agrees, with or without consideration, to a material modification of the obligation of a party other than an extension of the due date, the modification discharges the obligation of an endorser or accommodation party having a right of recourse against the person whose obligation is modified to the extent the modification causes loss to the endorser or accommodation party with respect to the right of recourse. The loss suffered by the endorser or accommodation party as a result of the modification is equal to the amount of the right of recourse unless the person enforcing the instrument proves that no loss was caused by the modification or that the loss caused by the modification was an amount less than the amount of the right of recourse.
4. If the obligation of a party to pay an instrument is secured by an interest in collateral and a person entitled to enforce the instrument impairs the value of the interest in collateral, the obligation of an endorser or accommodation party having a right of recourse against the obligor is discharged to the extent of the impairment. The value of an interest in collateral is impaired to the extent the value of the interest is reduced to an amount less than the amount of the right of recourse of the party asserting discharge, or to the extent the reduction in value of the interest causes an increase in the amount by which the amount of the right of recourse exceeds the value of the interest. The burden of proving impairment is on the party asserting discharge.
5. If the obligation of a party is secured by an interest in collateral not provided by an accommodation party and a person entitled to enforce the instrument impairs the value of the interest in collateral, the obligation of a party who is jointly and severally liable with respect to the secured obligation is discharged to the extent the impairment causes the party asserting discharge to pay more than that party would have been obliged to pay, taking into account rights of contribution, if impairment had not occurred. If the party asserting discharge is an accommodation party not entitled to discharge under (d) of this section, the party is considered to have a right to contribution based on joint and several liability rather than a right to reimbursement. The burden of proving impairment is on the party asserting discharge.
6. Under (d) or (e) of this section, impairing value of an interest in collateral includes
   1. failure to obtain or maintain perfection or recordation of the interest in collateral;
   2. release of collateral without substitution of collateral of equal value;
   3. failure to perform a duty to preserve the value of collateral owed, under AS 45.29 or other law, to a debtor or surety or other person secondarily liable; or
   4. failure to comply with applicable law in disposing of collateral.
7. An accommodation party is not discharged under (b), (c), or (d) of this section unless the person entitled to enforce the instrument knows of the accommodation or has notice under AS 45.03.419(c) that the instrument was signed for accommodation.
8. A party is not discharged under this section if
   1. the party asserting discharge consents to the event or conduct that is the basis of the discharge; or
   2. the instrument or a separate agreement of the party provides for waiver of discharge under this section either specifically or by general language indicating that parties waive defenses based on suretyship or impairment of collateral.
9. In this section, the term “endorser” includes a drawer having the obligation described in AS 45.03.414(d) .

History. (§ 3.605 ch 114 SLA 1962; am § 77 ch 35 SLA 1993)

Revisor’s notes. —

In 2000, “AS 45.29” was substituted for “AS 45.09” in accordance with § 35, ch. 113, SLA 2000.

Secs. 45.03.606 — 45.03.805. Impairment of recourse or collateral; advice of international sight draft; miscellaneous provisions. [Repealed, § 127 ch 35 SLA 1993.]

Sec. 45.04.101. Short title.

This chapter may be cited as Uniform Commercial Code — Bank Deposits and Collections.

History. (§ 4.101 ch 114 SLA 1962; am § 78 ch 35 SLA 1993)

Collateral references. —

10 Am. Jur. 2d, Banks and Financial Institutions, § 1 et seq.

Construction and effect of UCC Art. 4 [AS 45.04], dealing with bank deposits and collections, 18 ALR3d 1376; 97 ALR3d 714; 22 ALR4th 10; 29 ALR4th 631; 88 ALR4th 568; 88 ALR4th 613; 88 ALR4th 664.

Sec. 45.04.102. Applicability.

1. To the extent that items within this chapter are also within AS 45.03 and 45.08, they are subject to those chapters. If there is conflict, this chapter governs AS 45.03, but AS 45.08 governs this chapter.
2. The liability of a bank for action or nonaction with respect to an item handled by it for purposes of presentment, payment, or collection is governed by the law of the place where the bank is located.  In the case of action or nonaction by or at a branch or separate office of a bank, its liability is governed by the law of the place where the branch or separate office is located.

History. (§ 4.102 ch 114 SLA 1962; am § 79 ch 35 SLA 1993)

Collateral references. —

Liability of bank for diversion to benefit of presenter or third party of proceeds of check drawn to bank’s order by drawer not indebted to bank, 69 ALR4th 778.

Sec. 45.04.103. Variation by agreement; measure of damages; certain action constituting ordinary care.

1. The effect of this chapter may be varied by agreement, but the parties to the agreement may not disclaim a bank’s responsibility for its lack of good faith or failure to exercise ordinary care or limit the measure of damages for the lack or failure. However, the parties may determine by agreement the standards by which the bank’s responsibility is to be measured if the standards are not manifestly unreasonable.
2. Federal Reserve regulations and operating circulars, clearinghouse rules, and the like have the effect of agreements under (a) of this section, whether or not specifically assented to by all parties interested in items handled.
3. Action or nonaction approved by this chapter or under Federal Reserve regulations or operating circulars is the exercise of ordinary care and, in the absence of special instructions, action or nonaction consistent with clearinghouse rules and the like or with a general banking usage not disapproved by this chapter is prima facie the exercise of ordinary care.
4. The specification or approval of certain procedures by this chapter is not disapproval of other procedures that may be reasonable under the circumstances.
5. The measure of damages for failure to exercise ordinary care in handling an item is the amount of the item reduced by an amount that could not have been realized by the exercise of ordinary care, and if there is also bad faith it includes any other damages the party suffered as a proximate consequence.

History. (§ 4.103 ch 114 SLA 1962; am § 80 ch 35 SLA 1993)

Sec. 45.04.104. Definitions and index of definitions.

1. In this chapter, unless the context otherwise requires,
   1. “account” means a deposit or credit account with a bank, including a demand, time, savings, passbook, share draft, or like account, other than an account evidenced by a certificate of deposit;
   2. “afternoon” means the period of a day between noon and midnight;
   3. “banking day” means that part of a day on which a bank is open to the public for carrying on substantially all of its banking functions;
   4. “clearinghouse” means an association of banks or other payors regularly clearing items;
   5. “customer” means a person having an account with a bank or for whom a bank has agreed to collect items, including a bank that maintains an account at another bank;
   6. “documentary draft” means a draft to be presented for acceptance or payment if specified documents, certificated securities under AS 45.08.102 , instructions for uncertificated securities under AS 45.08.102 , or other certificates, statements, or the like are to be received by the drawee or other payor before acceptance or payment of the draft;
   7. “draft” means a draft as defined in AS 45.03.104 or an item, other than an instrument, that is an order;
   8. “drawee” means a person ordered in a draft to make payment;
   9. “item” means an instrument or a promise or order to pay money handled by a bank for collection or payment; the term does not include a credit or debit card slip;
   10. “midnight deadline” with respect to a bank is midnight on its next banking day following the banking day on which it receives the relevant item or notice, or from which the time for taking action commences to run, whichever is later;
   11. “settle” means to pay in cash, by clearinghouse settlement, in a charge or credit or by remittance, or otherwise as agreed; a settlement may be either provisional or final;
   12. “suspends payments” with respect to a bank means that it has been closed by order of the supervisory authorities, that a public officer has been appointed to take it over, or that it ceases or refuses to make payments in the ordinary course of business.
2. Other definitions applying to this chapter and the sections in which the definitions appear are:
   1. “agreement for electronic presentment” in AS 45.04.110 ;
   2. “bank” in AS 45.04.105 ;
   3. “collecting bank” in AS 45.04.105 ;
   4. “depositary bank” in AS 45.04.105;
   5. “intermediary bank” in AS 45.04.105;
   6. “payor bank” in AS 45.04.105;
   7. “presenting bank” in AS 45.04.105;
   8. “presentment notice” in AS 45.04.110 .
3. The following definitions in AS 45.03 apply to this chapter:
   1. “acceptance” (AS 45.03.409 );
   2. “alteration” (AS 45.03.407 );
   3. “cashier’s check” (AS 45.03.104 );
   4. “certificate of deposit” (AS 45.03.104 );
   5. “certified check” (AS 45.03.409 );
   6. “check” (AS 45.03.104);
   7. “control” (AS 45.07.116 );
   8. [Repealed, § 113 ch 44 SLA 2009.]
   9. “holder in due course” (AS 45.03.302 );
   10. “instrument” (AS 45.03.104);
   11. “notice of dishonor” (AS 45.03.503 );
   12. “order” (AS 45.03.103 );
   13. “ordinary care” (AS 45.03.103 );
   14. “person entitled to enforce” (AS 45.03.301 );
   15. “presentment” (AS 45.03.501 );
   16. “promise” (AS 45.03.103);
   17. “prove” (AS 45.03.103);
   18. “teller’s check” (AS 45.03.104);
   19. “unauthorized signature” (AS 45.03.403 ).
4. In addition, AS 45.01 contains general definitions and principles of construction and interpretation applicable throughout this chapter.

History. (§ 4.104 ch 114 SLA 1962; am §§ 81 — 88, 127 ch 35 SLA 1993; am § 3 ch 17 SLA 1996; am §§ 27, 113 ch 44 SLA 2009)

Revisor’s notes. —

Paragraphs (a)(7) and (8) were formerly (a)(12) and (13). Renumbered in 1994, at which time the entry for former (a)(9) was deleted and the remaining paragraphs renumbered accordingly.

Paragraph (c)(7) was enacted as (c)(19) and renumbered in 2009, at which time former paragraphs (c)(7) — (19) were renumbered accordingly.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, repealed (c)(7) [now (c)(8)], which read, “ ‘good faith’ (AS 45.03.103 );”; and added (c)(19) [now (c)(7)].

Collateral references. —

Bank’s right to stop payment on its own check or money order, 97 ALR3d 714.

What is documentary draft under UCC § 4-104(1)(f), 65 ALR4th 1095.

Sec. 45.04.105. “Bank”; “depositary bank”; “intermediary bank”; “collecting bank”; “payor bank”; “presenting bank.”

In this chapter,

1. “bank” means a person engaged in the business of banking, including a savings bank, savings and loan association, credit union, or trust company;
2. “collecting bank” means a bank handling an item for collection except the payor bank;
3. “depositary bank” means the first bank to take an item even though it is also the payor bank, unless the item is presented for immediate payment over the counter;
4. “intermediary bank” means a bank to which an item is transferred in course of collection except the depositary or payor bank;
5. “payor bank” means a bank that is the drawee of a draft;
6. “presenting bank” means a bank presenting an item except a payor bank.

History. (§ 4.105 ch 114 SLA 1962; am § 89 ch 35 SLA 1993)

Revisor’s notes. —

This section was reorganized in 2006 to maintain alphabetical order.

Collateral references. —

Construction of UCC § 4-105, which defines “payor bank,” “collecting bank,” and the like, 84 ALR3d 1073.

Sec. 45.04.106. Payable through or payable at bank; collecting bank.

1. If an item states that it is “payable through” a bank identified in the item, the item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item, and the item may be presented for payment only by or through the bank.
2. If an item states that it is “payable at” a bank identified in the item, the item is equivalent to a draft drawn on the bank.
3. If a draft names a nonbank drawee and it is unclear whether a bank named in the draft is a co-drawee or a collecting bank, the bank is a collecting bank.

History. (§ 4.106 ch 114 SLA 1962; am § 90 ch 35 SLA 1993)

Sec. 45.04.107. Separate office of a bank.

A branch or separate office of a bank is a separate bank for the purpose of computing the time within which and determining the place at or to which action may be taken or notices or orders must be given under this chapter and under AS 45.03.

History. (§ 4.107 ch 114 SLA 1962; am § 91 ch 35 SLA 1993)

Collateral references. —

10 Am. Jur. 2d, Banks and Financial Institutions, § 630 et seq.

Construction of UCC § 4-106 defining separate or branch office of bank, 5 ALR4th 665.

Sec. 45.04.108. Time of receipt of items.

1. To allow time to process items, prove balances, and make the necessary entries on its books to determine its position for the day, a bank may fix an afternoon hour of two o’clock in the afternoon or later as a cutoff hour for the handling of money and items and the making of entries on the books of the bank.
2. An item or deposit of money received on a day after a cutoff hour so fixed or after the close of the banking day may be treated as received at the opening of the next banking day.

History. (§ 4.108 ch 114 SLA 1962; am § 92 ch 35 SLA 1993)

Sec. 45.04.109. Delays.

1. Unless otherwise instructed, a collecting bank in a good faith effort to secure payment of a specific item drawn on a payor other than a bank, and with or without the approval of a person involved, may waive, modify, or extend time limits imposed or permitted by the code for a period not exceeding two additional banking days without discharge of drawers or endorsers or liability to its transferor or a prior party.
2. Delay by a collecting bank or payor bank beyond time limits prescribed or permitted by the code or by instructions is excused if the delay is caused by interruption of communication or computer facilities, suspension of payments by another bank, war, emergency conditions, failure of equipment, or other circumstances beyond the control of the bank, and if the bank exercises the diligence circumstances require.

History. (§ 93 ch 35 SLA 1993)

Collateral references. —

10 Am. Jur. 2d, Banks, § 813.

Sec. 45.04.110. Electronic presentment.

1. “Agreement for electronic presentment” means an agreement, clearinghouse rule, or Federal Reserve regulation or operating circular, providing that presentment of an item may be made by transmission of an image of an item or information describing the item, a “presentment notice,” rather than delivery of the item itself. The agreement may provide for procedures governing retention, presentment, payment, dishonor, and other matters concerning items subject to the agreement.
2. Presentment of an item under an agreement for presentment is made when the presentment notice is received.
3. If presentment is made by presentment notice, a reference to “item” or “check” in this chapter means the presentment notice unless the context otherwise indicates.

History. (§ 93 ch 35 SLA 1993)

Sec. 45.04.111. Statute of limitations.

An action to enforce an obligation, duty, or right arising under this chapter must be commenced within three years after the cause of action accrues.

History. (§ 93 ch 35 SLA 1993)

Sec. 45.04.201. Status of collecting bank as agent and provisional status of credits; applicability; item endorsed “pay any bank”.

1. Unless a contrary intent clearly appears and before a settlement given by a collecting bank for an item becomes final, the bank, with respect to the item, is an agent or subagent of the owner of the item and a settlement given for the item is provisional. This provision applies regardless of the form of endorsement or lack of endorsement and even though credit given for the item is subject to immediate withdrawal as of right or is in fact withdrawn; but the continuance of ownership of an item by its owner and the rights of the owner to proceeds of the item are subject to rights of a collecting bank such as those resulting from outstanding advances on the item and rights of recoupment or setoff. If an item is handled by banks for purposes of presentment, payment, collection, or return, the relevant provisions of this chapter apply even though action of the parties clearly establishes that a particular bank has purchased the item and is the owner of it.
2. After an item has been endorsed with the words “pay any bank” or the like, only a bank may acquire the rights of a holder until the item has been
   1. returned to the customer initiating collection; or
   2. specially endorsed by a bank to a person who is not a bank.

History. (§ 4.201 ch 114 SLA 1962; am § 94 ch 35 SLA 1993)

Sec. 45.04.202. Responsibility for collection or return; when action timely.

1. A collecting bank must exercise ordinary care in
   1. presenting an item or sending it for presentment;
   2. sending notice of dishonor or nonpayment or returning an item other than a documentary draft to the bank’s transferor after learning that the item has not been paid or accepted, as the case may be;
   3. settling for an item when the bank receives final settlement; and
   4. notifying its transferor of a loss or delay in transit within a reasonable time after discovery of the loss or delay.
2. A collecting bank exercises ordinary care under (a) of this section by taking proper action before its midnight deadline following receipt of an item, notice, or settlement; taking proper action within a reasonably longer time may constitute the exercise of ordinary care, but the bank has the burden of establishing timeliness.
3. Subject to (a)(1) of this section, a bank is not liable for the insolvency, neglect, misconduct, mistake, or default of another bank or person or for loss or destruction of an item in the possession of others or in transit.

History. (§ 4.202 ch 114 SLA 1962; am § 95 ch 35 SLA 1993)

Sec. 45.04.203. Effect of instructions.

Subject to the provisions concerning conversion of instruments (AS 45.03.420 ) and restrictive endorsements (AS 45.03.206 ), only a collecting bank’s transferor can give instructions that affect the bank or constitute notice to it, and a collecting bank is not liable to prior parties for an action taken under these instructions or in accordance with an agreement with its transferor.

History. (§ 4.203 ch 114 SLA 1962; am § 96 ch 35 SLA 1993)

Sec. 45.04.204. Methods of sending and presenting; sending directly to payor bank.

1. A collecting bank shall send items by a reasonably prompt method, taking into consideration relevant instructions, the nature of the item, the number of the items on hand, the cost of collection involved, and the method generally used by it or others to present the items.
2. A collecting bank may send an item
   1. directly to the payor bank;
   2. to a nonbank payor if authorized by its transferor; and
   3. other than documentary drafts to a nonbank payor, if authorized by federal reserve regulation or operating circular, clearinghouse rule, or the like.
3. Presentment may be made by a presenting bank at a place where the payor bank or other payor has requested that presentment be made.

History. (§ 4.204 ch 114 SLA 1962; am §§ 97, 98 ch 35 SLA 1993)

Sec. 45.04.205. Depositary bank holder of unendorsed item.

If a customer delivers an item to a depositary bank for collection

1. the depositary bank becomes a holder of the item at the time it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer endorses the item, and, if the bank satisfies the other requirements of AS 45.03.302 , it is a holder in due course; and
2. the depositary bank warrants to collecting banks, the payor bank or other payor, and the drawer that the amount of the item was paid to the customer or deposited to the customer’s account.

History. (§ 4.205 ch 114 SLA 1962; am § 99 ch 35 SLA 1993)

Collateral references. —

Construction and application of UCC § 4-205(1) allowing depositary bank to supply customer’s indorsement on item for collection, 29 ALR4th 631.

Sec. 45.04.206. Transfer between banks.

Any agreed method that identifies the transferor bank is sufficient for the item’s further transfer to another bank.

History. (§ 4.206 ch 114 SLA 1962)

Sec. 45.04.207. Transfer warranties.

1. A customer or collecting bank that transfers an item and receives a settlement or other consideration warrants to the transferee and to any subsequent collecting bank that
   1. the warrantor is a person entitled to enforce the item;
   2. all signatures on the item are authentic and authorized;
   3. the item has not been altered;
   4. the item is not subject to a defense or claim in recoupment under AS 45.03.305(a) of any party that can be asserted against the warrantor; and
   5. the warrantor does not have knowledge of any insolvency proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer.
2. If an item is dishonored, a customer or collecting bank transferring the item and receiving settlement or other consideration is obliged to pay the amount due on the item according to the terms of the item at the time it was transferred, or, if the transfer was of an incomplete item, according to its terms when completed as stated in AS 45.03.115 and 45.03.407 . The obligation of a transferor is owed to the transferee and to any subsequent collecting bank that takes the item in good faith. A transferor cannot disclaim its obligation under this subsection by an endorsement stating that it is made “without recourse” or otherwise disclaiming liability.
3. A person to whom the warranties under (a) of this section are made and who took the item in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, but not more than the amount of the item plus expenses and loss of interest incurred as a result of the breach.
4. The warranties stated in (a) of this section cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the warrantor is discharged to the extent of any loss caused by the delay in giving notice of the claim.
5. A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.

History. (§ 4.207 ch 114 SLA 1962; am § 100 ch 35 SLA 1993)

Collateral references. —

Liability of bank for diversion to benefit of presenter or third party of proceeds of check drawn to bank’s order by drawer not indebted to bank, 69 ALR4th 778.

Sec. 45.04.208. Presentment warranties.

1. If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, the person obtaining payment or acceptance, at the time of presentment, and a previous transferor of the draft, at the time of transfer, warrant to the drawee that pays or accepts the draft in good faith that
   1. the warrantor is, or was at the time the warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment or acceptance of the draft on behalf of a person entitled to enforce the draft;
   2. the draft has not been altered; and
   3. the warrantor does not have knowledge that the signature of the purported drawer of the draft is unauthorized.
2. A drawee making payment may recover from a warrantor damages for breach of warranty equal to the amount paid by the drawee less the amount the drawee received or is entitled to receive from the drawer because of the payment. In addition, the drawee is entitled to compensation for expenses and loss of interest resulting from the breach. The right of the drawee to recover damages under this subsection is not affected by a failure of the drawee to exercise ordinary care in making payment. If the drawee accepts the draft, breach of warranty is a defense to the obligation of the acceptor, and if the acceptor makes payment with respect to the draft, the acceptor is entitled to recover from a warrantor for breach of warranty the amounts stated in this subsection.
3. If a drawee asserts a claim for breach of warranty under (a) of this section based on an unauthorized endorsement of the draft or an alteration of the draft, the warrantor may defend by proving that the endorsement is effective under AS 45.03.404 or 45.03.405 or the drawer is precluded under AS 45.03.406 or AS 45.04.406 from asserting against the drawee the unauthorized endorsement or alteration.
4. If a dishonored draft is presented for payment to the drawer or an endorser, or if any other item is presented for payment to a party obliged to pay the item, and the item is paid, the person obtaining payment and a prior transferor of the item warrant to the person making payment in good faith that the warrantor is, or was, at the time the warrantor transferred the item, a person entitled to enforce the item or authorized to obtain payment on behalf of a person entitled to enforce the item. The person making payment may recover from any warrantor for breach of warranty an amount equal to the amount paid plus expenses and loss of interest resulting from the breach.
5. The warranties stated in (a) and (d) of this section may not be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the warrantor is discharged to the extent of any loss caused by the delay in giving notice of the claim.
6. A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.

History. (§ 4.208 ch 114 SLA 1962; am § 101 ch 35 SLA 1993)

Sec. 45.04.209. Encoding and retention warranties.

1. A person who encodes information on or with respect to an item after issue warrants to any subsequent collecting bank and to the payor bank or other payor that the information is correctly encoded. If the customer of a depositary bank encodes, that bank also makes the warranty.
2. A person who undertakes to retain an item pursuant to an agreement for electronic presentment warrants to any subsequent collecting bank and to the payor bank or other payor that retention and presentment of the item comply with the agreement. If a customer of a depositary bank undertakes to retain an item, that bank also makes this warranty.
3. A person to whom warranties are made under this section and who took the item in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, plus expenses and loss of interest incurred as a result of the breach.

History. (§ 4.209 ch 114 SLA 1962; am § 102 ch 35 SLA 1993)

Sec. 45.04.210. Security interest of collecting bank in items, accompanying documents, and proceeds.

1. A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either
   1. in case of an item deposited in an account, to the extent to which credit given for the item has been withdrawn or applied;
   2. in case of an item for which it has given credit available for withdrawal as of right, to the extent of the credit given, whether or not the credit is drawn upon or there is a right of charge-back; or
   3. if it makes an advance on or against the item.
2. If credit given for several items received at one time or under a single agreement is withdrawn or applied in part, the security interest remains upon all the items, accompanying documents, or the proceeds of either. For the purpose of this section, credits first given are first withdrawn.
3. Receipt by a collecting bank of a final settlement for an item is a realization on its security interest in the item, accompanying documents, and proceeds. So long as the bank does not receive final settlement for the item or give up possession of the item or possession or control of the accompanying documents for purposes other than collection, the security interest continues to that extent and is subject to AS 45.29, but
   1. a security agreement is not necessary to make the security interest enforceable (AS 45.29.203(b)(3)(A) );
   2. filing is not required to perfect the security interest; and
   3. the security interest has priority over conflicting perfected security interests in the item, accompanying documents, or proceeds.

History. (§ 4.210 ch 114 SLA 1962; am § 103 ch 35 SLA 1993; am § 12 ch 113 SLA 2000; am § 28 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (c), added “possession or control of the” preceding “accompanying documents”.

Sec. 45.04.211. When bank gives value for purposes of holder in due course.

To determine its status as a holder in due course, a bank has given value to the extent it has a security interest in an item, if the bank otherwise complies with the requirements of AS 45.03.302 on what constitutes a holder in due course.

History. (§ 4.211 ch 114 SLA 1962; am § 104 ch 35 SLA 1993)

Sec. 45.04.212. Presentment by notice of item not payable by, through, or at a bank; liability of drawer or endorser.

1. Unless otherwise instructed, a collecting bank may present an item not payable by, through, or at a bank by sending to the party to accept or pay a written notice that the bank holds the item for acceptance or payment. The notice must be sent in time to be received on or before the day when presentment is due and the bank must meet any requirement of the party to accept or pay under AS 45.03.501 by the close of the bank’s next banking day after it knows of the requirement.
2. If presentment is made by notice, and payment, acceptance, or request for compliance with a requirement under AS 45.03.501 is not received by the close of business on the day after maturity or, in the case of demand items, by the close of business on the third banking day after notice was sent, the presenting bank may treat the item as dishonored and charge a drawer or endorser by sending the drawer or endorser notice of the facts.

History. (§ 4.212 ch 114 SLA 1962; am § 105 ch 35 SLA 1993)

Collateral references. —

Liability of bank for diversion to benefit of presenter or third party of proceeds of check drawn to bank’s order by drawer not indebted to bank, 69 ALR4th 778.

Sec. 45.04.213. Medium and time of settlement by bank.

1. With respect to settlement by a bank, the medium and time of settlement may be prescribed by Federal Reserve regulations or circulars, clearinghouse rules, and the like, or by agreement. In the absence of a prescription
   1. the medium of settlement is cash or credit to an account in a Federal Reserve Bank of or specified by the person to receive settlement; and
   2. the time of settlement is with respect to tender of settlement
      1. by cash, a cashier’s check, or teller’s check, when the cash or check is sent or delivered;
      2. by credit in an account in a Federal Reserve Bank, when the credit is made;
      3. by a credit or debit to an account in a bank, when the credit or debit is made or, in the case of tender of settlement by authority to charge an account, when the authority is sent or delivered; or
      4. by a funds transfer, when payment is made to the person receiving settlement.
2. If the tender of settlement is not by a medium authorized by (a) of this section or the time of settlement is not fixed by (a) of this section, settlement does not occur until the tender of settlement is accepted by the person receiving settlement.
3. If settlement for an item is made by cashier’s check or teller’s check and the person receiving settlement, before its midnight deadline,
   1. presents or forwards the check for collection, settlement is final when the check is finally paid; or
   2. fails to present or forward the check for collection, settlement is final at the midnight deadline of the person receiving settlement.
4. If settlement for an item is made by giving authority to charge the account of the bank giving settlement in the bank receiving settlement, settlement is final when the charge is made by the bank receiving settlement if there are funds available in the account for the amount of the item.

History. (§ 4.213 ch 114 SLA 1962; am § 106 ch 35 SLA 1993)

Sec. 45.04.214. Right of charge back or refund; liability of collecting bank; return of item.

1. If a collecting bank has made provisional settlement with its customer for an item and fails, by reason of dishonor, suspension of payments by a bank, or otherwise, to receive a settlement for the item that is or becomes final, the bank may revoke the settlement given by it, charge back the amount of a credit given for the item to its customer’s account, or obtain refund from its customer, whether or not it is able to return the items, if by its midnight deadline or within a longer reasonable time after it learns the facts it returns the item or sends notification of the facts. If the return or notice is delayed beyond the bank’s midnight deadline or a longer reasonable time after it learns the facts, the bank may revoke the settlement, charge back the credit, or obtain refund from its customer, but it is liable for any loss resulting from the delay. These rights to revoke, charge back, and obtain refund terminate if and when a settlement for the item received by the bank is or becomes final.
2. A collecting bank returns an item when it is sent or delivered to the bank’s customer or transferor or according to its instructions.
3. A depositary bank that is also the payor may charge back the amount of an item to its customer’s account or obtain refund in accordance with AS 45.04.301 , the section governing return of an item received by a payor bank for credit on its books.
4. The right to charge back is not affected by
   1. previous use of a credit given for the item; or
   2. failure by a bank to exercise ordinary care with respect to the item, but a bank so failing remains liable.
5. A failure to charge back or claim refund does not affect other rights of the bank against the customer or another party.
6. If credit is given in dollars as the equivalent of the value of an item payable in foreign money, the dollar amount of a charge back or refund must be calculated on the basis of the bank offered spot rate for the foreign money prevailing on the day when the person entitled to the charge back or refund learns that it will not receive payment in ordinary course.

History. (§ 4.214 ch 114 SLA 1962; am § 107 ch 35 SLA 1993)

Collateral references. —

11 Am. Jur. 2d, Banks, § 978.

Liability of bank for diversion to benefit of presenter or third party of proceeds of check drawn to bank’s order by drawer not indebted to bank, 69 ALR4th 778.

Sec. 45.04.215. Final payment of item by payor bank; when provisional debits and credits become final; when certain credits become available for withdrawal.

1. An item is finally paid by a payor bank when the bank has first
   1. paid the item in cash;
   2. settled for the item without having a right to revoke the settlement under statute, clearinghouse rule, or agreement; or
   3. made a provisional settlement for the item and failed to revoke the settlement in the time and manner permitted by statute, clearinghouse rule, or agreement.
2. If provisional settlement for an item does not become final, the item is not finally paid.
3. If provisional settlement for an item between the presenting and payor banks is made through a clearinghouse or by debits or credits in an account between them, then, to the extent that provisional debits or credits for the item are entered in accounts between the presenting and payor banks or between the presenting and successive prior collecting banks seriatim, they become final upon final payment of the item by the payor bank.
4. If a collecting bank receives a settlement for an item that is or becomes final, the bank is accountable to its customer for the amount of the item and a provisional credit given for the item in an account with its customer becomes final.
5. Subject to applicable law stating a time for availability of funds and a right of the bank to apply the credit to an obligation of the customer, credit given by a bank for an item in a customer’s account becomes available for withdrawal as of right if the bank
   1. has received a provisional settlement for the item, when the settlement becomes final and the bank has had a reasonable time to receive return of the item and the item has not been received within that time;
   2. is both the depositary bank and the payor bank, and the item is finally paid, at the opening of the bank’s second banking day following receipt of the item.
6. Subject to applicable law stating a time for availability of funds and a right of a bank to apply a deposit to an obligation of the depositor, a deposit of money becomes available for withdrawal as of right at the opening of the bank’s next banking day after receipt of the deposit.

History. (§ 108 ch 35 SLA 1993)

Sec. 45.04.216. Insolvency and preference.

1. If an item is in or comes into the possession of a payor or collecting bank that suspends payment and the item has not been finally paid, the item shall be returned by the receiver, trustee, or agent in charge of the closed bank to the presenting bank or the closed bank’s customer.
2. If a payor bank finally pays an item and suspends payments without making a settlement for the item with its customer or the presenting bank, which settlement is or becomes final, the owner of the item has a preferred claim against the payor bank.
3. If a payor bank gives or a collecting bank gives or receives a provisional settlement for an item and later suspends payments, the suspension does not prevent or interfere with the settlement’s becoming final if the finality occurs automatically upon the lapse of certain time or the happening of certain events.
4. If a collecting bank receives from subsequent parties settlement for an item, which settlement is or becomes final and the bank suspends payments without making a settlement for the item with its customer, which settlement is or becomes final, the owner of the item has a preferred claim against the collecting bank.

History. (§ 108 ch 35 SLA 1993)

Sec. 45.04.301. Deferred posting; recovery of payment by return of items; time of dishonor; return of items by payor bank.

1. If a payor bank settles for a demand item other than a documentary draft presented other than for immediate payment over the counter before midnight of the banking day of receipt, the payor bank may revoke the settlement and recover the settlement if, before it has made final payment and before its midnight deadline, it
   1. returns the item; or
   2. sends written notice of dishonor or nonpayment if the item is unavailable for return.
2. If a demand item is received by a payor bank for credit on its books, it may return the item or send notice of dishonor and may revoke a credit given or recover the amount of the credit withdrawn by its customer if it acts within the time limit and in the manner specified in (a) of this section.
3. Unless previous notice of dishonor has been sent, an item is dishonored at the time when, for purposes of dishonor, it is returned or notice is sent in accordance with this section.
4. An item is returned
   1. as to an item presented through a clearinghouse, when it is delivered to the presenting or last collecting bank or to the clearinghouse or is sent or delivered in accordance with clearinghouse rules; or
   2. in all other cases, when it is sent or delivered to the bank’s customer or transferor or under the instructions of the customer or transferor.

History. (§ 4.301 ch 114 SLA 1962; am § 109 ch 35 SLA 1993)

Collateral references. —

Construction and effect of UCC §§ 4-301 and 4-302 making payor bank accountable for failure to act promptly on item presented for payment, 22 ALR4th 10.

Sec. 45.04.302. Payor bank’s responsibility for late return of item.

1. If an item is presented to and received by a payor bank, the bank is accountable for the amount of
   1. a demand item, other than a documentary draft, whether properly payable or not, if the bank,
      1. in any case in which it is not also the depositary bank, retains the item beyond midnight of the banking day of receipt without settling for it; or
      2. whether or not it is also the depositary bank, does not pay or return the item or send notice of dishonor until after its midnight deadline; or
   2. any other properly payable item unless, within the time allowed for acceptance or payment of that item, the bank either accepts or pays the item or returns it and accompanying documents.
2. The liability of a payor bank to pay an item under (a) of this section is subject to defenses based on breach of a presentment warranty under AS 45.04.208 or proof that the person seeking enforcement of the liability presented or transferred the item for the purpose of defrauding the payor bank.

History. (§ 4.302 ch 114 SLA 1962; am §§ 110, 111 ch 35 SLA 1993)

Collateral references. —

Construction and effect of UCC §§ 4-301 and 4-302 making payor bank accountable of failure to act promptly on item presented for payment, 22 ALR4th 10.

Liability of bank for diversion to benefit of presenter or third party of proceeds of check drawn to bank’s order by drawer not indebted to bank, 69 ALR4th 778.

Sec. 45.04.303. When items subject to notice, stop-payment order, legal process, or setoff; order in which items may be charged or certified.

1. Any knowledge, notice, or stop-payment order received by, legal process served upon, or setoff exercised by a payor bank is too late to terminate, suspend, or modify the bank’s right or duty to pay an item or to charge its customer’s account for the item if the knowledge, notice, stop-payment order, or legal process is received or served and a reasonable time for the bank to act on it expires or the setoff is exercised after the earliest of the following:
   1. the bank accepts or certifies the item;
   2. the bank pays the item in cash;
   3. the bank settles for the item without having a right to revoke the settlement under statute, clearinghouse rule, or agreement;
   4. the bank becomes accountable for the amount of the item under AS 45.04.302 , which deals with the payor bank’s responsibility for late return of items; or
   5. with respect to checks, a cutoff hour no earlier than one hour after the opening of the next banking day after the banking day on which the bank received the check and no later than the close of that next banking day or, if a cutoff hour is not fixed, the close of the next banking day after the banking day on which the bank received the check.
2. Subject to (a) of this section, items may be accepted, paid, certified, or charged to the indicated account of its customer in any order.

History. (§ 4.303 ch 114 SLA 1962; am § 112 ch 35 SLA 1993)

Sec. 45.04.401. When bank may charge customer’s account.

1. A bank may charge against the account of a customer an item that is properly payable from that account even though the charge creates an overdraft. An item is properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and the bank.
2. A customer is not liable for the amount of an overdraft if the customer neither signed the item nor benefited from the proceeds of the item.
3. A bank may charge against the account of a customer a check that is otherwise properly payable from the account, even though payment was made before the date of the check, unless the customer has given notice to the bank of the postdating describing the check with reasonable certainty. The notice is effective for the period stated in AS 45.04.403(b) for stop-payment orders, and must be received at a time and in a manner that afford the bank a reasonable opportunity to act on it before the bank takes any action with respect to the check described in AS 45.04.303 . If a bank charges against the account of a customer a check before the date stated in the notice of postdating, the bank is liable for damages for the loss resulting from its act. The loss may include damages for dishonor of subsequent items under AS 45.04.402 .
4. A bank that in good faith makes payment to a holder may charge the indicated account of its customer according to
   1. the original terms of the altered item; or
   2. the terms of the completed item, even though the bank knows the item has been completed, unless the bank has notice that the completion was improper.

History. (§ 4.401 ch 114 SLA 1962; am § 113 ch 35 SLA 1993)

Collateral references. —

Nondrawing cosigner’s liability for joint checking account overdraft, 48 ALR4th 1136.

Sec. 45.04.402. Bank’s liability to customer for wrongful dishonor; time of determining insufficiency of account.

1. Except as otherwise provided in this chapter, a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but a bank may dishonor an item that would create an overdraft unless it has agreed to pay the overdraft.
2. A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. Liability is limited to actual damages proved and may include damages for an arrest or prosecution of the customer or other consequential damages. Whether any consequential damages are proximately caused by the wrongful dishonor is a question of fact to be determined in each case.
3. A payor bank’s determination of the customer’s account balance on which a decision to dishonor for insufficiency of available funds is based may be made at any time between the time the item is received by the payor bank and the time that the payor bank returns the item or gives notice in lieu of return, and the bank does not need to make more than one determination. If, at the election of the payor bank, a subsequent balance determination is made for the purpose of reevaluating the bank’s decision to dishonor the item, the account balance at that time is determinative of whether a dishonor for insufficiency of available funds is wrongful.

History. (§ 4.402 ch 114 SLA 1962; am § 114 ch 35 SLA 1993)

Sec. 45.04.403. Customer’s right to stop payment; burden of proof of loss.

1. A customer, or any person authorized to draw on the account if there is more than one person, may stop payment of any item drawn on the customer’s account or close the account by an order to the bank describing the item or account with reasonable certainty, received at a time and in a manner that affords the bank a reasonable opportunity to act on it before any action by the bank with respect to the item described in AS 45.04.303 . If the signature of more than one person is required to draw on an account, any of these persons may stop payment or close the account.
2. A stop-payment order is effective for six months, but it lapses after 14 calendar days if the original order was oral and was not confirmed in writing within that period. A stop-payment order may be renewed for additional six-month periods by a writing given to the bank within a period during which the stop-payment order is effective.
3. The burden of establishing the fact and amount of loss resulting from the payment of an item contrary to a stop-payment order or order to close an account is on the customer. The loss from payment of an item contrary to a stop-payment order may include damages for dishonor of subsequent items under AS 45.04.402 .

History. (§ 4.403 ch 114 SLA 1962; am § 115 ch 35 SLA 1993)

Sec. 45.04.404. Bank not obligated to pay check more than six months old.

A bank is under no obligation to a customer having a checking account to pay a check, other than a certified check, that is presented more than six months after its date, but it may charge its customer’s account for a payment made later in good faith.

History. (§ 4.404 ch 114 SLA 1962)

Sec. 45.04.405. Death or incompetence of a customer.

1. A payor or collecting bank’s authority to accept, pay, or collect an item or to account for proceeds of its collection if otherwise effective is not rendered ineffective by incompetence of a customer of either bank existing at the time the item is issued or its collection is undertaken if the bank does not know of an adjudication of incompetence.  Neither death nor incompetence of a customer revokes this authority to accept, pay, collect, or account until the bank knows of the fact of death or of an adjudication of incompetence and has reasonable opportunity to act on it.
2. Even with knowledge a bank may, for 10 days after the date of death, pay or certify checks drawn on or before that date unless ordered to stop payment by a person claiming an interest in the account.

History. (§ 4.405 ch 114 SLA 1962)

Sec. 45.04.406. Customer’s duty to discover and report unauthorized signature or alteration.

1. A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return or make available to the customer the items paid or provide information in the statement of account sufficient to allow the customer reasonably to identify the items paid. The statement of account provides sufficient information if the item is described by item number, amount, and date of payment.
2. If the items are not returned to the customer, the person retaining the items shall either retain the items or, if the items are destroyed, maintain the capacity to furnish legible copies of the items until the expiration of seven years after receipt of the items. A customer may request an item from the bank that paid the item, and that bank must provide in a reasonable time either the item or, if the item has been destroyed or is not otherwise obtainable, a legible copy of the item.
3. If a bank sends or makes available a statement of account or items under (a) of this section, the customer must exercise reasonable promptness in examining the statement or the items to determine whether a payment was not authorized because of an alteration of an item or because a purported signature by or on behalf of the customer was not authorized. If, based on the statement or items provided, the customer should reasonably have discovered the unauthorized payment, the customer must promptly notify the bank of the relevant facts.
4. If the bank proves that the customer failed, with respect to an item, to comply with the duties imposed on the customer by (c) of this section, the customer is precluded from asserting against the bank the customer’s unauthorized signature or
   1. any alteration on the item, if the bank also proves that it suffered a loss by reason of the failure; and
   2. alteration by the same wrongdoer on any other item paid in good faith by the bank, if the payment was made before the bank received notice from the customer of the unauthorized signature or alteration and after the customer had been afforded a reasonable period of time, not exceeding 30 days, in which to examine the item or statement of account and notify the bank.
5. If (d) of this section applies and the customer proves that the bank failed to exercise ordinary care in paying the item and that the failure substantially contributed to loss, the loss is allocated between the customer precluded and the bank asserting the preclusion according to the extent to which the failure of the customer to comply with (c) of this section and the failure of the bank to exercise ordinary care contributed to the loss. If the customer proves that the bank did not pay the item in good faith, the preclusion under (d) of this section does not apply.
6. Without regard to care or lack of care of either the customer or the bank, a customer who does not within one year after the statement or items are made available to the customer under (a) of this section discover and report the customer’s unauthorized signature on or an alteration on the item is precluded from asserting against the bank the unauthorized signature or alteration. If there is a preclusion under this subsection, the payor bank may not recover for breach of warranty under AS 45.04.208 with respect to the unauthorized signature or alteration to which the preclusion applies.

History. (§ 4.406 ch 114 SLA 1962; am § 116 ch 35 SLA 1993)

Sec. 45.04.407. Payor bank’s right to subrogation on improper payment.

If a payor bank has paid an item over the order of the drawer or maker to stop payment, or after an account has been closed, or otherwise under circumstances giving a basis for objection by the drawer or maker, to prevent unjust enrichment and only to the extent necessary to prevent loss to the bank by reason of its payment of the item, the payor bank is subrogated to the rights

1. of a holder in due course on the item against the drawer or maker;
2. of the payee or any other holder of the item against the drawer or maker either on the item or under the transaction out of which the item arose; and
3. of the drawer or maker against the payee or another holder of the item with respect to the transaction out of which the item arose.

History. (§ 4.407 ch 114 SLA 1962; am § 117 ch 35 SLA 1993)

Sec. 45.04.501. Handling of documentary drafts; duty to send for presentment and to notify customer of dishonor.

A bank that takes a documentary draft for collection must present or send the draft and accompanying documents for presentment and, upon learning that the draft has not been paid or accepted in due course, must seasonably notify its customer of this fact even though it may have discounted or bought the draft or extended credit available for withdrawal as of right.

History. (§ 4.501 ch 114 SLA 1962)

Sec. 45.04.502. Presentment of “on arrival” drafts.

If a draft or the relevant instructions require presentment “on arrival,” “when goods arrive,” or the like, the collecting bank need not present until in its judgment a reasonable time for arrival of the goods has expired. Refusal to pay or accept because the goods have not arrived is not dishonor; the bank must notify its transferor of this refusal, but need not present the draft again until it is instructed to do so or learns of the arrival of the goods.

History. (§ 4.502 ch 114 SLA 1962)

Sec. 45.04.503. Responsibility of presenting bank for documents and goods; report of reasons for dishonor; referee in case of need.

1. Unless otherwise instructed and except as provided in AS 45.05, a bank presenting a documentary draft
   1. must deliver the documents to the drawee on acceptance of the draft if it is payable more than three days after presentment; otherwise, only on payment; and
   2. upon dishonor, either in the case of presentment for acceptance or presentment for payment, may seek and follow instructions from a referee in case of need designated in the draft or, if the presenting bank does not choose to use a referee’s services, it must use diligence and good faith to ascertain the reason for dishonor, must notify its transferor of the dishonor and of the results of its effort to ascertain the reasons for dishonor, and must request instructions.
2. A presenting bank is under no obligation with respect to goods represented by the documents except to follow reasonable instructions seasonably received; it has a right to reimbursement for expenses incurred in following instructions and to prepayment of or indemnity for these expenses.

History. (§ 4.503 ch 114 SLA 1962)

Sec. 45.04.504. Privilege of presenting bank to deal with goods; security interest for expenses.

1. A presenting bank that, following the dishonor of a documentary draft, seasonably requests instructions but does not receive them within a reasonable time, may store, sell, or otherwise deal with the goods in a reasonable manner.
2. For its reasonable expenses incurred by action under (a) of this section, the presenting bank has a lien upon the goods or their proceeds, which may be foreclosed in the same manner as an unpaid seller’s lien.

History. (§ 4.504 ch 114 SLA 1962)

Secs. 45.05.002 — 45.05.018. [Renumbered as AS 45.01.101 — 45.01.109.]

Secs. 45.05.020 — 45.05.034. [Renumbered as AS 45.01.201 — 45.01.208.]

Secs. 45.05.036 — 45.05.048. [Renumbered as AS 45.02.101 — 45.02.107.]

Secs. 45.05.050 — 45.05.068. [Renumbered as AS 45.02.201 — 45.02.210.]

Secs. 45.05.070 — 45.05.100. [Renumbered as AS 45.02.301 — 45.02.316.]

Sec. 45.05.101. Short title.

This chapter shall be known and may be cited as Uniform Commercial Code — Letters of Credit.

History. (§ 5.101 ch 114 SLA 1962)

Revisor’s notes. —

Formerly AS 45.05.476 . Renumbered in 1980.

Collateral references. —

11 Am. Jur. 2d, Bills and Notes, § 22

50 Am. Jur. 2d, Letters of Credit, § 1 et seq.

Construction and effect of UCC Art. 5 [AS 45.05.101 — 45.05.117 ], dealing with letters of credit, 35 ALR3d 1404; 8 ALR5th 463; 13 ALR5th 465.

Sec. 45.05.102. Definitions.

1. In this chapter,
   1. “adviser” means a person who, at the request of the issuer, a confirmer, or another adviser, notifies or requests another adviser to notify the beneficiary that a letter of credit has been issued, confirmed, or amended;
   2. “applicant” means a person at whose request or for whose account a letter of credit is issued; “applicant” includes a person who requests an issuer to issue a letter of credit on behalf of another if the person making the request undertakes an obligation to reimburse the issuer;
   3. “beneficiary” means a person who under the terms of a letter of credit is entitled to have the letter of credit’s complying presentation honored; “beneficiary” includes a person to whom drawing rights have been transferred under a transferable letter of credit;
   4. “confirmer” means a nominated person who undertakes, at the request or with the consent of the issuer, to honor a presentation under a letter of credit issued by another;
   5. “dishonor” of a letter of credit means the failure timely to honor or to take an interim action, such as acceptance of a draft, that may be required by the letter of credit;
   6. “document” means a draft or other demand, document of title, investment security, certificate, invoice, or other record, statement, or representation of fact, law, right, or opinion that is
      1. presented in a written or other medium permitted by the letter of credit or, unless prohibited by the letter of credit, by the standard practice referred to in AS 45.05.108(e) ;
      2. capable of being examined for compliance with the terms and conditions of the letter of credit; and
      3. not oral;
   7. “good faith” means honesty in fact in the conduct or transaction concerned;
   8. “honor” of a letter of credit means performance of the issuer’s undertaking in the letter of credit to pay or deliver an item of value; unless the letter of credit provides otherwise, “honor” occurs
      1. upon payment;
      2. if the letter of credit provides for acceptance, upon acceptance of a draft and, at maturity, its payment; or
      3. if the letter of credit provides for incurring a deferred obligation, upon incurring the obligation and, at maturity, its performance;
   9. “issuer” means a bank or other person that issues a letter of credit, but does not include an individual who makes an engagement for personal, family, or household purposes;
   10. “letter of credit” means a definite undertaking that satisfies the requirements of AS 45.05.104 by an issuer to a beneficiary at the request or for the account of an applicant, or, in the case of a financial institution, to itself or for its own account, to honor a documentary presentation by payment or delivery of an item of value;
   11. “nominated person” means a person whom the issuer
       1. designates or authorizes to pay, accept, negotiate, or otherwise give value under a letter of credit; and
       2. undertakes by agreement or custom and practice to reimburse;
   12. “presentation” means delivery of a document to an issuer or nominated person for honor or giving of value under a letter of credit;
   13. “presenter” means a person making a presentation as or on behalf of a beneficiary or nominated person;
   14. “record” means information that is inscribed on a tangible medium, or that is stored in an electronic or other medium and is retrievable in perceivable form;
   15. “successor of a beneficiary” means a person who succeeds to substantially all of the rights of a beneficiary by operation of law, including a corporation with or into which the beneficiary has been merged or consolidated, an administrator, an executor, a personal representative, a trustee in bankruptcy, a debtor in possession, a liquidator, and a receiver.
2. The following definitions that apply to this chapter and the sections in which they appear are
   1. “accept” or “acceptance” (AS 45.03.409 );
   2. “value” (AS 45.03.303 and AS 45.04.211 ).
3. AS 45.01 contains certain additional general definitions and principles of construction and interpretation applicable throughout this chapter.

History. (§ 5.102 ch 114 SLA 1962; am § 4 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.478. Renumbered in 1980. Former AS 45.05.102 was renumbered as AS 45.02.317 in 1980.

Cross references. —

For transition provisions relating to the applicability of the 1999 amendment of this section, see § 26, ch. 75, SLA 1999, which is set out in the 1999 Temporary & Special Acts and in the editor’s notes at the beginning of this chapter.

Sec. 45.05.103. Scope.

1. This chapter applies to letters of credit and to certain rights and obligations arising out of transactions involving letters of credit.
2. The statement of a rule in this chapter does not by itself require, imply, or negate application of the same or a different rule to a situation not provided for, or to a person not specified, in this chapter.
3. With the exception of this subsection, (a) and (d) of this section, AS 45.05.102(a)(9) and (10), 45.05.106(d) , and 45.05.114(d) , and except to the extent prohibited in AS 45.01.302 and AS 45.05.117(d) , the effect of this chapter may be varied by agreement or by a provision stated or incorporated by reference in an undertaking. A term in an agreement or undertaking generally excusing liability or generally limiting remedies for failure to perform obligations is not sufficient to vary obligations prescribed by this chapter.
4. Rights and obligations of an issuer to a beneficiary or a nominated person under a letter of credit are independent of the existence, performance, or nonperformance of a contract or arrangement out of which the letter of credit arises or that underlies it, including contracts or arrangements between the issuer and the applicant and between the applicant and the beneficiary.

History. (§ 5.103 ch 114 SLA 1962; am § 118 ch 35 SLA 1993; am § 5 ch 75 SLA 1999; am § 29 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (c), substituted “AS 45.01.302 ” for “AS 45.01.102(c)” following “except to the extent prohibited in”.

Sec. 45.05.104. Formal requirements.

A letter of credit, confirmation, advice, transfer, amendment, or cancellation may be issued in any form that is a record and is authenticated

1. by a signature; or
2. under the agreement of the parties or the standard practice referred to in AS 45.05.108(e) .

History. (§ 5.104 ch 114 SLA 1962; am § 6 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.482. Renumbered in 1980. Former AS 45.05.104 was renumbered as AS 45.02.318 in 1980.

Sec. 45.05.105. Consideration.

Consideration is not required to issue, amend, transfer, or cancel a letter of credit, advice, or confirmation.

History. (§ 5.105 ch 114 SLA 1962; am § 7 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.484. Renumbered in 1980.

Sec. 45.05.106. Issuance, amendment, cancellation, and duration.

1. A letter of credit is issued and becomes enforceable according to its terms against the issuer when the issuer sends or otherwise transmits it to the person requested to advise or to the beneficiary. A letter of credit is revocable only if it provides that it is revocable.
2. After a letter of credit is issued, rights and obligations of a beneficiary, applicant, confirmer, and issuer are not affected by an amendment or cancellation to which the beneficiary, applicant, confirmer, or issuer has not consented, except to the extent the letter of credit provides that the letter of credit is revocable or that the issuer may amend or cancel the letter of credit without the consent.
3. If there is no stated expiration date or other provision that determines the letter of credit’s duration, a letter of credit expires one year after its stated date of issuance or, if a date of issuance is not stated, after the date on which the letter of credit is issued.
4. A letter of credit that states that it is perpetual expires five years after its stated date of issuance or, if a date of issuance is not stated, after the date on which the letter of credit is issued.

History. (§ 5.106 ch 114 SLA 1962; am § 8 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.486. Renumbered in 1980. Former AS 45.05.106 was renumbered as AS 45.02.319 in 1980.

Sec. 45.05.107. Confirmer, nominated person, and adviser.

1. A confirmer is directly obligated on a letter of credit and has the rights and obligations of an issuer to the extent of the confirmer’s confirmation. The confirmer also has rights against and obligations to the issuer as if the issuer were an applicant and the confirmer had issued the letter of credit at the request and for the account of the issuer.
2. A nominated person who is not a confirmer is not obligated to honor or otherwise give value for a presentation.
3. A person requested to advise may decline to act as an adviser. An adviser that is not a confirmer is not obligated to honor or give value for a presentation. An adviser undertakes to the issuer and to the beneficiary to advise accurately as to the terms of the letter of credit, confirmation, amendment, or advice received by the person requested to advise, and undertakes to the beneficiary to check the apparent authenticity of the request to advise. Even if the advice is inaccurate, the letter of credit, confirmation, or amendment is enforceable as issued.
4. A person who notifies a transferee beneficiary of the terms of a letter of credit, confirmation, amendment, or advice has the rights and obligations of an adviser under (c) of this section. The terms in the notice to the transferee beneficiary may differ from the terms in a notice to the transferor beneficiary to the extent permitted by the letter of credit, confirmation, amendment, or advice received by the person who notifies the transferee beneficiary.

History. (§ 5.107 ch 114 SLA 1962; am § 9 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.488. Renumbered in 1980.

Sec. 45.05.108. Issuer’s rights and obligations.

1. Except as otherwise provided in AS 45.05.109 , an issuer shall honor a presentation that, as determined by the standard practice referred to in (e) of this section, appears on its face to comply strictly with the terms and conditions of the letter of credit. Except as otherwise provided in AS 45.05.113 and unless otherwise agreed with the applicant, an issuer shall dishonor a presentation that does not appear so to comply.
2. An issuer has a reasonable time after presentation, but not beyond the end of the seventh business day of the issuer after the day of the issuer’s receipt of documents,
   1. to honor the presentation;
   2. if the letter of credit provides for honor to be completed more than seven business days after presentation, to accept a draft or incur a deferred obligation; or
   3. to give notice to the presenter of discrepancies in the presentation.
3. Except as otherwise provided in (d) of this section, an issuer is precluded from asserting a discrepancy as a basis for dishonor if
   1. timely notice is not given; or
   2. the discrepancy is not stated in the notice, if timely notice is given.
4. Failure to give the notice specified in (b) of this section or to mention fraud, forgery, or expiration in the notice does not preclude the issuer from asserting as a basis for dishonor fraud or forgery as described in AS 45.05.109(a) or expiration of the letter of credit before presentation.
5. An issuer shall observe the standard practice of financial institutions that regularly issue letters of credit. A determination of the issuer’s observance of the standard practice is a matter of interpretation for a court. A court shall offer the parties a reasonable opportunity to present evidence of the standard practice.
6. An issuer is not responsible for
   1. the performance or nonperformance of the underlying contract, arrangement, or transaction;
   2. an act or omission of others; or
   3. observance or knowledge of the usage of a particular trade, other than the standard practice referred to in (e) of this section.
7. If an undertaking constituting a letter of credit under AS 45.05.102(a)(10) contains nondocumentary conditions, an issuer shall disregard the nondocumentary conditions and treat them as if they were not stated.
8. An issuer that dishonors a presentation shall return the documents or hold them at the disposal of, and send advice to that effect to, the presenter.
9. An issuer that honors a presentation as permitted or required by this chapter
   1. is entitled to be reimbursed by the applicant in immediately available funds not later than the date of the payment of funds;
   2. takes the documents free of claims of the beneficiary or presenter;
   3. is precluded from asserting a right of recourse on a draft under AS 45.03.414 — 45.03.415 ;
   4. except as otherwise provided in AS 45.05.110 and 45.05.117 , is precluded from restitution of money paid or other value given by mistake to the extent the mistake concerns discrepancies in the documents or tender that are apparent on the face of the presentation; and
   5. is discharged to the extent of the issuer’s performance under the letter of credit unless the issuer honored a presentation in which a required signature of a beneficiary was forged.

History. (§ 5.108 ch 114 SLA 1962; am § 10 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.490. Renumbered in 1980. Former AS 45.05.108 was renumbered as AS 45.02.320 in 1980.

Sec. 45.05.109. Fraud and forgery.

1. If a presentation is made that appears on its face to comply strictly with the terms and conditions of the letter of credit, but a required document is forged or materially fraudulent, or honor of the presentation would facilitate a material fraud by the beneficiary on the issuer or applicant, the issuer
   1. shall honor the presentation, if honor is demanded by
      1. a nominated person that has given value in good faith and without notice of forgery or material fraud;
      2. a confirmer that has honored its confirmation in good faith;
      3. a holder in due course of a draft that was drawn under the letter of credit and that was taken after acceptance by the issuer or nominated person; or
      4. an assignee of the issuer’s or nominated person’s deferred obligation if the obligation was taken for value and without notice of forgery or material fraud after the obligation was incurred by the issuer or nominated person; and
   2. acting in good faith, may honor or dishonor the presentation in a case not covered by (1) of this subsection.
2. If an applicant claims that a required document is forged or materially fraudulent or that honor of the presentation would facilitate a material fraud by the beneficiary on the issuer or applicant, a court of competent jurisdiction may temporarily or permanently enjoin the issuer from honoring a presentation or grant similar relief against the issuer or other persons only if the court finds that
   1. the relief is not prohibited under the law applicable to an accepted draft or deferred obligation incurred by the issuer;
   2. a beneficiary, issuer, or nominated person who may be adversely affected is adequately protected against loss that the beneficiary, issuer, or nominated person may suffer because the relief is granted;
   3. all of the conditions that entitle a person to the relief under the law of this state are met; and
   4. on the basis of the information submitted to the court, the applicant is more likely than not to succeed under its claim of forgery or material fraud, and the person demanding honor does not qualify for protection under (a)(1) of this section.

History. (§ 5.109 ch 114 SLA 1962; am § 11 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.492. Renumbered in 1980.

Sec. 45.05.110. Warranties.

1. If its presentation is honored, the beneficiary warrants to
   1. the issuer, another person to whom presentation is made, and the applicant that there is no fraud or forgery of the kind described in AS 45.05.109(a) ; and
   2. the applicant that the drawing does not violate an agreement between the applicant and beneficiary or another agreement intended by them to be augmented by the letter of credit.
2. The warranties in (a) of this section are in addition to warranties arising under AS 45.03, AS 45.04, AS 45.07, and AS 45.08 because of the presentation or transfer of documents covered by those chapters.

History. (§ 5.110 ch 114 SLA 1962; am § 12 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.494. Renumbered in 1980. Former AS 45.05.110 was renumbered as AS 45.02.321 in 1980.

Sec. 45.05.111. Remedies.

1. If an issuer wrongfully dishonors or repudiates its obligation to pay money under a letter of credit before presentation, the beneficiary, successor, or nominated person presenting on its own behalf may recover from the issuer the amount that is the subject of the dishonor or repudiation. If the issuer’s obligation under the letter of credit is not for the payment of money, the claimant may obtain specific performance or, at the claimant’s election, recover an amount equal to the value of performance from the issuer. In either case, the claimant may also recover incidental but not consequential damages. The claimant is not obligated to take action to avoid damages that might be due from the issuer under this subsection. If, although not obligated to do so, the claimant avoids damages, the claimant’s recovery from the issuer is reduced by the amount of damages avoided. The issuer has the burden of proving the amount of damages avoided. In the case of repudiation, the claimant does not need to present a document.
2. If an issuer wrongfully dishonors a draft or demand presented under a letter of credit or honors a draft or demand in breach of the issuer’s obligation to the applicant, the applicant may recover damages resulting from the breach, including incidental but not consequential damages, less any amount saved as a result of the breach.
3. If an adviser or nominated person other than a confirmer breaches an obligation under this chapter or an issuer breaches an obligation not covered in (a) or (b) of this section, a person to whom the obligation is owed may recover damages resulting from the breach, including incidental but not consequential damages, less any amount saved as a result of the breach. To the extent of the confirmation, a confirmer has the liability of an issuer specified in this subsection and in (a) and (b) of this section.
4. An issuer, nominated person, or adviser who is found liable under (a) — (c) of this section shall pay interest on the amount owed under the liability from the date of wrongful dishonor or other appropriate date.
5. Attorney fees and costs shall be awarded under Rules 79 and 82, Alaska Rules of Civil Procedure, to the prevailing party in an action in which a remedy is sought under this chapter.
6. Damages that would otherwise be payable by a party for breach of an obligation under this chapter may be liquidated by agreement or undertaking, but only in an amount or by a formula that is reasonable in light of the harm anticipated.

History. (§ 5.111 ch 114 SLA 1962; am § 13 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.496. Renumbered in 1980.

Sec. 45.05.112. Transfer of letter of credit.

1. Except as otherwise provided in AS 45.05.113 , unless a letter of credit provides that it is transferable, the right of a beneficiary to draw or otherwise demand performance under a letter of credit may not be transferred.
2. Even if a letter of credit provides that it is transferable, the issuer may refuse to recognize or carry out a transfer if
   1. the transfer would violate applicable law; or
   2. the transferor or transferee has failed to comply with a requirement stated in the letter of credit, or with another requirement that
      1. relates to transfer imposed by the issuer; and
      2. is within the standard practice referred to in AS 45.05.108(e) or is otherwise reasonable under the circumstances.

History. (§ 5.112 ch 114 SLA 1962; am § 14 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.498. Renumbered in 1980. Former AS 45.05.112 was renumbered as AS 45.02.322 in 1980.

Sec. 45.05.113. Transfer by operation of law.

1. A successor of a beneficiary may consent to amendments, sign and present documents, and receive payment or other items of value in the name of the beneficiary without disclosing its status as a successor.
2. A successor of a beneficiary may consent to amendments, sign and present documents, and receive payment or other items of value in its own name as the disclosed successor of the beneficiary. Except as otherwise provided in (e) of this section, an issuer shall recognize a disclosed successor of a beneficiary as beneficiary in full substitution for the successor’s predecessor upon compliance with
   1. the requirements for recognition by the issuer of a transfer of drawing rights by operation of law under the standard practice in AS 45.05.108(e) ; or
   2. in the absence of the standard practice referred to in AS 45.05.108(e) , other reasonable procedures sufficient to protect the issuer.
3. An issuer is not obliged to determine whether a purported successor is a successor of a beneficiary or whether the signature of a purported successor is genuine or authorized.
4. Honor of a purported successor’s apparently complying presentation under (a) or (b) of this section has the consequences specified in AS 45.05.108(i) even if the purported successor is not the successor of a beneficiary. Documents signed in the name of the beneficiary or of a disclosed successor by a person who is not the beneficiary or the successor of the beneficiary are forged documents for the purposes of AS 45.05.109 .
5. An issuer whose rights of reimbursement are not covered by (d) of this section, or by substantially similar law, and any confirmer or nominated person may decline to recognize a presentation under (b) of this section.
6. A beneficiary whose name is changed after the issuance of a letter of credit has the same rights and obligations as a successor of a beneficiary under this section.

History. (§ 5.113 ch 114 SLA 1962; am § 15 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.500. Renumbered in 1980.

Sec. 45.05.114. Assignment of proceeds.

1. In this section, “proceeds of a letter of credit” means the cash, check, accepted draft, or other item of value paid or delivered upon honor or giving of value by the issuer or a nominated person under the letter of credit. The term does not include a beneficiary’s drawing rights or documents presented by the beneficiary.
2. A beneficiary may assign its right to part or all of the proceeds of a letter of credit. The beneficiary may do so before presentation as a present assignment of the beneficiary’s right to receive proceeds contingent upon the beneficiary’s compliance with the terms and conditions of the letter of credit.
3. An issuer or nominated person need not recognize an assignment of proceeds of a letter of credit until the issuer or nominated person consents to the assignment.
4. An issuer or nominated person does not have an obligation to give or withhold its consent to an assignment of proceeds of a letter of credit, but consent may not be unreasonably withheld if the assignee possesses and exhibits the letter of credit and if presentation of the letter of credit is a condition to honor.
5. Rights of a transferee beneficiary or nominated person are independent of the beneficiary’s assignment of the proceeds of a letter of credit and are superior to the assignee’s right to the proceeds.
6. Neither the rights recognized by this section between an assignee and an issuer, transferee beneficiary, or nominated person nor the issuer’s or nominated person’s payment of proceeds to an assignee or a third person affect the rights between the assignee and a person other than the issuer, transferee beneficiary, or nominated person. The mode of creating and perfecting a security interest in or granting an assignment of a beneficiary’s rights to proceeds is governed by AS 45.29 or other law. As against a person other than the issuer, transferee beneficiary, or nominated person, the rights and obligations arising on the creation of a security interest and its perfection, or other assignment of a beneficiary’s rights to proceeds, are governed by AS 45.29 or other law.

History. (§ 5.114 ch 114 SLA 1962; am § 4 ch 49 SLA 1990; am § 4 ch 17 SLA 1996; am § 16 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.502. Renumbered in 1980. Former AS 45.05.114 was renumbered as AS 45.02.323 in 1980.

In 2000, “AS 45.29” was substituted for “AS 45.09” in accordance with § 35, ch. 113, SLA 2000.

Collateral references. —

What constitutes fraud or forgery justifying refusal to honor, or injunction against honoring, letter of credit under UCC § 5-114, 25 ALR4th 239.

What constitutes compliance of documents presented with terms of letter of credit so as to require honor of draft under UCC § 5-114, 8 ALR5th 463.

Sec. 45.05.115. Statute of limitations.

An action to enforce a right or obligation arising under this chapter must be commenced within one year after the expiration date of the relevant letter of credit or one year after the cause of action accrues, whichever occurs later. A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach.

History. (§ 5.115 ch 114 SLA 1962; am § 17 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.504. Renumbered in 1980.

Collateral references. —

Damages recoverable for wrongful dishonor of letter of credit under UCC § 5-115, 2 ALR4th 665.

Sec. 45.05.116. Choice of law and forum.

1. The liability of an issuer, nominated person, or adviser for an action or omission is governed by the law of the jurisdiction chosen by an agreement in the form of a record signed or otherwise authenticated by the affected parties in the manner provided in AS 45.05.104 or by a provision in the letter of credit, confirmation, or other undertaking. The jurisdiction whose law is chosen does not need to bear a relation to the transaction.
2. Unless (a) of this section applies, the liability of an issuer, nominated person, or adviser for action or omission is governed by the law of the jurisdiction in which the issuer, nominated person, or adviser is located. The issuer, nominated person, or adviser is considered to be located at the address indicated in the undertaking of the issuer, nominated person, or adviser. If more than one address is indicated, the issuer, nominated person, or adviser is considered to be located at the address from which the undertaking of the issuer, nominated person, or adviser was issued. For the purpose of jurisdiction, choice of law, and recognition of interbranch letters of credit, but not enforcement of a judgment, all branches of a bank are considered separate juridical entities, and a bank is considered to be located at the place where the bank’s relevant branch is considered to be located under this subsection.
3. Except as otherwise provided in this subsection, the liability of an issuer, nominated person, or adviser is governed by rules of custom or practice, such as the Uniform Customs and Practice for Documentary Credits, to which the letter of credit, confirmation, or other undertaking is expressly made subject. If this chapter would govern the liability of an issuer, nominated person, or adviser under (a) or (b) of this section, if the relevant undertaking incorporates rules of custom or practice, and if there is conflict between this chapter and those rules as applied to that undertaking, those rules govern except to the extent of a conflict with the nonvariable provisions specified in AS 45.05.103(c) .
4. If there is conflict between this chapter and AS 45.03, AS 45.04, AS 45.14, or AS 45.29 this chapter governs.
5. The forum for settling disputes arising out of an undertaking within this chapter may be chosen in the manner and with the binding effect that governing law may be chosen under (a) of this section.

History. (§ 5.116 ch 114 SLA 1962; am § 6 ch 16 SLA 1982; am § 18 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.506. Renumbered in 1980. Former AS 45.05.116 was renumbered as AS 45.02.324 in 1980.

In 2000, “AS 45.03, AS 45.04, AS 45.14, or AS 45.29” was substituted for “AS 45.03 , AS 45.04, AS 45.09, or AS 45.14” in accordance with § 35, ch. 113, SLA 2000.

Sec. 45.05.117. Subrogation of issuer, applicant, and nominated person.

1. An issuer who honors a beneficiary’s presentation is subrogated to the rights of
   1. the beneficiary to the same extent as if the issuer were a secondary obligor of the underlying obligation owed to the beneficiary; and
   2. the applicant to the same extent as if the issuer were the secondary obligor of the underlying obligation owed to the applicant.
2. An applicant that reimburses an issuer is subrogated to the rights of the issuer against a beneficiary, presenter, or nominated person to the same extent as if the applicant were the secondary obligor of the obligations owed to the issuer, and the applicant has the rights of subrogation of the issuer to the rights of the beneficiary stated in (a) of this section.
3. A nominated person who pays or gives value against a draft or demand presented under a letter of credit is subrogated to the rights of
   1. the issuer against the applicant to the same extent as if the nominated person were a secondary obligor of the obligation owed to the issuer by the applicant;
   2. the beneficiary to the same extent as if the nominated person were a secondary obligor of the underlying obligation owed to the beneficiary; and
   3. the applicant to the same extent as if the nominated person were a secondary obligor of the underlying obligation owed to the applicant.
4. Notwithstanding an agreement or term to the contrary, the rights of subrogation stated in (a) and (b) of this section do not arise until the issuer honors the letter of credit or otherwise pays, and the rights of subrogation stated in (c) of this section do not arise until the nominated person pays or otherwise gives value. Until then, the issuer, nominated person, and the applicant do not derive under this section present or prospective rights forming the basis of a claim, defense, or excuse.

History. (§ 5.117 ch 114 SLA 1962; am § 19 ch 75 SLA 1999)

Revisor’s notes. —

Formerly AS 45.05.508. Renumbered in 1980.

Sec. 45.05.118. Security interest of issuer or nominated person.

1. An issuer or nominated person has a security interest in a document presented under a letter of credit to the extent that the issuer or nominated person honors or gives value for the presentation.
2. So long as and to the extent that an issuer or nominated person has not been reimbursed or has not otherwise recovered the value given with respect to a security interest in a document under (a) of this section, the security interest continues and is subject to AS 45.29, but
   1. a security agreement is not necessary to make the security interest enforceable under AS 45.29.203(b)(3) ;
   2. if the document is presented in a medium other than a written or other tangible medium, the security interest is perfected; and
   3. if the document is presented in a written or other tangible medium and is not a certificated security, chattel paper, a document of title, an instrument, or a letter of credit, the security interest is perfected and has priority over a conflicting security interest in the document so long as the debtor does not have possession of the document.

History. (§ 13 ch 113 SLA 2000)

Revisor’s notes. —

Former AS 45.05.118 was renumbered as AS 45.02.325 in 1980.

Secs. 45.05.120 — 45.05.124. [Renumbered as AS 45.02.326 — 45.02.328.]

Sec. 45.05.125. [Renumbered as AS 45.02.350.]

Secs. 45.05.126 — 45.05.130. [Renumbered as AS 45.02.401 — 45.02.403.]

Secs. 45.05.132 — 45.05.160. [Renumbered as AS 45.02.501 — 45.02.515.]

Secs. 45.05.162 — 45.05.192. [Renumbered as AS 45.02.601 — 45.02.616.]

Secs. 45.05.194 — 45.05.242. [Renumbered as AS 45.02.701 — 45.02.725.]

Secs. 45.05.246 — 45.05.288. [Renumbered as AS 45.03.101 — 45.03.122.]

Secs. 45.05.290 — 45.05.304. [Renumbered as AS 45.03.201 — 45.03.208.]

Secs. 45.05.306 — 45.05.318. [Renumbered as AS 45.03.301 — 45.03.307.]

Secs. 45.05.320 — 45.05.356. [Renumbered as AS 45.03.401 — 45.03.419.]

Secs. 45.05.358 — 45.05.378. [Renumbered as AS 45.03.501 — 45.03.511.]

Secs. 45.05.380 — 45.05.390. [Renumbered as AS 45.03.601 — 45.03.606.]

Sec. 45.05.392. [Renumbered as AS 45.03.701.]

Secs. 45.05.394 — 45.05.402. [Renumbered as AS 45.03.801 — 45.03.805.]

Secs. 45.05.404 — 45.05.418. [Renumbered as AS 45.04.101 — 45.04.108.]

Secs. 45.05.420 — 45.05.446. [Renumbered as AS 45.04.201 — 45.04.214.]

Secs. 45.05.448 — 45.05.452. [Renumbered as AS 45.04.301 — 45.04.303.]

Secs. 45.05.454 — 45.05.468. [Renumbered as AS 45.04.401 — 45.04.408.]

Secs. 45.05.470 — 45.05.474. [Renumbered as AS 45.04.502 — 45.04.504.]

Secs. 45.05.476 — 45.05.508. [Renumbered as AS 45.05.101 — 45.05.117.]

Secs. 45.05.510 — 45.05.530. [Renumbered as AS 45.06.101 — 45.06.111.]

Secs. 45.05.532 — 45.05.540. [Renumbered as AS 45.07.101 — 45.07.105.]

Secs. 45.05.542 — 45.05.560. [Renumbered as AS 45.07.201 — 45.07.210.]

Secs. 45.05.562 — 45.05.578. [Renumbered as AS 45.07.301 — 45.07.309.]

Secs. 45.05.580 — 45.05.586. [Renumbered as AS 45.07.401 — 45.07.404.]

Secs. 45.05.588 — 45.05.604. [Renumbered as AS 45.07.501 — 45.07.509.]

Secs. 45.05.606 — 45.05.610. [Renumbered as AS 45.07.601 — 45.07.603.]

Sec. 45.05.611. [Renumbered as AS 45.07.650.]

Secs. 45.05.612 — 45.05.622. [Renumbered as AS 45.08.101 — 45.08.106.]

Secs. 45.05.624 — 45.05.638. [Renumbered as AS 45.08.201 — 45.08.208.]

Secs. 45.05.640 — 45.05.677. [Renumbered as AS 45.08.301 — 45.08.320.]

Secs. 45.05.678 — 45.05.688. [Renumbered as AS 45.08.401 — 45.08.406.]

Secs. 45.05.690 — 45.05.714. [Renumbered as AS 45.09.101 — 45.09.113.]

Secs. 45.05.716 — 45.05.730. [Renumbered as AS 45.09.201 — 45.09.208.]

Secs. 45.05.732 — 45.05.766. [Renumbered as AS 45.09.301 — 45.09.318.]

Secs. 45.05.768 — 45.05.780. [Renumbered as AS 45.09.401 — 45.09.407.]

Secs. 45.05.782 — 45.05.794. [Renumbered as AS 45.09.501 — 45.09.507.]

Secs. 45.07.101 — 45.07.105. Short title; definitions and index of definitions; relation of sections to treaty, statute, tariff, classification, or regulation; negotiable and nonnegotiable warehouse receipt, bill of lading, or other document of title; construction against negative implication. [Repealed, § 113 ch. 44 SLA 2009.]

Sec. 45.07.111. Short title.

This chapter may be cited as the Uniform Commercial Code — Documents of Title.

History. (§ 30 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effective dates. —

Section 119, ch. 44, SLA 2009 makes this section effective January 1, 2010.

Sec. 45.07.112. Definitions and index of definitions.

1. In this chapter, unless the context otherwise requires,
   1. “bailee” means a person who, by a warehouse receipt, bill of lading, or other document of title, acknowledges possession of goods and contracts to deliver them;
   2. “carrier” means a person who issues a bill of lading;
   3. “consignee” means a person named in a bill of lading to whom or to whose order the bill promises delivery;
   4. “consignor” means a person named in a bill of lading as the person from whom the goods have been received for shipment;
   5. “delivery order” means a record that contains an order to deliver goods directed to a warehouse, carrier, or other person who, in the ordinary course of business, issues warehouse receipts or bills of lading;
   6. “goods” means all things that are treated as movable for the purposes of a contract for storage or transportation;
   7. “issuer” means a bailee who issues a document of title or, in the case of an unaccepted delivery order, the person who orders the possessor of goods to deliver; “issuer” includes a person for whom an agent or employee purports to act in issuing a document if the agent or employee has real or apparent authority to issue documents, even if the issuer did not receive the goods, the goods were misdescribed, or in another respect the agent or employee violated the issuer’s instructions;
   8. “person entitled under the document” means the holder, in the case of a negotiable document of title, or the person to whom delivery of the goods is to be made by the terms of, or under instructions in a record under, a nonnegotiable document of title;
   9. “shipper” means a person who enters into a contract of transportation with a carrier;
   10. “sign” means, with present intent to authenticate or adopt a record, to
       1. execute or adopt a tangible symbol; or
       2. attach to or logically associate with the record an electronic sound, symbol, or process;
   11. “warehouse” means a person engaged in the business of storing goods for hire.
2. Definitions in other chapters applying to this chapter and the sections in which the definitions appear are
   1. “contract for sale” (AS 45.02.106 );
   2. “lessee in ordinary course of business” (AS 45.12.103 );
   3. “receipt” of goods (AS 45.02.103 ).
3. In addition, AS 45.01 contains general definitions and principles of construction and interpretation applicable throughout this chapter.

History. (§ 30 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effective dates. —

Section 119, ch. 44, SLA 2009 makes this section effective January 1, 2010.

Sec. 45.07.113. Relation of chapter to treaty or statute.

1. This chapter is subject to a treaty or statute of the United States or regulatory statute of this state to the extent the treaty, statute, or regulatory statute is applicable.
2. This chapter does not modify or repeal a law prescribing the form or content of a document of title or the services or facilities to be afforded by a bailee, or otherwise regulating a bailee’s business in respects not specifically treated in this chapter. However, violation of a law described under the previous sentence does not affect the status of a document of title that otherwise is within the definition of a document of title.
3. To the extent there is a conflict between AS 09.80 and this chapter, this chapter governs.

History. (§ 30 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effective dates. —

Section 119, ch. 44, SLA 2009 makes this section effective January 1, 2010.

Sec. 45.07.114. Negotiable and nonnegotiable document of title.

1. Except as otherwise provided in (c) of this section, a document of title is negotiable if by its terms the goods are to be delivered to bearer or to the order of a named person.
2. A document of title other than one described in (a) of this section is nonnegotiable. A bill of lading that states that the goods are consigned to a named person is not made negotiable by a provision that the goods are to be delivered only against an order in a record signed by the same or another named person.
3. A document of title is nonnegotiable if, at the time it is issued, the document has a conspicuous legend, however expressed, that it is nonnegotiable.

History. (§ 30 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effective dates. —

Section 119, ch. 44, SLA 2009 makes this section effective January 1, 2010.

Sec. 45.07.115. Reissuance in alternative medium.

1. On request of a person entitled under an electronic document of title, the issuer of the electronic document may issue a tangible document of title as a substitute for the electronic document if
   1. the person entitled under the electronic document surrenders control of the document to the issuer; and
   2. the tangible document when issued contains a statement that it is issued in substitution for the electronic document.
2. Upon issuance of a tangible document of title in substitution for an electronic document of title under (a) of this section,
   1. the electronic document ceases to have effect or validity; and
   2. the person who procured issuance of the tangible document warrants to all subsequent persons entitled under the tangible document that the warrantor was a person entitled under the electronic document when the warrantor surrendered control of the electronic document to the issuer.
3. On request of a person entitled under a tangible document of title, the issuer of the tangible document may issue an electronic document of title as a substitute for the tangible document if
   1. the person entitled under the tangible document surrenders possession of the document to the issuer; and
   2. the electronic document when issued contains a statement that it is issued in substitution for the tangible document.
4. On issuance of an electronic document of title in substitution for a tangible document of title under (c) of this section,
   1. the tangible document ceases to have effect or validity; and
   2. the person who procured issuance of the electronic document warrants to all subsequent persons entitled under the electronic document that the warrantor was a person entitled under the tangible document when the warrantor surrendered possession of the tangible document to the issuer.

History. (§ 30 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effective dates. —

Section 119, ch. 44, SLA 2009 makes this section effective January 1, 2010.

Sec. 45.07.116. Control of electronic document of title.

1. A person has control of an electronic document of title if a system employed for evidencing the transfer of interests in the electronic document reliably establishes that person as the person to whom the electronic document was issued or transferred.
2. A system satisfies (a) of this section, and a person is considered to have control of an electronic document of title, if the document is created, stored, and assigned in a manner by which
   1. a single authoritative copy of the document exists that is unique, identifiable, and, except as otherwise provided in (4), (5), and (6) of this subsection, unalterable;
   2. the authoritative copy identifies the person asserting control as
      1. the person to whom the document was issued; or
      2. if the authoritative copy indicates that the document has been transferred, the person to whom the document was most recently transferred;
   3. the authoritative copy is communicated to and maintained by the person asserting control or the person’s designated custodian;
   4. copies or amendments that add or change an identified assignee of the authoritative copy can be made only with the consent of the person asserting control;
   5. each copy of the authoritative copy and a copy of a copy are readily identifiable as a copy that is not the authoritative copy; and
   6. an amendment of the authoritative copy is readily identifiable as authorized or unauthorized.

History. (§ 30 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effective dates. —

Section 119, ch. 44, SLA 2009 makes this section effective January 1, 2010.

Sec. 45.07.201. Person who may issue a warehouse receipt; storage under bond.

1. A warehouse receipt may be issued by a warehouse.
2. If goods, including distilled spirits and agricultural commodities, are stored under a statute requiring a bond against withdrawal or a license for the issuance of receipts in the nature of warehouse receipts, a receipt issued for the goods is considered to be a warehouse receipt even if issued by a person who is the owner of the goods and is not a warehouse.

History. (§ 7.201 ch 114 SLA 1962; am § 31 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, rewrote the section heading, which read, “Who may issue a warehouse receipt; storage under government bond.”; in (a), substituted “warehouse” for “warehouseman” following “may be issued by a”; in (b), substituted “is considered to be” for “has like effect as” following “receipt issued for the goods”, substituted “if” for “though” following “warehouse receipt even”, and substituted “warehouse” for “warehouseman” at the end of the subsection.

Sec. 45.07.202. Form of warehouse receipt; effect of omission.

1. A warehouse receipt need not be in a particular form.
2. Unless a warehouse receipt provides for each of the following, the warehouse is liable for damages caused to a person injured by its omission:
   1. a statement of the location of the warehouse facility where the goods are stored;
   2. the date of issue of the receipt;
   3. the unique identification code of the receipt;
   4. a statement whether the goods received will be delivered to the bearer, to a named person, or to a named person or the named person’s order;
   5. the rate of storage and handling charges, unless goods are stored under a field warehousing arrangement, in which case a statement of that fact is sufficient on a nonnegotiable receipt;
   6. a description of the goods or the packages containing them;
   7. the signature of the warehouse or its agent;
   8. if the receipt is issued for goods that the warehouse owns, solely, jointly, or in common with others, a statement of that ownership; and
   9. a statement of the amount of advances made and of liabilities incurred for which the warehouse claims a lien or security interest, unless the precise amount of advances made or liabilities incurred, at the time of the issue of the receipt, is unknown to the warehouse or to its agent who issued the receipt, in which case, a statement of the fact that advances have been made or liabilities incurred and the purpose of the advances or liabilities is sufficient.
3. A warehouse may insert in its receipt terms that are not contrary to the code and do not impair its obligation of delivery under AS 45.07.403 or its duty of care under AS 45.07.204 . A contrary provision is ineffective.

History. (§ 7.202 ch 114 SLA 1962; am § 32 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, rewrote the section.

Sec. 45.07.203. Liability for nonreceipt or misdescription.

A party to or purchaser for value in good faith of a document of title, other than a bill of lading, that relies on the description of the goods in the document may recover from the issuer damages caused by the nonreceipt or misdescription of the goods, except to the extent that

1. the document conspicuously indicates that the issuer does not know whether all or part of the goods in fact were received or conform to the description, as in the case where the description is in terms of marks or labels or kind, quantity, or condition, or the receipt or description is qualified by “contents, condition, and quality unknown,” “said to contain,” or words of similar import, if this indication is true; or
2. the party or purchaser otherwise has notice of the nonreceipt or misdescription.

History. (§ 7.203 ch 114 SLA 1962; am § 33 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the introductory language, substituted “, that relies on” for “relying in either case upon”, and made a stylistic change; added the (1) and (2) designations, and, in (1), substituted “whether all or part” for “whether any part or all”, added “in the case” preceding “where the description”, substituted “or” for “of” preceding “kind, quantity, or condition,” substituted “words of similar import” for “the like” preceding “, if this indication is true”, and made a stylistic change; in (2), added “of the nonreceipt or misdescription”.

Sec. 45.07.204. Duty of care; contractual limitation of warehouse’s liability.

1. A warehouse is liable for damages for loss of or injury to the goods caused by the warehouse’s failure to exercise care with regard to the goods that a reasonably careful person would exercise under similar circumstances. Unless otherwise agreed, the warehouse is not liable for damages that could not have been avoided by the exercise of this care.
2. Damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in case of loss or damage beyond which the warehouse is not liable. The limitation is not effective with respect to the warehouse’s liability for conversion to its own use. On request of the bailor in a record at the time of signing the storage agreement, or within a reasonable time after receipt of the warehouse receipt, the warehouse’s liability may be increased on part or all of the goods covered by the storage agreement or the warehouse receipt. In this event, increased rates may be charged based on an increased valuation of the goods.
3. Reasonable provisions as to the time and manner of presenting claims and commencing actions based on the bailment may be included in the warehouse receipt or storage agreement.

History. (§ 7.204 ch 114 SLA 1962; am § 34 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the section heading, and throughout the section, substituted “warehouse” or similar, for “warehouseman” or similar; in (a), added “warehouse’s” preceding “failure to exercise”, and made stylistic changes; rewrote (b), which read, “Damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in case of loss or damage, and setting out a specific liability per article or item, or value per unit of weight, beyond which the warehouseman shall not be liable; however, this liability may, on written request of the bailor at the time of signing the storage agreement, or within a reasonable time after receipt of the warehouse receipt, be increased on part or all of the goods under the receipt or agreement. In this event, increased rates may be charged based on the increased valuation, but no increase may be permitted contrary to a lawful limitation of liability contained in the warehouseman’s tariff. No limitation is effective with respect to the warehouseman’s liability for conversion to the warehouseman’s own use.”; in (c), substituted “commencing” for “instituting” following “presenting claims and”, and substituted “storage agreement” for “tariff” at the end of the subsection.

Sec. 45.07.205. Title under warehouse receipt defeated in certain cases.

A buyer in ordinary course of business of fungible goods sold and delivered by a warehouse that is also in the business of buying and selling those goods takes the goods free of any claim under a warehouse receipt even if the receipt is negotiable and has been duly negotiated.

History. (§ 7.205 ch 114 SLA 1962; am § 35 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, substituted “warehouse that” for “warehouseman who” following “sold and delivered by a”, substituted “if the receipt is negotiable and” for “though it”, following “under a warehouse receipt even”; made stylistic changes.

Sec. 45.07.206. Termination of storage at warehouse’s option.

1. A warehouse may, by giving notice to the person on whose account the goods are held and other persons known to claim an interest in the goods, require payment of any charges and removal of the goods from the warehouse at the termination of the period of storage fixed by the document of title, or, if a period is not fixed, within a stated period not less than 30 days after the warehouse gives notice. If the goods are not removed before the date specified in the notice, the warehouse may sell them under AS 45.07.210 .
2. If a warehouse in good faith believes that goods are about to deteriorate or decline in value to less than the amount of its lien within the time provided in (a) of this section and AS 45.07.210 , the warehouse may specify in the notice given under (a) of this section a reasonable shorter time for removal of the goods and, if the goods are not removed, may sell them at public sale held not less than one week after a single advertisement or posting.
3. If, as a result of a quality or condition of the goods of which the warehouse did not have notice at the time of deposit, the goods are a hazard to other property, the warehouse facilities, or other persons, the warehouse may sell the goods at public or private sale without advertisement or posting on reasonable notification to all persons known to claim an interest in the goods. If the warehouse, after a reasonable effort, is unable to sell the goods, the warehouse may dispose of them in a lawful manner and does not incur liability by reason of this disposition.
4. A warehouse shall deliver the goods to a person entitled to them under this chapter on due demand made at any time before sale or other disposition under this section.
5. A warehouse may satisfy the warehouse’s lien from the proceeds of a sale or disposition under this section, but shall hold the balance for delivery on the demand of a person to whom the warehouse would have been bound to deliver the goods.

History. (§ 7.206 ch 114 SLA 1962; am § 36 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the section heading, and throughout the section, substituted “warehouse’s” or similar for “warehouseman’s” or similar; in (a), added “of title” following “fixed by the document”, substituted “under AS 45.07.210 ” for “in accordance with the provisions of the section on enforcement of a warehouseman’s lien (AS 45.07.210 )” at the end of the subsection; made stylistic changes; in (b), substituted “and AS 45.07.210” for “for notification, advertisement, and sale”, substituted “notice given under (a) of this section” for “notification”, and made stylistic changes; in (c), added “facilities” following “other property, the warehouse”; made stylistic changes; in (d), made stylistic changes; and in (e), substituted “shall” for “must” following “under this section, but”.

Collateral references. —

Improper sale, removal, concealment, or disposal of property subject to security interest under UCC, 48 ALR4th 819.

Sec. 45.07.207. Goods must be kept separate; fungible goods.

1. Unless the warehouse receipt provides otherwise, a warehouse shall keep separate the goods covered by each receipt so as to permit at all times identification and delivery of those goods. However, different lots of fungible goods may be commingled.
2. If different lots of fungible goods are commingled, the goods are owned in common by the persons entitled to them, and the warehouse is severally liable to each owner for that owner’s share. If, because of overissue, a mass of fungible goods is insufficient to meet all the receipts that the warehouse has issued against it, the persons entitled include all holders to whom overissued receipts have been duly negotiated.

History. (§ 7.207 ch 114 SLA 1962; am § 37 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (b), substituted “If different lots of fungible” for “Fungible”, substituted “warehouse” for “warehouseman”, and similar, throughout, and made stylistic changes.

Sec. 45.07.208. Altered warehouse receipts.

If a blank in a negotiable warehouse receipt has been filled in without authority, a good faith purchaser for value and without notice of the lack of authority may treat the insertion as authorized. Any other unauthorized alteration leaves a tangible or electronic warehouse receipt enforceable against the issuer according to its original tenor.

History. (§ 7.208 ch 114 SLA 1962; am § 38 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, added “good faith” preceding “purchaser”, and substituted “lack” for “want” in the first sentence; in the second sentence, added “tangible or electronic warehouse” preceding “receipt enforceable against the issuer”.

Sec. 45.07.209. Lien of warehouse.

1. A warehouse has a lien against the bailor on the goods covered by a warehouse receipt or storage agreement or on the proceeds of the goods in the warehouse’s possession for charges for storage or transportation, including demurrage and terminal charges, insurance, labor, or other charges, present or future, in relation to the goods, and for expenses necessary for preservation of the goods or reasonably incurred in their sale under law. If the person on whose account the goods are held is liable for similar charges or expenses in relation to other goods whenever deposited and it is stated in the warehouse receipt or storage agreement that a lien is claimed for charges and expenses in relation to other goods, the warehouse also has a lien against the goods covered by the warehouse receipt or storage agreement or on the proceeds of the goods in its possession for these charges and expenses, whether or not the other goods have been delivered by the warehouse. However, as against a person to whom a negotiable warehouse receipt is duly negotiated, a warehouse’s lien is limited to charges in an amount or at a rate specified in the warehouse receipt or, if no charges are specified, then to a reasonable charge for storage of the specific goods covered by the receipt after the date of the receipt.
2. A warehouse may also reserve a security interest against the bailor for the maximum amount specified on the receipt for charges other than those specified in (a) of this section, such as for money advanced and interest. The security interest is governed by AS 45.29.
3. A warehouse’s lien for charges and expenses under (a) of this section or a security interest under (b) of this section is also effective against a person who entrusted the bailor with possession of the goods to the extent that a pledge of them by the bailor to a good faith purchaser for value would have been valid. However, the lien or security interest is not effective against a person who, before issuance of a document of title, had a legal interest or a perfected security interest in the goods and did not
   1. deliver or entrust the goods or a document of title covering the goods to the bailor or the bailor’s nominee with
      1. actual or apparent authority to ship, store, or sell;
      2. power to obtain delivery under AS 45.07.403 ; or
      3. power of disposition under AS 45.02.403 , AS 45.12.304(b) , 45.12.305(b) , AS 45.29.320 , 45.29.321(c) , or other statute or rule of law; or
   2. acquiesce in the procurement by the bailor or its nominee of a document.
4. A warehouse loses its lien on any goods that the warehouse voluntarily delivers or unjustifiably refuses to deliver.
5. A warehouse’s lien on household goods for charges and expenses in relation to the goods under (a) of this section is also effective against all persons if the depositor was the legal possessor of the goods at the time of deposit. In this subsection, “household goods” means furniture, furnishings, or personal effects used by the depositor in a dwelling.

History. (§ 7.209 ch 114 SLA 1962; am §§ 39, 40 ch 44 SLA 2009)

Revisor’s notes. —

In 2000, “AS 45.29” was substituted for “AS 45.09” in accordance with § 35, ch. 113, SLA 2000.

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the section heading and throughout the section, substituted “warehouse” or similar for “warehouseman” or similar; in (a), added “storage agreement or” preceding “on the proceeds of the goods”, in the first sentence; in the second sentence, substituted “warehouse receipt or storage agreement” for “receipt”, and “the goods covered by the warehouse receipt or storage agreement or on the proceeds of the goods in its possession” for “that person”; in the third sentence, added “specific” preceding “goods covered by the receipt”; in (b), rewrote the second sentence, which read, “Such a security interest is governed by AS 45.29 on secured transactions.”; rewrote (c), which read, “A warehouseman’s lien for charges and expenses under (a) of this section or a security interest under (b) of this section is also effective against a person who so entrusted the bailor with possession of the goods that a pledge of them by the bailor to a good faith purchaser for value would have been valid, but is not effective against a person as to whom the document confers no right in the goods covered by it under AS 45.07.503 .”; added (e); made stylistic changes throughout the section.

Sec. 45.07.210. Enforcement of warehouse’s lien.

1. Except as otherwise provided in (b) of this section, a warehouse’s lien may be enforced by public or private sale of the goods, in block or in packages, at any time or place, and on any terms that are commercially reasonable, after notifying all persons known to claim an interest in the goods. This notification must include a statement of the amount due, the nature of the proposed sale, and the time and place of any public sale. The fact that a better price could have been obtained by a sale at a different time or in a method different from that selected by the warehouse is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. The warehouse sells in a commercially reasonable manner if the warehouse sells the goods in the usual manner in a recognized market for the goods, sells at the price current in the market at the time of the sale, or otherwise sells in conformity with commercially reasonable practices among dealers in the type of goods sold. A sale of more goods than apparently necessary to be offered to ensure satisfaction of the obligation is not commercially reasonable, except in cases covered by the preceding sentence.
2. A warehouse may enforce its lien on goods, other than goods stored by a merchant in the course of the merchant’s business, only if the following requirements are satisfied:
   1. all persons known to claim an interest in the goods must have been notified;
   2. the notification must include an itemized statement of the claim, a description of the goods subject to the lien, a demand for payment within a specified time not less than 10 days after receipt of the notification, and a conspicuous statement that, unless the claim is paid within that time, the goods will be advertised for sale and sold by auction at a specified time and place;
   3. the sale must conform to the terms of the notification;
   4. the sale must be held at the nearest suitable place to where the goods are held or stored;
   5. after the expiration of the time given in the notification, an advertisement of the sale must be published once a week for two weeks consecutively in a newspaper of general circulation where the sale is to be held; the advertisement must include a description of the goods, the name of the person on whose account the goods are being held, and the time and place of the sale; the sale must take place at least 15 days after the first publication; if there is no newspaper of general circulation where the sale is to be held, the advertisement must be posted at least 10 days before the sale in not fewer than three conspicuous places in the neighborhood of the proposed sale.
3. Before a sale under this section, a person claiming a right in the goods may pay the amount necessary to satisfy the lien and the reasonable expenses incurred in complying with this section. In that event, the goods may not be sold, but must be retained by the warehouse subject to the terms of the receipt and this chapter.
4. A warehouse may buy at a public sale held under this section.
5. A purchaser in good faith of goods sold to enforce a warehouse’s lien takes the goods free of the rights of persons against whom the lien was valid, despite the warehouse’s noncompliance with this section.
6. A warehouse may satisfy its lien from the proceeds of a sale under this section, but shall hold the balance, if any, for delivery on demand to a person to whom the warehouse would have been bound to deliver the goods.
7. The rights provided by this section are in addition to all other rights allowed by law to a creditor against a debtor, including the remedies available under AS 34.35.225 .
8. If a lien is on goods stored by a merchant in the course of the merchant’s business, the lien may be enforced in accordance with either (a) or (b) of this section.
9. A warehouse is liable for damages caused by failure to comply with the requirements for sale under this section and, in case of wilful violation, is liable for conversion.

History. (§ 7.210 ch 114 SLA 1962; am §§ 41 — 48 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (a), in the first sentence, added “otherwise” preceding “provided in (b), substituted “packages” for “parcels” and added “any” preceding “terms that are commercially reasonable”; in the second sentence, substituted “any public sale” for “a public sale” at the end; rewrote the fourth sentence, which read, “If the warehouseman either sells the goods in the usual manner in a recognized market for the goods, or if the warehouseman sells at the price current in the market at the time of the sale, or if the warehouseman has otherwise sold in conformity with commercially reasonable practices among dealers in the type of goods sold, the warehouseman has sold in a commercially reasonable manner.”; in the fifth sentence, substituted “ensure satisfaction of the obligation” for “insure satisfaction of the obligation”; in (b), rewrote the introductory language, which read, “A warehouseman’s lien on goods other than goods stored by a merchant in the course of the merchant’s business may be enforced only as follows:”, deleted (b)(2), relating to notification by registered letter, and redesignated (b)(3) through (b)(6) as (b)(2) through (b)(5); in (c), in the first sentence, substituted “in complying with” for “under” following “reasonable expenses incurred”; in (d), added “held” following “at a public sale”; in (g), added “, including the remedies available under AS 34.35.225 ” at the end of the subsection; throughout the section substituted “warehouse” or similar for “warehouseman” or similar and made stylistic changes.

Sec. 45.07.301. Liability for nonreceipt or misdescription; “said to contain”; “shipper’s weight, load, and count”; improper handling.

1. A consignee of a nonnegotiable bill of lading who has given value in good faith, or a holder to whom a negotiable bill has been duly negotiated, relying on the description in the bill of the goods or on the date shown in the bill, may recover from the issuer damages caused by the misdating of the bill or the nonreceipt or misdescription of the goods, except to the extent that the bill indicates that the issuer does not know whether a part or all of the goods in fact were received or conform to the description, as where the description is in terms of marks or labels or kind, quantity, or condition or the receipt or description is qualified by “contents or condition of contents of packages unknown,” “said to contain,” “shipper’s weight, load, and count,” or words of similar import, if this indication is true.
2. If goods are loaded by the issuer of a bill of lading,
   1. the issuer shall count the packages of goods if shipped in packages and ascertain the kind and quantity if shipped in bulk; and
   2. the words, “shipper’s weight, load, and count,” or other words of similar import indicating that the description was made by the shipper are ineffective except as to goods concealed in packages.
3. If bulk goods are loaded by a shipper who makes available to the issuer of a bill of lading adequate facilities for weighing those goods, the issuer shall ascertain the kind and quantity within a reasonable time after receiving the shipper’s request in a record to ascertain the kind and quantity. In this case, “shipper’s weight” or other words of similar import are ineffective.
4. The issuer of a bill of lading, by including in the bill the words “shipper’s weight, load, and count” or words of similar import, may indicate that the goods were loaded by the shipper, and, if the statement is true, the issuer is not liable for damages caused by the improper loading. However, omission of these words does not imply liability for damages by improper loading.
5. A shipper guarantees to an issuer the accuracy at the time of shipment of the description, marks, labels, number, kind, quantity, condition, and weight as furnished by the shipper, and the shipper shall indemnify the issuer against damage caused by inaccuracies in these particulars. This right of indemnity does not limit the issuer’s responsibility or liability under the contract of carriage to a person other than the shipper.

History. (§ 7.301 ch 114 SLA 1962; am § 49 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the section heading, substituted “shipper’s weight, load, and count” for “shipper’s load and count”; in (a), added “of lading” following “a nonnegotiable bill”, substituted “on” for “in either case upon” following “relying”, substituted “on” for “upon” following “the bill of the goods or”, substituted “bill” for “document” following “except to the extent that the”, substituted “words of similar import” for “the like” following “ ‘shipper’s weight, load, and count,’ or”; in (b), in the introductory language, substituted “issuer of a bill of lading” for “issuer who is a common carrier”, added the (b)(1) and (b)(2) designations, and in (b)(1), substituted “shipped in packages” for “package freight”, and “if shipped in bulk; and” for “if bulk”, in (b)(2), substituted “the words,” for “freight in this case” at the beginning, added “of similar import” following “or other words”, substituted “goods concealed in packages” for “freight concealed by packages” at the end; rewrote (c), which read, “If bulk freight is loaded by a shipper who makes available to the issuer adequate facilities for weighing the freight, an issuer who is a common carrier must ascertain the kind and quantity within a reasonable time after receiving the written request of the shipper to do so. In this case ‘shipper’s weight‘ or other words of like purport are ineffective.”; in (d), in the first sentence, substituted, “The issuer of a bill of lading, by including” for “The issuer may by inserting”, substituted “or words of similar import, may” for “other words of like purport” preceding “indicate that the goods”, and rewrote the second sentence, which read, “But their omission does not imply liability for the damages.”; in (e), in the first sentence, substituted “A shipper guarantees to an issuer” for “The shipper is considered to have guaranteed to the issuer”, and in the second sentence, substituted “This right of indemnity does not limit the issuer’s responsibility or” for “The right of the issuer to this indemnity in no way limits the issuer’s responsibility and”; made stylistic changes throughout the section.

Sec. 45.07.302. Through bills of lading and similar documents of title.

1. The issuer of a through bill of lading, or other document of title embodying an undertaking to be performed in part by a person acting as the issuer’s agent or by a performing carrier, is liable to a person entitled to recover on the bill or other document for a breach by the other person or the performing carrier of its obligation under the bill or other document. However, this liability for breach by the other person or the performing carrier may be varied by agreement of the parties, except to the extent other law prohibits variation of the liability by agreement.
2. If goods covered by a through bill of lading or other document of title embodying an undertaking to be performed in part by a person other than the issuer are received by the other person, the person is subject, with respect to its own performance while the goods are in its possession, to the obligation of the issuer. The person’s obligation is discharged by delivery of the goods to another person under the bill or other document, and does not include liability for breach by another person or by the issuer.
3. The issuer of a through bill of lading or other document of title described in (a) of this section may recover from the performing carrier, or other person in possession of the goods when the breach of the obligation under the bill occurred, the amount
   1. the issuer may be required to pay to a person entitled to recover on the bill or other document for the breach, as may be evidenced by a receipt, judgment, or transcript of judgment; and
   2. of an expense reasonably incurred by the issuer in defending an action commenced by a person entitled to recover on the bill or other document for the breach.

History. (§ 7.302 ch 114 SLA 1962; am § 50 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the section heading, added “of title” following “documents”; rewrote (a), which read, “The issuer of a through bill of lading or other document embodying an undertaking to be performed in part by persons acting as the issuer’s agents or by connecting carriers is liable to anyone entitled to recover on the document for a breach by the other persons or by a connecting carrier of its obligation under the document, but, to the extent that the bill covers an undertaking to be performed overseas or in territory not contiguous to the continental United States or an undertaking including matters other than transportation, this liability may be varied by agreement of the parties.”; in (b), added “of title” following “bill of lading or other document” and “bill or other” following “person under the”; in the introductory language of (c), added “of title described in (a) of this section” following “bill of lading or other document”, substituted “performing carrier” for “connecting carrier” and “obligation under the bill” for “obligation under the document”, added the (c)(1) and (c)(2) designations, and, in (c)(1), substituted “the issuer may be required to pay to a person” for “the issuer is required to pay to anyone”, added “bill or other” preceding “document for the breach,” and substituted “transcript of judgment” for “transcript of that amount”, and in (c)(2), substituted “of an expense” for “the amount of expense”, substituted “issuer” for “carrier”, substituted “an action commenced by a person” for “an action brought by anyone” and added “bill or other” preceding “document for the breach”; made stylistic changes throughout the section.

Sec. 45.07.303. Diversion; reconsignment; change of instructions.

1. Unless the bill of lading otherwise provides, a carrier may deliver the goods to a person or destination other than that stated in the bill or may otherwise dispose of the goods, without liability for misdelivery, on instructions from
   1. the holder of a negotiable bill;
   2. the consignor on a nonnegotiable bill, even if the consignee has given contrary instructions;
   3. the consignee on a nonnegotiable bill in the absence of contrary instructions from the consignor, if the goods have arrived at the billed destination or if the consignee is in possession of the tangible bill or in control of the electronic bill; or
   4. the consignee on a nonnegotiable bill, if the consignee is entitled as against the consignor to dispose of the goods.
2. Unless instructions described in (a) of this section are included in a negotiable bill of lading, a person to whom the bill is duly negotiated may hold the bailee according to the original terms.

History. (§ 7.303 ch 114 SLA 1962; am § 51 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the introductory language of (a), added “, without liability for misdelivery,” preceding “on instructions from”, rewrote (a)(2), which read, “the consignor on a nonnegotiable bill notwithstanding contrary instruction from the consignee”, in (a)(3), substituted “the tangible bill or in control of the electronic bill” for “the bill”, and in (a)(4), substituted “the goods” for “them” at the end; rewrote (b), which read, “Unless the instructions are noted on a negotiable bill of lading, a person to whom the bill is duly negotiated can hold the bailee according to the original terms.”; made stylistic changes throughout the section.

Sec. 45.07.304. Tangible bills of lading in a set.

1. Except as customary in international transportation, a tangible bill of lading may not be issued in a set of parts. The issuer is liable for damages caused by violation of this subsection.
2. If a tangible bill of lading is lawfully issued in a set of parts, each of which contains an identification code and is expressed to be valid only if the goods have not been delivered against another part, the whole of the parts constitutes one bill.
3. If a tangible negotiable bill of lading is lawfully issued in a set of parts and different parts are negotiated to different persons, the title of the holder to whom the first due negotiation is made prevails as to both the document of title and the goods even if a later holder may have received the goods from the carrier in good faith and discharged the carrier’s obligation by surrendering its part.
4. A person who negotiates or transfers a single part of a tangible bill of lading issued in a set is liable to holders of that part as if it were the whole set.
5. The bailee shall deliver in accordance with AS 45.07.401 — 45.07.404 against the first presented part of a tangible bill of lading lawfully issued in a set. Delivery in this manner discharges the bailee’s obligation on the whole bill.

History. (§ 7.304 ch 114 SLA 1962; am § 52 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the section heading, substituted “Tangible bills” for “Bills”; in (a), substituted “international” for “overseas”, substituted “a tangible bill of lading may not” for “a bill of lading must not” preceding “be issued in a set of parts”; in (b), added “tangible” preceding “bill of lading”, substituted “issued” for “drawn” following “lawfully”, substituted “contains an identification code and is” for “is numbered and”, substituted “against another part” for “against any other part”; in (c), substituted “If a tangible negotiable bill of lading” for “If a bill of lading”, substituted “both the document of title and the goods even if” for “both the document and the goods even though”, substituted “carrier’s obligation by surrendering its part” for “carrier’s obligation by surrender of the later holder’s part”; in (d), substituted “a tangible bill of lading issued” for “a bill of lading drawn”; in (e), in the first sentence, substituted “The bailee shall deliver” for “The bailee is obliged to deliver”, substituted “tangible bill of lading lawfully issued” for “bill of lading lawfully drawn”, and in the second sentence of (e), substituted “Delivery in this manner” for “This delivery”; made stylistic changes throughout the section.

Sec. 45.07.305. Destination bills.

1. Instead of issuing a bill of lading to the consignor at the place of shipment, a carrier may, at the request of the consignor, procure the bill to be issued at destination or at any other place designated in the request.
2. Upon request of a person entitled as against a carrier to control the goods while in transit and on surrender of possession or control of an outstanding bill of lading or other receipt covering the goods, the issuer, subject to AS 45.07.115 , may procure a substitute bill to be issued at a place designated in the request.

History. (§ 7.305 ch 114 SLA 1962; am § 53 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (b), substituted “Upon request of a person” for “Upon request of anyone”, added “possession or control of” preceding “an outstanding bill of lading”, and “, subject to AS 45.07.115 ,” preceding “may procure a substitute bill”, and made stylistic changes.

Sec. 45.07.306. Altered bills of lading.

An unauthorized alteration or filling in of a blank in a bill of lading leaves the bill enforceable according to its original tenor.

History. (§ 7.306 ch 114 SLA 1962)

Sec. 45.07.307. Lien of carrier.

1. A carrier has a lien on the goods covered by a bill of lading or on the proceeds of the goods in its possession for charges after the date of the carrier’s receipt of the goods for storage or transportation, including demurrage and terminal charges, and for expenses necessary for preservation of the goods incident to their transportation or reasonably incurred in their sale under law. However, against a purchaser for value of a negotiable bill of lading, a carrier’s lien is limited to charges stated in the bill or the applicable tariffs, or, if no charges are stated, to a reasonable charge.
2. A lien for charges and expenses under (a) of this section on goods that the carrier was required by law to receive for transportation is effective against the consignor or a person entitled to the goods unless the carrier had notice that the consignor lacked authority to subject the goods to the charges and expenses. Another lien under (a) of this section is effective against the consignor and a person who permitted the bailor to have control or possession of the goods unless the carrier had notice that the bailor lacked authority.
3. A carrier loses its lien on goods that the carrier voluntarily delivers or unjustifiably refuses to deliver.

History. (§ 7.307 ch 114 SLA 1962; am § 54 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in (a), added “or on the proceeds of the goods in its possession” following “covered by a bill of lading” and made stylistic changes throughout the section.

Sec. 45.07.308. Enforcement of carrier’s lien.

1. A carrier’s lien on goods may be enforced by public or private sale of the goods, in bulk or in packages, at any time or place, and on terms that are commercially reasonable, after notifying all persons known to claim an interest in the goods. The notification must include a statement of the amount due, the nature of the proposed sale, and the time and place of any public sale. The fact that a better price could have been obtained by a sale at a different time or by a method different from that selected by the carrier is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. The carrier sells goods in a commercially reasonable manner if the carrier sells the goods in the usual manner in a recognized market for them, sells at the price current in that market at the time of the sale, or otherwise sells in conformity with commercially reasonable practices among dealers in the type of goods sold. A sale of more goods than apparently necessary to be offered to ensure satisfaction of the obligation is not commercially reasonable except in cases covered by the preceding sentence.
2. Before a sale under this section, a person claiming a right in the goods may pay the amount necessary to satisfy the lien and the reasonable expenses incurred in complying with this section. In that event, the goods may not be sold but must be retained by the carrier, subject to the terms of the bill of lading and this chapter.
3. A carrier may buy at a public sale under this section.
4. A purchaser in good faith of goods sold to enforce a carrier’s lien takes the goods free of the rights of persons against whom the lien was valid, despite the carrier’s noncompliance with this section.
5. A carrier may satisfy the carrier’s lien from the proceeds of a sale under this section, but shall hold the balance, if any, for delivery on demand to a person to whom the carrier would have been bound to deliver the goods.
6. The rights provided by this section are in addition to all other rights allowed by law to a creditor against a debtor.
7. A carrier’s lien may be enforced in accordance with either (a) of this section or the procedure set out in AS 45.07.210(b) .
8. A carrier is liable for damages caused by failure to comply with the requirements for sale under this section and, in case of wilful violation, is liable for conversion.

History. (§ 7.308 ch 114 SLA 1962; am §§ 55 — 60 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, rewrote (a), which read, “A carrier’s lien may be enforced by public or private sale of the goods, in block or in parcels, at any time or place, and on any terms that are commercially reasonable, after notifying all persons known to claim an interest in the goods. This notification must include a statement of the amount due, the nature of the proposed sale, and the time and place of a public sale. The fact that a better price could have been obtained by a sale at a different time or in a different method from that selected by the carrier is not of itself sufficient to establish that the sale was not made in a commercially reasonable manner. If the carrier either sells the goods in the usual manner in a recognized market for them or if the carrier sells at the price current in the market at the time of the sale or if the carrier has otherwise sold in conformity with commercially reasonable practices among dealers in the type of goods sold, the carrier has sold in a commercially reasonable manner. A sale of more goods than apparently necessary to be offered to ensure satisfaction of the obligation is not commercially reasonable except in cases covered by the preceding sentence.”; in (b), substituted “in complying with” for “under” following “reasonable expenses incurred”, substituted “the goods may” for “the goods must”, added “of lading” following “subject to the terms of the bill”; in (d), substituted “the carrier’s noncompliance with this section” for “noncompliance by the carrier with the requirements of this section”; rewrote (e), which read, “The carrier may satisfy the lien from the proceeds of a sale under this section, but must hold the balance for delivery on demand to a person to whom the carrier would have been bound to deliver the goods.”; made stylistic changes throughout the section.

Sec. 45.07.309. Duty of care; contractual limitation of carrier’s liability.

1. A carrier who issues a bill of lading, whether negotiable or nonnegotiable, shall exercise the degree of care in relation to the goods that a reasonably careful person would exercise under similar circumstances. This subsection does not affect a statute, regulation, or rule of law that imposes liability on a common carrier for damages not caused by its negligence.
2. Damages may be limited by a term in the bill of lading or in a transportation agreement that the carrier’s liability may not exceed a value stated in the bill or transportation agreement if the carrier’s rates are dependent on value and the consignor is afforded an opportunity to declare a higher value and the consigner is advised of this opportunity. However, the limitation is not effective with respect to the carrier’s liability for conversion to its own use.
3. Reasonable provisions as to the time and manner of presenting claims and commencing actions based on the shipment may be included in a bill of lading or a transportation agreement.

History. (§ 7.309 ch 114 SLA 1962; am § 56 ch 41 SLA 2009; am § 61 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the amendment of this section, by § 61, ch. 44, SLA 2009, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The first 2009 amendment, effective June 21, 2009, in (a), substituted “shall” for “must” preceding “exercise the degree of care”, and substituted “person” for “man” following “reasonably careful”.

The second 2009 amendment, effective January 1, 2010, in (a), substituted “does not affect a statute, regulation, or rule of law” for “does not repeal or change any law or rule of law”; rewrote (b), which read, “Damages may be limited by a provision that the carrier’s liability shall not exceed a value stated in the document if the carrier’s rates are dependent upon value and the consignor by the carrier’s tariff is afforded an opportunity to declare a higher value or a value as lawfully provided in the tariff, or if no tariff is filed the consigner is otherwise advised of this opportunity; but no such limitation is effective with respect to the carrier’s liability for conversion to its own use.”; in (c), substituted “commencing” for “instituting” and “a transportation agreement” for “tariff”; made stylistic changes throughout the section.

Sec. 45.07.401. Irregularities in issue of receipt or bill or conduct of issuer.

The obligations imposed by this chapter on an issuer apply to a document of title even if

1. the document does not comply with the requirements of this chapter or another statute, a regulation, or another rule of law regarding its issuance, form, or content;
2. the issuer violated laws regulating the conduct of the issuer’s business;
3. the goods covered by the document were owned by the bailee when the document was issued; or
4. the person issuing the document is not a warehouse but the document purports to be a warehouse receipt.

History. (§ 7.401 ch 114 SLA 1962; am § 62 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the introductory language, substituted “apply to a document of title even if” for “apply to a document of title regardless of the fact that”; in (1), substituted “does” for “may” following “the document”, substituted “another statute, a regulation, or another rule of law regarding its issuance” for “of any other law or regulation regarding its issue”; in (2), deleted “may have” following “the issuer”; in (3), substituted “when the document was issued” for “at the time the document was issued”; rewrote (4), which read, “the person issuing the document does not come within the definition of warehouseman if it purports to be a warehouse receipt”.

Sec. 45.07.402. Duplicate document of title; overissue.

A duplicate or another document of title purporting to cover goods already represented by an outstanding document of the same issuer does not confer a right in the goods, except as provided in the case of tangible bills of lading in a set of parts, overissue of documents for fungible goods, substitutes for lost, stolen, or destroyed documents, or substitute documents issued under AS 45.07.115 . The issuer is liable for damages caused by the issuer’s overissue or failure to identify a duplicate document by a conspicuous notation.

History. (§ 7.402 ch 114 SLA 1962; am § 63 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, rewrote the section, which read, “Duplicate receipt or bill; overissue. Neither a duplicate nor any other document of title purporting to cover goods already represented by an outstanding document of the same issuer confers a right in the goods, except as provided in the case of bills in a set, overissue of documents for fungible goods, and substitutes for lost, stolen, or destroyed documents. But the issuer is liable for damages caused by the issuer’s overissue or failure to identify a duplicate document as such by conspicuous notation on its face.”

Sec. 45.07.403. Obligation of bailee to deliver; excuse.

1. A bailee shall deliver the goods to a person entitled under a document of title if the person complies with (b) and (c) of this section, unless and to the extent that the bailee establishes any of the following:
   1. delivery of the goods to a person whose receipt was rightful as against the claimant;
   2. damage to or delay, loss, or destruction of the goods for which the bailee is not liable;
   3. previous sale or other disposition of the goods in lawful enforcement of a lien or on a warehouse’s lawful termination of storage;
   4. the exercise by a seller of its right to stop delivery under AS 45.02.705 or by a lessor of its right to stop delivery under AS 45.12.526 ;
   5. a diversion, reconsignment, or other disposition under AS 45.07.303 ;
   6. release, satisfaction, or another personal defense against the claimant; or
   7. another lawful excuse.
2. A person claiming goods covered by a document of title shall satisfy the bailee’s lien if the bailee requests the person to satisfy the lien or if the bailee is prohibited by law from delivering the goods until the charges are paid.
3. Unless the person claiming the goods is a person against whom the document of title does not confer a right under AS 45.07.503(a) ,
   1. the person claiming under a document shall surrender possession or control of an outstanding negotiable document covering the goods for cancellation or indication of partial deliveries; and
   2. the bailee shall cancel the document or conspicuously indicate in the document the partial delivery, or the bailee is liable to a person to whom the document is duly negotiated.
4. [Repealed, § 113 ch 44 SLA 2009.]

History. (§ 7.403 ch 114 SLA 1962; am §§ 64 — 66, 113 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the introductory language in (a), substituted “A bailee shall” for “The bailee must” preceding “deliver the goods to a person”; in (a)(3), substituted “a warehouse’s” for “warehouseman’s”; in (a)(4), added “or by a lessor of its right to stop delivery under AS 45.12.526 ” at the end; in (a)(5), deleted “or tariff regulating this right” at the end; in (a)(6), substituted “another” for “any other fact affording a”; in (a)(7), substituted “another” for “any other”; in (b), substituted “document of title shall satisfy the bailee’s lien if the bailee requests the person to satisfy the lien” for “document of title must satisfy the bailee’s lien if the bailee so requests”; rewrote (c), which read, “Unless the person claiming is one against whom the document confers no right under AS 45.07.503(a) , the person must surrender for cancellation or notation of partial deliveries an outstanding negotiable document covering the goods, and the bailee must cancel the document or conspicuously note the partial delivery on the document or be liable to a person to whom the document is duly negotiated.”; repealed (d), which read, “ ‘Person entitled under the document’ means holder in the case of a negotiable document, or the person to whom delivery is to be made by the terms of or under written instructions under a nonnegotiable document.”; made stylistic changes throughout the section.

Sec. 45.07.404. No liability for good faith delivery under document of title.

A bailee who, in good faith, has received goods and delivered or otherwise disposed of the goods according to the terms of a document of title or under this chapter is not liable for the goods even if the person

1. from whom the bailee received the goods did not have authority to procure the document or to dispose of the goods; or
2. to whom the bailee delivered the goods did not have authority to receive the goods.

History. (§ 7.404 ch 114 SLA 1962; am § 67 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, rewrote the section, which read, “No liability for good faith delivery pursuant to receipt or bill. A bailee who in good faith, including observance of reasonable commercial standards, has received goods and delivered or otherwise disposed of them according to the terms of the document of title or under this chapter is not liable for that disposal. This rule applies even though the person from whom the bailee received the goods had no authority to procure the document or to dispose of the goods and even though the person to whom the bailee delivered the goods had no authority to receive them.”

Sec. 45.07.501. Form of negotiation and requirements of due negotiation.

1. The following rules apply to a negotiable tangible document of title:
   1. if the document’s original terms run to the order of a named person, the document is negotiated by the named person’s endorsement and delivery; after the named person’s endorsement in blank or to bearer, a person may negotiate the document by delivery alone;
   2. if the document’s original terms run to bearer, it is negotiated by delivery alone;
   3. if the document’s original terms run to the order of a named person and it is delivered to the named person, the effect is the same as if the document had been negotiated;
   4. negotiation of the document after it has been endorsed to a named person requires endorsement by the named person and delivery;
   5. a document is duly negotiated if it is negotiated in the manner stated in this subsection to a holder who purchases it in good faith, without notice of a defense against or claim to it on the part of a person, and for value, unless it is established that the negotiation is not in the regular course of business or financing or involves receiving the document in settlement or payment of a monetary obligation.
2. The following rules apply to a negotiable electronic document of title:
   1. if the document’s original terms run to the order of a named person or to bearer, the document is negotiated by delivery of the document to another person; endorsement by the named person is not required to negotiate the document;
   2. if the document’s original terms run to the order of a named person and the named person has control of the document, the effect is the same as if the document had been negotiated;
   3. a document is duly negotiated if it is negotiated in the manner stated in this subsection to a holder who purchases it in good faith, without notice of a defense against or claim to it on the part of a person, and for value, unless it is established that the negotiation is not in the regular course of business or financing or involves taking delivery of the document in settlement or payment of a monetary obligation.
3. Endorsement of a nonnegotiable document of title does not make it negotiable or add to the transferee’s rights.
4. The naming in a negotiable bill of lading of a person to be notified of the arrival of the goods does not limit the negotiability of the bill or constitute notice to a purchaser of the bill of an interest of that person in the goods.

History. (§ 7.501 ch 114 SLA 1962; am § 68 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, repealed and reenacted the section, including the terms of the former section in (a), (c), and (d). Subsection (b), relating to negotiable electronic documents of title, was added.

Sec. 45.07.502. Rights acquired by due negotiation.

1. Subject to AS 45.07.205 and 45.07.503 , a holder to whom a negotiable document of title has been duly negotiated acquires by the due negotiation
   1. title to the document;
   2. title to the goods;
   3. all rights accruing under the law of agency or estoppel, including rights to goods delivered to the bailee after the document was issued; and
   4. the direct obligation of the issuer to hold or deliver the goods according to the terms of the document free of a defense or claim by the issuer except those arising under the terms of the document or under this chapter, but, in the case of a delivery order, the bailee’s obligation accrues only upon the bailee’s acceptance of the delivery order, and the obligation acquired by the holder is that the issuer and any endorser will procure the acceptance of the bailee.
2. Subject to AS 45.07.503 , title and rights acquired by due negotiation are not defeated by a stoppage of the goods represented by the document of title or by surrender of the goods by the bailee and are not impaired even if
   1. the due negotiation or a prior due negotiation constituted a breach of duty;
   2. a person has been deprived of possession of a negotiable tangible document or control of a negotiable electronic document by misrepresentation, fraud, accident, mistake, duress, loss, theft, or conversion; or
   3. a previous sale or other transfer of the goods or document has been made to a third person.

History. (§ 7.502 ch 114 SLA 1962; am § 69 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the introductory language in (a), substituted “AS 45.07.205 and 45.07.503 ” for “AS 45.07.503 and to the provisions of AS 45.07.205 on fungible goods”, and added “by the due negotiation” following “duly negotiated acquires”; in (a)(4), substituted “except those arising” for “except one arising”, added “, but,” following “under this chapter”, substituted “upon the bailee’s acceptance of the delivery order” for “upon acceptance”, and substituted “any endorser will procure” for “an endorser will procure”; rewrote (b), which read, “Subject to AS 45.07.503, title and rights so acquired are not defeated by a stoppage of the goods represented by the document or by surrender of the goods by the bailee, and are not impaired even though the negotiation or a prior negotiation constituted a breach of duty or even though a person has been deprived of possession of the document by misrepresentation, fraud, accident, mistake, duress, loss, theft, or conversion, or even though a previous sale or other transfer of the goods or document has been made to a third person.”; made stylistic changes throughout the section.

Sec. 45.07.503. Document of title to goods defeated in certain cases.

1. A document of title confers no right in goods against a person who, before issuance of the document, had a legal interest or a perfected security interest in the goods and who did not
   1. deliver or entrust the goods or a document of title covering the goods to the bailor or the bailor’s nominee with
      1. actual or apparent authority to ship, store, or sell;
      2. power to obtain delivery under AS 45.07.403 ; or
      3. power of disposition under AS 45.02.403 , AS 45.12.304(b) , 45.12.305(b) , AS 45.29.320 , 45.29.321(c) or other statute or rule of law; or
   2. acquiesce in the procurement by the bailor or its nominee of a document.
2. Title to goods based upon an unaccepted delivery order is subject to the rights of a person to whom a negotiable warehouse receipt or bill of lading covering the goods has been duly negotiated. That title may be defeated under AS 45.07.504 to the same extent as the rights of the issuer or a transferee from the issuer.
3. Title to goods based upon a bill of lading issued to a freight forwarder is subject to the rights of a person to whom a bill issued by the freight forwarder is duly negotiated. However, delivery by the carrier in accordance with AS 45.07.401 — 45.07.404 under its own bill of lading discharges the carrier’s obligation to deliver.

History. (§ 7.503 ch 114 SLA 1962; am § 14 ch 113 SLA 2000; am § 70 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the introductory language of (a), substituted “security interest in the goods and who did not” for “security interest in them and who neither”; rewrote (a)(1), which read, “delivered or entrusted them or a document of title covering them to the bailor or the bailor’s nominee with actual or apparent authority to ship, store, or sell or with power to obtain delivery under AS 45.07.403 or with power of disposition under AS 45.02.403 and AS 45.29.320 or other statute or rule of law; nor”; rewrote (a)(2), which read, “acquiesced in the procurement by the bailor or the bailor’s nominee of a document of title.”; in (b), substituted “rights of a person” for “rights of anyone” in the first sentence, and substituted “That” for “Such a” at the beginning of the second sentence; in (c), substituted “rights of a person” for “rights of anyone” in the first sentence, and divided the first sentence into two sentences, with the second sentence beginning, “However, delivery by the carrier”.

Sec. 45.07.504. Rights acquired in absence of due negotiation; effect of diversion; stoppage of delivery.

1. A transferee of a document of title, whether negotiable or nonnegotiable, to whom the document has been delivered but not duly negotiated, acquires the title and rights that the transferor had or had actual authority to convey.
2. In the case of a transfer of a nonnegotiable document of title, until, but not after, the bailee receives notice of the transfer, the rights of the transferee may be defeated
   1. by those creditors of the transferor who could treat the transfer as void under AS 45.02.402 or AS 45.12.308 ;
   2. by a buyer from the transferor in ordinary course of business if the bailee has delivered the goods to the buyer or received notification of the buyer’s rights;
   3. by a lessee from the transferor in ordinary course of business if the bailee has delivered the goods to the lessee or received notification of the lessee’s rights; or
   4. as against the bailee, by good faith dealings of the bailee with the transferor.
3. A diversion or other change of shipping instructions by the consignor in a nonnegotiable bill of lading that causes the bailee not to deliver the goods to the consignee defeats the consignee’s title to the goods if the goods have been delivered to a buyer in ordinary course of business or a lessee in ordinary course of business and, in any event, defeats the consignee’s rights against the bailee.
4. Delivery of the goods under a nonnegotiable document of title may be stopped by a seller under AS 45.02.705 or a lessor under AS 45.12.526 , subject to the requirement of due notification in those sections. A bailee who honors the seller’s or lessor’s instructions is entitled to be indemnified by the seller or lessor against a resulting loss or expense.

History. (§ 7.504 ch 114 SLA 1962; am § 71 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the section heading, deleted “the” following “Rights acquired in” and “seller’s” preceding “stoppage of delivery”; in (a), substituted “document of title, whether negotiable or nonnegotiable” for “document, whether negotiable or not”; in the introductory language of (b), substituted “transfer of a nonnegotiable document of title” for “nonnegotiable document” and substituted “notice” for “notification”; in (b)(1), substituted “transfer” for “sale” preceding “as void under” and added “or AS 45.12.308 ”; added (b)(3); redesignated (b)(3) as (b)(4); in (c), added “the goods” following “not to deliver, substituted “the goods” for “they” following “title to the goods if”, and added “or a lessee in ordinary course of business” following “buyer in ordinary course of business”; rewrote (d), which read, “Delivery under a nonnegotiable document may be stopped by a seller under AS 45.02.705 , and subject to the requirement of due notification set out in AS 45.02.705 . A bailee honoring the seller’s instructions is entitled to be indemnified by the seller against a resulting loss or expense.”; made stylistic changes throughout the section.

Sec. 45.07.505. Endorser not guarantor for other parties.

The endorsement of a tangible document of title issued by a bailee does not make the endorser liable for a default by the bailee or previous endorsers.

History. (§ 7.505 ch 114 SLA 1962; am § 72 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the section heading, deleted “a” following “Endorser not”; added “tangible” following “The endorsement of a”, and deleted “by” preceding “previous endorsers”.

Sec. 45.07.506. Delivery without endorsement; right to compel endorsement.

The transferee of a negotiable tangible document of title has a specifically enforceable right to have its transferor supply a necessary endorsement, but the transfer becomes a negotiation only as of the time the endorsement is supplied.

History. (§ 7.506 ch 114 SLA 1962; am § 73 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2009, added “tangible” following “negotiable” and substitued “its” for “the” preceding “transferor supply”.

Sec. 45.07.507. Warranties on negotiation or delivery of document of title.

If a person negotiates or delivers a document of title for value, other than as a mere intermediary under AS 45.07.508 , unless otherwise agreed, the transferor, in addition to any warranty made in selling or leasing the goods, warrants to its immediate purchaser only that

1. the document is genuine;
2. the transferor does not have knowledge of a fact that would impair the document’s validity or worth; and
3. the negotiation or delivery is rightful and fully effective with respect to the title to the document and the goods it represents.

History. (§ 7.507 ch 114 SLA 1962; am § 74 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, rewrote the section, which read, “Warranties on negotiation or transfer of receipt or bill. If a person negotiates or transfers a document of title for value otherwise than as a mere intermediary under AS 45.07.508 , then, unless otherwise agreed, the person warrants to the immediate purchaser only in addition to any warranty made in selling the goods

“(1) that the document is genuine;

“(2) that the person has no knowledge of a fact that would impair its validity or worth; and

“(3) that the negotiation or transfer is rightful and fully effective with respect to the title to the document and the goods it represents.”

Sec. 45.07.508. Warranties of collecting bank as to documents of title.

A collecting bank or other intermediary known to be entrusted with documents of title on behalf of another or with collection of a draft or other claim against delivery of documents warrants by the delivery of the documents only its own good faith and authority even if the collecting bank or other intermediary has purchased or made advances against the claim or draft to be collected.

History. (§ 7.508 ch 114 SLA 1962; am § 75 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, in the section heading, added “of title” at the end; in the first sentence, added “of title” following “entrusted with documents”, and merged the second sentence into the first by substituting “even if the collecting bank or other” for “. This rule applies even though the intermediary” following “good faith and authority”.

Sec. 45.07.509. Adequate compliance with commercial contract.

Whether a document of title is adequate to fulfill the obligations of a contract for sale or a contract for lease or the conditions of a letter of credit is determined by AS 45.02, AS 45.05, or AS 45.12.

History. (§ 7.509 ch 114 SLA 1962; am § 76 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, rewrote the section, which read, “Receipt or bill: When adequate compliance with commercial contract. The question whether a document is adequate to fulfill the obligations of a contract for sale or the conditions of a credit is governed by AS 45.02 on sales and AS 45.05 on letters of credit.”

Sec. 45.07.601. Lost, stolen, or destroyed documents of title.

1. If a document of title is lost, stolen, or destroyed, a court may order delivery of the goods or issuance of a substitute document, and the bailee may, without liability to any person, comply with the order. If the document was negotiable, a court may not order delivery of the goods or issuance of a substitute document without the claimant’s posting security unless the court finds that any person who may suffer loss as a result of nonsurrender of possession or control of the document is adequately protected against the loss. If the document was nonnegotiable, the court may require security.
2. A bailee who, without a court order, delivers goods to a person claiming under a missing negotiable document of title is liable to a person injured by the delivery. If the delivery is not in good faith, the bailee is liable for conversion. Delivery in good faith is not conversion if the claimant posts security with the bailee in an amount at least double the value of the goods at the time of posting to indemnify a person injured by the delivery who files a notice of claim within one year after the delivery.

History. (§ 7.601 ch 114 SLA 1962; am § 77 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, repealed and reenacted the section, rephrased (a) and (b), and deleted the information relating to classification or tariff in (b).

Sec. 45.07.602. Judicial process against goods covered by negotiable document of title.

Unless a document of title was originally issued upon delivery of the goods by a person who did not have power to dispose of them, a lien does not attach by virtue of a judicial process to goods in the possession of a bailee for which a negotiable document of title is outstanding unless possession or control of the document is first surrendered to the bailee or negotiation of the document is enjoined. The bailee may not be compelled to deliver the goods under process until possession or control of the document is surrendered to the bailee or to the court. A purchaser of the document for value without notice of the process or injunction takes free of the lien imposed by judicial process.

History. (§ 7.602 ch 114 SLA 1962; am § 78 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, rewrote the section, which read, “Attachment of goods covered by a negotiable document. Except where the document was originally issued upon delivery of the goods by a person who had no power to dispose of them, no lien attaches by virtue of judicial process to goods in the possession of a bailee for which a negotiable document of title is outstanding unless the document is first surrendered to the bailee or its negotiation enjoined, and the bailee may not be compelled to deliver the goods under process until the document is surrendered to the bailee or impounded by the court. One who purchases the document for value without notice of the process or injunction takes free of lien imposed by judicial process.”

Sec. 45.07.603. Conflicting claims; interpleader.

If more than one person claims title to or possession of the goods, the bailee is excused from delivery until the bailee has a reasonable time to ascertain the validity of the adverse claims or to commence an action for interpleader. The bailee may assert an interpleader either in defending an action for nondelivery of the goods or by original action.

History. (§ 7.603 ch 114 SLA 1962; am § 79 ch 44 SLA 2009)

Cross references. —

For applicability and savings provisions related to the 2009 amendment of this section, see §§ 115 and 116, ch. 44, SLA 2009, quoted in the editor’s note that follows the chapter analysis for this chapter.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, substituted “title to or possession of the goods” for “title or possession of the goods”; substituted “commence an action for interpleader. The bailee may assert an interpleader either in defending an action for nondelivery of the goods or by original action.” for “bring an action to compel all claimants to interplead and may compel this interpleader, either in defending an action for nondelivery of the goods or by original action, whichever is appropriate.”; made a stylistic change.

Sec. 45.07.650. Laws not repealed by this chapter. [Repealed, § 113 ch 44 SLA 2009.]

Sec. 45.08.101. Short title.

This chapter may be cited as Uniform Commercial Code — Investment Securities.

History. (§ 8.101 ch 114 SLA 1962)

Revisor’s notes. —

In 1993, the words “shall be known and” were deleted from this section to conform to the style of the code as amended by chs. 34 and 35, SLA 1993.

Collateral references. —

15A Am. Jur. 2d, Commercial Code, § 68 et seq.

69 Am. Jur. 2d, Securities Regulation — Federal, § 1 et seq.

69A Am. Jur. 2d, Securities Regulation — State, § 1 et seq.

Construction and effect of UCC Art. 8 [AS 45.08.101 — 45.08.406 ], dealing with investment securities, 21 ALR3d 964; 88 ALR3d 949.

Sec. 45.08.102. Definitions.

1. In this chapter,
   1. “adverse claim” means a claim that a claimant has a property interest in a financial asset and that it is a violation of the rights of the claimant for another person to hold, transfer, or deal with the financial asset;
   2. “bearer form,” as applied to a certificated security, means a form in which the security is payable to the bearer of the security certificate according to its terms but not by reason of an endorsement;
   3. “broker” means a person defined as a broker or dealer under the federal securities laws, but without excluding a bank acting in that capacity;
   4. “certificated security” means a security that is represented by a certificate;
   5. “clearing corporation” means
      1. a person who is registered as a “clearing agency” under the federal securities laws;
      2. a federal reserve bank; or
      3. any other person who provides clearance or settlement services with respect to financial assets that would require it to register as a clearing agency under the federal securities laws but for an exclusion or exemption from the registration requirement, if its activities as a clearing corporation, including promulgation of rules, are subject to regulation by a federal or state governmental authority;
   6. “communicate” means to
      1. send a signed writing; or
      2. transmit information by any mechanism agreed upon by the persons transmitting and receiving the information;
   7. “endorsement” means a signature that alone or accompanied by other words is made on a security certificate in registered form or on a separate document for the purpose of assigning, transferring, or redeeming the security or granting a power to assign, transfer, or redeem it;
   8. “entitlement holder” means a person identified in the records of a securities intermediary as the person having a security entitlement against the securities intermediary; if a person acquires a security entitlement by virtue of AS 45.08.501 (a)(2) or (3), that person is the entitlement holder;
   9. “entitlement order” means a notification communicated to a securities intermediary directing transfer or redemption of a financial asset to which the entitlement holder has a security entitlement;
   10. “financial asset,” except as otherwise provided in AS 45.08.103 , means
       1. a security;
       2. an obligation of a person or a share, participation, or other interest in a person or in property or an enterprise of a person, that is, or is of a type, dealt in or traded on financial markets, or that is recognized in any area in which it is issued or dealt in as a medium for investment; or
       3. any property that is held by a securities intermediary for another person in a securities account if the securities intermediary has expressly agreed with the other person that the property is to be treated as a financial asset under this chapter; as context requires, the term means either the interest itself or the means by which a person’s claim to it is evidenced, including a certificated or uncertificated security, a security certificate, or a security entitlement;
   11. [Repealed, § 113 ch 44 SLA 2009.]
   12. “instruction” means a notification communicated to the issuer of an uncertificated security that directs that the transfer of the security be registered or that the security be redeemed;
   13. “registered form,” as applied to a certificated security, means a form in which
       1. the security certificate specifies a person entitled to the security; and
       2. a transfer of the security may be registered upon books maintained for that purpose by or on behalf of the issuer, or the security certificate states that a transfer of the security may be registered upon books maintained for that purpose by or on behalf of the issuer;
   14. “securities intermediary” means
       1. a clearing corporation; or
       2. a person, including a bank or broker, that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity;
   15. “security,” except as otherwise provided in AS 45.08.103 , means an obligation of an issuer or a share, participation, or other interest in an issuer or in property or an enterprise of an issuer, if the obligation, share, participation, or interest
       1. is represented by a security certificate in bearer or registered form, or if the transfer of the obligation, share, participation, or interest may be registered upon books maintained for that purpose by or on behalf of the issuer;
       2. is one of a class or series or by its terms is divisible into a class or series of shares, participations, obligations, or interests; and
       3. is, or is of a type, dealt in or traded on securities exchanges or securities markets, or is a medium for investment and the terms of the obligation, share, participation, or interest expressly provide that the obligation, share, participation, or interest is a security governed by this chapter;
   16. “security certificate” means a certificate representing a security;
   17. “security entitlement” means the rights and property interest of an entitlement holder with respect to a financial asset specified in AS 45.08.501 — 45.08.511 ;
   18. “uncertificated security” means a security that is not represented by a certificate.
2. Other definitions applying to this chapter and the sections in which they appear are
   1. “appropriate person” (AS 45.08.107 );
   2. “control” (AS 45.08.106 );
   3. “delivery” (AS 45.08.301 );
   4. “investment company security” (AS 45.08.103 );
   5. “issuer” (AS 45.08.201 );
   6. “overissue” (AS 45.08.210 );
   7. “protected purchaser” (AS 45.08.303 );
   8. “securities account” (AS 45.08.501 ).
3. In addition, AS 45.01 contains general definitions and principles of construction and interpretation applicable throughout this chapter.
4. The characterization of a person, business, or transaction for purposes of this chapter does not determine the characterization of the person, business, or transaction for purposes of another law, regulation, or rule.

History. (§ 8.102 ch 114 SLA 1962; am § 1 ch 140 SLA 1970; am § 1 ch 94 SLA 1974; am §§ 7, 72 ch 16 SLA 1982; am § 5 ch 49 SLA 1990; am § 119 ch 35 SLA 1993; am § 5 ch 17 SLA 1996; am § 113 ch 44 SLA 2009)

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, repealed (a)(11), which read, “ ‘good faith,’ for purposes of the obligation of good faith in the performance or enforcement of contracts or duties within this chapter, means honesty in fact and the observance of reasonable commercial standards of fair dealing;”.

Collateral references. —

What is a “security” under UCC Art. 8, 11 ALR4th 1036.

Sec. 45.08.103. Rules for determining whether certain obligations and interests are securities or financial assets.

1. A share or similar equity interest issued by a corporation, business trust, joint stock company, or similar entity is a security.
2. An investment company security is a security.
3. An interest in a partnership or limited liability company is not a security unless it is dealt in or traded on securities exchanges or in securities markets, its terms expressly provide that it is a security governed by this chapter, or it is an investment company security. However, an interest in a partnership or limited liability company is a financial asset if it is held in a securities account.
4. A writing that is a security certificate is governed by this chapter and not by AS 45.03, even though it also meets the requirements of AS 45.03. However, a negotiable instrument governed by AS 45.03 is a financial asset if it is held in a securities account.
5. An option or similar obligation issued by a clearing corporation to its participants is not a security but is a financial asset.
6. A commodity contract, as defined in AS 45.29.102(a) , is not a security or a financial asset.
7. A document of title is not a financial asset unless AS 45.08.102(a)(10)(C) applies.
8. In this section, “investment company security” means a share or similar equity interest issued by an entity that is registered as an investment company under federal investment company laws, an interest in a unit investment trust that is registered as an investment company under federal investment company laws, or a face-amount certificate issued by a face-amount certificate company that is registered as an investment company under federal investment company laws; “investment company security” does not include an insurance policy or endowment policy or annuity contract issued by an insurance company.

History. (§ 8.103 ch 114 SLA 1962; am § 6 ch 49 SLA 1990; am § 6 ch 17 SLA 1996; am § 15 ch 113 SLA 2000; am § 80 ch 44 SLA 2009)

Revisor’s notes. —

Subsection (h) was formerly the last two sentences of subsection (b). Relettered as (g) in 2006, at which time minor punctuation changes were made to conform to the relettering. Subsection (g) was enacted as (h); relettered in 2009, at which time former subsection (g) was relettered as (h).

Cross references. —

For applicability and savings provisions related to (g) of this section, see §§ 115 and 116, ch. 44, SLA 2009.

Effect of amendments. —

The 2009 amendment, effective January 1, 2010, added (h) (now (g)).

Sec. 45.08.104. Acquisition of security or financial asset or interest in security or financial asset.

1. A person acquires a security or an interest in a security under this chapter if the person
   1. is a purchaser to whom a security is delivered under AS 45.08.301 ; or
   2. acquires a security entitlement to the security under AS 45.08.501 .
2. A person acquires a financial asset other than a security or an interest in a financial asset other than a security, under this chapter if the person acquires a security entitlement to the financial asset.
3. A person who acquires a security entitlement to a security or other financial asset has the rights specified in AS 45.08.501 — 45.08.511 , but is a purchaser of a security, security entitlement, or other financial asset held by the securities intermediary only to the extent provided in AS 45.08.503 .
4. Unless the context shows that a different meaning is intended, a person who is required by other law, regulation, rule, or agreement to transfer, deliver, present, surrender, exchange, or otherwise put in the possession of another person a security or financial asset satisfies that requirement by causing the other person to acquire an interest in the security or financial asset under (a) or (b) of this section.

History. (§ 8.104 ch 114 SLA 1962; am § 7 ch 49 SLA 1990; am § 7 ch 17 SLA 1996)

Sec. 45.08.105. Notice of adverse claim.

1. A person has notice of an adverse claim if
   1. the person knows of the adverse claim;
   2. the person is aware of facts sufficient to indicate that there is a significant probability that the adverse claim exists and deliberately avoids information that would establish the existence of the adverse claim; or
   3. the person has a duty, imposed by statute or regulation, to investigate whether an adverse claim exists, and the investigation required would establish the existence of the adverse claim.
2. Having knowledge that a financial asset or interest in a financial asset is or has been transferred by a representative does not impose a duty of inquiry into the rightfulness of a transaction and is not notice of an adverse claim. However, a person who knows that a representative has transferred a financial asset or interest in a financial asset in a transaction that is, or whose proceeds are being used, for the individual benefit of the representative or otherwise in breach of duty has notice of an adverse claim.
3. An act or event that creates a right to immediate performance of the principal obligation represented by a security certificate or sets a date on or after which the certificate is to be presented or surrendered for redemption or exchange does not itself constitute notice of an adverse claim except in the case of a transfer more than
   1. one year after a date set for presentment or surrender for redemption or exchange; or
   2. six months after a date set for payment of money against presentation or surrender of the certificate, if money was available for payment on that date.
4. A purchaser of a certificated security has notice of an adverse claim if the security certificate
   1. whether in bearer or registered form, has been endorsed “for collection” or “for surrender” or for some other purpose not involving transfer; or
   2. is in bearer form and has on it an unambiguous statement that it is the property of a person other than the transferor, but the mere writing of a name on the certificate does not constitute this statement.
5. Filing of a financing statement under AS 45.29 is not notice of an adverse claim to a financial asset.

History. (§ 8.105 ch 114 SLA 1962; am § 8 ch 49 SLA 1990; am § 8 ch 17 SLA 1996)

Revisor’s notes. —

In 2000, “AS 45.29” was substituted for “AS 45.09” in accordance with § 35, ch. 113, SLA 2000.

Sec. 45.08.106. Control.

1. A purchaser has control of a certificated security in bearer form if the certificated security is delivered to the purchaser.
2. A purchaser has control of a certificated security in registered form if the certificated security is delivered to the purchaser, and the certificate is
   1. endorsed to the purchaser or in blank by an effective endorsement; or
   2. registered in the name of the purchaser, upon original issue or registration of transfer by the issuer.
3. A purchaser has control of an uncertificated security if
   1. the uncertificated security is delivered to the purchaser; or
   2. the issuer has agreed that the issuer will comply with instructions originated by the purchaser without further consent by the registered owner.
4. A purchaser has control of a security entitlement if
   1. the purchaser becomes the entitlement holder;
   2. the securities intermediary has agreed that the securities intermediary will comply with entitlement orders originated by the purchaser without further consent by the entitlement holder; or
   3. another person has control of the security entitlement on behalf of the purchaser or, having previously acquired control of the security entitlement, acknowledges that it has control on behalf of the purchaser.
5. If an interest in a security entitlement is granted by the entitlement holder to the entitlement holder’s own securities intermediary, the securities intermediary has control.
6. A purchaser who has satisfied the requirements of (c) or (d) of this section has control even if the registered owner in the case of (c) of this section or the entitlement holder in the case of (d) of this section retains the right to make substitutions for the uncertificated security or security entitlement, to originate instructions or entitlement orders to the issuer or securities intermediary, or otherwise to deal with the uncertificated security or security entitlement.
7. An issuer or a securities intermediary may not enter into an agreement described in (c)(2) or (d)(2) of this section without the consent of the registered owner or entitlement holder, but an issuer or a securities intermediary is not required to enter into an agreement even though the registered owner or entitlement holder directs the issuer or securities intermediary to enter into the agreement. An issuer or securities intermediary that has entered into an agreement is not required to confirm the existence of the agreement to another party unless requested to do so by the registered owner or entitlement holder. In this subsection, “agreement” means an agreement described in (c)(2) or (d)(2) of this section.

History. (§ 8.106 ch 114 SLA 1962; am § 9 ch 49 SLA 1990; am § 9 ch 17 SLA 1996; am §§ 16, 17 ch 113 SLA 2000)

Sec. 45.08.107. Whether endorsement, instruction, or entitlement order is effective.

1. An endorsement, instruction, or entitlement order is effective if
   1. it is made by the appropriate person;
   2. it is made by a person who has power under the law of agency to transfer the security or financial asset on behalf of the appropriate person, including, in the case of an instruction or entitlement order, a person who has control under AS 45.08.106(c)(2) or (d)(2); or
   3. the appropriate person has ratified it or is otherwise precluded from asserting its ineffectiveness.
2. An endorsement, instruction, or entitlement order made by a representative is effective even if
   1. the representative has failed to comply with a controlling instrument or with the law of the state having jurisdiction of the representative relationship, including a law requiring the representative to obtain court approval of the transaction; or
   2. the representative’s action in making the endorsement, instruction, or entitlement order or using the proceeds of the transaction is otherwise a breach of duty.
3. If a security is registered in the name of or specially endorsed to a person described as a representative, or if a securities account is maintained in the name of a person described as a representative, an endorsement, instruction, or entitlement order made by the person is effective even though the person no longer serves in the described capacity.
4. Effectiveness of an endorsement, instruction, or entitlement order is determined as of the date the endorsement, instruction, or entitlement order is made, and an endorsement, instruction, or entitlement order does not become ineffective by reason of any later change of circumstances.
5. In this chapter, “appropriate person” means
   1. with respect to an endorsement, the person specified by a security certificate or by an effective special endorsement to be entitled to the security;
   2. with respect to an instruction, the registered owner of an uncertificated security;
   3. with respect to an entitlement order, the entitlement holder;
   4. if the person designated in (1), (2), or (3) of this subsection is deceased, the designated person’s successor taking under other law or the designated person’s personal representative acting for the estate of the decedent; or
   5. if the person designated in (1), (2), or (3) of this subsection lacks capacity, the designated person’s guardian, conservator, or other similar representative who has power under other law to transfer the security or financial asset.

History. (§ 8 ch 16 SLA 1982; am § 10 ch 49 SLA 1990; am § 10 ch 17 SLA 1996)

Sec. 45.08.108. Warranties in direct holding.

1. A person who transfers a certificated security to a purchaser for value warrants to the purchaser, and an endorser, if the transfer is by endorsement, warrants to any subsequent purchaser, that
   1. the certificate is genuine and has not been materially altered;
   2. the transferor or endorser does not know of a fact that might impair the validity of the security;
   3. there is no adverse claim to the security;
   4. the transfer does not violate any restriction on transfer;
   5. if the transfer is by endorsement, the endorsement is made by an appropriate person, or if the endorsement is by an agent, the agent has actual authority to act on behalf of the appropriate person; and
   6. the transfer is otherwise effective and rightful.
2. A person who originates an instruction for registration of transfer of an uncertificated security to a purchaser for value warrants to the purchaser that
   1. the instruction is made by an appropriate person, or if the instruction is by an agent, the agent has actual authority to act on behalf of the appropriate person;
   2. the security is valid;
   3. there is no adverse claim to the security; and
   4. at the time the instruction is presented to the issuer;
      1. the purchaser will be entitled to the registration of transfer;
      2. the transfer will be registered by the issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction;
      3. the transfer will not violate any restriction on transfer; and
      4. the requested transfer will otherwise be effective and rightful.
3. A person who transfers an uncertificated security to a purchaser for value and does not originate an instruction in connection with the transfer warrants that
   1. the uncertificated security is valid;
   2. there is no adverse claim to the security;
   3. the transfer does not violate any restriction on transfer; and
   4. the transfer is otherwise effective and rightful.
4. A person who endorses a security certificate warrants to the issuer that
   1. there is no adverse claim to the security; and
   2. the endorsement is effective.
5. A person who originates an instruction for registration of transfer of an uncertificated security warrants to the issuer that
   1. the instruction is effective; and
   2. at the time the instruction is presented to the issuer, the purchaser will be entitled to the registration of transfer.
6. A person who presents a certificated security for registration of transfer or for payment or exchange warrants to the issuer that the person is entitled to the registration, payment, or exchange, but a purchaser for value and without notice of adverse claims to whom transfer is registered warrants only that the person does not have knowledge of an unauthorized signature in a necessary endorsement.
7. If a person acts as agent of another in delivering a certificated security to a purchaser, the identity of the principal was known to the person to whom the certificate was delivered, and the certificate delivered by the agent was received by the agent from the principal or received by the agent from another person at the direction of the principal, the person delivering the security certificate warrants only that the delivering person has authority to act for the principal and does not know of an adverse claim to the certificated security.
8. A secured party who redelivers a security certificate received, or after payment and on order of the debtor delivers the security certificate to another person, makes only the warranties of an agent under (g) of this section.
9. Except as otherwise provided in (g) of this section, a broker acting for a customer makes to the issuer and a purchaser the warranties provided in (a) — (f) of this section. A broker that delivers a security certificate to its customer, or causes its customer to be registered as the owner of an uncertificated security, makes to the customer the warranties provided in (a) or (b) of this section, and has the rights and privileges of a purchaser under this section. The warranties of and in favor of the broker acting as an agent are in addition to applicable warranties given by and in favor of the customer.

History. (§ 11 ch 49 SLA 1990; am § 11 ch 17 SLA 1996)

Sec. 45.08.109. Warranties in indirect holding.

1. A person who originates an entitlement order to a securities intermediary warrants to the securities intermediary that
   1. the entitlement order is made by an appropriate person, or if the entitlement order is by an agent, the agent has actual authority to act on behalf of the appropriate person; and
   2. there is no adverse claim to the security entitlement.
2. A person who delivers a security certificate to a securities intermediary for credit to a securities account or originates an instruction with respect to an uncertificated security directing that the uncertificated security be credited to a securities account makes to the securities intermediary the warranties specified in AS 45.08.108(a) or (b).
3. If a securities intermediary delivers a security certificate to its entitlement holder or causes its entitlement holder to be registered as the owner of an uncertificated security, the securities intermediary makes to the entitlement holder the warranties specified in AS 45.08.108(a) or (b).

History. (§ 12 ch 17 SLA 1996)

Sec. 45.08.110. Applicability; choice of law.

1. The local law of the issuer’s jurisdiction, as specified in (f) of this section, governs
   1. the validity of a security;
   2. the rights and duties of the issuer with respect to registration of transfer;
   3. the effectiveness of registration of transfer by the issuer;
   4. whether the issuer owes a duty to an adverse claimant to a security; and
   5. whether an adverse claim can be asserted against a person to whom transfer of a certificated or uncertificated security is registered or a person who obtains control of an uncertificated security.
2. The local law of the securities intermediary’s jurisdiction, as specified in (e) of this section, governs
   1. acquisition of a security entitlement from the securities intermediary;
   2. the rights and duties of the securities intermediary and entitlement holder arising out of a security entitlement;
   3. whether the securities intermediary owes a duty to an adverse claimant to a security entitlement; and
   4. whether an adverse claim can be asserted against a person who acquires a security entitlement from the securities intermediary or a person who purchases a security entitlement or interest in a security entitlement from an entitlement holder.
3. The local law of the jurisdiction in which a security certificate is located at the time of delivery governs whether an adverse claim can be asserted against a person to whom the security certificate is delivered.
4. The following rules determine a securities intermediary’s jurisdiction for purposes of this section:
   1. if an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that a particular jurisdiction is the securities intermediary’s jurisdiction for purposes of AS 45.08.101 — 45.08.116 , this chapter, or this code, that jurisdiction is the securities intermediary’s jurisdiction;
   2. if (1) of this subsection does not apply and an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the securities intermediary’s jurisdiction;
   3. if neither (1) nor (2) of this subsection applies and an agreement between the securities intermediary and its entitlement holder governing the securities account expressly provides that the securities account is maintained at an office in a particular jurisdiction, that jurisdiction is the securities intermediary’s jurisdiction;
   4. if none of the preceding paragraphs of this subsection applies, the securities intermediary’s jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the entitlement holder’s account is located;
   5. if none of the preceding paragraphs of this subsection applies, the securities intermediary’s jurisdiction is the jurisdiction in which the chief executive office of the securities intermediary is located.
5. A securities intermediary’s jurisdiction is not determined by the physical location of certificates representing financial assets, by the jurisdiction in which is organized the issuer of the financial asset with respect to which an entitlement holder has a security entitlement, or by the location of facilities for data processing or other record keeping concerning the account.
6. In this chapter, “issuer’s jurisdiction” means the jurisdiction under which the issuer of the security is organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified by the issuer. An issuer organized under the law of this state may specify the law of another jurisdiction as the law governing the matters specified in (a)(2) — (5) of this section.

History. (§ 12 ch 17 SLA 1996; am § 18 ch 113 SLA 2000; am § 38 ch 22 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective July 1, 2015, in (d)(3), deleted “specifies” following “account expressly provides”.

Sec. 45.08.111. Clearing corporation rules.

A rule adopted by a clearing corporation governing rights and obligations among the clearing corporation and its participants in the clearing corporation is effective even if the rule conflicts with this chapter and affects another party who does not consent to the rule.

History. (§ 12 ch 17 SLA 1996)

Sec. 45.08.112. Creditor’s legal process.

1. The interest of a debtor in a certificated security may be reached by a creditor only by actual seizure of the security certificate by the officer making the attachment or levy, except as otherwise provided in (d) of this section. However, a certificated security for which the certificate has been surrendered to the issuer may be reached by a creditor by legal process upon the issuer.
2. The interest of a debtor in an uncertificated security may be reached by a creditor only by legal process upon the issuer at its chief executive office in the United States, except as otherwise provided in (d) of this section.
3. The interest of a debtor in a security entitlement may be reached by a creditor only by legal process upon the securities intermediary with whom the debtor’s securities account is maintained, except as otherwise provided in (d) of this section.
4. The interest of a debtor in a certificated security for which the certificate is in the possession of a secured party, or in an uncertificated security registered in the name of a secured party, or a security entitlement maintained in the name of a secured party, may be reached by a creditor by legal process upon the secured party.
5. A creditor whose debtor is the owner of a certificated security, uncertificated security, or security entitlement is entitled to aid from a court of competent jurisdiction, by injunction or otherwise, in reaching the certificated security, uncertificated security, or security entitlement or in satisfying the claim by means allowed at law or in equity in regard to property that cannot readily be reached by other legal process.

History. (§ 12 ch 17 SLA 1996)

Sec. 45.08.113. Statute of frauds inapplicable.

A contract or modification of a contract for the sale or purchase of a security is enforceable whether or not there is a writing signed or record authenticated by a party against whom enforcement is sought, even if the contract or modification is not capable of performance within one year of its making.

History. (§ 12 ch 17 SLA 1996)

Sec. 45.08.114. Evidentiary rules concerning certificated securities.

The following rules apply in an action on a certificated security against the issuer:

1. unless specifically denied in the pleadings, each signature on a security certificate or in a necessary endorsement is admitted;
2. if the effectiveness of a signature is put in issue, the burden of establishing effectiveness is on the party claiming under the signature, but the signature is presumed to be genuine or authorized;
3. if signatures on a security certificate are admitted or established, production of the certificate entitles a holder to recover on it unless the defendant establishes a defense or a defect going to the validity of the security;
4. if it is shown that a defense or defect exists, the plaintiff has the burden of establishing that the plaintiff or some person under whom the plaintiff claims is a person against whom the defense or defect cannot be asserted.

History. (§ 12 ch 17 SLA 1996)

Cross references. —

For effect of this section on Alaska Rule of Civil Procedure 8, see § 70, ch. 17, SLA 1996 in the Temporary and Special Acts.

Sec. 45.08.115. Securities intermediary and others not liable to adverse claimant.

A securities intermediary that has transferred a financial asset under an effective entitlement order, or a broker or other agent or bailee that has dealt with a financial asset at the direction of its customer or principal, is not liable to a person having an adverse claim to the financial asset, unless the securities intermediary, broker, other agent, or bailee

1. took the action after it had been served with an injunction, restraining order, or other legal process enjoining it from doing so, issued by a court of competent jurisdiction, and had a reasonable opportunity to act on the injunction, restraining order, or other legal process;
2. acted in collusion with the wrongdoer in violating the rights of the adverse claimant; or
3. in the case of a security certificate that has been stolen, acted with notice of the adverse claim.

History. (§ 12 ch 17 SLA 1996)

Sec. 45.08.116. Securities intermediary as purchaser for value.

A securities intermediary that receives a financial asset and establishes a security entitlement to the financial asset in favor of an entitlement holder is a purchaser for value of the financial asset. A securities intermediary that acquires a security entitlement to a financial asset from another securities intermediary acquires the security entitlement for value if the securities intermediary acquiring the security entitlement establishes a security entitlement to the financial asset in favor of an entitlement holder.

History. (§ 12 ch 17 SLA 1996)

Sec. 45.08.201. “Issuer”.

1. With respect to obligations on or defenses to a security, “issuer” includes a person who
   1. places or authorizes the placing of the person’s name on a security certificate, other than as authenticating trustee, registrar, transfer agent, or the like, to evidence a share, participation, or other interest in the person’s property or in an enterprise, or to evidence the person’s duty to perform an obligation represented by the certificate;
   2. creates shares, participations, or other interests in that person’s property or in an enterprise, or undertakes obligations, if the shares, participations, interests, or obligations are uncertificated securities;
   3. directly or indirectly creates fractional interests in the person’s rights or property, if the fractional interests are represented by security certificates; or
   4. becomes responsible for, or in place of, another person described as an issuer in this section.
2. With respect to obligations on or defenses to a security, a guarantor is an issuer to the extent of the guarantor’s guarantee, whether or not the guarantor’s obligation is noted on a security certificate.
3. With respect to registration of a transfer, “issuer” means a person on whose behalf transfer books are maintained.

History. (§ 8.201 ch 114 SLA 1962; am § 12 ch 49 SLA 1990; am § 13 ch 17 SLA 1996)

Sec. 45.08.202. Issuer’s responsibility and defenses; notice of defect or defense.

1. Even against a purchaser for value and without notice, the terms of a certificated security include terms stated on the certificate and terms made part of the security by reference on the certificate to another instrument, indenture, or document or to a constitution, statute, ordinance, rule, regulation, order, or the like, to the extent the terms referred to do not conflict with terms stated on the certificate. A reference under this subsection does not of itself charge a purchaser for value with notice of a defect going to the validity of the security, even if the certificate expressly states that a person accepting it admits notice. The terms of an uncertificated security include those stated in an instrument, indenture, or document or in a constitution, statute, ordinance, rule, regulation, order, or the like, under which the security is issued.
2. The following rules apply if an issuer asserts that a security is not valid:
   1. a security other than one issued by a government or governmental subdivision, agency, or instrumentality, even though issued with a defect going to its validity, is valid in the hands of a purchaser for value and without notice of the particular defect unless the defect involves a violation of a constitutional provision; in that case, the security is valid in the hands of a purchaser for value and without notice of the defect, other than one who takes by original issue;
   2. paragraph (1) of this subsection applies to an issuer that is a government or governmental subdivision, agency, or instrumentality only if there has been substantial compliance with the legal requirements governing the issue or the issuer has received a substantial consideration for the issue as a whole or for the particular security and a stated purpose of the issue is one for which the issuer has power to borrow money or issue the security.
3. Except as otherwise provided in AS 45.08.205 , lack of genuineness of a certificated security is a complete defense, even against a purchaser for value and without notice.
4. All other defenses of the issuer of a security, including nondelivery and conditional delivery of a certificated security, are ineffective against a purchaser for value who has taken the certificated security without notice of the particular defense.
5. This section does not affect the right of a party to cancel a contract for a security “when, as, and if issued” or a “when distributed” in the event of a material change in the character of the security that is the subject of the contract or in the plan or arrangement under which the security is to be issued or distributed.
6. If a security is held by a securities intermediary against whom an entitlement holder has a security entitlement with respect to the security, the issuer may not assert a defense that the issuer could not assert if the entitlement holder held the security directly.

History. (§ 8.202 ch 114 SLA 1962; am § 9 ch 16 SLA 1982; am § 13 ch 49 SLA 1990; am §§ 14 — 19 ch 17 SLA 1996)

Sec. 45.08.203. Staleness as notice of defects or defenses.

1. After an act or event, other than a call that has been revoked, creating a right to immediate performance of the principal obligation represented by a certificated security or setting a date on or after which the security is to be presented or surrendered for redemption or exchange, a purchaser is charged with notice of any defect in the security’s issue or defense of the issuer, if the act or event
   1. requires the payment of money, the delivery of certificated securities, the registration of transfer of uncertificated securities, or any of these on presentation or surrender of the security certificate, the money or securities are available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date; or
   2. is not covered by (1) of this subsection and the purchaser takes the security more than two years after the date set for surrender or presentation or the date on which performance became due.
2. [Repealed, § 68 ch 17 SLA 1996.]

History. (§ 8.203 ch 114 SLA 1962; am § 14 ch 49 SLA 1990; am §§ 20, 68 ch 17 SLA 1996)

Sec. 45.08.204. Effect of issuer’s restriction on transfer.

A restriction on transfer of a security imposed by the issuer, even though otherwise lawful, is ineffective against a person without knowledge of the restriction unless the security

1. is certificated and the restriction is noted conspicuously on the security certificate; or
2. is uncertificated and the registered owner has been notified of the restriction.

History. (§ 8.204 ch 114 SLA 1962; am § 15 ch 49 SLA 1990; am § 21 ch 17 SLA 1996)

Sec. 45.08.205. Effect of unauthorized signature on security certificate.

An unauthorized signature placed on a security certificate before or in the course of issue is ineffective, but the signature is effective in favor of a purchaser for value of the certificated security if the purchaser is without notice of the lack of authority and the signing has been done by

1. an authenticating trustee, registrar, transfer agent, or other person entrusted by the issuer with the signing of the security certificate or of similar security certificates, or the immediate preparation for signing of any of them; or
2. an employee of the issuer, or of a person listed in (1) of this section, entrusted with responsible handling of the security certificate.

History. (§ 8.205 ch 114 SLA 1962; am § 16 ch 49 SLA 1990; am § 22 ch 17 SLA 1996)

Sec. 45.08.206. Completion or alteration of certificated security.

1. If a security certificate contains the signatures necessary to its issue or transfer but is incomplete in another respect,
   1. a person may complete it by filling in the blanks as authorized; and
   2. even if the blanks are incorrectly filled in, the security certificate as completed is enforceable by a purchaser who takes it for value and without notice of the incorrectness.
2. A complete security certificate that has been improperly altered, even if fraudulently, remains enforceable, but only according to its original terms.
3. [Repealed, § 68 ch 17 SLA 1996.]
4. [Repealed, § 68 ch 17 SLA 1996.]

History. (§ 8.206 ch 114 SLA 1962; am §§ 17, 18 ch 49 SLA 1990; am §§ 23, 24, 68 ch 17 SLA 1996)

Sec. 45.08.207. Rights and duties of issuer with respect to registered owners and registered pledgees.

1. Before due presentment for registration of transfer of a certificated security in registered form or of an instruction requesting registration of transfer of an uncertificated security, the issuer or indenture trustee may treat the registered owner as the person exclusively entitled to vote, to receive notifications, and otherwise to exercise all the rights and powers of an owner.
2. [Repealed, § 68 ch 17 SLA 1996.]
3. [Repealed, § 68 ch 17 SLA 1996.]
4. [Repealed, § 68 ch 17 SLA 1996.]
5. [Repealed, § 68 ch 17 SLA 1996.]
6. [Repealed, § 68 ch 17 SLA 1996.]
7. This chapter does not affect the liability of the registered owner of a security for calls, assessments, or the like.

History. (§ 8.207 ch 114 SLA 1962; am § 19 ch 49 SLA 1990; am §§ 25, 26, 68 ch 17 SLA 1996)

Collateral references. —

Construction and effect of UCC § 8-207(1) allowing issuer of investment security to treat registered owner as entitled to owner’s rights until presentment for registration of transfer, 21 ALR4th 879.

Sec. 45.08.208. Effect of signature of authenticating trustee, registrar, or transfer agent.

1. A person signing a security certificate as authenticating trustee, registrar, transfer agent, or the like, warrants to a purchaser for value of the certificated security, if the purchaser is without notice of the particular defect, that
   1. the certificate is genuine;
   2. the person’s own participation in the issue of the security is within the person’s capacity and within the scope of the authority received by the person from the issuer; and
   3. the person has reasonable grounds to believe that the certificated security is in the form and within the amount the issuer is authorized to issue.
2. Unless otherwise agreed, a person signing under (a) of this section does not assume responsibility for the validity of the security in other respects.

History. (§ 8.208 ch 114 SLA 1962; am §§ 10, 11 ch 16 SLA 1982; am § 20 ch 49 SLA 1990; am § 27 ch 17 SLA 1996)

Sec. 45.08.209. Issuer’s lien.

A lien in favor of an issuer upon a certificated security is valid against a purchaser only if the right of the issuer to the lien is noted conspicuously on the security certificate.

History. (§ 28 ch 17 SLA 1996)

Sec. 45.08.210. Overissue.

1. Except as otherwise provided in (b) and (c) of this section, the provisions of AS 45.08.201 — 45.08.210 that validate a security or compel its issue or reissue do not apply to the extent that validation, issue, or reissue would result in overissue.
2. If an identical security not constituting an overissue is reasonably available for purchase, a person entitled to issue or validation may compel the issuer to purchase the security and deliver it if certificated or register its transfer if uncertificated, against surrender of any security certificate the person holds.
3. If a security is not reasonably available for purchase, a person entitled to issue or validation may recover from the issuer the price the person or the last purchaser for value paid for it with interest from the date of the person’s demand.
4. In this section, “overissue” means the issue of securities in excess of the amount the issuer has corporate power to issue, but an overissue does not occur if appropriate action has cured the overissue.

History. (§ 28 ch 17 SLA 1996)

Sec. 45.08.301. Delivery.

1. Delivery of a certificated security to a purchaser occurs when
   1. the purchaser acquires possession of the security certificate;
   2. another person, other than a securities intermediary, either acquires possession of the security certificate on behalf of the purchaser or, having previously acquired possession of the certificate, acknowledges that it holds for the purchaser; or
   3. a securities intermediary acting on behalf of the purchaser acquires possession of the security certificate, only if the certificate is in registered form and is
      1. registered in the name of the purchaser;
      2. payable to the order of the purchaser; or
      3. specially endorsed to the purchaser by an effective endorsement and has not been endorsed to the securities intermediary or in blank.
2. Delivery of an uncertificated security to a purchaser occurs when
   1. the issuer registers the purchaser as the registered owner, upon original issue or registration of transfer; or
   2. another person, other than a securities intermediary, either becomes the registered owner of the uncertificated security on behalf of the purchaser or, having previously become the registered owner, acknowledges that it holds for the purchaser.

History. (§ 8.301 ch 114 SLA 1962; am § 21 ch 49 SLA 1990; am § 29 ch 17 SLA 1996; am § 19 ch 113 SLA 2000)

Sec. 45.08.302. Rights of purchaser.

1. Except as otherwise provided in (b) and (c) of this section, a purchaser of a certificated or uncertificated security acquires all rights in the security that the transferor had or had power to transfer.
2. A purchaser of a limited interest acquires rights only to the extent of the interest purchased.
3. A purchaser of a certificated security who as a previous holder had notice of an adverse claim does not improve its position by taking from a protected purchaser.

History. (§ 8.302 ch 114 SLA 1962; am §§ 22, 23 ch 49 SLA 1990; am § 30 ch 17 SLA 1996; am § 20 ch 113 SLA 2000)

Collateral references. —

Who is “bona fide purchaser” of investment security under UCC § 8-302, 88 ALR3d 949.

Sec. 45.08.303. Protected purchaser.

1. In this chapter, “protected purchaser” means a purchaser of a certificated or uncertificated security, or of an interest in the security, who gives value, does not have notice of an adverse claim to the security, and obtains control of the certificated or uncertificated security.
2. In addition to acquiring the rights of a purchaser, a protected purchaser also acquires the interest in the security free of any adverse claim.

History. (§ 8.303 ch 114 SLA 1962; am § 24 ch 49 SLA 1990; am § 31 ch 17 SLA 1996)

Sec. 45.08.304. Endorsement.

1. An endorsement may be in blank or special. An endorsement in blank includes an endorsement to bearer. A special endorsement specifies to whom a security is to be transferred or who has power to transfer it. A holder may convert a blank endorsement to a special endorsement.
2. An endorsement purporting to be only of part of a security certificate representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.
3. An endorsement, whether special or in blank, does not constitute a transfer until delivery of the certificate on which it appears or, if the endorsement is on a separate document, until delivery of both the document and the certificate.
4. If a security certificate in registered form has been delivered to a purchaser without a necessary endorsement, the purchaser may become a protected purchaser only when the endorsement is supplied. However, against a transferor, a transfer is complete upon delivery and the purchaser has a specifically enforceable right to have any necessary endorsement supplied.
5. An endorsement of a security certificate in bearer form may give notice of an adverse claim to the certificate, but it does not otherwise affect a right to registration that the holder possesses.
6. Unless otherwise agreed, a person making an endorsement assumes only the obligations provided in AS 45.08.108 and not an obligation that the security will be honored by the issuer.

History. (§ 8.304 ch 114 SLA 1962; am § 25 ch 49 SLA 1990; am § 32 ch 17 SLA 1996)

Sec. 45.08.305. Instruction.

1. If an instruction has been originated by an appropriate person but is incomplete in another respect, any person may complete the instruction as authorized and the issuer may rely on the instruction as completed, even though the instruction has been completed incorrectly.
2. Unless otherwise agreed, a person initiating an instruction assumes only the obligations imposed by AS 45.08.108 and not an obligation that the security will be honored by the issuer.

History. (§ 8.305 ch 114 SLA 1962; am § 26 ch 49 SLA 1990; am § 33 ch 17 SLA 1996)

Sec. 45.08.306. Effect of guaranteeing signature, endorsement, or instruction.

1. A person who guarantees a signature of an endorser of a security certificate warrants that at the time of signing
   1. the signature was genuine;
   2. the signer was an appropriate person to endorse, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person; and
   3. the signer had legal capacity to sign.
2. A person who guarantees a signature of the originator of an instruction warrants that at the time of signing
   1. the signature was genuine;
   2. the signer was an appropriate person to originate the instruction, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person, if the person specified in the instruction as the registered owner was, in fact, the registered owner, but the signature guarantor does not make a warranty that the person specified in the instruction as the registered owner was, in fact, the registered owner; and
   3. the signer had legal capacity to sign.
3. A person who specially guarantees the signature of an originator of an instruction makes the warranties of a signature guarantor under (b) of this section and also warrants that at the time the instruction is presented to the issuer
   1. the person specified in the instruction as the registered owner of the uncertificated security will be the registered owner; and
   2. the transfer of the uncertificated security requested in the instruction will be registered by the issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction.
4. A guarantor under (a) and (b) of this section or a special guarantor under (c) of this section does not otherwise warrant the rightfulness of the transfer.
5. A person who guarantees an endorsement of a security certificate makes the warranties of a signature guarantor under (a) of this section and also warrants the rightfulness of the transfer in all respects.
6. A person who guarantees an instruction requesting the transfer of an uncertificated security makes the warranties of a special signature guarantor under (c) of this section and also warrants the rightfulness of the transfer in all respects.
7. An issuer may not require a special guarantee of signature, a guarantee of endorsement, or a guarantee of instruction as a condition to registration of transfer.
8. The warranties under this section are made to a person taking or dealing with the security in reliance on the guarantee, and the guarantor is liable to the person for loss resulting from their breach. An endorser or originator of an instruction whose signature, endorsement, or instruction has been guaranteed is liable to a guarantor for loss suffered by the guarantor as a result of breach of the warranties of the guarantor.

History. (§ 8.306 ch 114 SLA 1962; am § 27 ch 49 SLA 1990; am § 34 ch 17 SLA 1996)

Sec. 45.08.307. Purchaser’s right to requisites for registration of transfer.

Unless otherwise agreed, the transferor of a security on due demand shall supply the purchaser with proof of authority to transfer or with any other requisite necessary to obtain registration of the transfer of the security, but if the transfer is not for value, a transferor does not need to comply unless the purchaser pays the necessary expenses. If the transferor fails within a reasonable time to comply with the demand, the purchaser may reject or rescind the transfer.

History. (§ 8.307 ch 114 SLA 1962; am § 28 ch 49 SLA 1990; am § 35 ch 17 SLA 1996)

Secs. 45.08.308 — 45.08.321. [Repealed, § 68 ch 17 SLA 1996.]

Sec. 45.08.401. Duty of issuer to register transfer.

1. If a certificated security in registered form is presented to the issuer with a request to register transfer or an instruction is presented to the issuer with a request to register transfer of an uncertificated security, the issuer shall register the transfer as requested if
   1. under the terms of the security the person seeking registration of transfer is eligible to have the security registered in the person’s name;
   2. the endorsement or instruction is made by the appropriate person or by an agent who has actual authority to act on behalf of the appropriate person;
   3. reasonable assurance is given under AS 45.08.402 that the endorsement or instruction is genuine and authorized;
   4. applicable law relating to the collection of taxes has been complied with;
   5. the transfer does not violate a restriction on transfer imposed by the issuer under AS 45.08.204 ;
   6. a demand that the issuer not register transfer has not become effective under AS 45.08.403 , or the issuer has complied with AS 45.08.403(b) but legal process or indemnity bond is not obtained under AS 45.08.403(d) ; and
   7. the transfer is in fact rightful or is to a protected purchaser.
2. If an issuer is under a duty to register a transfer of a security, the issuer is liable to a person presenting a certificated security or an instruction for registration or to the person’s principal for loss resulting from an unreasonable delay in registration or failure or refusal to register the transfer.

History. (§ 8.401 ch 114 SLA 1962; am § 44 ch 49 SLA 1990; am §§ 36, 37 ch 17 SLA 1996)

Sec. 45.08.402. Assurance that endorsements and instructions are effective.

1. An issuer may require the following assurance that each necessary endorsement or each instruction is genuine and authorized:
   1. in all cases, a guarantee of the signature of the person making an endorsement or originating an instruction including, in the case of an instruction, reasonable assurance of identity;
   2. if the endorsement is made or the instruction is originated by an agent, appropriate assurance of actual authority to sign;
   3. if the endorsement is made or the instruction is originated by a fiduciary under AS 45.08.107(e)(4) or (5), appropriate evidence of appointment or incumbency;
   4. if there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and
   5. if the endorsement is made or the instruction is originated by a person not covered by another provision of this subsection, assurance appropriate to the case corresponding as nearly as may be to the provisions of this subsection.
2. [Repealed, § 68 ch 17 SLA 1996.]
3. In this section,
   1. “appropriate evidence of appointment or incumbency” means
      1. in the case of a fiduciary appointed or qualified by a court, a certificate issued by or under the direction or supervision of the court or an officer of the court and dated within 60 days before the date of presentation for transfer; or
      2. in any other case, a copy of a document showing the appointment or a certificate issued by or on behalf of a person reasonably believed by the issuer to be responsible or, in the absence of that document or certificate, other evidence the issuer reasonably considers to be appropriate;
   2. “guarantee of the signature” means a guarantee signed by or on behalf of a person reasonably believed by the issuer to be responsible; an issuer may adopt standards with respect to responsibility if the standards are not manifestly unreasonable.
4. An issuer may elect to require reasonable assurance beyond that specified in this section.

History. (§ 8.402 ch 114 SLA 1962; am § 45 ch 49 SLA 1990; am §§ 38 — 40, 68 ch 17 SLA 1996)

Sec. 45.08.403. Demand that issuer not register transfer.

1. A person who is an appropriate person to make an endorsement or originate an instruction may demand that the issuer not register transfer of a security by communicating to the issuer a notification that identifies the registered owner and the issue of which the security is a part and provides an address for communications directed to the person making the demand. The demand is effective only if it is received by the issuer at a time and in a manner affording the issuer reasonable opportunity to act on it.
2. If a certificated security in registered form is presented to an issuer with a request to register transfer or an instruction is presented to an issuer with a request to register transfer of an uncertificated security after a demand that the issuer not register transfer has become effective, the issuer shall promptly communicate to the person who initiated the demand at the address provided in the demand and to the person who presented the security for registration of transfer or initiated the instruction requesting registration of transfer a notification stating that
   1. the certificated security has been presented for registration of transfer or the instruction for registration of transfer of the uncertificated security has been received;
   2. a demand that the issuer not register transfer had previously been received; and
   3. the issuer will withhold registration of transfer for a period of time stated in the notification in order to provide the person who initiated the demand an opportunity to obtain legal process or an indemnity bond.
3. The period described in (b)(3) of this section may not exceed 30 days after the date of communication of the notification. A shorter period may be specified by the issuer if it is not manifestly unreasonable.
4. An issuer is not liable to a person who initiated a demand that the issuer not register transfer for loss the person suffers as a result of registration of a transfer under an effective endorsement or instruction if the person who initiated the demand does not, within the time stated in the issuer’s communication, either
   1. obtain an appropriate restraining order, injunction, or other process from a court of competent jurisdiction enjoining the issuer from registering the transfer; or
   2. file with the issuer an indemnity bond, sufficient in the issuer’s judgment to protect the issuer and any transfer agent, registrar, or other agent of the issuer involved from a loss the issuer, transfer agent, registrar, or other agent of the issuer may suffer by refusing to register the transfer.
5. This section does not relieve an issuer from liability for registering transfer under an endorsement or instruction that was not effective.

History. (§ 8.403 ch 114 SLA 1962; am §§ 46, 47 ch 49 SLA 1990; am § 41 ch 17 SLA 1996)

Sec. 45.08.404. Wrongful registration.

1. Except as otherwise provided in AS 45.08.406 , an issuer is liable for wrongful registration of transfer if the issuer has registered a transfer of a security to a person not entitled to the security and the transfer was registered
   1. under an ineffective endorsement or instruction;
   2. after a demand that the issuer not register transfer became effective under AS 45.08.403(a) and the issuer did not comply with AS 45.08.403(b) ;
   3. after the issuer had been served with an injunction, restraining order, or other legal process enjoining it from registering the transfer, issued by a court of competent jurisdiction, and the issuer had a reasonable opportunity to act on the injunction, restraining order, or other legal process; or
   4. by an issuer acting in collusion with the wrongdoer.
2. An issuer that is liable for wrongful registration of transfer under (a) of this section on demand shall provide the person entitled to the security with a like certificated or uncertificated security, and payments or distributions that the person did not receive as a result of the wrongful registration. If an overissue would result, the issuer’s liability to provide the person with a like security is governed by AS 45.08.210 .
3. Except as otherwise provided in (a) of this section or in a law relating to the collection of taxes, an issuer is not liable to an owner or other person suffering loss as a result of the registration of a transfer of a security if registration was made under an effective endorsement or instruction.

History. (§ 8.404 ch 114 SLA 1962; am §§ 48, 49 ch 49 SLA 1990; am § 42 ch 17 SLA 1996)

Sec. 45.08.405. Lost, destroyed, and stolen certificated securities.

1. [Repealed, § 68 ch 17 SLA 1996.]
2. If the owner of a certificated security, whether in registered or bearer form, claims that the certificate has been lost, destroyed, or wrongfully taken, the issuer shall issue a new certificate if the owner
   1. so requests before the issuer has notice that the certificate has been acquired by a protected purchaser;
   2. files with the issuer a sufficient indemnity bond; and
   3. satisfies other reasonable requirements imposed by the issuer.
3. If, after the issue of a new security certificate, a protected purchaser of the original certificate presents the original certificate for registration of transfer, the issuer shall register the transfer unless an overissue would result. In that case, the issuer’s liability is governed by AS 45.08.210 . In addition to rights on the indemnity bond, an issuer may recover the new certificate from a person to whom it was issued or a person taking under that person, except a protected purchaser.

History. (§ 8.405 ch 114 SLA 1962; am § 50 ch 49 SLA 1990; am §§ 43, 44, 68 ch 17 SLA 1996)

Sec. 45.08.406. Obligation to notify issuer of lost, destroyed, or wrongfully taken security certificate.

If a security certificate has been lost, apparently destroyed, or wrongfully taken, the owner fails to notify the issuer of the loss, destruction, or taking within a reasonable time after the owner has notice of the loss, destruction, or taking, and the issuer registers a transfer of the security before receiving notification, the owner may not assert against the issuer a claim for registering the transfer under AS 45.08.404 or a claim to a new security certificate under AS 45.08.405 .

History. (§ 8.406 ch 114 SLA 1962; am § 51 ch 49 SLA 1990; am § 45 ch 17 SLA 1996)

Sec. 45.08.407. Authenticating trustee, transfer agent, and registrar.

A person acting as authenticating trustee, transfer agent, registrar, or other agent for an issuer in the registration of a transfer of its securities, in the issue of new security certificates or uncertificated securities, or in the cancellation of surrendered security certificates has the same obligation to the holder or owner of a certificated or uncertificated security with regard to the particular functions performed as the issuer has in regard to those functions.

History. (§ 52 ch 49 SLA 1990; am § 46 ch 17 SLA 1996)

Sec. 45.08.408. Statements of uncertificated securities. [Repealed, § 68 ch 17 SLA 1996.]

Sec. 45.08.501. Acquisition of security entitlement from securities intermediary; securities account.

1. Except as otherwise provided in (b) and (c) of this section, a person acquires a security entitlement if a securities intermediary
   1. indicates by book entry that a financial asset has been credited to the person’s securities account;
   2. receives a financial asset from the person or acquires a financial asset for the person and, in either case, accepts the asset for credit to the person’s securities account; or
   3. becomes obligated under another law, regulation, or rule to credit a financial asset to the person’s securities account.
2. If a condition of (a) of this section has been met, a person has a security entitlement even if the securities intermediary does not itself hold the financial asset.
3. If a securities intermediary holds a financial asset for another person, and the financial asset is registered in the name of, payable to the order of, or specially endorsed to the other person, and has not been endorsed to the securities intermediary or in blank, the other person is treated as holding the financial asset directly rather than as having a security entitlement with respect to the financial asset.
4. Issuance of a security is not establishment of a security entitlement.
5. In this chapter, “securities account” means an account to which a financial asset is or may be credited in accordance with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset.

History. (§ 47 ch 17 SLA 1996)

Sec. 45.08.502. Assertion of adverse claim against entitlement holder.

An action based on an adverse claim to a financial asset, whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against a person who acquires a security entitlement under AS 45.08.501 for value and without notice of the adverse claim.

History. (§ 47 ch 17 SLA 1996)

Sec. 45.08.503. Property interest of entitlement holder in financial asset held by securities intermediary.

1. To the extent necessary for a securities intermediary to satisfy all security entitlements with respect to a particular financial asset, all interests in that financial asset held by the securities intermediary are held by the securities intermediary for the entitlement holders, are not property of the securities intermediary, and are not subject to claims of creditors of the securities intermediary, except as otherwise provided in AS 45.08.511 .
2. An entitlement holder’s property interest with respect to a particular financial asset under (a) of this section is a pro rata property interest in all interests in that financial asset held by the securities intermediary, without regard to the time the entitlement holder acquired the security entitlement or the time the securities intermediary acquired the interest in that financial asset.
3. An entitlement holder’s property interest with respect to a particular financial asset under (a) of this section may not be enforced against the securities intermediary unless the interest is enforced by exercising the entitlement holder’s rights under AS 45.08.505 — 45.08.508 .
4. An entitlement holder’s property interest with respect to a particular financial asset under (a) of this section may not be enforced against a purchaser of the financial asset or of an interest in the financial asset, unless
   1. insolvency proceedings have been initiated by or against the securities intermediary;
   2. the securities intermediary does not have sufficient interests in the financial asset to satisfy the security entitlements of all of the intermediary’s entitlement holders to that financial asset;
   3. the securities intermediary violated the intermediary’s obligations under AS 45.08.504 by transferring the financial asset or interest in the financial asset to the purchaser; and
   4. the purchaser is not protected under (f) of this section.
5. Under (d) of this section, the trustee or other liquidator, acting on behalf of all entitlement holders having security entitlements with respect to a particular financial asset, may recover the financial asset, or the interest in the financial asset, from the purchaser; if the trustee or other liquidator elects not to pursue this right of recovery, an entitlement holder whose security entitlement remains unsatisfied has the right to recover the entitlement holder’s interest in the financial asset from the purchaser.
6. An action based on the entitlement holder’s property interest with respect to a particular financial asset under (a) of this section, whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against a purchaser of a financial asset or an interest in a financial asset who gives value, obtains control, and does not act in collusion with the securities intermediary in violating the securities intermediary’s obligations under AS 45.08.504 .

History. (§ 47 ch 17 SLA 1996)

Sec. 45.08.504. Duty of securities intermediary to maintain financial asset.

1. A securities intermediary shall promptly obtain and maintain a financial asset in a quantity corresponding to the aggregate of all security entitlements the securities intermediary has established in favor of the securities intermediary’s entitlement holders with respect to that financial asset. The securities intermediary may maintain those financial assets directly or through one or more other securities intermediaries.
2. Except to the extent otherwise agreed by its entitlement holder, a securities intermediary may not grant a security interest in a financial asset the securities intermediary is obligated to maintain under (a) of this section.
3. A securities intermediary satisfies the duty in (a) of this section if
   1. the securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or
   2. in the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to obtain and maintain the financial asset.
4. This section does not apply to a clearing corporation if the clearing corporation is the obligor of an option or similar obligation to which the entitlement holders of the clearing corporation have security entitlements.

History. (§ 47 ch 17 SLA 1996)

Sec. 45.08.505. Duty of securities intermediary with respect to payments and distributions.

1. A securities intermediary shall take action to obtain a payment or distribution made by the issuer of a financial asset. A securities intermediary satisfies the duty if
   1. the securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or
   2. in the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to attempt to obtain the payment or distribution.
2. A securities intermediary is obligated to the securities intermediary’s entitlement holder for a payment or distribution made by the issuer of a financial asset if the payment or distribution is received by the securities intermediary.

History. (§ 47 ch 17 SLA 1996)

Sec. 45.08.506. Duty of securities intermediary to exercise rights as directed by entitlement holder.

A securities intermediary shall exercise rights with respect to a financial asset if directed by an entitlement holder to exercise the rights. A securities intermediary satisfies the duty if

1. the securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or
2. in the absence of agreement, the securities intermediary either places the entitlement holder in a position to exercise the rights directly or exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder.

History. (§ 47 ch 17 SLA 1996)

Sec. 45.08.507. Duty of securities intermediary to comply with entitlement order.

1. A securities intermediary shall comply with an entitlement order if the entitlement order is originated by the appropriate person, the securities intermediary has had reasonable opportunity to assure itself that the entitlement order is genuine and authorized, and the securities intermediary has had reasonable opportunity to comply with the entitlement order. A securities intermediary satisfies the duty if
   1. the securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or
   2. in the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to comply with the entitlement order.
2. If a securities intermediary transfers a financial asset under an ineffective entitlement order, the securities intermediary shall reestablish a security entitlement in favor of the person entitled to the entitlement order, and pay or credit payments or distributions that the person did not receive as a result of the wrongful transfer. If the securities intermediary does not reestablish a security entitlement, the securities intermediary is liable to the entitlement holder for damages.

History. (§ 47 ch 17 SLA 1996)

Sec. 45.08.508. Duty of securities intermediary to change entitlement holder’s position to other form of security holding.

A securities intermediary shall act at the direction of an entitlement holder to change a security entitlement into another available form of holding for which the entitlement holder is eligible or to cause the financial asset to be transferred to a securities account of the entitlement holder with another securities intermediary. A securities intermediary satisfies the duty if

1. the securities intermediary acts as agreed upon by the entitlement holder and the securities intermediary; or
2. in the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder.

History. (§ 47 ch 17 SLA 1996)

Sec. 45.08.509. Specification of duties of securities intermediary by other statute, regulation, or rule; manner of performance of duties of securities intermediary and exercise of rights of entitlement holder.

1. If the substance of a duty imposed upon a securities intermediary by AS 45.08.504 — 45.08.508 is the subject of other statute, regulation, or rule, compliance with that statute, regulation, or rule satisfies the duty.
2. To the extent that specific standards for the performance of the duties of a securities intermediary or the exercise of the rights of an entitlement holder are not specified by other statute, regulation, or rule or by agreement between the securities intermediary and entitlement holder, the securities intermediary shall perform the duties of the securities intermediary and the entitlement holder shall exercise the rights of the entitlement holder in a commercially reasonable manner.
3. The obligation of a securities intermediary to perform the duties imposed by AS 45.08.504 — 45.08.508 is subject to the rights of the securities intermediary
   1. arising out of a security interest under a security agreement with the entitlement holder or otherwise; and
   2. under other law, regulation, rule, or agreement to withhold performance of the duties of the securities intermediary as a result of unfulfilled obligations of the entitlement holder to the securities intermediary.
4. AS 45.08.504 — 45.08.508 do not require a securities intermediary to take action that is prohibited by other statute, regulation, or rule.

History. (§ 47 ch 17 SLA 1996)

Sec. 45.08.510. Rights of purchaser of security entitlement from entitlement holder.

1. In a case not covered by the priority rules in AS 45.29 or the rules stated in (c) of this section, an action based on an adverse claim to a financial asset or security entitlement, whether framed in conversion, replevin, constructive trust, equitable lien, or other theory, may not be asserted against a person who purchases a security entitlement, or an interest in a security entitlement, from an entitlement holder if the purchaser gives value, does not have notice of the adverse claim, and obtains control.
2. If an adverse claim could not have been asserted against an entitlement holder under AS 45.08.502 , the adverse claim cannot be asserted against a person who purchases a security entitlement, or an interest in a security entitlement, from the entitlement holder.
3. In a case not covered by the priority rules in AS 45.29, a purchaser for value of a security entitlement, or an interest in a security entitlement, who obtains control has priority over a purchaser of a security entitlement, or an interest in a security entitlement, who does not obtain control. Except as otherwise provided in (d) of this section, purchasers who have control rank according to priority in time of
   1. the purchaser’s becoming the person for whom the securities account in which the security entitlement is carried is maintained, if the purchaser obtained control under AS 45.08.106(d)(1) ;
   2. the securities intermediary’s agreement to comply with the purchaser’s entitlement orders with respect to security entitlements carried or to be carried in the securities account in which the security entitlement is carried if the purchaser obtained control under AS 45.08.106(d)(2) ; or
   3. if the purchaser obtained control through another person under AS 45.08.106(d)(3) , the time on which priority would be based under this subsection if the other person were the secured party.
4. A securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed by the securities intermediary.

History. (§ 47 ch 17 SLA 1996; am §§ 21 — 23 ch 113 SLA 2000)

Sec. 45.08.511. Priority among security interests and entitlement holders.

1. Except as otherwise provided in (b) and (c) of this section, if a securities intermediary does not have sufficient interests in a particular financial asset to satisfy both the securities intermediary’s obligations to entitlement holders who have security entitlements to that financial asset and the securities intermediary’s obligation to a creditor of the securities intermediary who has a security interest in the financial asset, the claims of entitlement holders, other than the creditor, have priority over the claim of the creditor.
2. A claim of a creditor of a securities intermediary who has a security interest in a financial asset held by a securities intermediary has priority over claims of the securities intermediary’s entitlement holders who have security entitlements with respect to the financial asset if the creditor has control over the financial asset.
3. If a clearing corporation does not have sufficient financial assets to satisfy both the clearing corporation’s obligations to entitlement holders who have security entitlements with respect to a financial asset and the clearing corporation’s obligation to a creditor of the clearing corporation who has a security interest in the financial asset, the claim of the creditor has priority over the claims of entitlement holders.

History. (§ 47 ch 17 SLA 1996)

Sec. 45.10.010. The contract document.

1. A retail installment contract must be contained in a single document.  The document must contain the entire agreement of the parties including promissory notes and other evidences of indebtedness between the parties relating to the transaction, except as provided in AS 45.10.040 , 45.10.050 , and 45.10.100 .
2. If the buyer’s obligation to pay the time balance is represented by a promissory note secured by a chattel mortgage, a provision of the mortgage by which the buyer undertakes to do something besides pay a sum certain in money is considered to be contained in a separate document for the purpose of determining the negotiability of the note unless the provision is expressly incorporated in the note by reference to the provision of the mortgage.
3. The contract must be dated, signed by the retail buyer, and completed as to all essential provisions, except as otherwise provided in AS 45.10.050 and 45.10.060 .

History. (§ 2 ch 141 SLA 1962)

Sec. 45.10.020. Buyer’s copy.

The retail seller shall deliver to the retail buyer, or mail to the buyer at the address shown on the retail installment contract, a copy of the contract as accepted by the seller. Until the seller does so, the buyer is obligated to pay only the cash sale price. An acknowledgment by the buyer of delivery of a copy of the contract must appear directly above the buyer’s signature.

History. (§ 3 ch 141 SLA 1962)

Cross references. —

For seller’s responsibilities in catalog sales situations, see AS 45.10.050(b) .

Sec. 45.10.030. Contents of contract.

1. The retail installment contract must contain the names of the seller and the buyer, the place of business of the seller, the residence or other address of the buyer as named by the buyer, and a description or identification of the goods sold or to be sold or services furnished or rendered or to be furnished or rendered. The contract must also contain the following items:
   1. the cash sale price of each item of goods or services;
   2. the amount of the buyer’s down payment, identifying the amounts paid in money and allowed for goods traded in;
   3. the difference between items (1) and (2);
   4. the aggregate amount included for insurance, if a separate identified charge is made for insurance, specifying the types of insurance and the terms of coverage;
   5. the aggregate amount of official fees;
   6. the principal balance, which is the sum of items (3), (4), (5), and (11);
   7. the amount or rate of the service charge;
   8. any other charges;
   9. the amount of the time balance owed by the buyer to the seller, which is the sum of items (6), (7), if (7) is stated in a dollar amount, (8), and (11);
   10. except as provided in (c) of this section, the maximum number of installment payments required and the amount of each installment and the due date of each payment necessary to pay the balance;
   11. if the retail installment contract is for the sale of a motor vehicle, the amount, if any, that the seller agrees to pay to discharge an outstanding obligation of the buyer under an existing motor vehicle agreement, loan, installment sales contract, or lease.
2. Additional items may be included to explain the calculations involved in determining the balance to be paid by the buyer.
3. If the installment payments other than the final payment are stated as a series of equal scheduled amounts and if the amount of the final installment payment does not substantially exceed the scheduled amount of each preceding installment payment, the maximum number of payments and the amount and due date of each payment need not be separately stated, and the amount of the scheduled final installment payment may be stated as the remaining unpaid balance. The due date of the first installment payment may be fixed by a day or date or may be fixed by reference to the date of the contract or to the time of delivery or installation.
4. The contract is not required to state the items in (a) of this section in the order stated in (a) of this section.

History. (§ 4 ch 141 SLA 1962; am §§ 1, 2 ch 67 SLA 2006)

Collateral references. —

Applicability of warranty of fitness under UCC § 2-315 to supplies or equipment used in performance of service contract, 47 ALR4th 238.

Sec. 45.10.040. Other documents.

1. A retail installment contract may be contained in more than one document, if one is an original document signed by the retail buyer stated to be applicable to purchase of goods or services to be made by the retail buyer from time to time.  In this case the document, together with the sales slip,